The Illinois State Universities Retirement System (SURS) is redeeming its $265m (€239m) investment in JP Morgan Asset Management’s open-ended core US real estate fund, due in part to the departure of the fund’s senior portfolio manager Kim Adams.
Adams has since joined Clarion Partners to focus on global alternative property strategies.
A report by investment consultant Verus for the Kern County Employees’ Retirement Association shows that redemption queues for core open-ended US real estate funds have risen from $10bn at the end of 2021 to over $39bn by the end of 2023.
Verus said the JP Morgan Strategic Property Fund’s performance through March of this year was -5.7% net, underperforming the NCREIF ODCE index, which returned -2.4%.
Other funds have also experienced performance challenges. For example, the ASB Allegiance Real Estate Fund posted a net return of -6.9% during the same period, according to the report.
Verus also said the average percentage of redemption queues relative to net asset values (NAVs) in funds has risen from 13% at the end of 2022 to 17% currently.
Verus expects redemption payouts to be delayed, citing a significant slowdown in the transaction market. In 2023, only $5.7bn was paid out, representing less than 15% of the redemption queues.
The average estimated time for full redemption payments is over a year from now.
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