J.P. Morgan Places $325MM Investment into Industrial Development in Inland Empire

Cushman & Wakefield, Los Alamitos, Orange County, Duke Realty, Don Wilson Builders
Photo by Ryan Parker

By Jon Peterson

The industrial market has been one of the darlings of the commercial real estate industry promoting notable institutional grade investors to allocate funds into the sector. New York City-based J.P. Morgan Asset Management is one of them, and the company just announced that it made a $325 million investment into the Ontario Ranch East development project in Ontario, Calif. according to information that the manager provided in a board meeting document for the Mississippi Public Employees Retirement System.

In return for its investment, J.P. Morgan will receive 98 percent ownership of the project. The other two percent will go to the project’s joint venture partners. These are two Newport Beach firms, Sares-Regis Group and Orbis Real Estate Partners.

Ontario Ranch East is a 147-acre development site that is located within the Inland Empire West submarket. It has a current site plan that calls for the construction of 12 industrial buildings that are ranging in size from 45,000 square feet to 180,000 square feet. The project has a total future development potential of 1.3 million square feet.

This investment has been issued on behalf of the J.P. Morgan Strategic Property Fund. This is the real estate manager’s flagship core open-ended commingled fund, and it has a net asset value of $34.9 billion, through March of this year.

This investment will be part of the commingled fund’s strategy to keep it over-allocated to the industrial sector. Through March of this year, the Strategic Property Fund had invested 33 percent of its portfolio in the industrial space. This compared to 32.6 percent for the fund’s benchmark, the NCREIF Fund Index Open-End Diversified Core Equity (NFI-ODCE).

The industrial development transaction also fits in with two of the SPF’s investment outlooks and objectives for the 2022 calendar year. One of these is to advance and deliver key development projects with the industrial and multifamily property types. The other is to scale existing/source extended programmatic ventures.

The industrial property type in Southern California remains one of its favorites for J.P. Morgan. This region is known as one with a differentiation in the rental rate growth trajectory and supply constraints. The Southern California region makes up 43.5 percent of the total industrial assets in the commingled fund.