Knight Frank’s private equity arm, which manages the listed Rutley European Property fund, has agreed to waive 10% of its fee for the current year.

It also confirmed today that the fund would buy back 10% of its shares to appease shareholders, following a strategic review conducted with Cenkos.

It said: ‘The second half of 2008 witnessed the worst financial news since the onset of the credit crunch. All this resulted in a sharp fall in European property values. The board is reviewing property and administration expenses for 2009 and expects to reduce outgoings of the fund.’

Rutley European said it was in breach of its loan to value (LTV) covenants on eight of its 11 special purpose vehicles, and its average ratio now stood at 79% against a weighted average LTV covenant of 76%. It is in breach on €411m (£384m) of its total €476m (£445m) debt facilities and said discussions with its banks were ongoing.

Its shares are trading at 4.13p, a discount of 94% to its NAV at the end of June 2008 of 70.4p a share.

The value of the company’s property portfolio fell by 8% in the last quarter of 2008 if measured in euros – €616m – but due to the fall in the pound against the euro, the value in sterling increased by 12% to £577m.