JLL Income Property Trust Completes UPREIT of Industrial and Medical Office DST Portfolio
CHICAGO, Aug. 18, 2026 — JLL Income Property Trust, a daily NAV REIT traded on Nasdaq, has completed a full-cycle 721 UPREIT transaction involving JLLX Diversified Portfolio III, DST, converting two fully leased commercial properties into operating partnership units of the REIT, the firm announced Monday.
The transaction involves a light industrial property in Durham, North Carolina, leased to KBI Biopharma, and a medical outpatient building in Florham Park, New Jersey, leased to Summit Health Management. Both properties are 100% occupied and carry a combined weighted average lease term of 7.5 years. The portfolio recorded a $1.3 million increase in value over the hold period from syndication through the UPREIT election.
How the Transaction Works
JLLX Diversified Portfolio III, DST was syndicated between November 2023 and May 2024 through JLL Exchange, JLL Income Property Trust's platform designed to offer reinvestment opportunities to 1031 exchange investors. Investors initially sold appreciated investment property and reinvested proceeds into the DST to complete a Section 1031 like-kind exchange, deferring capital gains taxes while receiving cash flow from the two assets.
In the current transaction, JLL Income Property Trust exercised its option to acquire the DST properties through a Section 721 UPREIT. DST investors will receive operating partnership units of JLL Income Property Trust equal to the value of the DST properties, adjusted for transaction costs, distributions, and reserves. The contribution is tax-deferred, meaning embedded gains remain unrecognized until investors later sell or redeem their operating units. The structure effectively extends tax deferral — first achieved through the 1031 exchange — indefinitely until the operating units are liquidated.
JLL Income Property Trust carries approximately $6.9 billion in portfolio equity and debt investments and owns a diversified portfolio of residential, industrial, grocery-anchored retail, healthcare, and office properties across the United States.
Executives Weigh In
"JLL Exchange continues to provide innovative solutions to the historical challenges investors face with traditional 1031 products," said Drew Dornbusch, Head of JLL Exchange. "With JLL Income Property Trust's UPREIT acquisition of these properties, we've demonstrated our ability to provide 1031 exchange investors with current income, capital preservation and ultimately, a tax-deferred interest in a diversified, institutional core real estate portfolio."
Allan Swaringen, President and CEO of JLL Income Property Trust, said the transaction illustrates the program's value for the private wealth market. "Delivering an income-focused, high-quality core diversified real estate fund to our DST investors through the UPREIT of these properties demonstrates the true benefits of our JLL Exchange program," Swaringen said. "These transactions confirm our ability to respond to market demand with another innovative tax-advantaged solution for the private wealth market."
Program Scale and Track Record
Since its inception in 2019, JLL Exchange has provided exchange solutions for more than $2.5 billion of investor capital across 30 DST offerings. The completion of the JLLX Diversified Portfolio III transaction marks JLL Income Property Trust's 20th full-cycle UPREIT, bringing the cumulative total of completed UPREIT transactions to $1.5 billion.
The 1031-to-DST-to-721 UPREIT structure allows investors to transition from property-level risk in a single-asset or small-portfolio DST to portfolio-level exposure across JLL Income Property Trust's broader diversified holdings. As a daily NAV REIT, the trust provides structured liquidity through monthly redemptions at net asset value, subject to program limits.
Asset and Tenant Profile
The two properties in JLLX Diversified Portfolio III reflect a focus on single-tenant, essential-service occupancy. The Durham, N.C., industrial asset is leased to KBI Biopharma, a contract development and manufacturing organization operating in the life sciences sector. The Florham Park, N.J., medical outpatient building is leased to Summit Health Management, a physician-led healthcare network. Both tenants represent sectors — biopharma and outpatient healthcare — that have drawn sustained institutional investor interest due to their long-term lease structures and demand characteristics.
Square footage, street addresses, sale price, cap rate, and loan terms for the two properties were not included in JLL's public disclosures, consistent with standard practice for private DST offerings.
JLL Income Property Trust is sponsored by LaSalle Investment Management, a subsidiary of JLL that manages $86.8 billion of assets in private and public real estate equity and debt investments globally as of the first quarter of 2026.
Sources: JLL Income Property Trust press release, PR Newswire, Aug. 18, 2026