Morgan Stanley to reopen troubled P2 fund

Morgan Stanley will reopen its P2 Value real estate fund on 1 November, putting an end to a ban on redemptions that has been in place since the banking crisis erupted in the autumn of 2008.

The bank has decided to reopen the fund due to the improving property climate in Europe, it said in a statement. However, it will first have to write down the value of the fund to between EUR820mln and EUR870mln, down from its current EUR922 mln, the statement said.

‘The market appears to have bottomed out, which has made it easier to re-open this fund. After substantial de-valuing we do not expect the net asset value of the fund to be de-valued anymore after October 31. We might also sell additional properties,’ the fund’s managing director, Walter Klug, told PropertyEU.

To improve the P2 fund’s liquidity, several properties have been sold in recent weeks, including properties in Hardwareweg and Soesterberg in the Netherlands, as well as in Paris and Singapore. The deals in Paris and Singapore are expected to close shortly. Together, after costs, the sales are expected to generate around EUR85 mln, according to Morgan Stanley. CBRE has advised Morgan Stanley on the sale of some of the properties.

According to the German Investment and Asset Management Association (BVI), the P2 fund has had inflows of just EUR338 mln so far this year. Several other property funds still have a freeze on redemptions, including funds managed by DEGI, AXA Immoselect and Credit Suisse, according to figures from the BVI.

Germany’s 46 open-ended property funds had EUR87.9bn of AUM as of 31 July, according to the BVI. Of this, funds will a ban on redemptions hold EUR24.75bn of AUM.