Johnson Controls R&D DST Overview
SE JCI (Glendale), DST (marketed as the Johnson Controls R&D DST) is a single-tenant net-lease Delaware Statutory Trust sponsored by Syndicated Equities. The Trust owns a newly constructed 2024 build-to-suit, single-story R&D and engineering laboratory/innovation center at 2022 W. Florist Avenue in Glendale (Milwaukee MSA), Wisconsin, approximately 109,500 SF on a site with 242 parking spaces, delivered in warm-shell condition with the tenant completing a specialized interior lab build-out (a $11.7M tenant improvement allowance funded by the seller), situated directly across from Johnson Controls North American Headquarters campus. The Property is 100% net leased to Johnson Controls, Inc. (the operating subsidiary of NYSE-listed Johnson Controls International PLC) on a 15-year triple-net lease commencing October 2024 and expiring September 2039, at an initial base rent of $2,861,702 ($26.14/SF) escalating annually to $34.49/SF by year 15, with three 5-year renewal options at 95% of market; the tenant bears taxes, insurance, utilities, and maintenance. Total capitalization is $49,488,000: $22,230,000 of equity plus a $27,258,000 non-recourse Old National Bank loan (60% loan-to-purchase-price, ~55% loan-to-cost; ~6.10% fixed; interest-only for 36 months then 30-year amortization; 10-year term), against a $45,430,000 purchase price. The thesis is a leveraged, income-oriented net-lease hold of an investment-grade-affiliated tenant in a strategic headquarters-adjacent location, with disposition targeted around the 10-year loan term.
Highlights
The Property is fully leased to Johnson Controls, Inc., the operating subsidiary of investment-grade Johnson Controls International PLC (NYSE: JCI; rated BBB+ by S&P; ~$23.6B in 2025 net sales, 94,000-plus employees). The critical nuance is that the parent does not guaranty the lease, so the contractual obligor is the unrated subsidiary rather than the rated parent; the headline investment-grade profile provides reputational and operational comfort but not a direct credit backstop, a distinction that materially affects the durability of the income stream.
The asset sits directly across from Johnson Controls North American Headquarters in Glendale, a strategic adjacency that supports the tenant long-term operational commitment and integrates the lab into JCI R&D footprint in a metro where the company traces its roots to 1885. The counterweight is that this same adjacency ties the asset fate to JCI continued Milwaukee-area presence, and the company post-Tyco reincorporation in Ireland is a reminder that corporate footprint decisions can shift over a 15-year horizon.
The newly built 2024 build-to-suit carries a 15-year triple-net lease with annual escalations (from $26.14/SF to $34.49/SF by year 15) and full expense pass-through, providing long-dated, low-management contractual cash flow, with in-place rent modestly below Class A market asking (~$27.70/SF) implying limited over-rent risk. The offset is that the specialized laboratory build-out is highly tenant-specific, so alternative-use flexibility is limited and re-leasing cost and downtime would be significant if Johnson Controls does not renew at the 2039 expiry, and its renewal options are struck at 95% of market, a slight tenant discount.
Leverage is moderate at 60% loan-to-purchase-price (~55% loan-to-cost) on a 10-year non-recourse loan at a projected 6.10% fixed rate, interest-only for the first 36 months. The structure front-loads distributable cash (Year-1 cash-on-cash ~6.03%) but steps down when amortization begins (to ~4.99% in Year 4), and because the 10-year loan matures roughly five years before the 2039 lease expiry, the hold carries refinancing or forced-sale pressure around 2036, with the rate not yet locked at the Memorandum date.
Syndicated Equities is an established Chicago-based sponsor active since 1986, with over $2 billion of institutional-quality acquisitions across office, medical office, retail, and industrial product and a senior team with 100-plus combined years of experience, providing institutional underwriting and asset management. The consideration is a relatively high fee load (acquisition, due-diligence, and loan-placement/guaranty fees aggregating ~16% of equity) and customary affiliated-party conflicts, with broker-dealer commissions funded by the Sponsor out of its fees rather than charged separately.
Analysis of Johnson Controls R&D DST
Insights
This is a conventional leveraged single-tenant net-lease acquisition whose appeal rests on long-dated contractual income from a facility integrated into Johnson Controls headquarters ecosystem, but whose risk-adjusted profile is more nuanced than the investment-grade headline suggests. The central credit question is the gap between the rated, non-guarantying parent and the unrated subsidiary that actually signs the lease; the asset value is underwritten to JCI continued occupancy of a purpose-built lab it helped design, so the practical risk is operational commitment rather than balance-sheet default. The financing is the second analytical pivot: moderate leverage at a thin positive-leverage spread, with a 36-month interest-only runway masking the amortization step-down that arrives in Year 4, and a 10-year loan maturing well inside the 15-year lease that imports refinancing risk into a 2036 rate environment that cannot be known today. The roughly 5.90% average cash-on-cash and modestly below-market in-place rent are reasonable for a newly built, HQ-adjacent net-lease asset, but the high fee load, single-tenant and single-asset concentration, specialized improvements, and loan-versus-lease maturity mismatch are the idiosyncratic items least reflected in the headline distribution rate, and they argue for evaluating the offering on a hold-to-refinance, credit-of-the-actual-obligor basis.
Advantages
The offering provides long-dated, low-touch contractual income: a newly built 2024 build-to-suit R&D laboratory on a 15-year triple-net lease to Johnson Controls, Inc., the operating subsidiary of an investment-grade global parent, with strong annual rent escalations and full expense pass-through, located strategically across from Johnson Controls North American Headquarters in the Milwaukee market. In-place rent (~$26.14/SF) sits modestly below Class A market asking, limiting over-rent risk, and the asset is financed with moderate, non-recourse leverage (60% loan-to-purchase-price) at a projected 6.10% fixed rate with a 36-month interest-only period that supports a ~6.03% initial cash-on-cash building to ~6.75% by year ten (5.90% average). Syndicated Equities is an experienced sponsor (active since 1986; $2B-plus of acquisitions), and broker-dealer commissions are borne by the Sponsor rather than charged directly to the offering.
Concerns
All income depends on a single tenant in a single special-purpose asset, and critically the lease obligor is Johnson Controls, Inc., the unrated operating subsidiary, while the investment-grade rating belongs to the non-guarantying parent, so the headline credit overstates the direct backstop. The laboratory build-out is highly tenant-specific with limited alternative use, creating substantial re-leasing cost and downtime risk if the tenant does not renew at the 2039 expiry (and renewals are struck at 95% of market), while the 10-year loan matures around 2036, roughly five years before lease expiry, concentrating refinancing or forced-sale risk, with the fixed rate still unlocked at the Memorandum date (the Sponsor contributes additional equity, reducing its promote, only if the rate exceeds 5.90%). Positive leverage is thin, and once the 36-month interest-only period ends, amortization compresses distributions to roughly 4.99% in Year 4 before rent escalations rebuild them. The fee load is high relative to peers (acquisition ~2.75% of price, due diligence ~3.0% of price, and a loan-placement/guaranty fee ~2.65% of the loan, aggregating ~16% of equity), the Sponsor retains any savings between estimated and actual third-party costs, and the asset fortunes are tied to Johnson Controls continued Milwaukee-area presence following the parent earlier reincorporation abroad.
Johnson Controls R&D DST — Complete Offering Data
Offering & Structure
Investment NameJohnson Controls R&D DST
SponsorSyndicated Equities
StructureDelaware Statutory Trust (DST)
StatusClosed
Last Updated2026-06-08
Size & Availability
Total Offering$49,488,000
Equity$22,230,000
Debt$27,258,000
Available Equity$0 (0% of equity)
Minimum Investment$100,000
Total Load16.32%
Initial Reserves0.31%
Property
Property TypeIndustrial
StrategyCore
LocationWI
Market TierTier 2
Income & Projections
Average Yield5.90%
Projected Yields (Y1–Y10)Y1 6.03% · Y2 5.86% · Y3 6.13% · Y4 4.99% · Y5 5.27% · Y6 5.55% · Y7 5.85% · Y8 6.14% · Y9 6.44% · Y10 6.75%
Tax-Adjusted Yield7.70%
Cap Rate Equivalent9.33%
Financing
In-Place LTV55.08% LTV
LenderOld National Bank
Loan TypeFixed
Interest Rate6.10% (Fixed)
Loan Term10 years
I/O Period3 years
Amortization30 years
Y1 DSCR1.72x
Exit
Estimated Hold Period7-10 Years
721 Exchange ExitNone
Benchmarks (vs sector median)
Avg. Income5.90% vs 5.33% market — Meets Average
Growth11.94% vs 15.09% market — Below Average
Peak6.75% vs 5.80% market — Above Average
Every data point Baker 1031 tracks for this offering, in one place. Figures are drawn from the offering’s private placement memorandum and sponsor materials unless noted, are summaries for convenience only, and are qualified in their entirety by the PPM. Tap the ⓘ icon next to any label for what it means and how it is calculated.
