The JP Morgan Strategic Property Fund (SPF) had a redemption queue of $5.6bn (€5.2bn) and an entry queue of $714m at the end of June, according to a board meeting report provided to the Alaska Retirement Management Board.
The numbers reflect a wider move among institutional investors looking to exit open-ended US core real estate funds amid concern about falling property values, according to industry sources.
JP Morgan Asset Management did not respond to an email seeking comment.
According to National Council of Real Estate Investment Fiduciaries (NCREIF), the Open-end Diversified Core Equity (NFI-ODCE) index, which covers 25 funds with $318bn in gross assets, saw net outflows of $2.5bn in the second quarter of 2023. This was higher than the $2bn of net outflows in Q1 this year and the $874m of net outflows in Q2 last year.
NCREIF said contributions dropped 56.4% year on year in Q2 2023, the largest since December 2009. For the year ending 30 June 2023, contributions were $11.2bn and distributions and redemptions were $15.9bn, resulting in an annual net negative cashflow of $4.7bn.
According to the Alaska Retirement Management Board, the $42.3bn JP Morgan SPF – one of the biggest in the index – recently sold a 49% interest in 61 industrial assets for $579.4m.
The portfolio included 2m sqft of buildings, including truck terminals, last-mile distribution warehouses and outdoor storage, in markets such as Northern New Jersey, Chicago, the Inland Empire, Atlanta and Los Angeles.
JP Morgan SPF is under-allocated to the industrial sector with a 30.5% exposure versus 35% for the NFI-ODCE index.
It has an ongoing programme with Black Creek Group to develop core industrial assets. The portfolio has a net asset value of $1.4bn and includes a total of 6.9m sqft.
Alaska Retirement Management Board is a long-standing investor in the JP Morgan fund, dating back to 1998. The pension fund’s current investment in the fund is valued at $172.5m.
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