The closure of P2 Value comes around nine months after MS Real Estate shut the fund last summer to capital withdrawals – certificate sales – citing the need for a valuation write-down of around 10%. Walter Klug, head of Morgan Stanley Real Estate Germany, said the bank objective is to reopen the fund, and that he plans to unveil a new business plan in July or August.

However, a liquidation cannot theoretically be ruled out. P2 Value opened in November 2005 and held more than $2.5 billion in assets at end-March. Nearly a third of the entire portfolio is invested in Japanese real estate. "While the investments in Europe are already picking up again, there is no sign of that yet in Japan," Klug said.

The fund manager said further depreciations are likely to be needed and it cannot rule out further individual write-downs over the next few months. The move is also another casualty of the turmoil in the German OEPF sector following the publication last week of federal government plans to unilaterally impose a 10% across the board discount on all $111 billion in property assets in the segment. Swedish-owned manager SEB last week shut its $7.8 billion SEB Immoinvest fund to investors after a run sparked by nerves over the proposal, just a day after Munich-based independent manager Kanam closed its $4.9 billion Kanam Grundinvest, citing the same problems. Seven of around 30 OEPFs are now closed to capital withdrawals, some for lengthy periods.