JLL Income Property Trust Subscribes $200M DST Portfolio

Duke Medical Plaza. Image courtesy of JLL

JLL Income Property Trust has fully subscribed its JLLX Diversified II, DST, a five-property, $200 million diversified portfolio structured as a Delaware Statutory Trust.

The DST is designed to “provide 1031 exchange investors the opportunity to defer taxes on gains from the sale of appreciated real estate,” according to JLL Income Property Trust, an institutionally managed daily NAV REIT with $7 billion in portfolio assets.

JLLX Diversified II, DST features five institutional-quality properties diversified by property type, geography and tenant profile:

• Silverstone Marketplace, a 78,000-square-foot Class A, grocery-anchored shopping center in Scottsdale, Ariz., in metro Phoenix, leased to Sprout’s Farmers Market and other tenants.
• Suwanee Distribution Center, a 559,000-square-foot bulk industrial distribution facility that’s in the Greater Atlanta market and is leased to Mitsubishi.
• Three medical office properties leased to various creditworthy medical tenants—the South Reno Medical Center, Reno, Nev. (32,000 square feet); Duke Medical Plaza, Durham, N.C. (60,000 square feet); and Sugar Land Medical Plaza in metro Houston (37,000 square feet), which are leased to a select group of creditworthy medical tenants.

JLLX Diversified II, DST marks the firm’s largest 1031 exchange offering to date. Drew Dornbusch, head of JLL Exchange, said in a prepared statement that the platform experienced significant demand from wealth management firms and their property owner clients.

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According to Allan Swaringen, president & CEO of JLL Income Property Trust, the JLL Exchange platform was designed as a sophisticated tax and estate planning tool for high-net-worth property owners. He added in prepared remarks that the successful syndication of the $200 million offering proves that the program is resonating with 1031 exchange investors and their financial advisors. Swaringen also observed that despite a slowdown in the traditional syndicated DST marketplace, demand continues to be strong.

Since launching the program in 2020, JLLX reportedly has attracted about $900 million across 16 DST offerings from property owners seeking to defer taxes on appreciated investment real estate.

Widespread activity

Just last month, JLL Income Property Trust acquired Louisville Logistics Center, a 1 million-square-foot, newly completed Class A industrial property in the South Louisville, Ky., submarket, for about $82 million.

Around the same time last year, JLL Income Property Trust purchased the 458,000-square-foot Class A Northeast Atlanta Distribution Center, in Jefferson, Ga. The trust paid about $54 million in the off-market transaction.