JLL Income Property Trust, a daily NAV real estate investment trust, disclosed a recent share value decline, which it claims is largely due to decreased values of properties impacted by the coronavirus (COVID-19) pandemic and the nationwide quarantine.
“COVID-19 has impacted global financial markets, severely restricted international trade and travel, disrupted business operations (in part or in their entirety) and negatively impacted most investment asset classes including real estate,” the company said in a filing with the Securities and Exchange Commission.
Over the last seven business days of the first quarter of 2020, JLL Income Property Trust indicated that its M-I share class declined $0.36, from $12.33 on Monday, March 23rd to $11.97 on Tuesday, March 31st. The decline in share price across all share classes was similar and approximated 3 percent over this period.
The REIT noted that one component of the net asset value decline was that stockholders received a nearly $0.14 dividend payment for the first quarter of 2020 on March 26th, which accounts for approximately 40 percent of the overall share price movement during the period and is consistent with movement over the last 33 quarters of dividend payments.
The larger, approximately 60 percent component of the NAV decline of $0.22, occurred over three business days in late March and was due to decreased property value, the company said.
The REIT’s independent valuation advisor, RERC LLC (formerly Real Estate Research Corporation), assessed the near-term impacts of the COVID-19 pandemic on specific properties.
The properties’ value decline totaled nearly $41 million, an approximate 1.4 percent decline in the REIT’s approximate $3 billion gross asset value, and an approximate 2 percent decline in net asset value.
Property sectors most impacted were:
- Grocery anchored retail, which includes 12 investments worth approximately $810 million and representing 27 percent of the overall portfolio. The revised appraisals reflected increased credit loss reserves, reduced future rental growth rates, reductions to percentage rent revenues and slower projected lease-up of vacant space.
- Parking garages, which includes two investments worth approximately $39 million and representing 1 percent of the overall portfolio. The revised appraisals reflected “significantly reduced” near-term revenue expectations.
- Student-oriented apartment community, which includes one investment worth approximately $21 million and representing 0.5 percent of the overall portfolio. The revised appraisal reflected increased credit loss reserves, reduced future rental growth rates and increased near-term vacancy.
The NAV adjustment also includes an approximate $1.5 million reserve for due diligence costs and deposits associated with acquisitions in progress which may not be completed due to the changing economic environment, the company said.
JLL Income Property Trust (NASDAQ: ZIPTAX; ZIPTMX; ZIPIAX; ZIPIMX) owns and manages a multi-billion-dollar portfolio of apartment, industrial, office and retail properties located in the United States. The REIT has raised approximately $1.8 billion through its ongoing public and various private offerings, as well as its distribution reinvestment plan.