Chad Tredway

Which asset class is J.P. Morgan Asset Management (JPMAM) actively pursuing right now? Which are you avoiding?

We see compelling opportunities across several asset classes, but, if I had to choose the one we’re most excited about right now, it would be net lease. With levered yields in the 9 percent to 11 percent range, the income profile is particularly attractive in today’s rate environment.

These assets also benefit from a surge in advanced manufacturing demand driven by the reshoring of critical industries, as well as the growing popularity of sale-leasebacks, which enable mid-market companies to unlock value from real estate held on their balance sheets. Combined with J.P. Morgan Chase’s banking relationships, we can generate a large and attractive deal pipeline, which helps drive performance and volume.

Additionally, because tenants are responsible for all capital and operating costs, owners are better insulated from inflationary pressures. Owners also benefit from increasing asset values driven by tenant-funded capital projects, as well as stronger rent potential as replacement costs rise.

As for what we’re avoiding: lower-yielding, capital-intensive sectors with more modest growth expectations.

What are the benefits of investing in industrial outdoor storage (IOS) right now? How is the relationship with Zenith going?

IOS remains one of our highest-conviction investment themes. Yields compare very favorably to other sectors, and these assets benefit from the public and private investment we’re seeing drive growth across the country. Supply remains muted, and, with limited institutional competition, we’re leveraging our data advantage to target markets and assets that we believe can drive long-term performance.

We’re also very excited about our relationship with Zenith and the continued growth of our partnership. We see a significant opportunity in combining an entrepreneurial operator with the insights and resources of our broader real estate platform. This combination is unlocking meaningful strategic and competitive advantages, and we look forward to continuing to grow together.

Is the opportunistic window open or closed? How long does it remain open?

The opportunistic window is absolutely open. Broadly speaking, real estate values are still down approximately 20 percent from peak, creating the most compelling entry point we’ve seen in over a decade.

Additionally, we believe the window for opportunistic investing never closes. It may narrow as cycles mature, but there are always new and exciting sectors to pursue, and there are always pockets of mispricing in the market.

How are rising interest rates affecting JPMAM’s strategy?

The days of buying a basic multifamily or industrial asset and leveraging it up are largely over. In many cases, cap rates are too low and borrowing costs too high to make that math work.

Instead, we’re approaching this environment by leaning into high-yield opportunities, growth, and sectors or assets where we believe we have a competitive advantage. We’ve mentioned net lease and IOS, as well as advanced manufacturing — these are among our top themes today.

We’re also doing more levered lending. 

For example, a 65 percent loan-to-value ratio on a multifamily asset, with reasonable back leverage, can generate a levered cash yield of 9 percent to 10 percent. That is in line with, and in some cases better than, owning the building outright, while still enjoying a 35 percent equity buffer to absorb potential losses. In addition, because these are floating-rate loans, yields increase as rates rise, making the opportunity set particularly compelling in the current environment.

Have you made cuts in your portfolio? 

In most sectors, the flight to quality is real and accelerating. As a result, we’re doubling down on top buildings. We’re selling assets that, over time or due to shifting tenant preferences, have drifted into Class B properties. 

We’re reinvesting the proceeds into trophy and fortress assets in top markets and, where appropriate, reallocating the capital into the higher-yielding and growth-driven strategies mentioned previously.

What’s the most surprising item in JPMAM’s portfolio?

As one of the largest real estate owners in the country, we have some unique properties and very interesting tenants. A few notable examples include: a multifamily property in Boston that operated as a chocolate factory for two centuries before being restored and converted into apartments, and a property in Atlanta that was converted from a high school. Some units still have original chalkboards on the walls, and a few even retain the free throw lines from the former gymnasium on the living room floor.

We also have a food producer that makes 15 million doughnuts a year for Krispy Kreme. In Miami, we have two of the largest floral companies in the world that move roughly 4.5 billion flowers through our asset each year, and, perhaps the most interesting, a tenant launching rockets into space to mine asteroids. Real estate is certainly a fascinating business.

Lightning Round:

Your AI platform of choice? OpenAI.

Who would play you in a movie? Michael B. Jordan.

One prompt you’d never give AI. Where are interest rates headed?

Jalen Brunson or Aaron Judge? Brunson — Go Knicks!

“Oppenheimer” or “Odyssey”? Neither.

Tom Holland, Andrew Garfield or Tobey Maguire? Tobey Maguire.

Have you ever eaten pizza with a knife and fork? Never. I’m from Chicago — deep dish, please.

The most money you’ve ever spent on a hamburger? I’m not sure about the cost, but the best is In-N-Out Burger, Animal Style (IYKYK).

Bank or non-bank? Depends on risk profile.

Last book you read? Am I Being Too Subtle? by Sam Zell.

Borrowing costs — up or down in 2027? Up.

What was your nickname when you grew up/started out? Treddy. 

How long do we have before AI kills us all? I don’t think it will! We’re harnessing it to find great deals.

Where’s your secret escape compound? (Think Peter Thiel’s New Zealand Plan B.) Ludlow, Vt. — best in fall and winter.