ExchangeRight, a sponsor of securitized 1031 exchange real estate offerings, has taken its Delaware statutory trust offering, Net-Leased Portfolio 3 DST, full cycle.
According to documents filed with the Securities and Exchange Commission, the Regulation D offering launched in March 2013 and had a target raise of $6.75 million. The offering was comprised of a portfolio of nine business essential properties located in four states, and the tenants paid 100 percent of their rent throughout the pandemic, the company noted.
“The DST portfolio’s strong performance enabled investors to enjoy uninterrupted distributions and made an attractive acquisition target for the acquiring [real estate investment trust],” ExchangeRight said in a statement.
Each DST investor had the option to perform another 1031 exchange, receive cash, or complete a tax-deferred 721 exchange, or any combination of these options.
According to ExchangeRight, total returns topped 169 percent, including return of capital for investors who chose to cash out or complete a 1031 exchange. Total returns were equivalent to more than 181 percent including return of capital for investors who chose to complete a tax-deferred 721 exchange into the acquiring real estate investment trust, based on an independent valuation performed by KPMG of the acquiring REIT portfolio, the company added.
ExchangeRight said that the portfolio’s average annualized rate of return for cash and 1031 exchange investors was 9.10 percent, more than 23 percent higher than its initial projections.
For 721 investors who received operating units in the acquiring portfolio, the company indicated that average annualized returns were equivalent to 10.64 percent, more than 44 percent higher than the company’s initial projections.
“This is the fifth Net-Leased Portfolio offering we have brought full cycle in just over a year…,” said Warren Thomas, a managing partner of ExchangeRight.
ExchangeRight and its affiliates’ platform has more than $2.9 billion in assets under management, comprised of 700 properties totaling in excess of 13 million square feet in 38 different states.
The company offers REIT, fund, and 1031 DST portfolios that target secure capital, stable income, and strategic exits. The company sources, syndicates, and manages long-term, net-leased assets backed by corporations that operate essential businesses in the necessity-based retail and healthcare industries.