JLL Income Property Trust Inc.

11/05/2026 | Press release | Distributed by Public on 11/05/2026 14:22

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
$ in thousands, except per share amounts
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q ("Form 10-Q") may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), regarding, among other things, our plans, strategies and prospects, both business and financial. Forward-looking statements include, but are not limited to, statements that represent our beliefs concerning future operations, strategies, financial results or other developments. Forward-looking statements can be identified by the use of forward-looking terminology such as, but not limited to, "may," "should," "expect," "anticipate," "estimate," "would be," "believe," or "continue" or the negative or other variations of comparable terminology. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the SEC. Except as required by law, we do not undertake to update or revise any forward-looking statements contained in this Form 10-Q. Important factors that could cause actual results to differ materially from the forward-looking statements are disclosed in "Item 1A. Risk Factors," "Item 1. Business" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our 2025 Form 10-K and our periodic reports filed with the SEC.
Management Overview
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to the consolidated financial statements appearing elsewhere in this Form 10-Q. All references to numbered Notes are to specific notes to our consolidated financial statements beginning on page 9 of this Form 10-Q, and the descriptions referred to are incorporated into the applicable portion of this section by reference. References to "base rent" in this Form 10-Q refer to cash payments made under the relevant lease(s), excluding real estate taxes and certain property operating expenses that are paid by us and are recoverable under the relevant lease(s) and exclude adjustments for straight-line rent revenue and above- and below-market lease amortization.
The discussions surrounding our portfolio of properties refer to our Consolidated Properties, including our DST Properties, and our Unconsolidated Properties, which can be found below (see - Properties).
Our primary business is the ownership and management of a diversified portfolio of healthcare, industrial, residential, retail and other properties primarily located in the United States and debt and equity interests backed principally by real estate, which we refer to as "real estate-related assets," located in the United States. The healthcare segment includes a small allocation to traditional office properties. The residential segment includes apartment properties and single-family rental homes. It is expected that over time our real estate portfolio will be further diversified on a global basis and complemented further by additional investments in real estate-related assets.
We are managed by our Advisor, LaSalle Investment Management, Inc., a subsidiary of our Sponsor, Jones Lang LaSalle Incorporated (NYSE: JLL), a leading professional services firm that specializes in real estate and investment management. We hire property management and leasing companies to provide the on-site, day-to-day management and leasing services for our properties. When selecting a property management or leasing company for one of our properties, we look for service providers that have a strong local market or industry presence, create portfolio efficiencies, have the ability to develop new business for us and will provide a strong internal control environment that will comply with our Sarbanes-Oxley Act of 2002 internal control requirements. We currently use a mix of property management and leasing service providers that include large national real estate service firms, including an affiliate of our Advisor and smaller local firms.
We seek to minimize risk and maintain stability of income and principal value through broad diversification across property sectors and geographic markets and by balancing tenant lease expirations and debt maturities across the real estate portfolio. Our diversification goals also take into account investing in sectors or regions we believe will create returns consistent with our investment objectives. Under normal conditions, we intend to pursue investments principally in well-located, well-leased properties within the healthcare, industrial, residential, retail and other sectors. We expect to actively manage the mix of properties and markets over time in response to changing operating fundamentals within each property sector and to changing economies and real estate markets in the geographic areas considered for investment. When consistent with our investment objectives, we also seek to maximize the tax efficiency of our investments through like-kind exchanges and other tax planning strategies.
The following charts summarize our portfolio diversification by property sector and geographic region based upon the fair value of our properties. These tables provide examples of how our Advisor evaluates our real estate portfolio when making investment decisions.
Estimated Percent of Fair Value as of September 30, 2026:
Our investments are not materially impacted by seasonality, despite certain of our retail tenants being impacted by seasonality. Percentage rents (rents computed as a percentage of tenant sales) that we earn from investments in retail properties may, in the future, be impacted by seasonality.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions. These estimates and assumptions impact the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. For example, significant estimates and assumptions have been made with respect to the useful lives of assets, recoverable amounts of receivables, fair value of derivatives and real estate assets, initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions. Actual results could differ from those estimates.
Critical Accounting Policies
This MD&A is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe there have been no significant changes during the nine months ended September 30, 2026 to the items that we disclosed as our critical accounting policies and estimates under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K.
Properties
Properties owned at September 30, 2026, including DST Properties, are as follows:
Percentage Leased as of September 30, 2026
Property Name
Location
Acquisition Date
Ownership %
Net Rentable Square Feet
Consolidated Properties:
Healthcare Segment:
Monument IV at Worldgate Herndon, VA August 27, 2004 100% 228,000 100%
140 Park Avenue Florham Park, NJ December 21, 2015 100 100,000 100
San Juan Medical Center San Juan Capistrano, CA April 1, 2016 100 40,000 93
Genesee Plaza
9333 Genesee Avenue San Diego, CA July 2, 2019 100 80,000 94
9339 Genesee Avenue San Diego, CA July 2, 2019 100 81,000 94
Fountainhead Corporate Park
Fountainhead Corporate Park I Tempe, AZ February 6, 2020 100 167,000 91
Fountainhead Corporate Park II Tempe, AZ February 6, 2020 100 128,000 81
170 Park Avenue Florham Park, NJ February 2, 2021 100 147,000 100
9101 Stony Point Drive Richmond, VA September 15, 2021 100 87,000 100
North Tampa Surgery Center Odessa, FL October 8, 2021 100 13,000 100
Duke Medical Center Durham, NC December 23, 2021 100 60,000 98
KC Medical Office Portfolio
8600 NE 82nd Street Kansas City, MO December 23, 2021 100 11,000 100
1203 SW 7 Highway Blue Springs, MO December 23, 2021 100 10,000 100
Roeland Park Medical Office Roeland Park, KS December 28, 2021 100 30,000 100
South Reno Medical Center Reno, NV December 28, 2021 100 32,000 100
Sugar Land Medical Plaza Sugar Land, TX December 30, 2021 100 37,000 86
Cedar Medical Center Flagstaff, AZ April 29, 2022 100 26,000 100
North Boston Medical Center Haverhill, MA June 28, 2022 100 30,000 100
North Charlotte Medical Center Stanley, NC June 28, 2022 100 25,000 100
Grand Rapids Medical Center Wyoming, MI July 21, 2022 100 25,000 80
Glendale Medical Center Los Angeles, CA July 29, 2022 100 20,000 100
6300 Dumbarton Circle Fremont, CA September 15, 2022 100 44,000 100
6500 Kaiser Drive Fremont, CA September 15, 2022 100 88,000 76
Greater Sacramento Medical Center Rancho Cordova, CA September 16, 2022 100 18,000 100
Naperville Medical Center Naperville, IL March 28, 2025 100 39,000 100
3000 University Center Drive Tampa, FL December 12, 2025 100 133,000 100
West Boston Medical Center Watertown, MA February 27, 2026 100 53,000 100
Roseville Outpatient Center Roseville, CA September 10, 2026 100 42,000 95
Industrial Segment:
Kendall Distribution Center Atlanta, GA June 30, 2005 100% 409,000 100%
Suwanee Distribution Center Suwanee, GA June 28, 2013 100 559,000 100
Grand Prairie Distribution Center
3325 West Trinity Boulevard Grand Prairie, TX January 22, 2014 100 277,000 100
3324 West Trinity Boulevard Grand Prairie, TX May 31, 2019 100 145,000 100
Charlotte Distribution Center Charlotte, NC June 27, 2014 100 347,000 100
DFW Distribution Center
4050 Corporate Drive Grapevine, TX April 15, 2015 100 441,000 100
4055 Corporate Drive Grapevine, TX April 15, 2015 100 202,000 100
O'Hare Industrial Portfolio
200 Lewis Wood Dale, IL September 30, 2015 100 31,000 100
1225 Michael Drive Wood Dale, IL September 30, 2015 100 109,000 100
1300 Michael Drive Wood Dale, IL September 30, 2015 100 71,000 100
1301 Mittel Drive Wood Dale, IL September 30, 2015 100 53,000 100
1350 Michael Drive Wood Dale, IL September 30, 2015 100 56,000 100
2501 Allan Drive Elk Grove, IL September 30, 2015 100 198,000 100
2601 Allan Drive Elk Grove, IL September 30, 2015 100 124,000 100
Tampa Distribution Center Tampa, FL April 11, 2016 100 386,000 59
Aurora Distribution Center Aurora, IL May 19, 2016 100 305,000 100
Valencia Industrial Portfolio
28150 West Harrison Parkway Valencia, CA June 29, 2016 100 87,000 100
28145 West Harrison Parkway Valencia, CA June 29, 2016 100 114,000 100
28904 Paine Avenue Valencia, CA June 29, 2016 100 117,000 100
25045 Tibbitts Avenue Santa Clarita, CA June 29, 2016 100 142,000 100
Mason Mill Distribution Center Buford, GA December 20, 2017 100 340,000 100
Fremont Distribution Center
45275 Northport Court Fremont, CA March 29, 2019 100 117,000 100
45630 Northport Loop East Fremont, CA March 29, 2019 100 120,000 100
Taunton Distribution Center Taunton, MA August 23, 2019 100 200,000 100
Chandler Distribution Center
1725 East Germann Road Chandler, AZ December 5, 2019 100 122,000 100
1825 East Germann Road Chandler, AZ December 5, 2019 100 89,000 100
Fort Worth Distribution Center Fort Worth, TX October 23, 2020 100 351,000 100
Whitestown Distribution Center
4993 Anson Boulevard Whitestown, IN December 11, 2020 100 280,000 100
5102 East 500 South Whitestown, IN December 11, 2020 100 440,000 100
4337 Allpoints Drive Whitestown, IN April 17, 2026 100 605,000 100
5190 South SR 267 Whitestown, IN July 30, 2026 100 1,119,000 100
Louisville Distribution Center Shepherdsville, KY January 21, 2021 100 1,040,000 100
Southeast Phoenix Distribution Center
6511 West Frye Road Chandler, AZ February 23, 2021 100 102,000 100
6565 West Frye Road Chandler, AZ February 23, 2021 100 118,000 100
6615 West Frye Road Chandler, AZ February 23, 2021 100 136,000 100
6677 West Frye Road Chandler, AZ February 23, 2021 100 118,000 100
6635 West Frye Road Chandler, AZ June 8, 2022 100 105,000 100
6575 West Frye Road Chandler, AZ June 8, 2022 100 140,000 100
Louisville Airport Distribution Center Louisville, KY June 24, 2021 100 284,000 36
13500 Danielson Street Poway, CA July 2, 2021 100 73,000 100
5 National Way Durham, NC September 28, 2021 100 188,000 100
47 National Way Durham, NC September 28, 2021 100 187,000 100
Friendship Distribution Center
4627 Distribution Parkway Buford, GA October 20, 2021 100 126,000 100
4630 Distribution Parkway Buford, GA October 20, 2021 100 149,000 100
4646 Distribution Parkway Buford, GA October 20, 2021 100 102,000 -
4651 Distribution Parkway Buford, GA October 20, 2021 100 272,000 100
South San Diego Distribution Center
2001 Sanyo Avenue San Diego, CA October 28, 2021 100 320,000 17
2055 Sanyo Avenue San Diego, CA October 28, 2021 100 209,000 58
2065 Sanyo Avenue San Diego, CA October 28, 2021 100 136,000 100
Elgin Distribution Center
1755 Britannia Drive Elgin, IL November 16, 2021 100 80,000 100
2451 Bath Road Elgin, IL November 16, 2021 100 327,000 100
687 Conestoga Parkway Shepherdsville, KY November 17, 2021 100 327,000 100
15890 Bernardo Center Drive San Diego, CA November 30, 2021 100 48,000 100
Northeast Atlanta Distribution Center Jefferson, GA April 8, 2022 100 459,000 100
West Phoenix Distribution Center Glendale, AZ September 30, 2022 100 1,200,000 100
Puget Sound Distribution Center Lacey, WA October 6, 2022 100 142,000 100
Louisville Logistics Center Shepherdsville, KY April 20, 2023 100 1,043,000 100
Minneapolis Distribution Center Maple Grove, MN November 19, 2024 100 443,000 100
Richmond Distribution Center Richmond, VA March 5, 2025 100 279,000 100
Glendale Distribution Center Glendale, AZ July 29, 2025 100 1,024,000 100
West Raleigh Distribution Center
895 Gateway Drive Apex, NC September 10, 2025 100 138,000 100
875 Gateway Drive Apex, NC September 10, 2025 100 176,000 100
3550 Brightleaf Lane Apex, NC September 10, 2025 100 138,000 100
3560 Brightleaf Lane Apex, NC September 10, 2025 100 206,000 47
3530 Brightleaf Lane Apex, NC September 10, 2025 100 327,000 100
Worcester Distribution Center Boylston, MA September 25, 2026 100 396,000 100
Residential Segment:
Townlake of Coppell Coppell, TX May 22, 2015 100% 351,000 95%
AQ Rittenhouse Philadelphia, PA July 30, 2015 100 92,000 100
Lane Parke Apartments Mountain Brook, AL May 26, 2016 100 263,000 97
The Penfield St. Paul, MN September 22, 2016 100 245,000 91
Jory Trail at the Grove Wilsonville, OR July 14, 2017 100 315,000 97
The Reserve at Johns Creek Johns Creek, GA July 28, 2017 100 244,000 93
Villas at Legacy Plano, TX June 6, 2018 100 340,000 94
Summit at San Marcos Chandler, AZ July 31, 2019 100 257,000 95
Haven North Andover North Andover, MA May 3, 2021 100 204,000 96
The Preserve at the Meadows Fort Collins, CO August 23, 2021 100 208,000 94
The Rockwell Berlin, MA August 31, 2021 100 233,000 94
Miramont Apartments Fort Collins, CO September 29, 2021 100 212,000 97
Pinecone Apartments Fort Collins, CO September 29, 2021 100 176,000 96
Reserve at Venice North Venice, FL December 17, 2021 100 268,000 71
Woodside Trumbull Trumbull, CT December 21, 2021 100 207,000 94
Shores at Lake Howell Casselberry, FL March 30, 2022 100 374,000 96
Oak Street Lofts Tigard, OR July 15, 2022 100 162,000 94
Molly Brook on Belmont North Haledon, NJ September 27, 2022 100 177,000 97
Creekview Crossing Sherwood, OR February 29, 2024 100 217,000 96
Single-Family Rental Portfolio I (1)
Various August 5, 2021 95 3,379,000 95
Single-Family Rental Portfolio II (1)
Various Various 95 858,000 93
Retail Segment:
The District at Howell Mill (1)
Atlanta, GA June 15, 2007 88% 306,000 99%
Grand Lakes Marketplace (1)
Katy, TX September 17, 2013 90 131,000 99
Rancho Temecula Town Center Temecula, CA June 16, 2014 100 165,000 98
Skokie Commons Skokie, IL May 15, 2015 100 97,000 98
Whitestone Market Austin, TX September 30, 2015 100 145,000 98
Maui Mall Kahului, HI December 22, 2015 100 235,000 88
Silverstone Marketplace Scottsdale, AZ July 27, 2016 100 78,000 95
Kierland Village Center Scottsdale, AZ September 30, 2016 100 118,000 99
Timberland Town Center Beaverton, OR September 30, 2016 100 92,000 97
Montecito Marketplace Las Vegas, NV August 8, 2017 100 190,000 100
Milford Crossing Milford, MA January 29, 2020 100 159,000 100
Patterson Place Durham, NC May 31, 2022 100 25,000 100
Silverado Square Las Vegas, NV June 1, 2022 100 48,000 96
Woodlawn Point Marietta, GA June 30, 2022 100 98,000 100
Westbury Square Huntsville, AL December 22, 2025 100 123,000 99
Midtown Village (1)
Tuscaloosa, AL August 25, 2026 88 345,000 94
Other Segment:
South Beach Parking Garage (2)
Miami Beach, FL January 28, 2014 100% 130,000 N/A
Unconsolidated Properties:
Chicago Parking Garage (3)
Chicago, IL December 23, 2014 100% 167,000 N/A
NYC Retail Portfolio (4)
NY/NJ December 8, 2015 14 1,790,000 87
Pioneer Tower (5)
Portland, OR June 28, 2016 100 308,000 23
The Tremont (1)
Burlington, MA July 19, 2018 75 175,000 94
The Huntington (1)
Burlington, MA July 19, 2018 75 115,000 90
Siena Suwanee Town Center (6)
Suwanee, GA December 15, 2020 100 226,000 94
________
(1)We own a majority interest in the joint venture that owns a fee simple interest in this property or portfolio of single-family rental houses.
(2)The parking garage contains 343 stalls. This property is owned leasehold.
(3)We own a condominium interest in the building that contains a 366 stall parking garage.
(4)We own an approximate 14% interest in a portfolio of six urban infill retail properties located in the greater New York City area.
(5)We own a condominium interest in the building that contains a 17 story multi-tenant office property within our healthcare segment.
(6)We own a condominium interest in the project that contains a 240-unit residential property.
Operating Statistics
We generally hold investments in properties with high occupancy rates leased to quality tenants under long-term, non-cancelable leases, except for residential leases which are generally for one year. We believe these leases are beneficial to achieving our investment objectives. The following table shows our operating statistics by property type for our consolidated properties as of September 30, 2026:
Number of
Properties / Portfolios (1)
Total Area
(Sq Ft) 		% of Total
Area 		Stabilized Occupancy %
Average Minimum
Base Rent per
Occupied Sq Ft (1)
Healthcare 27 1,794,000 6 % 95 % $ 34.19
Industrial 67 18,514,000 59 95 7.31
Residential(2)
21 8,782,000 28 94 20.75
Retail 16 2,355,000 7 97 23.11
Other 1 130,000 - N/A N/A
Total 132 31,575,000 100 % 96 % $ 13.90
________
(1)Amount calculated as in-place minimum base rent for all occupied space at September 30, 2026 and excludes any straight line rents, tenant recoveries and percentage rent revenues.
(2)Residential includes 2,440 single-family rental homes in the Single-Family Rental Portfolios I and II.
As of September 30, 2026, our average effective annual rent per square foot, calculated as average minimum base rent per occupied square foot less tenant concessions and allowances, was $13.15 for our consolidated properties.
Recent Events and Outlook
Net Asset Value
Property valuations increased by approximately 0.5% across our portfolio during the three months ended September 30, 2026 driven by strong leasing activities at a number of our properties as capital market assumptions remained mostly unchanged from the second quarter. Our Class M-I shares posted a total return of 1.49% for the three months ended September 30, 2026, comprised of 1.40% of income return and 0.09% related to appreciation. This total return represented our second highest quarterly return since the second quarter of 2022.
Credit Facility
On March 12, 2026, we amended our $1,000,000 Credit Facility, which consists of a $600,000 Revolving Credit Facility and a $400,000 Term Loan. The Credit Facility provides us with the ability, from time to time, to increase the size of the Credit Facility up to a total of $1,300,000, subject to receipt of lender commitments and other conditions. The maturity date of both the Term Loan and Revolving Credit Facility is March 13, 2028 and contains three one-year extension options. We are in compliance with our debt covenants as of September 30, 2026. We expect to maintain compliance with our debt covenants.
Liquidity
At September 30, 2026, we had in excess of $145,000 in total cash on hand and $385,000 of capacity under our Credit Facility.
Share Repurchase Plan
During the quarter ended September 30, 2026, we repurchased 100% of requests totaling $75,004 of our common stock pursuant to our share repurchase plan, which had a quarterly limit of $115,493. The quarterly limit on repurchases is calculated as 5% of our NAV as of the last day of the previous quarter. The limit for the fourth quarter of 2026 is $113,661.
Fair Value of Assets and Liabilities
We account for our approximate 14% investment in the NYC Retail Portfolio using the fair value option. During the three months ended September 30, 2026, we recorded an unrealized fair value loss of $1,166 related to our investment in the NYC Retail Portfolio. Our consolidated interest rate swaps and collars resulted in an unrealized fair value gain of $14,344 during the three months ended September 30, 2026. We utilize our interest rate caps, swaps and collars to manage interest rates on variable rate debt we plan to hold to maturity.
Current Offerings
On June 6, 2025, the SEC declared our Current Public Offering effective registering up to $1,500,000 in any combination of shares of our Class A, Class M, Class A-I and Class M-I common stock, consisting of up to $1,200,000 of shares offered in our primary offering and up to $300,000 in shares offered pursuant to our distribution reinvestment plan. We intend to offer shares of our common stock on a continuous basis for an indefinite period of time by filing a new registration statement before the end of each offering period, subject to regulatory approval. We intend to primarily use the net proceeds from our public offerings, after we pay the fees and expenses attributable to the offerings and our operations, to (1) grow and further diversify our portfolio by making investments in accordance with our investment strategy and policies, (2) reduce borrowings and repay indebtedness incurred under various financing instruments and (3) fund repurchases of our shares under our share repurchase plan.
On March 3, 2015, we commenced our Class N Private Offering of up to $350,000 in shares of our Class N common stock with an indefinite duration. On October 7, 2025, we commenced our Continuous Private Offering of Class D, Class I, Class S, and Class Z common stock. Proceeds from our Class N Private Offering and Continuous Private Offering will be used for the same corporate purposes as the proceeds from our public offerings.
On October 16, 2019, we, through our operating partnership, initiated the DST Program, and on August 6, 2024, our board of directors approved an increase to raise up to a total of $3,000,000 in private placements exempt from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder through the sale of beneficial interests to accredited investors in specific DSTs holding DST Properties, which may be sourced from our real estate portfolio or from third parties.
Capital Raised and Use of Proceeds
As of September 30, 2026, we have raised gross proceeds of approximately $7,484,000 since 2012 from our public and private offerings as well as through our DST Program. We used these proceeds along with proceeds from mortgage debt to acquire approximately $6,583,000 of real estate investments, deleverage the Company by repaying mortgage loans of approximately $1,164,000 and repurchase shares of our common stock for approximately $2,590,000.
2026 Property Acquisitions
•two healthcare properties totaling 95,000 square feet for approximately $50,650;
•three industrial properties totaling 2,120,000 square feet for approximately $287,500; and
•an 87.5% interest in a retail property totaling 345,000 square feet for approximately $82,250.
2026 Property Dispositions
•Dylan Point Loma for approximately $91,000 less closing costs and recorded a gain on the disposition of approximately $13,000;
•Kingston at McLean Crossing for approximately $144,500 less closing costs and recorded a gain on the disposition of approximately $20,000;
•4211 Starboard Drive for approximately $61,000 less closing costs and recorded a gain on the disposition of approximately $27,000; and
•2840 Loker Avenue for approximately $26,600 less closing costs and recorded a gain on the disposition of approximately $3,000.
2026 Financings
•Amended the Credit Facility extending the maturity date on the Term Loan and Revolving Credit Facility to March 13, 2028;
•Retired five loans totaling approximately $148,514; and
•Entered into four mortgage notes payable totaling $193,200.
Investment Objectives and Strategy
Our primary investment objectives are:
•to generate an attractive level of current income for distribution to our stockholders;
•to preserve and protect our stockholders' capital investments;
•to achieve appreciation of our NAV over time; and
•to enable stockholders to utilize real estate as an asset class in diversified, long-term investment portfolios.
We cannot ensure that we will achieve our investment objectives. Our charter places numerous limitations on us with respect to the manner in which we may invest our funds. In most cases, these limitations cannot be changed unless our charter is amended, which may require the approval of our stockholders.
The cornerstone of our investment strategy is to acquire and manage income-producing commercial real estate properties and real estate-related assets around the world. We believe this strategy enables us to provide our stockholders with a portfolio that is well-diversified across property type, geographic region and industry, both in the United States and internationally. It is our belief that adding international investments to our portfolio over time will serve as an effective tool to construct a well-diversified portfolio designed to provide our stockholders with stable distributions and attractive long-term risk-adjusted returns.
We believe that our broadly diversified portfolio benefits our stockholders by providing:
•diversification of sources of income;
•access to attractive real estate opportunities currently in the United States and, over time, around the world; and
•exposure to a return profile that should have lower correlations with other investments.
Since real estate markets are often cyclical in nature, our strategy allows us to more effectively deploy capital into property types and geographic regions where the underlying investment fundamentals are relatively strong or strengthening and away from those property types and geographic regions where such fundamentals are relatively weak or weakening. We intend to meet our investment objectives by selecting investments across multiple property types and geographic regions to achieve portfolio stability, diversification, current income and favorable risk-adjusted returns. To a lesser degree, we also invest in debt and equity interests backed principally by real estate, which we refer to collectively as "real estate-related assets."
We leverage LaSalle's broad commercial real estate research and strategy platform and resources to employ a research-based investment philosophy focused on building a portfolio of commercial properties and real estate-related assets that we believe has the potential to provide stable income streams and outperform market averages over an extended holding period. Furthermore, we believe that having access to LaSalle and JLL's international organization and platform, with real estate professionals living and working full time throughout our global target markets, will be a valuable resource to us when considering and executing upon international investment opportunities.
Our board of directors has adopted investment guidelines for our Advisor to implement and actively monitor in order to allow us to achieve and maintain diversification in our overall investment portfolio. Our board of directors formally reviews our investment guidelines on an annual basis and our investment portfolio on a quarterly basis or, in each case, more often as they deem appropriate. Our board of directors reviews the investment guidelines to ensure that the guidelines are being followed and are in the best interests of our stockholders. Each such determination and the basis therefor shall be set forth in the minutes of the meetings of our board of directors. Changes to our investment guidelines must be approved by our board of directors but do not require notice to or the vote of stockholders.
We seek to invest:
•up to 95% of our assets in properties;
•up to 25% of our assets in real estate-related assets; and
•up to 15% of our assets in cash, cash equivalents and other short-term investments.
Notwithstanding the above, the actual percentage of our portfolio that is invested in each investment type may from time to time be outside these target levels due to numerous factors including, but not limited to, large inflows of capital over a short period of time, lack of attractive investment opportunities or increases in anticipated cash requirements for repurchase requests.
We expect to maintain a targeted company leverage ratio (calculated as our share of total liabilities divided by our share of the fair value of total assets) of between 30% and 50%. We intend to use low leverage, or in some cases possibly no leverage, to finance new acquisitions in order to maintain our targeted company leverage ratio. Our company leverage ratio was 32% as of September 30, 2026.
2026 Key Initiatives
Our initiatives for 2026 are to use capital raised from our public and private offerings and the DST Program to acquire new investment opportunities, repurchase stock under our share repurchase plan, and fund monthly distributions. Likely acquisition candidates may include well-located, industrial, healthcare, residential, retail properties and originating mortgage loan investments that align with our property investment strategy. We will also attempt to further our geographic diversification. We will use debt financing when attractive interest rates are available, while looking to keep the company leverage ratio in the 30% to 50% range. We also intend to use our Revolving Credit Facility to allow us to efficiently manage our cash flows.
Results of Operations
General
Our revenues are primarily received from tenants in the form of fixed minimum base rents and recoveries of operating expenses. Our expenses primarily relate to the costs of operating and financing our properties. Our share of the net income, net loss or dividend income from our unconsolidated real estate affiliates is included in income from unconsolidated affiliates and fund investments. We believe the following analysis of reportable segments provides important information about the operating results of our real estate investments, such as trends in total revenues or operating expenses that may not be as apparent in a period-over-period comparison of our entire Company. We group our investments in real estate assets from continuing operations into five reportable operating segments based on the type of property, which are healthcare, industrial, residential, retail and other. Operations from corporate level items and real estate assets sold are excluded from reportable segments.
Results of Operations for the Three Months Ended September 30, 2026 and 2025:
Properties acquired or sold after January 1, 2025 are presented within the recent acquisitions and sold properties line for all periods presented. The properties currently presented within the recent acquisitions and sold properties line include the properties listed as either acquired in the current or prior year in the Properties section above in addition to Single-Family Rental Portfolio I (consolidated in 2025), 237 Via Vera Cruz (sold in 2025), Dylan Point Loma, 4211 Starboard Drive and 2840 Loker Avenue (sold in 2026). Properties owned for the nine months ended September 30, 2026 and 2025 are referred to as our comparable properties.
Revenues
The following table sets forth revenues, by reportable segment, for the three months ended September 30, 2026 and 2025:
Three Months Ended September 30, 2026 Three Months Ended September 30, 2025 $
Change 		%
Change
Revenues:
Rental revenue
Healthcare $ 16,529 $ 16,841 $ (312) (1.9) %
Industrial 31,968 32,906 (938) (2.9)
Residential 30,206 30,279 (73) (0.2)
Retail 14,737 13,652 1,085 7.9
Other 71 71 - -
Comparable properties total $ 93,511 $ 93,749 $ (238) (0.3) %
Recent acquisitions and sold properties 23,874 16,966 6,908 40.7
Total rental revenue $ 117,385 $ 110,715 $ 6,670 6.0 %
Other revenue
Healthcare $ 539 $ 429 $ 110 25.6 %
Industrial 269 1,021 (752) (73.7)
Residential 1,419 1,533 (114) (7.4)
Retail 342 220 122 55.5
Other 493 425 68 16.0
Comparable properties total $ 3,062 $ 3,628 $ (566) (15.6) %
Recent acquisitions and sold properties 1,226 829 397 47.9
Total other revenue $ 4,288 $ 4,457 $ (169) (3.8) %
Interest on mortgage notes receivable $ 548 $ 2,624 $ (2,076) (79.1) %
Total revenues $ 122,221 $ 117,796 $ 4,425 3.8 %
Rental revenue at comparable properties decreased by $238 for the three months ended September 30, 2026 as compared to the same period in 2025. The increase within our retail segment was primarily related to an increase in occupancy at The District at Howell Mill during the three months ended September 30, 2026 as compared to the same period in 2025. The decreases in rental revenue within the healthcare, industrial and residential segments were primarily related to decreases in rental rates and occupancy percentage at certain properties during the three months ended September 30, 2026 as compared to the same period in 2025.
Other revenues relate mainly to parking and nonrecurring revenue such as lease termination fees. Other revenue at comparable properties decreased by $566 for the three months ended September 30, 2026 as compared to the same period in 2025. The decrease within our industrial segment is related to an $870 lease termination fee received at South San Diego Distribution Center during the three months ended September 30, 2025.
Interest on mortgage notes receivable relates to interest income earned on first mortgage notes originated by us. The decrease in interest earned relates to lower outstanding balances held during the three months ended September 30, 2026 as compared to the same period in 2025 due to mortgage notes being repaid in full during 2025.
Operating Expenses
The following table sets forth real estate taxes and property operating expenses by reportable segment, for the three months ended September 30, 2026 and 2025:
Three Months Ended September 30, 2026 Three Months Ended September 30, 2025 $
Change 		%
Change
Operating expenses:
Real estate taxes
Healthcare $ 1,381 $ 1,485 $ (104) (7.0) %
Industrial 5,022 5,445 (423) (7.8)
Residential 4,263 4,187 76 1.8
Retail 1,734 1,730 4 0.2
Other 106 106 - -
Comparable properties total $ 12,506 $ 12,953 $ (447) (3.5) %
Recent acquisitions and sold properties 2,159 2,503 (344) (13.7)
Total real estate taxes $ 14,665 $ 15,456 $ (791) (5.1) %
Property operating expenses
Healthcare $ 4,770 $ 3,908 $ 862 22.1 %
Industrial 2,526 2,763 (237) (8.6)
Residential 9,164 8,628 536 6.2
Retail 2,804 2,509 295 11.8
Other 161 202 (41) (20.3)
Comparable properties total $ 19,425 $ 18,010 $ 1,415 7.9 %
Recent acquisitions and sold properties 3,545 3,533 12 0.3
Total property operating expenses $ 22,970 $ 21,543 $ 1,427 6.6 %
Total operating expenses $ 37,635 $ 36,999 $ 636 1.7 %
Real estate taxes at comparable properties decreased by $447 for the three months ended September 30, 2026 as compared to the same period in 2025. Our properties are reassessed periodically by the taxing authorities, which may result in increases or decreases in the real estate taxes that we owe. Overall, we expect real estate taxes to increase over time; however, we utilize real estate tax consultants to attempt to control assessment increases.
Property operating expenses consist of the costs of ownership and operation of the real estate investments, many of which are recoverable under net leases. Examples of property operating expenses include insurance, utilities and repair and maintenance expenses. Property operating expenses at comparable properties increased by $1,415 during the three months ended September 30, 2026 as compared to the same period in 2025 and are generally related to higher repairs and maintenance projects, increased property management costs and higher utility costs in certain markets.
The following table sets forth revenues and expenses not directly related to the operations of the reportable segments for the three months ended September 30, 2026 and 2025:
Three Months Ended September 30, 2026 Three Months Ended September 30, 2025 $
Change 		%
Change
Property general and administrative $ (710) $ (707) $ (3) 0.4 %
Advisor fees (10,623) (10,430) (193) 1.9
Company level expenses (3,094) (2,230) (864) 38.7
Provision for impairment of real estate (26) (67) 41 (61.2)
Depreciation and amortization (44,221) (42,737) (1,484) 3.5
Interest expense (9,252) (21,662) 12,410 (57.3)
Unrealized loss on financial obligation (15,270) (10,168) (5,102) 50.2
Realized loss on financial obligation (2,022) - (2,022) N/A
Loss from unconsolidated real estate affiliates and fund investments (900) (5,369) 4,469 (83.2)
Gain on disposition of property and extinguishment of debt, net 2,927 (63) 2,990 (4,746.0)
Loss on sale of unconsolidated real estate affiliate (479) - (479) 100.0
Total expenses $ (83,670) $ (93,433) $ 9,763 (10.4) %
Property general and administrative expenses consist mainly of property expenses unrelated to the operations of the property. Property general and administrative expenses were flat during the three months ended September 30, 2026 as compared to the same period in 2025.
Advisor fees relate to the fixed advisory and performance fees earned by our Advisor. Fixed fees increase or decrease based on changes in our NAV, which have been and will be primarily impacted by changes in capital raised and the value of our properties. The performance fee is accrued when the total return per share for a share class exceeds 7% for that calendar year, and our Advisor will receive 10% of the excess total return above the 7% threshold. The increase in advisor fees of $193 for the three months ended September 30, 2026 as compared to the same period in 2025 is related to an increase in NAV of our operating partnership.
Company level expenses relate mainly to our compliance and administration related costs. Company level expenses increased by $864 for the three months ended September 30, 2026 when compared to the same period in 2025 primarily due to higher professional fees.
Provision for impairment of real estate relates to real estate investments where the estimated future undiscounted cash flows during our hold period have decreased below the carrying value of the property. A provision for impairment of real estate is recorded to write the property down from its carrying value to its fair value. We recorded a provision for impairment of $26 and $67 during the three months ended September 30, 2026 and 2025, respectively, related to individual homes within the Single-Family Rental Portfolio I that are being sold.
Depreciation and amortization expense is impacted by the values assigned to buildings, personal property and in-place lease assets as part of the initial purchase price allocation. Depreciation and amortization expense increased by $1,484 for the three months ended September 30, 2026 as compared to the same period in 2025 primarily due to the consolidation of Single-Family Rental Portfolio I on April 23, 2025 and acquisitions.
Interest expense decreased by $12,410 for the three months ended September 30, 2026, as compared to the same period in 2025, primarily as a result of approximately $17,000 of lower interest expense related to the change in fair value of our interest rate derivatives during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. Additionally, interest expense decreased by approximately $1,100 due to lower overall mortgage loan balances during the three months ended September 30, 2026, when compared to the same period in 2025. Offsetting these decreases was interest income of $7,600 recognized during the three months ended September 30, 2025, related to our exercise of the FMV Option for DST Properties that had decreased in fair value, which did not recur during the three months ended September 30, 2026.
Unrealized loss on financial obligation relates to changes in the fair value of our financial obligation for the various DST Programs that we have elected the fair value option and is driven by payments made to the DST under the master lease as well as changes to the fair value of the DST Properties. We recorded an unrealized loss on financial obligation of $15,270 for the three months ended September 30, 2026 as compared to $10,168 for the three months ended September 30, 2025.
Realized loss on financial obligation relates to exercising of our FMV Option and issuing OP Units. We recorded a realized loss of $2,022 during the three months ended September 30, 2026 related to the financing obligation on 140 Park Avenue and 47 National Way.
Loss from unconsolidated real estate affiliates and fund investments relates to income or losses from Chicago Parking Garage, Pioneer Tower, The Tremont, The Huntington, and Siena Suwanee Town Center, as well as changes in fair value and operating distributions received from our investments in Single-Family Rental Portfolio I and the NYC Retail Portfolio, which we account for under the fair value option. Prior to its consolidation on April 23, 2025, we recorded a $6,395 increase in the fair value of our investment in Single-Family Rental Portfolio I during the three months ended September 30, 2025. During the three months ended September 30, 2026, we recorded a $1,166 decrease in the fair value of our investment in the NYC Retail Portfolio, as compared to a $4,901 decrease in the fair value during the same period in 2025.
Gain on disposition of property and extinguishment of debt, net of $2,927 during the three months ended September 30, 2026 relates to the disposition of 2840 Loker Avenue and extinguishment of debt associated with the property.
During the three months ended September 30, 2026, we recorded a loss on sale of unconsolidated real estate affiliate of $479, related to the final true-up of joint venture cash flows of Kingston at McLean Crossing.
Results of Operations for the Nine Months Ended September 30, 2026 and 2025
Revenues
The following table sets forth revenues by reportable segment, for the nine months ended September 30, 2026 and 2025:
Nine Months Ended September 30, 2026 Nine Months Ended September 30, 2025 $
Change 		%
Change
Revenues:
Rental revenue
Healthcare $ 48,820 $ 49,463 $ (643) (1.3) %
Industrial
97,741 99,362 (1,621) (1.6)
Residential 90,633 91,341 (708) (0.8)
Retail
43,387 40,143 3,244 8.1
Other
214 214 - -
Comparable properties total
$ 280,795 $ 280,523 $ 272 0.1 %
Recent acquisitions and sold properties
66,034 32,896 33,138 100.7
Total rental revenue $ 346,829 $ 313,419 $ 33,410 10.7 %
Other revenue
Healthcare $ 3,336 $ 1,350 $ 1,986 147.1 %
Industrial
1,273 1,295 (22) (1.7)
Residential 4,133 4,146 (13) (0.3)
Retail
871 666 205 30.8
Other
1,635 1,514 121 8.0
Comparable properties total
$ 11,248 $ 8,971 $ 2,277 25.4 %
Recent acquisitions and sold properties
3,021 1,804 1,217 67.5
Total other revenue $ 14,269 $ 10,775 $ 3,494 32.4 %
Interest on mortgage notes receivable $ 1,635 $ 7,739 $ (6,104) (78.9) %
Total revenues $ 362,733 $ 331,933 $ 30,800 9.3 %
Rental revenue at comparable properties increased by $272 for the nine months ended September 30, 2026 as compared to the same period in 2025. The increase within our retail segment was primarily related to an increase in occupancy at The District at Howell Mill during the nine months ended September 30, 2026 as compared to the same period in 2025. The decreases in rental revenue within the healthcare, industrial and residential segments were primarily related to decreases in rental rates and occupancy percentage at certain properties during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.
Other revenues relate mainly to parking and nonrecurring revenue such as lease termination fees. Other revenue at comparable properties increased by $2,277 for the nine months ended September 30, 2026 as compared to the same period in 2025. The increase within our healthcare segment was primarily related to a $1,715 lease termination fee received at 6500 Kaiser Drive.
Interest on mortgage notes receivable relates to interest income earned on first mortgage notes originated by us. The decrease in interest earned relates to lower outstanding balances held during the nine months ended September 30, 2026 as compared to the same period in 2025.
Operating Expenses
The following table sets forth real estate taxes and property operating expenses by reportable segment, for the nine months ended September 30, 2026 and 2025:
Nine Months Ended September 30, 2026 Nine Months Ended September 30, 2025 $
Change 		%
Change
Operating expenses:
Real estate taxes
Healthcare $ 3,955 $ 4,468 $ (513) (11.5) %
Industrial 16,972 16,804 168 1.0
Residential 13,418 13,196 222 1.7
Retail 5,224 5,128 96 1.9
Other 321 336 (15) (4.5)
Comparable properties total $ 39,890 $ 39,932 $ (42) (0.1) %
Recent acquisitions and sold properties 7,436 4,859 2,577 53.0
Total real estate taxes $ 47,326 $ 44,791 $ 2,535 5.7 %
Property operating expenses
Healthcare $ 12,154 $ 11,090 $ 1,064 9.6 %
Industrial 8,093 8,090 3 -
Residential 26,576 25,890 686 2.6
Retail 7,839 7,091 748 10.5
Other 524 639 (115) (18.0)
Comparable properties total $ 55,186 $ 52,800 $ 2,386 4.5 %
Recent acquisitions and sold properties 10,330 7,062 3,268 46.3
Total property operating expenses $ 65,516 $ 59,862 $ 5,654 9.4 %
Total operating expenses $ 112,842 $ 104,653 $ 8,189 7.8 %
Real estate taxes at comparable properties decreased by $42 for the nine months ended September 30, 2026 as compared to the same period in 2025. Our properties are reassessed periodically by the taxing authorities, which may result in increases or decreases in the real estate taxes that we owe. Overall, we expect real estate taxes to increase over time; however, we utilize real estate tax consultants to attempt to control assessment increases.
Property operating expenses consist of the costs of ownership and operation of the real estate investments, many of which are recoverable under net leases. Examples of property operating expenses include insurance, utilities and repair and maintenance expenses. Property operating expenses at comparable properties increased by $2,386 during the nine months ended September 30, 2026 compared to the same period in 2025. The increase relates to higher repairs and maintenance projects, increased insurance costs, increased property management costs, higher salary costs and higher utility costs in some markets.
The following table sets forth revenues and expenses not directly related to the operations of the reportable segments for the nine months ended September 30, 2026 and 2025:
Nine Months Ended September 30, 2026 Nine Months Ended September 30, 2025 $
Change 		%
Change
Property general and administrative $ (2,275) $ (2,642) $ 367 (13.9) %
Advisor fees (31,337) (30,341) (996) 3.3
Company level expenses (8,789) (6,307) (2,482) 39.4
Provision for impairment of real estate (272) (278) 6 (2.2)
Depreciation and amortization (133,086) (117,810) (15,276) 13.0
Interest expense (43,098) (61,670) 18,572 (30.1)
Unrealized loss on financial obligation (52,015) (30,613) (21,402) 69.9
Realized loss on financial obligation (2,317) - (2,317) N/A
Loss from unconsolidated affiliates and fund investments (2,889) (3,127) 238 (7.6)
Gain on disposition of property and extinguishment of debt, net 43,199 2,371 40,828 1,722
Gain on sale of unconsolidated real estate affiliate 20,270 - 20,270 100.0
Total revenue and expenses $ (212,609) $ (250,417) $ 37,808 (15.1) %
Property general and administrative expenses consist mainly of property expenses unrelated to the operations of the property. Property general and administrative expenses decreased during the nine months ended September 30, 2026 as compared to the same period in 2025 by $367 primarily due to a decrease in state level taxes.
Advisor fees relate to the fixed advisory and performance fees earned by the Advisor. Fixed fees increase or decrease based on changes in our NAV, which will be primarily impacted by changes in capital raised and the value of our properties. The performance fee is accrued when the total return per share for a share class exceeds 7% for that calendar year, and our Advisor will receive 10% of the excess total return above the 7% threshold. The increase in advisor fees of $996 for the nine months ended September 30, 2026 as compared to the same period in 2025 is related to an increase in NAV of our operating partnership.
Company level expenses relate mainly to our compliance and administration related costs. The increase for the nine months ended September 30, 2026 when compared to 2025 is primarily related to higher professional fees.
Provision for impairment of real estate relates to real estate investments where the estimated future undiscounted cash flows during our hold period have decreased below the carrying value of the property. A provision for impairment of real estate is recorded to write the property down from its carrying value to its fair value. We recorded a provision for impairment of $272 and $278 during the nine months ended September 30, 2026 and 2025, respectively, related to individual homes within the Single-Family Rental Portfolio I that are in the process of being sold.
Depreciation and amortization expense is impacted by the values assigned to buildings, personal property and in-place lease assets as part of the initial purchase price allocation. Depreciation and amortization expense increased by $15,276 for the nine months ended September 30, 2026 as compared to the same period in 2025 primarily due to the consolidation of Single-Family Rental Portfolio I on April 23, 2025 and acquisitions.
Interest expense decreased by $18,572 for the nine months ended September 30, 2026, as compared to the same period in 2025, primarily as a result of approximately $35,000 of lower interest expense from changes in the fair value of our interest rate derivatives. Offsetting the decrease was an increase of approximately $6,300 in interest expense, primarily related to the consolidation of Single-Family Rental Portfolio I on April 23, 2025. Additionally, we recognized approximately $8,600 of interest income during the nine months ended September 30, 2025, related to our exercise of the FMV Option for DST Properties that had decreased in fair value, which did not recur during the nine months ended September 30, 2026.
Unrealized loss on financial obligation relates to changes in the fair value of our financial obligation for the various DST Programs that we have elected the fair value option and is driven by payments made to the DST under the master lease as well as changes to the fair value of the DST Properties. We recorded an unrealized loss on financial obligation of $52,015 for the nine months ended September 30, 2026 and $30,613 for the same period in 2025.
Realized loss on financial obligation relates to exercising of our FMV Option and issuing OP Units. We recorded a realized loss of $2,317 during the nine months ended September 30, 2026 related to the financial obligation on Woodlawn Point, 140 Park Avenue and 47 National Way.
Loss from unconsolidated affiliates and fund investments relates to income or losses from Chicago Parking Garage, Pioneer Tower, The Tremont, The Huntington, Siena Suwanee Town Center, and Kingston at McLean Crossing as well as changes in fair value and operating distributions received from our investments in the Single-Family Rental Portfolio I and the NYC Retail Portfolio, which we account for under the fair value option. Prior to its consolidation on April 23, 2025, we recorded an $11,261 increase in the fair value of our investment in Single-Family Rental Portfolio I during the nine months ended September 30, 2025. We also incurred $2,506 of costs related to restructuring the Single-Family Rental Portfolio I on April 23, 2025. During the nine months ended September 30, 2026, we recorded a $3,418 decrease in the fair value of the NYC Retail Portfolio as compared to a $13,149 decrease in the fair value during the same period in 2025. Additionally, during the nine months ended September 30, 2025, we recorded an impairment charge related to our investment in Pioneer Tower in the amount of $917 as the carrying value of the investment exceeded its estimated fair value.
Gain on disposition of property and extinguishment of debt, net of $43,199 in the nine months ended September 30, 2026 relates to the disposition and extinguishment of debt for Dylan Point Loma, 4211 Starboard Drive, 2840 Loker Avenue and individual houses within our Single-Family Rental Portfolio I. Gain on disposition of property and extinguishment of debt, net of $2,371 in the nine months ended September 30, 2025 relates to the disposition of 237 Via Vera Cruz, individual homes within our Single-Family Rental Portfolio I and the early extinguishment of debt on Pinecone and Miramont Apartments.
During the nine months ended September 30, 2026, we recorded a gain on sale of unconsolidated real estate affiliate of $20,270, related to the sale of our unconsolidated interest in Kingston at McLean Crossing.
Funds From Operations
Consistent with real estate industry and investment community preferences, we consider funds from operations ("FFO") as a supplemental measure of the operating performance for a real estate investment trust and a complement to GAAP measures because it facilitates an understanding of the operating performance of our properties. The National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income attributable to the Company (computed in accordance with GAAP), excluding gains or losses from cumulative effects of accounting changes, extraordinary items, impairment write-downs of depreciable real estate and sales of properties, plus real estate related depreciation and amortization and after adjustments for these items related to noncontrolling interests and unconsolidated affiliates.
FFO does not give effect to real estate depreciation and amortization because these amounts are computed to allocate the cost of a property over its useful life. Because values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, we believe that FFO provides stockholders with an additional view of our operating performance. We also use Adjusted FFO ("AFFO") as a supplemental measure of operating performance. We define AFFO as FFO adjusted for straight-line rental income, amortization of above- and below-market leases, amortization of net premium or discount on assumed debt, gains or losses on derivative instruments and the extinguishment or modification of debt, adjustments for investments accounted for under the fair value option, net unrealized change in fair value of investments in marketable securities, acquisition expenses and adjustments for DST Properties.
In order to provide a better understanding of the relationship between FFO, AFFO and GAAP net income, the most directly comparable GAAP financial reporting measure, we have provided reconciliations of GAAP net income attributable to JLL Income Property Trust, Inc. to FFO and FFO to AFFO. FFO and AFFO do not represent cash flow from operating activities in accordance with GAAP, should not be considered as an alternative to GAAP net income and are not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to more comprehensively understand our operating performance, FFO and AFFO should be considered along with our reported net income attributable to JLL Income Property Trust, Inc. and our cash flows in accordance with GAAP, as presented in our consolidated financial statements. Our presentations of FFO and AFFO are not necessarily comparable to the similarly titled measures of other REITs due to the fact that not all REITs use the same definitions.
The following table presents a reconciliation of net income to NAREIT FFO for the periods presented:
Reconciliation of net income to NAREIT FFO Three Months Ended September 30, 2026 Three Months Ended September 30, 2025 Nine Months Ended September 30, 2026 Nine Months Ended September 30, 2025
Net income (loss) attributable to JLL Income Property Trust, Inc. $ 668 $ (8,902) $ 25,426 $ (17,336)
Real estate depreciation and amortization (1)
30,867 33,490 94,896 96,868
Gain on disposition of property and unrealized loss on investment in unconsolidated real estate affiliate (1)
(757) 3,651 (41,094) 1,611
Impairment of depreciable real estate (1)
16 47 175 945
NAREIT FFO attributable to JLL Income Property Trust, Inc. Common Stockholders $ 30,794 $ 28,286 $ 79,403 $ 82,088
Weighted average shares outstanding, basic and diluted 203,391,784 216,747,168 206,371,103 221,120,115
NAREIT FFO per share, basic and diluted $ 0.15 $ 0.13 $ 0.38 $ 0.37
________
(1) Includes amounts attributable to our ownership share of both consolidated properties and unconsolidated real estate affiliates and our operating partnership for all periods.
We believe AFFO is useful to investors because it provides supplemental information regarding the performance of our portfolio over time.
The following table presents a reconciliation of NAREIT FFO to AFFO for the periods presented:
Reconciliation of NAREIT FFO to AFFO Three Months Ended September 30, 2026 Three Months Ended September 30, 2025 Nine Months Ended September 30, 2026 Nine Months Ended September 30, 2025
NAREIT FFO attributable to JLL Income Property Trust, Inc. $ 30,794 $ 28,286 $ 79,403 $ 82,088
Straight-line rental income (1)
(1,138) (1,397) (2,727) (3,737)
Amortization of above- and below-market leases (1)
(766) (895) (2,115) (2,957)
Amortization of net discount on assumed debt (1)
169 174 522 549
(Gain) loss on derivative instruments and extinguishment or modification of debt (1)
(9,549) 2,358 (16,215) 8,939
Adjustment for investments accounted for under the fair value option (2)
(198) (245) (314) 2,091
Acquisition expenses (1)
- (10) - 58
Adjustment for DST Properties (3)
1,951 (6,354) 13,028 (14,960)
AFFO attributable to JLL Income Property Trust, Inc. Common Stockholders $ 21,263 $ 21,917 $ 71,582 $ 72,071
Weighted average shares outstanding, basic and diluted 203,391,784 216,747,168 206,371,103 221,120,115
AFFO per share, basic and diluted $ 0.10 $ 0.10 $ 0.35 $ 0.33
________
(1) Includes amounts attributable to our ownership share of both consolidated properties and unconsolidated real estate affiliates and our operating partnership.
(2) Represents the normal and recurring AFFO reconciling adjustments for the NYC Retail Portfolio and Single-Family Rental Portfolio I prior to consolidation on April 23, 2025.
(3) Adjustments to reflect the AFFO attributable to the Company for DST Properties, including non-cash interest expense and income and unrealized losses related to the FMV Option.
The following table provides a breakdown of the major components of our NAV:
Component of NAV September 30, 2026 December 31, 2025
Real estate investments(1)
$ 3,459,112 $ 3,564,600
Debt (1,385,556) (1,379,332)
Other assets and liabilities, net 199,661 202,560
Estimated enterprise value premium None assumed None assumed
NAV $ 2,273,217 $ 2,387,828
________
(1)The value of our real estate investments was less than the historical cost by approximately 1.8% and 1.6% as of September 30, 2026 and December 31, 2025, respectively.
The decrease in NAV from December 31, 2025 to September 30, 2026, was primarily related to net redemptions incurred in addition to the payment of our monthly dividends. Our NAV for the different share classes is reduced by normal and recurring class-specific fees and offering and organization costs.
The following are key assumptions (shown on a weighted-average basis) that are used in the discounted cash flow models to estimate the value of our real estate investments as of September 30, 2026:
Healthcare Industrial Traditional Office Residential Retail
Other (1)
Total
Company
Exit capitalization rate 6.0 % 5.7 % 6.9 % 5.4 % 6.0 % 6.5 % 5.7 %
Discount rate/internal rate of return (IRR) 7.4 7.4 8.5 7.0 7.5 8.3 7.3
Annual market rent growth rate 3.0 3.1 2.7 3.2 3.0 3.0 3.1
Holding period (years) 10.1 10.4 10.0 10.0 10.0 17.6 10.2
________
(1) Other includes Chicago and South Beach parking garages. South Beach Parking Garage is subject to a ground lease and the appraisal incorporates discounted cash flows over its remaining lease term and therefore does not utilize an exit capitalization rate.
The following are key assumptions (shown on a weighted-average basis) that are used in the discounted cash flow models to estimate the value of our real estate investments as of December 31, 2025:
Healthcare Industrial Traditional Office Residential Retail
Other (1)
Total
Company
Exit capitalization rate 5.9 % 5.7 % 6.9 % 5.3 % 6.0 % 6.5 % 5.6 %
Discount rate/internal rate of return (IRR) 7.3 7.4 8.6 7.0 7.5 8.3 7.3
Annual market rent growth rate 3.0 3.1 2.6 3.2 3.0 3.0 3.1
Holding period (years) 10.0 10.3 10.0 10.0 10.0 18.1 10.2
________
(1) Other includes Chicago and South Beach parking garages. South Beach Parking Garage is subject to a ground lease, the appraisal incorporates discounted cash flows over its remaining lease term and therefore does not utilize an exit capitalization rate.
While we believe our assumptions are reasonable, a change in these assumptions would impact the calculation of the value of our real estate investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our real estate investment value:
Input September 30, 2026
December 31, 2025
Discount Rate - weighted average 0.25% increase (1.8) % (1.9) %
Exit Capitalization Rate - weighted average 0.25% increase (2.5) (2.7)
Annual market rent growth rate - weighted average 0.25% decrease (1.5) (1.7)
The fair value of our mortgage notes and other debt payable was estimated to be approximately $79,977 and $73,340 lower than the carrying values at September 30, 2026 and December 31, 2025, respectively. The NAV per share would have increased by $0.27 and $0.25 per share at September 30, 2026 and December 31, 2025, if we were to have included the fair value of our mortgage notes and other debt payable in our methodology to determine NAV.
The selling commission and stockholder servicing fee are offering costs and are recorded as a reduction of additional paid in capital. Selling commissions are paid on the date of sale of our common stock. We accrue for future stockholder servicing fees at the time such shares are sold as an offering cost. For Class A, Class M and Class A-I shares, we accrue for future stockholder servicing fees up to the 10% regulatory limit. For Class D, Class S and Class Z shares, we accrue for future stockholder servicing fees based on an estimated life of the shares held by stockholders of such share classes as of September 30, 2026 as an offering cost. For NAV calculation purposes, stockholder servicing fees are accrued daily, on a continuous basis equal to 1/365th of the stated fee. Stockholder servicing fees payable are included in Accrued offering costs on our Consolidated Balance Sheets. Stockholder servicing fees payable as of September 30, 2026 and December 31, 2025 were $208,146 and $201,251, respectively.
The following table reconciles stockholders' equity per our Consolidated Balance Sheet to our NAV:
September 30, 2026
Stockholders' equity under GAAP $ 1,206,939
Adjustments:
Accrued stockholder servicing fees (1)
208,146
Organization and offering costs (2)
276
Unrealized real estate appreciation (3)
67,395
Accumulated depreciation, amortization and other (4)
790,461
NAV $ 2,273,217
________
(1) Accrued stockholder servicing fees represents the accrual for future stockholder servicing fees for Class A, Class M, Class A-I, Class D, Class S and Class Z shares. We accrue for future stockholder servicing fees at the time such shares are sold as an offering cost. For Class A, Class M and Class A-I shares, we accrue for future stockholder servicing fees up to the 10% regulatory limit. For Class D, Class S and Class Z shares, we accrue for future stockholder servicing fees based on an estimated life of the shares held by stockholders of such share classes as of September 30, 2026 as an offering cost. For NAV calculation purposes, stockholder servicing fees are accrued daily, on a continuous basis equal to 1/365th of the stated fee.
(2) The Advisor agreed to advance organization and offering costs for the Current Public Offering on our behalf through June 6, 2025, and all such costs will be reimbursed to the Advisor ratably over 36 months through June 6, 2028. Under GAAP, organization costs are expensed as incurred and offering costs are charged to equity as such amounts are incurred. For NAV, such costs will be recognized as a reduction to NAV ratably over 36 months.
(3) Our investments in real estate are presented under historical cost in our GAAP Consolidated Financial Statements. As such, any increases in the fair market value of our investments in real estate are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate are recorded at fair value.
(4) We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization is not recorded for purposes of determining our NAV. Additionally, we make other fair value adjustments to our NAV to account for differences with historical cost GAAP, an example would be straight-line rent revenue.
Limitations and Risks
As with any valuation methodology, our methodology is based upon a number of estimates and assumptions that may not be accurate or complete. Our valuation methodology may not result in the determination of the fair value of our net assets as our mortgage notes and other debt payable are valued at cost. Different parties with different assumptions and estimates could derive a different NAV per share. Accordingly, with respect to our NAV per share, we can provide no assurance that:
•a stockholder would be able to realize this NAV per share upon attempting to resell his or her shares;
•we would be able to achieve for our stockholders the NAV per share upon a listing of our shares of common stock on a national securities exchange, selling our real estate portfolio or merging with another company; or
•the NAV per share, or the methodologies relied upon to estimate the NAV per share, will be found by any regulatory authority to comply with any regulatory requirements.
Furthermore, the NAV per share was calculated as of a particular point in time. The NAV per share will fluctuate over time in response to, among other things, changes in real estate market fundamentals, capital markets activities and attributes specific to the properties and leases within our portfolio.
Liquidity and Capital Resources
Our primary uses and sources of cash are as follows:
Uses Sources
Short-term liquidity and capital needs such as:
•
Operating cash flow, including the receipt of distributions of our share of cash flow produced by our unconsolidated real estate affiliates and fund investment
•
Interest payments on debt
•
Distributions to stockholders
•
Proceeds from secured loans collateralized by individual properties
•
Fees payable to our Advisor
•
Minor improvements made to individual properties that are not recoverable through expense recoveries or common area maintenance charges to tenants
•
Proceeds from our Credit Facility
•
Sales of our shares in our public and private offerings
•
General and administrative costs
•
Sales of real estate investments
•
Costs associated with our public offering, private offerings and DST Program
•
Draws from lender escrow accounts
•
Other company level expenses
•
Sales of beneficial interests in the DST Program
•
Lender escrow accounts for real estate taxes, insurance, and capital expenditures
•
Fees payable to our Dealer Manager
Longer-term liquidity and capital needs such as:
•
Acquisitions of real estate investments
•
Expansion of existing properties
•
Tenant improvements and leasing commissions
•
Issuance of mortgage notes receivable
•
Debt repayment requirements, including both principal and interest
•
Repurchases of our shares pursuant to our share repurchase plan
•
Fees payable to our Advisor
•
Fees payable to our Dealer Manager
The sources and uses of cash for the nine months ended September 30, 2026 and 2025 were as follows:
Nine Months Ended September 30, 2026 Nine Months Ended September 30, 2025 $ Change
Net cash provided by operating activities $ 112,672 $ 106,538 $ 6,134
Net cash used in investing activities (271,492) (355,462) 83,970
Net cash provided by financing activities 200,298 276,707 (76,409)
Net cash provided by operating activities increased by $6,134 for the nine months ended September 30, 2026 as compared to the same period in 2025. The increase in cash from operating activities is primarily due to higher cash flows from recent acquisitions, higher rents from new leases and lease termination fees.
Net cash used in investing activities decreased by $83,970 for the nine months ended September 30, 2026 as compared to the same period in 2025. The decrease is primarily related to increased property dispositions during the nine months ended September 30, 2026 as compared to the same period in 2025.
Net cash provided by financing activities decreased by $76,409 for the nine months ended September 30, 2026 as compared to the same period in 2025. The change is primarily related to a decrease in net capital raise of approximately $31,000 when comparing the nine months ended September 30, 2026 to the same period in 2025. Offsetting this decrease was approximately $39,000 of lower net payments on our mortgage notes payable and our Credit Facility during the nine months ended September 30, 2026 as compared to the same period in 2025.
Financing
We have relied primarily on fixed-rate financing, locking in what were favorable spreads between real estate income yields and mortgage interest rates and have tried to maintain a balanced schedule of debt maturities. We also use interest rate derivatives to manage our exposure to interest rate movements on variable rate debt of $1,190,770 and $1,100,000 as of September 30, 2026 and December 31, 2025, respectively, which we then classify as fixed rate debt in the table below. The following consolidated debt table provides information on the outstanding principal balances and the weighted average interest rates at September 30, 2026 and December 31, 2025:
Consolidated Debt
September 30, 2026 December 31, 2025
Principal
Balance 		Weighted Average Interest Rate Principal
Balance 		Weighted Average Interest Rate
Fixed $ 2,157,096 4.49 % $ 1,899,778 4.30 %
Variable - - 53,433 5.29
Total $ 2,157,096 4.49 % $ 1,953,211 4.33 %
Covenants
At September 30, 2026, we were in compliance with all debt covenants.
Commitments
We are involved in various claims and litigation matters arising in the ordinary course of business, some of which involve claims for damages. Many of these matters are covered by insurance, although they may nevertheless be subject to deductibles or retentions. Although the ultimate liability for these matters cannot be determined, based upon information currently available, we believe the ultimate resolution of such claims and litigation will not have a material adverse effect on our financial position, results of operations or liquidity.
From time to time, we have entered into contingent agreements for the acquisition and financing of properties. Such acquisitions and financings are subject to satisfactory completion of due diligence.
We are subject to fixed ground lease payments on South Beach Parking Garage of $126 per year until September 30, 2029, which will increase every five years by the lesser of 12% or the cumulative CPI over the previous five year period. We are also subject to a variable ground lease payment calculated as 2.5% of revenue. The lease expires September 30, 2041 and has a ten-year renewal option.
The operating agreement for Grand Lakes Marketplace allows the unrelated third party joint venture partner, owning a 10% interest, to put its interest in the venture to us at a market determined value.
The operating agreement for our investment in Midtown Village allows the unrelated third party joint venture partner, owning a 12.5% interest, to put its interest to us at a market determined value starting August 25, 2029.
The operating agreement for our investment in Single-Family Rental Portfolio II allows the unrelated third party joint venture partner, owning a 5% interest, to put its interest to us at a market determined value starting November 9, 2030.
The operating agreement for our investment in Single-Family Rental Portfolio I allows the unrelated third party joint venture partner, owning a 5% interest, to put its interest to us at a market determined value starting April 15, 2033.
Distributions to Stockholders
To remain qualified as a REIT for federal income tax purposes, we must distribute or pay tax on 100% of our capital gains and distribute at least 90% of ordinary taxable income to stockholders.
The following factors, among others, will affect operating cash flow and, accordingly, influence the decisions of our board of directors regarding distributions:
•scheduled increases in base rents of existing leases;
•changes in minimum base rents and/or overage rents attributable to replacement of existing leases with new or renewal leases;
•changes in occupancy rates at existing properties and procurement of leases for newly acquired or developed properties;
•necessary capital improvement expenditures or debt repayments at existing properties;
•ability of our tenants to pay rent as a result of their financial condition; and
•our share of distributions of operating cash flow generated by the unconsolidated real estate affiliates, less management costs and debt service on additional loans that have been or will be incurred.
We anticipate that operating cash flow, cash on hand, proceeds from dispositions of real estate investments or refinancings will provide adequate liquidity to conduct our operations, fund general and administrative expenses, fund operating costs and interest payments and allow distributions to our stockholders in accordance with the REIT qualification requirements of the Internal Revenue Code of 1986, as amended.
Sources of Distributions
The following table summarizes our distributions paid over the nine months ended September 30, 2026 and 2025:
For the Nine Months Ended September 30,
2026 2025
Distributions:
Paid or payable in cash (1)
$ 78,859 $ 68,178
Reinvested in shares 53,304 57,373
Total distributions $ 132,163 $ 125,551
Source of distributions:
Cash flow from operating activities $ 78,859 $ 68,178
DRIP (2)
53,304 57,373
Total sources of distributions $ 132,163 $ 125,551
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(1) Includes distributions paid on common stock and OP Units.
(2) Common stockholders and OP Unit holders may elect to have their distributions reinvested in shares of common stock through our DRIP.
JLL Income Property Trust Inc. published this content on November 05, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 05, 2026 at 20:23 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]