JLL REIT Sells Bay Area Industrial Portfolio, Plans to Redeploy Capital
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 the sale of Pinole Point, a three-property industrial park in Richmond, Calif., in keeping with what the company describes as its long-term strategy of recycling capital at opportunistic points across real estate market cycles.
Pinole Point Distribution Center, acquired in 2016 in two separate transactions totaling $84.2 million, is comprised of three warehouses totaling 518,000 square feet and provides tenants access to critical transportation infrastructure including major interstate highways, the Port of Oakland, Oakland International Airport, and the densely populated San Francisco Bay Area where modern warehouse facilities have historically been in short supply. JLL did not disclose the disposition price.
“Investor demand for industrial properties in markets like the Bay Area remains strong,” said Allan Swaringen, president and chief executive officer of JLL Income Property Trust. “Pinole Point proved to be an outstanding investment for us over our eight-year hold period, providing inflation-hedging income through rent growth and an above target total return. This sale crystalized a more than 50% gain over our initial investment in this portfolio.”
In December 2020, the REIT renewed one of its Pinole Point tenants. Swaringen discussed how the latest vacancies influenced the company’s latest disposition.
“Given existing vacant space within the Pinole Point portfolio and in this market, we concluded it was an opportune time to redeploy capital into longer leased investments not requiring significant capital outlays for leasing commissions and tenant improvements. Selling out of our industrial portfolio’s largest vacancy while also realizing the runup in valuations across the warehouse property sector was an important strategic accomplishment and highly accretive to our portfolio’s performance,” he said.
According to the REIT, recycling capital through timely dispositions across market cycles underpins its investment strategy as a long-term, patient investor that aspires to deliver the benefits of core real estate to its investors as a permanent asset allocation decision within its diversified portfolios.
“As we enter what we believe to be the early stages of a new market cycle for core real estate, this was an opportune disposition that frees up significant capital – more than $125 million – to now invest in higher occupancy, longer leased, newer vintage properties with the potential for better core returns at lower risk,” Swaringen concluded.
Earlier this month, the REIT had mixed results with the disposition 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.
Over its 12-year history, JLL Income Property Trust has sold 49 properties at values totaling more than $1.2 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.
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. Warehouse investments account for approximately 31% of the company’s $6.6 billion portfolio.
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