ExchangeRight, a sponsor of securitized 1031 exchange real estate offerings, has taken its sixth and final multifamily offering full cycle with the sale of two Class B value-add properties located in El Paso, Texas.
El Paso Apartment Portfolio DST, a Delaware statutory trust offering, launched in early 2018 and sought to raise approximately $12.2 million.
While the sale prices were not disclosed, ExchangeRight reported total returns of 154.48 percent including return of capital to the DST and its investors. The returns represent a 14.35 percent annualized return on investors’ capital, which is reportedly more than 2.4 times higher than the company’s original target of 5.96 percent.
ExchangeRight said that it “capitalized on value-add measures that it implemented to increase net operating income, exiting while buyer underwriting is aggressive and valuations remain at record levels.” ExchangeRight’s value-add strategy included renovating units and “increasing management efficiencies” at the properties to achieve “strong” occupancy rates.
“We are pleased to have completed another successful multifamily exit event during this particular market cycle,” said Warren Thomas, a managing partner of ExchangeRight. “Profitably exiting the multifamily market at this opportunistic moment demonstrates our commitment to maximize value for investors and preserve their capital at both the time of acquisition and disposition.”
Joshua Ungerecht, a managing partner of ExchangeRight, said, “When we initially became active in the multifamily market in 2015, we were able to acquire properties in the 6 percent to 7 percent cap rate range. What we’re seeing in today’s market is that many multifamily properties are trading from the high 3 percent to the low 5 percent cap rate range. That is not an attractive market to buy in, but it’s a phenomenal market to sell in. Exiting at this time is the best way to serve our investors and to protect and grow their wealth.”
ExchangeRight and its affiliates’ platform has more than $4.4 billion in assets under management across more than 1,000 properties, 18 million square feet, and throughout 42 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.