ExchangeRight, the nation’s second largest sponsor of securitized 1031 exchange offerings, has recently brought three of its Delaware statutory trust programs full cycle with the sale of three multifamily properties.
The DSTs each invested in value-add Class B properties including Van Mark Apartments, a 144-unit community on 13 acres in Monroe, Louisiana; Lakeside at Arbor Place, a 246-unit complex of 14 buildings in the Atlanta metropolitan area; and Crystal Lake Apartments, a 224-unit property in Pensacola, Florida.
ExchangeRight said that the properties sold for a combined $70 million, with net annual returns to investors ranging from 7.27 percent to 10.81 percent. The company noted that the average annual return of 9.40 percent was 42 percent higher than its initial underwriting targets and that each DST program consistently paid monthly cash distributions at rates that were at or above their initial underwritten targets.
“Our decision to exit these investments on behalf of investors was predicated on the accretive returns that we were able to generate in a substantially shorter hold period than originally envisioned,” said Joshua Ungerecht, a managing member at ExchangeRight.
He added, “These accelerated returns were made possible by our driving net operating growth more aggressively than projected and due to the high valuations that the market has been paying for multifamily investments. Moreover, we also desired to help investors avoid the increasing risk of what appears to be a looming and potentially severe recession within the next few years.”
ExchangeRight is a privately held firm based in Pasadena, California, and together with its affiliates, has more than $2.1 billion in assets under management and a portfolio of 600 properties in 38 states totaling more than 14 million square feet.