BERLIN-The German real estate management unit of US investmentbank Morgan Stanley is preparing to reopen its P2 Value propertyopen-end fund at the start of November - after a 23% write-down inthe value of its portfolio.

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P2 Value, as many others too, has been closed since autumn 2008but, unlike several property open-fund peers, has made no attemptto re-open in the interim. The original closure came in theaftermath of the Lehman Brothers collapse with a run on redemptionsmainly, but not only, from larger wholesale investors. Smallinvestors were also panicked to move savings into bank savingsaccounts by a government announcement these would beguaranteed.

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Morgan Stanley expects a third-party value assessment atre-opening of $1 billion to $1.1 billion, compared with the currentnet asset value of $1.2 billion. This is based on devaluations,risk reserve additions in individual cases, and potential losses onshort-term asset sales to raise liquidity. In addition it will makereserve and risk allocations of $27 million so that the certificateprice will fall 18% from end-August to $39.01 at re-opening.

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The new NAV compares to a value of $2.2 billion at closing twoyears ago. The fund anticipates dividend payments in the next threeyears of around 5% per annum. Seven assets have been significantlywritten down already, and another eight are being newly valued.Results will be in by end-October.

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"After substantial de-valuation we do not expect the net assetvalue of the fund to be de-valued any more after Oct. 31," saidfund management company CEO Walter Klug. "This fund is now wellpositioned to profit from the recovery of the market."

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Klug is to step down next June. Morgan Stanley said MarcWeinstock, former chairman of HSH Real Estate, and SilviaSchmitten-Walgenbach, former MD of Aberdeen Asset Management'sDegi, are joining management, and it will also name a new CFO soon.The fund manager will, for the next three years, halve theremuneration packages of the new executives compared to the currentteam. Other funds, such as Munich-based Kanam and Degi itself, mayalso reopen.

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AllanSaunderson is a managing editor of Property InvestorEurope and a contributor to GlobeSt.com.

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