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Morgan Closes $2.5B Fund, Exits French JV

FRANKFORT-The bank's objective is to reopen the fund, but a liquidation can't be ruled out. The $72.8 million French JV is 75% leased to IBM.

By Allan Saunderson | Updated on May 20, 2010

FRANKFORT-The retrenchment of Morgan Stanley from the European real estate market went further this week with the complete closure of its German open-end property fund P2 Value – now for purchases in addition to sales – and disposal of a 75% stake in a French joint venture holding with French REIT Foncière des Régions of 115,000 sq.m. of office property.

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.

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