ExchangeRight Takes DST Full Cycle, Achieves Up to 147.67% Total Return
ExchangeRight, a sponsor of Delaware statutory trust and non-traded real estate investment trust investment offerings, has completed its 34th full-cycle event with the sale of Net-Leased Portfolio 28 DST’s 23-property portfolio to ExchangeRight’s Essential Income REIT.
The company said the event marks the 22nd net-leased portfolio ExchangeRight has brought full cycle on behalf of investors as part of its aggregation strategy.
In connection with the closing, ExchangeRight said it provided investors multiple exit options at their sole discretion, with total net annual returns to investors ranging from 6.96% to 9.02%, representing 134.57% to 147.67% total returns, including return of capital. Net-Leased Portfolio 28 DST investors were able to elect to complete a tax-deferred 721 exchange into the REIT, perform another 1031 exchange, receive cash on a non-tax-deferred basis, or any combination of these options.
ExchangeRight’s full-cycle net lease offerings have produced an average annual return on investment of 7.40% to 8.87% for 1031 exchange and cash investors, and 8.43% to 10.01% for 721 exchange investors.
According to past reporting by The DI Wire, the $117.1 million DST launched in July 2019 and was fully subscribed in November of the same year.
The acquired portfolio’s 23 properties are diversified across 22 markets spanning 482,287 square feet in nine states, and are occupied by historically recession-resilient tenants, including Tractor Supply, Dollar General, Pick ’n Save, and Hobby Lobby. Rental income from the portfolio’s tenants fully supported consistent and increasing distributions to Net-Leased Portfolio 28 investors throughout the pandemic and recent economic volatility, according to ExchangeRight.
“This is another example of how, by beginning with the end in mind, we have been able to benefit the investors in both ExchangeRight’s DST platform and REIT platform with the premium generated by the aggregation of high-quality net-leased assets,” said Joshua Ungerecht, a managing partner at ExchangeRight.
The REIT noted that although past performance doesn’t guarantee future results, its aggregation strategy features a rigorously vetted portfolio of properties – providing a systematic acquisition pipeline of net-leased properties with primarily investment-grade tenants.
“In addition to providing reduced risk, attractive total returns, and multiple tax-deferred exit options for DST investors in Net-Leased Portfolio 28, the aggregation of this portfolio has further enhanced the broad diversification and value of the Essential Income REIT with additional net-leased properties with historically recession-resilient performance,” added Ungerecht.
ExchangeRight reports that the company and its affiliates’ platform has more than $6.3 billion in assets under management that are diversified across more than 1,300 properties and over 25 million square feet across 47 states, as of Oct. 31, 2024. 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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