JLL Income Property Trust, an institutionally-managed daily NAV REIT (NASDAQ: ZIPTAX; ZIPTMX; ZIPIAX; ZIPIMX) with approximately $7 billion in portfolio assets, announced the full cycle return of three Delaware Statutory Trust (DST) programs from its JLL Exchange platform, which offers replacement properties to 1031 exchange investors. JLL Income Property Trust acquired four properties from the three DSTs through 721 UPREIT acquisitions. In a 721 UPREIT transaction, real estate can be exchanged on a tax-deferred basis for partnership interests in a REIT, offering the potential for owners of the exchanged property to achieve greater diversification, current income, and appreciation.
The JLL Exchange (“JLLX”) program is a sophisticated tax and estate planning tool that utilizes both a traditional 1031 exchange along with a potential 721 UPREIT exchange. The JLLX platform provides institutional quality properties through the DST structure, where owners of appreciated investment real estate can conduct a 1031 exchange by using proceeds from the sale of their real estate to acquire interests in the DST. After a required holding period, JLL Income Property Trust has an option to acquire the DST property, completing the full cycle transaction via a 721 UPREIT.
The JLLX program offers investors a pathway to move from a single property holding into a highly diversified, institutionally managed REIT while deferring taxes, maintaining their real estate allocation, and enjoying a wide range of estate planning benefits. JLL Income Property Trust benefits by attracting strategically aligned long-term investors through the 1031 exchange market.
With the UPREIT acquisition of the four properties, investors’ DST interests were exchanged into fractional, tax-deferred partnership interests in JLL Income Property Trust’s diversified, core real estate portfolio. The four properties were acquired from three distinct DST investments:
JLLX Johns Creek, DST
Property: The Reserve at Johns Creek Walk
Property Type: Class A Apartment Community
UPREIT Return to Investors: 4.4% average annual income through regular quarterly distributions and an average annualized return of approximately 24%
JLLX San Marcos, DST
Property: Summit at San Marcos
Property Type: Class A Apartment Community
UPREIT Return to Investors: 4.6% average annual income through regular quarterly distributions and an average annualized return of approximately 35%
JLLX Diversified I, DST
Properties: San Juan Medical Center and Mason Hill Distribution Center
Property Types: Class A Medical Office and Industrial
UPREIT Return to Investors: 5.0% average annual income through regular quarterly distributions and an average annualized return of approximately 27%
“The JLLX platform was established three years ago to address what we believed to be deficiencies in the historically syndicated 1031 market,” said Drew Dornbusch, Head of JLL Exchange. “By offering an end-to-end solution with lower fees, higher quality properties, and institutional management, we’ve now attracted high-net-worth property owners who previously had been underserved by traditional 1031 programs. With JLL Income Property Trust’s UPREIT acquisition of these properties, we’ve demonstrated our ability to provide 1031 exchange investors with current income, capital preservation, and, ultimately, a tax-deferred interest in a diversified, institutional core real estate portfolio.”
Allan Swaringen, President and CEO of JLL Income Property Trust, added, “Producing attractive returns for our DST investors through the UPREIT of these properties is a significant proof statement as to the value of our JLLX 1031 exchange program. Since the launch of our core, daily NAV REIT program more than ten years ago, the most requested solution from financial advisors has been a companion 1031 exchange offering, and these transactions demonstrate our ability to respond to market demand with another innovative solution for the private wealth market.”
Since its inception in 2020, JLLX has attracted approximately $900 million across 16 DST offerings from property owners seeking to defer taxes on appreciated investment real estate. JLL Income Property Trust has completed six full-cycle UPREIT transactions totaling nearly $470 million to date.