CHICAGO—JLL Income Property Trust, an institutionally managed daily NAV REIT with a national portfolio, has just published its first quarter results, and company officials see a lot of reasons for optimism. Not only is real estate performing well, but some of the worries that many observers were expressing about the new administration in Washington have dissipated.
“We generally see the fundamentals across all of the four primary real estate types as very strong, and they continue to improve,” Allan Swaringen, president and chief executive officer, tells GlobeSt.com. “Real estate is also, historically, a lagging asset class.” Therefore, the economy's good to moderate growth over the past few years means commercial real estate has excellent prospects. He expects increasing occupancy, declining vacancy rates and solid rent growth this year, although perhaps at a slower pace than seen in 2015 and 2016.
Swaringen says the trust has built a portfolio of safe, diversified core properties designed to provide its 12,000 stockholders with steady returns. In the first quarter, it achieved a total net return of 1.8% on Class M shares. And it has paid dividends for twenty-one consecutive quarters, with an average annualized dividend growth rate of 5.6% over that time period.
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“Our holdings in the Chicago area are a microcosm of what we are trying to own around the country,” he adds. The region is known as a national powerhouse in the industrial sector, for example, and the trust owns 11 fully-leased warehouses spread across Chicagoland's most vibrant submarkets, including Joliet and the land around O'Hare Airport. The downtown apartment market is also thriving, and the trust tapped into that by purchasing 180 N. Jefferson, one of the top boutique luxury apartment buildings near the CBD. Finally, Mariano's has become the region's hottest grocery store chain and, as reported in GlobeSt.com, two years ago the trust bought Skokie Commons, a new 93,000 square foot shopping center on Chicago's North Shore anchored by a Mariano's, for $43.75 million.
In total, the trust ended the first quarter with $2.3 billion in assets made up of 69 core properties spanning the retail, apartment, industrial and office sectors. Tenants occupy 95% of the portfolio.
Perhaps the most worrisome factor hanging over the market for commercial real estate during the first quarter was the new Trump Administration. Throughout the 2016 campaign, voters heard a lot of rhetoric that, if fulfilled, could have adversely impacted many companies. Industrial operators were particularly concerned about the rhetoric surrounding trade issues such as NAFTA. Businesses tend to dislike uncertainty, and it was feared that any drastic changes could cut the imports that help sustain the distribution sector.
Swaringen says people were wondering, “'are we going to work with these countries, or are we going to war with them?'” But the administration's recent step back from a confrontation with Canada and Mexico has eased fears of sudden change. “We're not seeing any pullback in the industrial market.”
CHICAGO—JLL Income Property Trust, an institutionally managed daily NAV REIT with a national portfolio, has just published its first quarter results, and company officials see a lot of reasons for optimism. Not only is real estate performing well, but some of the worries that many observers were expressing about the new administration in Washington have dissipated.
“We generally see the fundamentals across all of the four primary real estate types as very strong, and they continue to improve,” Allan Swaringen, president and chief executive officer, tells GlobeSt.com. “Real estate is also, historically, a lagging asset class.” Therefore, the economy's good to moderate growth over the past few years means commercial real estate has excellent prospects. He expects increasing occupancy, declining vacancy rates and solid rent growth this year, although perhaps at a slower pace than seen in 2015 and 2016.
Swaringen says the trust has built a portfolio of safe, diversified core properties designed to provide its 12,000 stockholders with steady returns. In the first quarter, it achieved a total net return of 1.8% on Class M shares. And it has paid dividends for twenty-one consecutive quarters, with an average annualized dividend growth rate of 5.6% over that time period.
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“Our holdings in the Chicago area are a microcosm of what we are trying to own around the country,” he adds. The region is known as a national powerhouse in the industrial sector, for example, and the trust owns 11 fully-leased warehouses spread across Chicagoland's most vibrant submarkets, including Joliet and the land around O'Hare Airport. The downtown apartment market is also thriving, and the trust tapped into that by purchasing 180 N. Jefferson, one of the top boutique luxury apartment buildings near the CBD. Finally, Mariano's has become the region's hottest grocery store chain and, as reported in GlobeSt.com, two years ago the trust bought Skokie Commons, a new 93,000 square foot shopping center on Chicago's North Shore anchored by a Mariano's, for $43.75 million.
In total, the trust ended the first quarter with $2.3 billion in assets made up of 69 core properties spanning the retail, apartment, industrial and office sectors. Tenants occupy 95% of the portfolio.
Perhaps the most worrisome factor hanging over the market for commercial real estate during the first quarter was the new Trump Administration. Throughout the 2016 campaign, voters heard a lot of rhetoric that, if fulfilled, could have adversely impacted many companies. Industrial operators were particularly concerned about the rhetoric surrounding trade issues such as NAFTA. Businesses tend to dislike uncertainty, and it was feared that any drastic changes could cut the imports that help sustain the distribution sector.
Swaringen says people were wondering, “'are we going to work with these countries, or are we going to war with them?'” But the administration's recent step back from a confrontation with Canada and Mexico has eased fears of sudden change. “We're not seeing any pullback in the industrial market.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
