Morgan Stanley liquidates P2 Value fund

Morgan Stanley said on Tuesday it is liquidating its P2 Value open-ended fund as it does not expect sustained high returns upon its reopening on 1 November. The fund's 34 properties will be sold over a period of three years and the proceeds paid out to investors. In the meantime the fund plans to pay out dividends 'at least' every six months, depending on the available liquidity.

The P2 Value fund was due to reopen on 1 November following a two-year closure prompted by mass withdrawals in the wake of the credit crisis. 'We were in favour of reopening the fund during the entire closure period but the investment climate remains difficult,' Morgan Stanley Real Estate board member Marc Weinstock said in a statement. Recent developments in the open-ended fund sector - such as new regulations and the liquidation of other funds - had compounded matters, resulting in a further deterioration of the sector environment, he noted.

Chris Gore, partner at King Sturge, said the decision to liquidate the fund and sell the assets was not a major surprise as the fund's liquidity was too low.

P2 Value is the third open-ended fund to be wound down in recent weeks. Aberdeen Asset Management said last week that it was liquidating its EUR 1.3 bn Degi Europa fund.and returning cash to shareholders. And in September, fund manager Kanam announced it was closing down its US-grundinvest fund in response to demands from a majority of unit holders.

Morgan Stanley said in early September that it planned to reopen P2 Value after writing down the value of the fund, which now has a volume of EUR 852 mln compared with EUR 922 mln previously. In an interview with PropertyEU at the time, Morgan Stanley's German head Walter Klug said the market appeared to have bottomed out, making it easier to reopen this fund.