ExchangeRight REIT Delivers Bonus Distribution to Class ER Share Investors
ExchangeRight, a sponsor of Delaware statutory trust and non-traded real estate investment trust investment offerings, has made its first bonus distribution to investors in the Essential Income REIT’s Class ER shares as a result of their participation in ExchangeRight’s DST fees. This represented a distribution of 3.58% on invested capital.
The company, which has more than 8,700 investors nationwide, said the bonus distribution is in line with ExchangeRight’s underwriting targets and comes ahead of schedule, generated by sponsor DST fees earned in connection with the REIT’s successful acquisition of ExchangeRight’s Net-Leased Portfolio 28 DST’s 23-property portfolio.
The bonus distribution is in addition to the current 6% tax-efficient annualized return for Class ER shares, which is anchored in the performance and growth of the Essential Income REIT’s $1.3 billion portfolio of properties, net-leased to historically recession-resilient tenants. The bonus distribution brings the total distribution rate for investors’ first full year of ownership in Class ER shares to 9.58%, before factoring in further potential tax efficiency benefits of an investment in the REIT.
In return for providing the Essential Income REIT with capital to accelerate acquisitions and growth, ExchangeRight said Class ER shares are eligible to participate in a first-year bonus from the sponsor’s DST fees, as well as other potential growth and sponsor fee participation at the end of a targeted five-year hold period.
“We are thrilled to begin sharing the fruits of the distinctive fee participation structure of our Class ER Shares with investors,” said Joshua Ungerecht, a managing partner at ExchangeRight. “Not only are ER Shares investors receiving a bonus distribution generated by the REIT’s acquisitions, but these newly acquired properties also create additional diversification for the REIT and are anticipated to be accretive to its net asset value and adjusted funds from operations dividend coverage ratio.”
ExchangeRight launched the new share class for its Essential Income REIT in June 2024. The ER shares, exclusively for broker-dealer representatives and their accredited investor clients, targeted a 10% internal rate of return net to investors.
“This potential accretive growth for the REIT may provide a further direct benefit to all Class ER investors, given their ownership in the REIT and participation in future potential sponsor profits that may be generated by the REIT’s growth,” added Ungerecht.
ExchangeRight and its affiliates’ vertically integrated platform features more than $6.3 billion in assets under management that are diversified across over 1,300 properties, and 25 million square feet throughout 47 states, as of Nov. 30, 2024. The company structures and manages net-leased portfolios of assets backed primarily by investment-grade corporations that have successfully operated in the necessity-based retail and healthcare industries.
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