J.P. Morgan Real Estate Income Trust Has Its Effective IPO

J.P. Morgan Asset Management announced that that the SEC had declared the company’s J.P. Morgan Real Estate Income Trust S-11 form effective, setting off the initial public offering. 

According to the prospectus, the IPO will offer up to $5 billion in shares of common stock, including $4 billion in shares of the primary offering and $1 billion in shares pursuant to a distribution reinvestment plan.

There are four different classes of stock—Class T, Class S, Class D, and Class I. “The share classes have different upfront selling commissions and dealer manager fees, and different ongoing stockholder servicing fees,” the prospectus states.

“JPMREIT’s equity real estate investments will include a range of asset types with a focus on stabilized, income-generating properties,” states a company press release. “To a lesser extent, JPMREIT will also invest in real estate value creation opportunities that incorporate property refurbishment, redevelopment and development, which are expected to be owned long-term for both income generation and potential capital appreciation.”

The portfolio strategy is for about three-quarters to be stabilized income-generating properties. The remaining 25% would be “refurbishment, redevelopment and development properties.”

The strategy will also take lessons from the recent pandemic years. “JPMREIT expects to invest in the property types helped by the manner in which the COVID-19 pandemic has accelerated fundamental changes in the way Americans use real estate to consume, work and live and expects to qualify as a real estate investment trust for federal income tax purposes.”

Share prices will be continuously offered at a price roughly equal to the net asset value per share of common stock, which will be updated monthly. “The initial per share purchase price was $10.00 per share, plus applicable upfront selling commissions and manager fees,” the company stated.

The prospectus also notes that investment in the REIT “involves a high degree of risk.” There is no operating history and because there is no public trading market, liquidity is thin. “[R]epurchase of shares by us will likely be the only way to dispose of your shares.” A share repurchase plan will allow shareholders to request a repurchase on a monthly basis, but there is no obligation for any such repurchases. This is also a “perpetual-life REIT” without any obligation for a liquidity event at any point.

Also, “We cannot guarantee that we will make distributions, and if we do we may fund such distributions from sources other than cash flow from operations, including, without limitation, the sale of or repayments under our assets, borrowings, return of capital or offering proceeds, and we have no limits on the amounts we may pay from such sources.”