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

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However, a liquidation cannot theoretically be ruled out. P2Value opened in November 2005 and held more than $2.5 billion inassets at end-March. Nearly a third of the entire portfolio isinvested in Japanese real estate. "While the investments in Europeare already picking up again, there is no sign of that yet inJapan," Klug said.

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

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In France, the JV's portfolio, located in Bordeaux, Orleans andMontpellier, is valued at $72.8 million and 75% let to the globalIT group IBM, FdR said. It carries a cap rate of 9% and has avacancy level of 15%. The portfolio was jointly acquired in 2004 ina sale and leaseback transaction.

AllanSaundersonis a managing editor of PropertyInvestor Europe and a contributor to GlobeSt.com.

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