Press Release

JLL Income Property Trust Expands Offering to Include 1031 Like-kind Exchange Solution

October 16, 2019 — Chicago

Chicago (October 16, 2019) – JLL Income Property Trust, an institutionally-managed daily NAV REIT (NASDAQ: ZIPTAX; ZIPTMX; ZIPIAX; ZIPIMX), announced today the launch of a 1031 tax-deferred exchange program designed to provide accredited investors with the opportunity to defer taxes on gains from the sale of appreciated real estate. This offering marks the first entry into the 1031 exchange market by a daily valued, perpetual NAV REIT advised by an institutional investment manager and sponsored by a global leader in commercial real estate services.  The JLL Exchange (JLLX) program will offer a series of private placements through the sale of interests in Delaware statutory trusts (DSTs) holding real properties sourced from Income Property Trust’s portfolio or from third parties.

Benefits of an Institutional 1031 Exchange Solution

  • Institutional investment management platform and track record.
  • Access to higher quality, larger and more broadly diversified property portfolio.
  • Long-term investment solution for investors no longer wanting to actively manage real estate.
  • Lower fees than typically charged to individual investors accessing the traditional 1031 marketplace.

Unmet Demand for Institutional 1031 Like-kind Solution

“Since the launch of our ground-breaking core daily NAV REIT investment program seven years ago, the request for a companion 1031 exchange offering has been the most asked for solution from financial advisors across our wirehouse, IBD and RIA distribution partners,” said Allan Swaringen, JLL Income Property Trust President and CEO.  He continued, “The investors and platforms we work with are keen to see more institutional quality managers and offerings in the 1031 space come to market.  As we revolutionized the historically high-fee, illiquid, non-traded REIT market back in 2012, today we aim to provide another evolutionary investment solution that prioritizes the goals and objectives of the investor first and foremost.”

An Expanding Yet Underserved Market

The 1031 like-kind exchange market continues to expand with sales, principally through the acceptance of the syndicated DST structure, expected to top $3 billion in originations in 2019, representing nine consecutive years of growth.  “Although the growth of syndicated 1031 sales is impressive, we believe it understates actual demand,” said Drew Dornbusch, Managing Director of LaSalle Investment Management and Head of its 1031 Exchange Platform. He added, “We believe the lower fees, higher quality properties, and institutional management offered by the JLLX platform will appeal to high net worth and ultra-high net worth property owners historically underserved by this market. We see our program materially expanding the range of solutions typically offered by financial advisors to high net worth clients who no longer wish to manage appreciated real estate.”  

1031 Solution Overview and History

The Revenue Act of 1921 authorized taxpayers selling appreciated investment real estate to defer taxes on capital gains by investing sale proceeds in similar “like-kind” property.  Congress later adopted specific requirements governing these transactions, codified as Section 1031 of the Internal Revenue Code.  Subsequent revisions to the tax code expanded the definition of “like-kind” property to include investments in fractional or co-ownership interests in real property, permitting Delaware statutory trusts (DSTs) to qualify as replacement property under Section 1031 and become the predominant solution in the market today.   Section 721 of the Internal Revenue Code provides an additional avenue of tax deferral for investors contributing appreciated property to a real estate operating partnership or UPREIT.  Under this type of a transaction, an operating partnership acquires a taxpayer’s property in exchange for operating partnership units.  The taxpayer realizes no gain from the transaction and subsequently owns a fractional interest in all properties held by the operating partnership.

JLL Income Property Trust Expands Offering to Include 1031 Like-kind Exchange Solution

Through its Operating Partnership, JLL Income Property Trust will now offer beneficial interests in DSTs as “like-kind” property to investors.  Each DST will be governed by a trust agreement to be entered into among JLL Exchange, LaSalle Investment Management, Inc., the Company’s external advisor, the Operating Partnership (OP), a Delaware resident trustee and investors of the DST.  Pursuant to each trust agreement, the Operating Partnership will retain a fair market value purchase option giving it the right, but not the obligation, to acquire the beneficial interests from the investors any time after two years from the closing of the applicable DST Offering in exchange for units of the Operating Partnership or cash. After a one-year holding period, investors who acquire OP Units generally have the right to redeem all or a portion of their OP Units for, at the Company’s sole discretion, shares of the Company’s common stock, cash, or a combination of both.

LaSalle, as Advisor will be engaged to serve as the manager of each DST and will have primary responsibility for performing administrative actions in connection with the DST and any DST Property and generally has the discretion to determine when it is appropriate for a DST to sell a property, subject to the Operating Partnership’s FMV Option.  The Operating Partnership of JLL Income Property Trust will hold an option to acquire the DST property at a future date in connection with each DST offering. If the Operating Partnership exercises its purchase option, DST investors will automatically exchange their DST interests for units of the JLL Income Property Trust Operating Partnership, thereby converting their investments in a single DST asset into fractional ownership interests in an institutional-quality, diversified, $3 billion, 75 property portfolio of commercial real estate.

JLL Income Property Trust is an institutionally managed, daily NAV REIT that gives investors access to a growing portfolio of commercial real estate investments selected by an institutional investment management team and sponsored by one of the world’s leading real estate services firms.

Source: According to Mountain Dell Consulting, LLC.


About JLL Income Property Trust

Jones Lang LaSalle Income Property Trust, Inc. (NASDAQ: ZIPTAX; ZIPTMX; ZIPIAX; ZIPIMX), is a daily NAV REIT that owns and manages a diversified portfolio of high quality, income-producing apartment, industrial, office and retail properties located in the United States. JLL Income Property Trust expects to further diversify its real estate portfolio over time, including on a global basis.

About LaSalle Investment Management

LaSalle Investment Management, Inc., a member of the JLL group and advisor to JLL Income Property Trust, is one of the world’s leading real estate investment managers with approximately $68 billion equity and debt investments under management (as of Q4 2018). LaSalle’s diverse client base includes public and private pension funds, insurance companies, governments, corporations, endowments and private individuals from across the globe. LaSalle sponsors a complete range of investment vehicles including separate accounts, open and closed-end funds, public securities and entity-level investments. LaSalle is a wholly-owned, operationally independent subsidiary of Jones Lang LaSalle Inc. (NYSE: JLL), one of the world’s largest real estate companies. For more information please visit www.lasalle.com.

Forward Looking Statements

This press release may contain forward-looking statements with respect to JLL Income Property Trust. Forward-looking statements are statements that are not descriptions of historical facts and include statements regarding management’s intentions, beliefs, expectations, research, market analysis, plans or predictions of the future. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. Past performance is not indicative of future results and there can be no assurance that future dividends will be paid.

Summary of Risk Factors

You should read the prospectus carefully for a description of the risks associated with an investment in JLL Income Property Trust. Some of these risks include but are not limited to the following:

  • Since there is no public trading market for shares of our common  stock, repurchases of shares by us after a one-year minimum  holding period will likely be the only way to dispose of your  shares. After a required one-year holding period, JLLIPT limits the amount of shares that may be repurchased under our repurchase plan to approximately 5% of our net asset value (NAV) per quarter and 20% of our NAV per annum. Because our assets will consist primarily of properties that generally cannot be readily liquidated, JLLIPT may not have sufficient liquid resources to satisfy repurchase requests. Further, our board of directors may modify or suspend our repurchase plan if it deems such action to be in the best interest of our stockholders. As a result, our shares have limited liquidity and at times may be illiquid.
  • The purchase and redemption price for shares of our common stock will be based on the NAV of each class of common stock and will not be based on any public trading market. Because valuation of properties is inherently subjective, our NAV may not accurately reflect the actual price at which our assets could be liquidated on any given day.
    JLLIPT is dependent on our advisor to conduct our operations. JLLIPT will pay substantial fees to our advisor, which increases your risk of loss. JLLIPT has a history of operating losses and cannot assure you that JLLIPT will achieve profitability. Our advisor will face conflicts of interest as a result of, among other things, time constraints, allocation of investment opportunities, and the fact that the fees it will receive for services rendered to us will be based on our NAV, which it is responsible for   calculating.
  • The amount of distributions JLLIPT makes is uncertain and there is no assurance that future distributions will be made. JLLIPT may pay distributions from sources other than cash f low from operations, including, without limitation, the sale of assets, borrowings, or offering proceeds. Our use of leverage increases the risk of your investment. If JLLIPT fails to maintain our status as a REIT, and no relief provisions apply, JLLIPT would be subject to serious adverse tax consequences that would cause a significant reduction in our cash available for distribution to our stockholders and potentially have a negative impact on our NAV.
  • While JLLIPT’s investment strategy is to invest in stabilized commercial real estate properties diversified by sector with a focus on providing current income to investors, an investment in JLLIPT is not an investment in fixed income. Fixed income has material differences from an investment in a non-traded REIT, including those related to vehicle structure, investment objectives and restrictions, risks, fluctuation of principal, safety, guarantees or insurance, fees and expenses, liquidity and tax treatment.
  • Investing in commercial real estate assets involves certain risks, including but not limited to: tenants’ inability to pay rent; increases in interest rates and lack of availability of financing; tenant turnover and vacancies; and changes in supply of or demand for similar properties in a given market.
  • You should carefully review the “Risk Factors” section of our prospectus for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
  • This sales material must be read in conjunction with the prospectus in order to fully understand all the implications and risks of the offering of securities to which it relates. This sales material is neither an offer to sell nor a solicitation of an offer to buy securities. An offering is made only by the prospectus.
  • Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for eligible, long-term investors who are willing to forgo liquidity and put capital at risk for an indefinite period of time.
  • This material is not to be reproduced or distributed to any other persons (other than professional advisors of the investors or prospective investors, as applicable, receiving this material) and is intended solely for the use of the persons to whom it has been delivered. 

Forward-Looking Statement Disclosure

This literature contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms such as  “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”  “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,”  and other similar terms, including references to assumptions  and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks, uncertainties, and contingencies include, but are not limited to, the following: our ability to effectively raise capital in our offering; uncertainties relating to changes in general economic and real estate conditions; uncertainties relating to the implementation of our investment strategy; and other risk factors as outlined in our prospectus and periodic reports filed with the Securities and Exchange Commission. Although JLLIPT believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. JLLIPT undertakes no obligation to update any forward-looking statement contained herein to conform the statement to actual results or changes in our expectations.