Morgan Stanley to close German property fund

26th October 2010, Comments 0 comments

US investment bank Morgan Stanley said on Tuesday that it would close its open-ended German property investment fund, P2 Value, the third such announcement in less than a month.

P2 Value was frozen two years ago to prevent a mass flight of investors during the storm that erupted after US investment bank Lehman Brothers collapsed in late 2008.

Open-ended funds were popular in Germany before the financial crisis, in part because they normally allowed investors to quickly withdraw their money.

With the freeze's legal duration of two years approaching, the German unit of Morgan Stanley Real Estate Investment decided to close the fund because "requests for share sales would very probably have well surpassed" its cash reserves, a statement said.

"We ensure that we will do everything to sell real-estate assets quickly and at their fair value, and will allow shareholders to participate in the results of the sales as quickly as possible," it added.

Following a series of charges, the fund was valued at 852 million euros (1.18 billion dollars), compared with almost 1.7 billion euros in 2008, the statement said.

Last week, Aberdeen Asset Management said it would close its frozen Degi Europa property fund at the end of the month and liquidate its assets by 2013 rather than re-open it and be swamped by those who wished to sell their shares.

Degi Europa was a benchmark for the sector in Germany.

In late September, KanAM, a German real-estate fund, said it would liquidate its assets for the same reason.

© 2010 AFP

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