Four funds. Three allocations.

One client constraint.

Why the balanced case gives JLL 50%, EQT 30%, Cottonwood 20%, and FS 0%

One client has $1 million available for private real estate. Four funds want the capital. Only three get a weight.

The hard part is not finding another credible product. It is deciding which product deserves scarce client risk capacity. That means separating three questions that private-markets marketing often blends together: Is the sector attractive? Is the vehicle good enough? Does it fit this client?

This edition treats the first question as already settled. EM Capital's Cross Asset report (our quarterly comparison of forward sector returns against risk-adjusted hurdles) sets the desired exposure for a balanced sleeve: an overweight to industrial and multifamily real estate. We take that sector call as the given, not something this note re-derives. What follows is the second question only: how much of that desired exposure each vehicle can safely carry once fees, leverage, concentration and structure are priced in. The third question, fit for a specific client's diversification, concentration tolerance and tax posture, is addressed separately below.

Our answer for a balanced client is 50% JLL Income Property Trust 30% EQT Exeter REIT, 20% COTTONWOOD COMMUNITIES, INC. , and 0% FS Credit REIT. The weights are not the output of an optimizer. They are a role budget, tested against fees, leverage, concentration, liquidity and evidence quality.

The answer first

Why 50 / 30 / 20 is a role budget, not an optimization

The balanced case assigns half of the sleeve to a diversified anchor and half to sector satellites. JLL receives the 50% anchor budget. The remaining 50% is split 60% to industrial and 40% to multifamily. That produces 30% EQT and 20% Cottonwood. FS receives nothing because it fails the evidence rule before portfolio construction begins.

What the Cross Asset report actually contributes

The Cross Asset work matters, but not in the way a sponsor ranking would. It estimated a 10.4% forward unlevered return for industrial against an 8.0% hurdle, a 2.4 percentage-point margin. Multifamily was 10.6% against an 8.5% hurdle, a 2.1-point margin. Both were overweights.

That evidence supports giving EQT and Cottonwood a place in the portfolio. It does not explain a 30% / 20% split. The sector margins are too close, and they are unlevered sector estimates based largely on public-market economics. Private-vehicle outcomes also depend on portfolio mix, property quality, leverage, financing obligations, fees and liquidity terms.

JLL creates a different problem. It is diversified across property types, so assigning either the industrial or multifamily return to it would be false precision. A sponsor-level expected return would require a portfolio look-through and a bridge from sector economics to vehicle economics. We have not pretended that bridge already exists.

Every vehicle in the chart below is modeled at the same 7% gross return. The differences aren't a forecast of which one performs best; they isolate what fees and structure do to an identical starting assumption.

Risk score is an editable EM Capital judgment. Bubble size is the balanced-client allocation. The vertical axis isolates fee drag under a common gross assumption, not the sector's or vehicle's expected return. On this scale, a score near 2 signals a lean structure with little left to resolve; a score near 4 or higher is a non-starter. The gap between vehicles ranks open issues. It isn't a claim that Cottonwood carries proportionally more risk than JLL.

Why the bubbles land where they do

JLL earns the anchor. Its weighted risk-burden score is 2.05, versus 3.00 for EQT and 3.65 for Cottonwood. Under the same 7% gross assumption, JLL Class M models to 5.45% net, ahead of EQT Class I at 5.03% and Cottonwood Class D at 5.00%. The difference is mainly fee structure, not a forecast of property performance.

The low score is not a clean bill of health. JLL reported 29% sponsor leverage on a fair-value denominator. On the GAAP balance sheet, debt was 33.0% of assets, while debt plus the $1.350 billion DST financing obligation was 57.5%. Those are different measures and should not be forced to reconcile. Unresolved affiliate service rates also keep JLL from earning a larger or unconditional weight.

EQT earns the larger satellite. Industrial has the strongest excess-over-hurdle signal in the Cross Asset work. The vehicle also reports fixed-rate debt with no principal due before 2032. But it owns five properties and lacks a full-cycle record. That combination supports 30%, not an anchor weight.

Cottonwood earns exposure, but less capacity. Multifamily's setup is attractive, but debt was 57.4% of assets and debt plus preferred capital was 67.1%. Roughly $225 million of preferred redemptions is scheduled for 2027 and 2028, and Class D carries a 5% early-repurchase haircut. Those burdens explain the smaller weight.

The same products should not produce the same answer for every client

The balanced case is useful because it makes the decision visible. It is not a suitability engine. Change the client's need for diversification, concentration tolerance and illiquidity capacity, and the role budgets should move.

None of these profiles gives FS a weight. A client's desire for income does not cure an evidence failure. Nor should these equity vehicles be presented as fixed-income substitutes merely because they distribute cash. They still carry valuation risk, illiquidity, leverage and the possibility of capital loss.

Four client facts could materially change the table: existing real estate exposure, maximum acceptable illiquidity, tax status and investor eligibility. Tax treatment can change after-tax results, but it cannot be responsibly quantified without the client's state, account type and the vehicle's actual tax reporting. Eligibility can also open cheaper private classes, but the worked case stays with registered classes whose access and terms can be verified publicly.

What the model actually says

The model gives every product the same annual gross return so that one variable is isolated: disclosed fees. At 7% gross, the funded portfolio models to 5.23% net, reaches approximately $1,665,937 after ten years and incurs approximately $224,259 of cumulative modeled fees. Those outputs now sit at the center of the decision rather than in the appendix.

The downside deserves equal attention. At 0% gross, the sleeve loses 1.45% a year to modeled recurring fees and falls to about $864,175 after ten years. That is the cost of being wrong before property-level losses, unresolved affiliate charges or liquidity discounts are considered.

The evidence gate should be one sentence, not the opening act

FS Class D charges 2.55% annually before its performance fee: 1.25% management, 1.00% administrative services and 0.30% servicing. The performance fee is tied to Core Earnings, but the filings do not provide the quarterly Core Earnings series, the average adjusted capital used for the hurdle or the bridge from GAAP profit. That makes the fee non-reproducible from the public record. The correct output is N/A on the chart and 0% in the portfolio.

What could change the allocation

• JLL: Complete affiliate service rates and the DST manager fee; monitor the advisory term after June 5, 2027.

• EQT: Obtain numeric affiliate property-service rates, current repurchase activity and more operating history.

• Cottonwood: Reconcile the debt schedule and monitor preferred-redemption liquidity and project-level affiliate economics.

• FS: Provide an eight-quarter Core Earnings bridge, average adjusted capital, hurdle calculations and performance fees accrued and paid.

The commercial test

An advisor with four live deals and limited client capacity does not need another product summary. The useful question is: which product earns which job for which client, and what evidence would make the answer change?

That is the allocator's work. The Cross Asset report supplies the market prior. The evidence packet tests whether the product can be trusted. The model shows what disclosed fees do to capital. The client map decides where scarce risk capacity should go.

Sources

• EM Capital Cross Asset Q2 report, Q2 2026.

• EM Capital worked private real estate allocation model and final evidence packet; registered-class scope; evidence cutoff August 25, 2026 at 7:55 p.m. ET.

• Cottonwood Communities, Inc., Forms 10-Q filed August 14, 2026; Form 10-K filed March 30, 2026; Form 424B3 filed August 17, 2026; share repurchase program effective August 12, 2025; SEC EDGAR, CIK 1692951.

• EQT Exeter Real Estate Income Trust, Inc., Form 10-Q filed August 12, 2026; prospectus dated April 23, 2026; Form S-11 filed July 29, 2026; SEC EDGAR, CIK 1946997.

• FS Credit Real Estate Income Trust, Inc., Forms 10-Q filed August 14, 2026; Form 10-K filed March 13, 2026; Form S-11/A filed May 22, 2026; SEC EDGAR, CIK 1690536.

• JLL Income Property Trust, Inc., Forms 10-Q filed May 7 and August 11, 2026; DEF 14A filed April 1, 2026; Form 424B3 filed August 12, 2026; SEC EDGAR, CIK 1314152.

This is an illustrative, educational worked example. It is not investment advice, a recommendation or a suitability determination. The client profiles are examples and do not describe any specific person or firm.