Breaking up is never easy, particularly when a rump of underperforming real estate assets looks set to drag out an unhappy relationship. The strong alignment of interests between fund manager and investor — endlessly touted as one of the top attractions of closed-end property funds — is tested, with investors facing the prospect of an exodus of investment professionals before a portfolio’s full realisation.

The enormously difficult fundraising markets following the credit crisis led to a significant shift in power from real estate manager to investor. Suddenly, investors, who for years had stumped up vast sums in fees for the privilege of committing their capital, had the weight to demand lower fees and better terms. But how far can investors push their luck with a fund in crisis? Can cheaper fees and lower return targets make both sets of parties happy? Or does failing to strike the right balance threaten to drive the investment team away?

European closed-end re