JLL Income Property Trust, an institutionally-managed daily NAV REIT based in Chicago, has launched 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. 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.
“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. “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.”
For nearly 100 years, taxpayers selling appreciated investment real estate have been allowed to defer taxes on capital gains by investing sale proceeds in a similar “like-kind” property. These exchanges—named after the Section 1031 of the Internal Revenue Code in which their specifics were codified—are a long-recognized vehicle for real estate investors to shelter taxes. 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. “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 also see this as a solution that can materially expand the range of solutions typically offered by financial advisors to their high net worth clients that have been long-term owners of real estate but no longer wish to actively manage it.”