Allan Swaringen, CEO of JLL Income Property Trust, joined the REIT Report to discuss the growing role that NAV REITs play, alongside listed REITs, in enabling leading wealth management firms to diversify portfolios beyond traditional equities and fixed income.
JLL IPT is an institutionally managed, daily NAV REIT advised by LaSalle and sponsored by JLL with approximately $7 billion in portfolio equity and debt investments. Swaringen is chair of Nareit’s Public Non-Listed REIT Council.
Greater investment allocations in alternative investments is a trend that's been growing for 10 years, Swaringen said, “and we think it still has a lot of legs to run. Wealth management firms want to move their clients beyond the traditional 60-40 stock and bond allocation model.”
Swaringen added, “we're truly helping private client and high net worth investors expand beyond the traditional traded market. We think it's good that they have both a public listed REIT exposure, but also have a private market exposure like we provide with the NAV REIT.”
Swaringen also highlighted JLL IPT’s increased focus on industrial/warehouse properties, which now comprise about 38% of the portfolio. A key demand driver for traditional warehouses is the new construction and development of data centers, which is creating demand for storing the range of components that go into those properties, he said. “We're seeing a very interesting kind of symbiotic relationship between growing AI demand and growing warehouse demand.”
The strategic shift toward industrial was facilitated by the sale of residential properties, allowing JLL IPT to reinvest in higher-cap-rate warehouse properties. The focus on newer, modern constructions with advanced technology has positioned JLL IPT favorably in a competitive market, Swaringen said.
At the same time, Swaringen noted that 15 years ago JLL IPT’s portfolio was 50% office, whereas today that level is only 3%. “One of the luxuries of the NAV REIT sector is that we can play across different property sectors,” he said.