(REUTERS) -- Investors have approved a year-long extension of a $4.7 billion property megafund from Morgan Stanley , a company spokesman told Reuters on Friday.

The spokesman said the investment bank's property asset-management arm had agreed to a trimming of fees in the fund, known as Morgan Stanley Real Estate Fund (MSREF) VII Global.

Morgan Stanley Real Estate Investing had also agreed to reduce the fund's size by $700 million, the spokesman said, adding that since the fund had not yet drawn down all the cash from investors, it had agreed to a reduction in commitments rather than returning cash.

The fund's life was due to end this June, but only 40 percent or about $1.9 billion of the money had been put to work. The fund will now have until June 2013 to invest the rest of what is now $4 billion in committed capital.

Morgan Stanley's property team has said they feel the time is right to strike deals in depressed property markets globally.

The team has sent a letter confirming the extension to investors, who had to vote to approve it. Government of Singapore Investment Corp Pte Ltd has a stake in the fund, along with China Investment Corp , General Motors Co and Canada Pension Plan Investment Board.

MSREF VII is now less than half the size of its predecessor, MSREF VI, which raised $8.8 billion in 2007. Fundraising for the seventh fund came amid media reports that MSREF VI was facing a loss of as much as $5.4 billion.

One investor told Reuters in Hong Kong that he had lost $20 million out of $25 million invested in the sixth fund.

(Reporting by Alex Frew McMillan; Additional reporting by Stephen Aldred; Editing by Chris Lewis)