UPDATE 1-M.Stanley freezes German real estate fund

* Freezes fund for subscriptions

* Says properties in fund face value cut

* Fund remains closed for redemptions

(Adds further details, background)

FRANFURT, July 13 (Reuters) - Morgan Stanley (MS.N) froze its 1.7 billion euro ($2.4 billion) German open-ended property fund, P2 Value, for subscriptions on Monday, saying the value of properties held by the fund may need to be cut considerably.

The fund had been closed for redemptions since the end pf October 2008.

A dozen open-ended property funds marketed in Germany were blocked for redemptions late last year as investors desperate for cash amid an across-the-board slide in asset prices redeemed fund units, forcing closures as many property funds' liquid assets threatened to fall below the legal minimum of 5 percent.

Some of the property funds closed at the time have since reopened. As an asset class, open-ended real estate funds have been among the most popular in Germany so far this year, with aggregate net inflows of 2.28 billion euros in January-May, according to monthly data from German mutual funds lobby BVI.

At the end of March, Morgan Stanley said the properties in its P2 Value fund were worth 2.3 billion euros.

In mid-June it announced an independent evaluation of the fund's real estate assets. In Monday's statement, it said the first results of that evaluation "point to a significant depreciation".

The global financial crisis has led to falling property prices, lower rental income and higher vacancy rates in many markets.

The subscription freeze aimed to ensure new investors would be informed in detail about the situation before making any purchase decision, Morgan Stanley said.

It did not say when the evaluation would be completed. (Reporting by Peter Starck; Editing by David Holmes)