ExchangeRight Fully Subscribes $40.75 Million Value-Add DST Offering

ExchangeRight, a sponsor of securitized 1031 exchanges and other real estate offerings, announced that investors have fully subscribed its $40.75 million Value-Add Portfolio 2 DST.

As The DI Wire previously reported, the company launched their value-add platform in July 2022, which makes this the second DST offering produced through its value-add platform.

ExchangeRight says the offering provides in-place cash flow for investors, beginning at 5.20% and is designed for investors who can afford more income volatility in exchange for long-term upside potential.

Value-Add Portfolio 2 DST consists of more than 50 tenants occupying 12 in-line shopping centers across nine states.

The centers collectively span 287,601 square feet and are shadow anchored by companies that do not occupy properties in the offering including The Kroger Company, Publix Super Markets Inc., Tractor Supply Company, and Dollar Tree Inc.

Since opening the portfolio to investors, ExchangeRight says Value-Add Portfolio 2 DST’s occupancy increased to 90.9% through leasing vacant space to tenants. The company says their positive variances in total income and mitigated expenses have led to a rental income increase of 10.7% and a net operating income increase of 12.2% through the first two quarters, compared to what the company predicted.

“While our net lease platform is designed to provide stable income regardless of economic cycles, our value-add platform is more sensitive to macroeconomic conditions and therefore could experience more near-term income volatility in exchange for long-term upside potential,” Joshua Ungerecht, managing partner at ExchangeRight, said. “What is distinctive about our value-add portfolios is the opportunity to enhance value through proactive leasing initiatives, and this is already taking shape with VAP 2. We’re proud to provide investors with a value-add alternative designed for capital preservation, current income, and long-term upside potential.”

ExchangeRight and its affiliates’ platform has more than $5.3 billion in assets under management that are diversified across more than 1,100 properties and over 21 million square feet throughout 47 states. The company invests in net-leased properties in the necessity-based retail and healthcare industries, as well as value-add inline and outparcel retail spaces shadow-anchored by grocery tenants.

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