JLL Income Property Trust Experiences Mixed Results With Pair of Property Sales
JLL Income Property Trust – a daily net asset value, non-traded real estate investment trust with approximately $6.6 billion in portfolio equity and debt investments – recently sold a pair of apartment assets: one in a Seattle suburb for an $11.3 million profit, roughly, and one in the heart of downtown Chicago for an approximate $20.5 million loss.
The latest sale was of Stonemeadow Farms, a 280-unit, garden-style apartment community in Bothell, Wash., a suburb less than 20 miles from Redmond, Bellevue, and downtown Seattle. The REIT said the disposition – for $93.1 million, according to Snohomish County records – aligned with its long-term track record of harvesting gains and reinvesting capital into property sectors and markets that are better positioned for higher point forward returns.
Acquired in May 2019 for $81.8 million, prior to the pandemic-induced record low interest and cap rates and benefiting from the apartment sector’s record high rent growth that followed, the company said the Stonemeadow Farms sale supports the fund’s recycling strategy targeting stronger markets positioned for better growth.
“Stonemeadow Farms proved to be an outstanding investment for us generating an attractive leveraged internal rate of return during our five-year hold,” said Allan Swaringen, president and chief executive officer of JLL Income Property Trust. “We remain bullish on apartments and single-family rentals, which represent our largest overweight sector at over 40% of our portfolio. Crystalizing this investment’s strong performance that exceeded our expectations in terms of occupancy and rent growth made sense in the current environment, especially in the face of our research and strategy team’s estimates of a growing competitive new supply pipeline.”
Last week, the REIT announced the disposition of 180 North Jefferson, a 28-story apartment community in downtown Chicago as part of its long-term strategy of reinvesting capital at opportunistic points in the market cycle. 180 North Jefferson, located in Chicago’s West Loop neighborhood, includes 274 fully renovated apartment units – along with upgraded common area amenities.
While the REIT purchased the Chicago property in 2016 for approximately $96.5 million, the sale price was reported to be $76 million.
“There remains strong institutional interest in higher quality multifamily properties and having completed our business plan for this [Chicago] investment over our nearly eight-year hold, this sale increases our available capital to reinvest in higher yielding properties that we believe will improve future cash flows and point forward returns,” said Swaringen.
Regarding the Stonemeadow Farms sale, Swaringen continued: “As active real estate managers, we carefully construct our portfolio allocations with critical input from LaSalle’s world-class research and strategy team. As we enter what we believe to be the early stages of a new market cycle for core real estate, this was an opportune time to move out of an older residential community freeing up capital to now invest in newer vintage properties with the potential for better returns and lower risk.”
According to the REIT, it has sold 48 properties over its 12-year history at values totaling over $1.1 billion, in aggregate trading on an arms-length basis within 2% of the most recent independent appraised value, all the while utilizing an institutional, independent valuation methodology – a valuation practice unique from many others in the NAV REIT industry.
At $2.7 billion, investments in the residential sector across 24 apartment communities and 4,500 single family rental homes comprise the largest percentage of JLL Income Property Trust’s $6.6 billion portfolio at 42%.
JLL Income Property Trust is an institutionally managed real estate investment trust that owns and manages a diversified portfolio of high quality, income-producing residential, industrial, grocery-anchored retail, healthcare and office properties located in the United States.
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