Morgan Stanley Aims New Product at UK Commercial Property Revival

Nick Parmee

7 May 2008

Morgan Stanley is launching a new structured product offering access to UK commercial property recovery up to 2013. The UK Commercial Property Growth Plan 1 will track the Investment Property Database annual capital growth index up to December 2013. The product will start tracking at 35 per cent under its current figure of 823 points, giving an element of downside protection or outperformance over the full term. Marc Chamberlain, vice-president of UK structured products, said: “People still want exposure to commercial property. Because of the downside protection this could sit well alongside a long-only active property fund in a portfolio. In the near term the index may fall but initial capital is 100 per cent protected. The index would have to fall 35 per cent for you not to receive any capital growth at maturity.” The product is not geared, offering 100 per cent of capital growth on the 12,344 commercial properties valued at £184 billion ($362 billion) tracked by IPD. It will not track rental appreciation.