J.P. Morgan’s Property Fund Closes Over $900MM of West Coast Deals

Jamestown, San Francisco, Pacific Place, Intuit, Demandforce, Old Navy, Container Store, Levi's, JP Morgan, Bay Area news, San Francisco real estate

By Jon Peterson

The J.P. Morgan Strategic Property Fund has significantly ramped up its acquisitions of properties on the West Coast with it paying more than $915 million for two assets, according to sources familiar with this investment entity.

Jamestown, San Francisco, Pacific Place, Intuit, Demandforce, Old Navy, Container Store, Levi's, JP Morgan, Bay Area news, San Francisco real estateThis commingled fund paid $415 million to acquire the Pacific Place, the 430,000 square foot mixed use office, retail and hotel complex located at 22 4th Street in San Francisco. The other transaction was the purchase of the 322,000 square foot Royal Hawaiian Center retail property in Honolulu’s Waikiki in Hawaii. The acquisition price of this property was in excess of $500 million, according to sources familiar with this transaction.

New York City-based J.P. Morgan Asset Management is the real estate manager of the Strategic Property Fund. It declined to comment on the capital source that it used when contacted for comment for this story.

The Strategic Property Fund had no shortage of capital to invest before it completed its two West Coast investments. The commingled fund had a deposit queue of approximately $1.5 billion prior to the transactions.

This capital had commitments from pension funds and other institutional investors into the fund, and it had not been called by the manager. The thinking was that it would have taken around 12 to 18 months to have this capital actually moved into the commingled fund. This has now changed with the two deals closed.

The Strategic Property Fund is a core open-ended commingled fund, and as such it is always open for new commitments. This is different from a closed-end commingled fund where the manager has a limited and specific time period where capital can be raised.

Pacific Place was acquired from Atlanta-based Jamestown. The asset has 202,000 square feet of office, 130,000 square feet of retail as well as the 198-room Hotel Palomar on its premises.

The Royal Hawaiian Center deal represents the first time that J.P. Morgan Asset Management has acquired a retail asset in Hawaii. The property was 90 percent occupied at the time of the purchase. The main tenants included Cheesecake Factory, Forever 21, Hermes and Tory Burch.

This property is considered to be located in one of the most desired retail markets in the country. It rivals other high street retail locations nationwide, such as Union Square of San Francisco, Michigan Avenue in Chicago and Rodeo Drive in Beverly Hills.

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