JP Morgan Asset Management intends to divest $2bn (€1.86bn) in assets from its core open-ended US property fund across 2024 and 2025, according to information the manager disclosed in Mississippi Public Employees Retirement System’s meeting document.
The JP Morgan Strategic Property Fund expects to use proceeds from asset sales to meet redemptions and reshape the fund for sustainable long-term performance.
The fund, with a $25.8bn net asset value, has a redemption queue of $7.3bn and a current contribution queue of $796.5m.
The fund’s planned disposals, all of which will be non-core, span various sectors and geographies. So far, four office buildings worth $1.2bn in total have been put up for sale.
Strategic Property Fund’s long-term strategy focuses on acquiring high-quality assets located in major growth markets with strong projected rent increases.
The fund produced a -16.5% one-year gross return compared with a return of -11.3% for the NFI-ODCE Value Weighted Index, according to the meeting document.
JP Morgan disclosed in the meeting document that deeper markdowns in the fund’s industrial portfolio which accounts for 33.8% of the overall assets; significant write-downs in the office assets, which account for 16.4% of the potrfolio; and the negative impact of higher leverage, which now stands at 30.7%, were key factors behind the fund’s poor performance.
The manager declined a request for further comment.
To read the latest IPE Real Assets magazine click here.