Benefits of Real Estate

REAL ESTATE is a key DIVERSIFIER for strong INVESTMENT PORTFOLIOS. 

Benefits of Real Estate

For decades, institutional investors have diversified their portfolios with commercial real estate. JLL Income Property Trust empowers a broader community of investors to access this cornerstone asset class and compliment their portfolios with a range of benefits. 

Performance

High-quality core commercial real estate as an asset class has historically outperformed most other asset classes, delivering an 8.3% annualized total return over the last 15 years ending in 2019. This exceeded the returns on corporate bonds over the same time period.

Average Annual Total Return, 15-Year Analysis
Average Annual Total Return, 15-Year Analysis Chart
  1. Sources: Core Real Estate: NCREIF ODCE; Public Real Estate: NAREIT Equity REITs; Large Cap Stock: S&P 500; Bonds: Citigroup Broad Investment Grade. Data as of 1Q 2020. Note: Past performance is not indicative of future results. There is no guarantee that any trends shown herein will continue. NCREIF ODCE data reflects the returns of diversified, core, open-end funds including leverage and fund expenses, but excluding management and advisory fees. Returns presented are net of fees. An investment in JLLIPT is different than the NCREIF ODCE, which is not an investable index. Like funds in the NCREIF ODCE, JLLIPT is a diversified, core, perpetual life commercial real estate investment alternative. Private real estate is not traded on an exchange and has less liquidity and price transparency. Stocks are represented by the S&P 500 Index and are subject to market risk. Corporate Bonds are represented by the Citigroup Broad Investment Grade Corporate Bond Index and are subject to credit risk. T-bills are represented by the U.S. Government 90-day T-bill and are subject to interest rate risk. Government bonds and Treasury Bills are guaranteed as to the timely payment of principal and interest. Indices are meant to illustrate general market performance; it is not possible to invest directly in an index. The indices presented represent investments that have material differences from an investment in a non-traded REIT, including those related to investment objectives, risks, fees and expenses, liquidity and tax treatment.

Tracking Symbols: Shares of JLL Income Property Trust are not listed on any securities exchange and they have limited liquidity.

Potential Income

Income has been an essential component of the attractive long term total returns provided by commercial real estate as an asset class. Historically, 70% of the total returns from commercial real estate, according to the NCREIF Index, have come in the form of income rather than capital appreciation. Over the last 20 years, the annual income returns generated from investing in commercial real estate have been more than 2.5 times higher than stocks and lagged bonds by only 50 basis points.

Average Annual Cash Returns / Dividend Income, 15-Year Analysis
Average Annual Cash Returns / Dividend Income, 15-Year Analysis Chart
  1. Sources: Private Real Estate: NCREIF NPI Income – CapEx returns; Public Real Estate: NAREIT Equity REITs dividend yield; Large Cap Stock: S&P 500 dividend yield; Corporate Bonds: Citigroup Broad Investment Grade Bond Index. Data as of 4Q 2019. NCREIF data reflects the returns of a blended portfolio of institutional-quality real estate and does not reflect the use of leverage or the impact of management and advisory fees. Stocks are represented by the dividend yield for the S&P 500 Index. Corporate Bonds are represented by the bond yield to maturity for the Citigroup Broad Investment Grade Corporate Bond Index. The indices presented represent investments that have material differences from an investment in a non-traded REIT, including those related to investment objectives, risks, fees and expenses, liquidity and tax treatment. Note: Past performance is not indicative of future results. There is no guarantee that any trends shown herein will continue.

Tracking Symbols: Shares of JLL Income Property Trust are not listed on any securities exchange and they have limited liquidity.

Inflation Hedge

Real estate income over the last 25 years has increased at nearly the same average annual rate as inflation (2.92% vs. 2.31%). In contrast, bonds are a “fixed income” investment, which means the income they generate does not increase with inflation, exposing the investor to the risk that inflation will erode the value of future interest payments. Similarly, principal payments do not grow at maturity, whereas real estate may appreciate over time, especially during periods of high inflation. An investment in bonds differs significantly from an investment in commercial real estate, and bonds are considered to be a less risky investment than commercial real estate.

Real Estate Income and Inflation
Real Estate Income and Inflation Chart
  1. Based on CPI Inflation. Real Estate Income is same-store NOI growth. Sources: Bureau of Labor Statistics, NCREIF. Data as of 1Q 2020 Inflation is represented by the Consumer Price Index for all urban consumers. Real Estate Income is the same-store NOI series of quarterly real estate income change. It is based on properties included in the NCREIF Property Index.

Tracking Symbols: Shares of JLL Income Property Trust are not listed on any securities exchange and they have limited liquidity.

Low Correlation

Modern portfolio theory suggests that the most effective way to maximize returns while at the same time minimizing risk is to add uncorrelated assets. Within the context of a multi-asset portfolio (composed of stocks, bonds, and other asset classes), commercial real estate may provide significant benefits, as correlations with stocks and bonds over time have been low.

 Chart
  1. Sources: FTSE NAREIT, NCREIF ODCE, Citigroup, Standard & Poor’s, S&P GSCI Total Return Index, HFRI Fund of Funds Index, and the Federal Reserve. Data as of 1Q 2020. Please keep in mind that investing in real estate involves risk. Real estate is not traded on an exchange; therefore, transactions do not provide immediate liquidity and their pricing is less transparent than that of stocks. Correlation is a statistical measure of how two securities move in relation to each other. The higher the co-efficient (1.00 is the maximum), the greater the correlation between the two markets. NCREIF ODCE data reflects the returns of diversified, core, open-end funds including leverage and fund expenses, but excluding management and advisory fees. An investment in JLLIPT is different than the NCREIF ODCE, which is not an investable index. Like funds in the NCREIF ODCE, JLLIPT is a diversified, core, perpetual life commercial real estate investment alternative. The indices presented represent investments that have material differences from an investment in a non-traded REIT, including those related to investment objectives, risks, fees and expenses, liquidity and tax treatment.

Tracking Symbols: Shares of JLL Income Property Trust are not listed on any securities exchange and they have limited liquidity.

Hard Assets

Regarded as a hard asset, “brick and mortar” real estate may be especially appealing to investors whose confidence in financial assets has been shaken. While the ownership of hard assets may be reassuring, especially during periods of higher inflation, realizing the true value of these assets requires a long-term investment perspective.

Harness the Benefits of Real Estate

JLL Income Property Trust is a real estate investment that is designed to bring stable income, broad diversification and institutional quality management.
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