Montana Board of Investments divested at least two fund stakes in the second half of 2016, including its interest in a JPMorgan Asset Management real estate vehicle, and considered wider asset class sales, documents prepared for an investment committee meeting show.
The US pension received $100 million from the stake in JPMorgan Strategic Property Fund, which reduced Montana’s core real estate exposure to 26 percent from 33 percent, according to minutes from its 6 October investment committee meeting. The stake was “outsized” compared with other positions and staff wanted to “trim a bit”, Ethan Hurley, director of private investments at Montana, said during the meeting.
Core real estate had been “running up” and it was a “good time to take some profits”, he added.
JPMorgan Strategic Property Fund is a 1998-vintage open-ended vehicle and is the largest pure core fund in the NFI-ODCE index of 36 commingled real estate funds.
Montana was also considering cleaning up its real estate portfolio through strategic sales, Hurley said, adding that the pension did not expect to sell the stakes at a premium to net asset value.
The $10.3 billion pension also wanted to reduced its fund of funds exposure, which have fee drags and create administrative burdens, Hurley said. Staff “may facilitate another transaction”, he added.
Montana has investments in 27 private equity fund of funds vehicles, including those managed by Adams Street Partners, Axiom Asia Private Capital, Portfolio Advisors and Neuberger Berman, according to PEI data.
The pension also sold its stake in Montlake Capital II, a 2006-vintage $45.3 million growth capital fund, in the second half of last year. Details of the disposal were not disclosed and a spokeswoman for the pension did not return a request for comment.
Montana is no stranger to the secondaries market: it saved around $100,000 in fees by not hiring an advisor when it sold its stakes in a 2010-vintage TA Associates fund and a 2011-vintage Summit Partners vehicle to Adams Street Partners, as Secondaries Investor reported in November.
The pension has committed to at least 10 secondaries funds, including HarbourVest Partners’ Dover Street IX and Lexington Partners vehicles, according to PEI data.
Public pensions accounted for almost a third of deal volume last year, according to a January report by Greenhill Cogent.