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Weighing up the risks from open-ended property funds

In light of the recent flare-up in commercial property related financial distress and news that investors have been rapidly pulling money out of property funds in Europe, we are re-sending this Update to clients. We also published a Focus this week on the impact of property debt distress in Europe and we will be holding a Drop-In on Wednesday, 14th February covering distress across the US, UK and Europe. Register here for the 20-minute session.

Recent turmoil in the banking sector has drawn attention to open-ended property investment funds (OEFs) due to their mismatch between footloose inflows and illiquid real estate assets. While we think that the immediate risk to European real estate values from forced sales of assets by these funds is relatively small, a downturn in OEF activity could still dampen any recovery.

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