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JPMorgan Targets $700 Million for Residential-Development Fund

The fund will seek to deliver annual returns of 13 to 15 percent after fees by developing single-family and multifamily rentals outside gateway markets.

(Bloomberg)—JPMorgan Chase & Co.’s asset-management arm is seeking $700 million for a residential-development fund focused on U.S. Sun Belt states as the pandemic accelerates migration to the region.

JPMorgan is courting investors that are potentially over-allocated to key gateway cities such as New York and San Francisco as well as property types including office and retail, according to an investor presentation reviewed by Bloomberg. The vehicle will seek to deliver an annual return of 13% to 15% after fees by developing single-family and multifamily rental homes in cities such as Atlanta; Austin, Texas; Charlotte and Raleigh, North Carolina; and Houston.

The firm is seeking to meet growing consumer demand as household debt remains a headwind to homeownership, the document shows. Although development carries risk, the firm said that 84% of multifamily properties have 85% occupancy or better within one year of completion. The figure jumps to 96% within two years.

The Sun Belt encompasses states in the U.S. South and West including Florida, Texas and Nevada. Many had tax policies that spurred migration even before the Covid-19 pandemic encouraged remote working. Rent growth for non-luxury properties is still climbing in suburban Sun Belt cities, a contrast to declines elsewhere, the presentation notes.

A JPMorgan spokesman declined to comment.

The firm’s real estate team has about $65 billion in assets under management across the U.S., including about 52,000 residential rental units, the document shows.

© 2020 Bloomberg L.P.

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