JLL REIT Closes Real Estate Loan; Sponsor Completes $100M Equity Investment
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 – announced that it originated a $32 million senior, secured floating rate first mortgage loan on a newly constructed, institutional-quality apartment community in north suburban Houston, Texas.
The loan has an initial three-year term and earns an interest rate of 3% above the secured overnight financing rate – with a SOFR floor of 3.25% – and is currently projected to deliver an attractive yield of approximately 7% to 8%.
“Even after the Federal Reserve’s three interest rate cuts, disruption in traditional real estate lending markets continues. These conditions, coupled with an estimated $1.2 trillion in real estate loans maturing over the next two years, provide an opportune environment for us to increase our allocation to the private real estate debt sector,” said Allan Swaringen, president and chief executive officer of JLL Income Property Trust. “Our expanding loan portfolio should provide JLL Income Property Trust with accretive cash flows; downside protection inherent in our senior, secured investments given substantial borrowers’ equity subordinate to our loans; and attractive diversification across our portfolio of core equity and debt investments.”
With this loan origination, JLL Income Property Trust has surpassed $130 million in its senior secured floating rate first mortgage portfolio. In a market environment where traditional real estate debt sources face balance sheet and legacy portfolio challenges resulting in significantly curtailed lending, JLL Income Property Trust said it is capitalizing on this opportunity by originating real estate loans that complement and diversify its core, multisector property portfolio, while also potentially enhancing investment performance.
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.
LaSalle Investment Management, the REIT’s adviser, and its affiliates have originated more than $5 billion of real estate loans globally and have 20-plus years of experience in real estate debt investing across multiple economic cycles.
The underlying collateral for this loan is a 231-unit apartment community in the submarket of Tomball, Texas, located approximately 28 miles northwest of the Houston central business district. The market has experienced significant growth in its population – 20% over the last five years – as well as growing commercial activity due to its proximity to major employers and residential amenities. Significant employers in the area include Exxon Mobil, Hewlett Packard, University of Texas MD Anderson Cancer Center and Southwest Energy, among others.
The property is located in the Tomball School District, with all three of its high schools ranked in the top 10% best high schools in the nation by U.S. News & World Report. Investing in residential properties located in top school districts is a key principle of LaSalle’s investment strategy, according to the company, as “these locations have exhibited stronger historical rent growth and higher average occupancy.”
In December, The DI Wire reported that the REIT had purchased a Class A industrial business park for approximately $66.5 million: Minneapolis Distribution Center in Maple Grove, Minn.
In other news, Jones Lang LaSalle Incorporated, the sponsor of JLL Income Property Trust, fully funded its previously announced commitment and acquired $100 million of JLL Income Property Trust’s common stock at the daily net asset value offering price on Jan. 2, 2025.
This additional investment in the company along with its successful capital recycling through recent property sales, expansion of its institutional Delaware statutory trust offerings through JLL Exchange, and the increasing allocations to core real estate by financial advisers, has generated significant investing capacity, the sponsor said, at what is believed to be an opportune time in the current real estate recovery cycle.
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