JLL Income Property Trust has completed another full-cycle UPREIT transaction through its JLL Exchange platform, bringing the daily NAV REIT’s total completed UPREIT transactions to 20 with an aggregate value of $1.5 billion.
The latest transaction involved JLLX Diversified Portfolio III, DST, a two-property Delaware statutory trust syndicated between November 2023 and May 2024. The portfolio includes a light industrial property and a medical outpatient building and is fully leased to two tenants with a weighted-average remaining lease term of 7.5 years.
Over the DST’s holding period, the combined portfolio increased in value by approximately $1.3 million, according to JLL Income Property Trust. The REIT elected to exercise its option to acquire the properties, completing the full-cycle transaction through a Section 721 UPREIT exchange.
Under the transaction, investors receive operating partnership units of JLL Income Property Trust equal to the value of the DST properties, adjusted for transaction costs, distributions and reserves. A 721 UPREIT transaction allows investors to exchange their interests in real estate for operating partnership units of a REIT on a tax-deferred basis rather than recognizing a taxable gain from a traditional property sale.
The structure can provide a potential next step for investors who initially used a DST to complete a Section 1031 exchange. Instead of finding another replacement property when the DST reaches the end of its investment cycle, investors may be able to transition their DST interests into operating partnership units of a larger, diversified REIT while continuing to defer recognition of capital gains.
JLL Income Property Trust President and CEO Allan Swaringen said the transaction demonstrates the JLL Exchange program’s ability to transition DST investors into an income-focused, diversified core real estate portfolio. JLL Exchange Head Drew Dornbusch pointed to current income, capital preservation and the opportunity to obtain a tax-deferred interest in an institutional real estate portfolio as objectives of the program.
The transaction marks another milestone for JLL Exchange, which launched in 2019 to provide tax-efficient real estate exchange solutions. Since inception, the platform has provided exchange solutions for more than $2.5 billion of investor capital across 30 DST offerings. JLL Income Property Trust has now completed 20 full-cycle UPREIT transactions totaling approximately $1.5 billion.
The pace of those transactions has increased significantly in recent years. In late 2024, JLL reported that it had completed 14 full-cycle UPREIT transactions totaling approximately $960 million. By early 2026, that total had increased to 15 transactions representing approximately $1.2 billion.
JLL Income Property Trust itself is an institutionally managed, daily NAV REIT with approximately $6.9 billion in portfolio equity and debt investments. Its portfolio includes residential, industrial, grocery-anchored retail, healthcare and office properties.
The latest transaction highlights the growing connection between the DST and NAV REIT markets. For 1031 exchange investors, the UPREIT structure can provide an alternative to repeatedly exchanging into individual replacement properties, potentially allowing investors to move from a concentrated DST investment into a diversified REIT while maintaining tax deferral. As with any UPREIT transaction, however, investors should consider the differences in liquidity, valuation, fees and tax consequences associated with holding operating partnership units of a nontraded REIT.
