ExchangeRight REIT Completes 506(c) Conversion Following Successful Public Reporting Launch

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Jul 12, 2023, 09:00 ET

PASADENA, Calif., July 12, 2023 /PRNewswire/ -- ExchangeRight, one of the nation's leading providers of diversified real estate DST and REIT investments, has announced that the ExchangeRight Essential Income REIT has converted to a 506(c) offering as of July 6 following its successful transition to a publicly reporting company as of June 26 to better serve the registered representatives, broker dealers, advisors, and institutions with whom the REIT works to offer its shares. The Essential Income REIT has maintained a perfect track record of timely monthly distributions that have been fully covered by funds generated by operations from its portfolio of long-term net-leased properties backed primarily by national investment-grade companies operating in historically recession-resilient industries. 94.19% of the portfolio's annualized base rent is generated from essential businesses.

PASADENA, Calif. - ExchangeRight, one of the nation’s leading providers of diversified real estate DST and REIT investments, has announced that the ExchangeRight Essential Income REIT has converted to a 506(c) offering as of July 6 following its successful transition to a publicly reporting company as of June 26 to better serve the registered representatives, broker dealers, advisors, and institutions with whom the REIT works to offer its shares (Wednesday, July 12, 2023).

The REIT's fully identified portfolio is diversified across 943 properties, 627 markets, 16+ million square feet, 43 states, and 55 recession-resilient tenants across 16 necessity-based industries. The REIT's fully identified portfolio top ten tenants include: Walgreens, Dollar General, Tractor Supply, Kroger, CVS, Hobby Lobby, Fresenius Medical Care, BioLife, Family Dollar, and Walmart Neighborhood Market.

ExchangeRight Essential Income REIT Key Statistics

5.89% current annualized distribution rate for the REIT's Class A shares
6.27% current annualized distribution rate for the REIT's Class I shares
9.46% tax-equivalent yield for the Essential Income REIT's Class A shares and 10.05% tax-equivalent yield for the REIT's Class I shares reported for 2022 based on a 37% federal tax bracket, 8% state tax bracket, and a 3.8% Medicare surtax; actual results may have been higher or lower based on investors' individual circumstances
100% rent collection since inception through June 30, 2023, inclusive of lockdown months through the COVID crisis, the inflation that followed, and the more recent economic turbulence that has preceded a rising risk of recession
Distributions that have been fully covered by operations, with a 109.44% AFFO to distribution coverage ratio from inception to March 31, 2023
Consistent net inflow of investor capital with all redemption requests fully satisfied inception-to-date representing less than 2% of total equity raised through June 30, 2023
Past performance of the Sponsor and any past offerings does not guarantee future results.

Warren Thomas, a managing partner at ExchangeRight, shared the story of the Essential Income REIT's uniquely strong track record and the investment strategy behind it.

"The Essential Income REIT is the most broadly diversified expression of ExchangeRight's investment strategy, which grew out of the aftermath of the 2008–2010 recession and is vitally focused on protecting the wealth that investors entrust to our stewardship," said Thomas. "Our strategy focuses on assets, tenants, and industries that have historically provided stable performance regardless of market conditions. We target properties located in growing markets with net leases to insulate investors from rising costs and surprise repairs. Long lease terms primarily with investment-grade credit and national tenants successfully operating in historically recession-resilient sectors are intended to bridge economic cycles and provide investors with consistent income.

"The Essential Income REIT has met or exceeded distribution targets every month since its inception, supported fully by its operations, even through the COVID crisis and economic turbulence that has followed. This means that inception-to-date our investor distributions have been paid exclusively from operations and not from financing, forced sales, or investors' capital."

Joshua Ungerecht, a managing partner at ExchangeRight, cited the Essential Income REIT's strong performance as a key reason for the offering's net inflows of investor capital.

"We've seen a flock to quality from accredited investors, especially during the recent market turmoil that has caused others to gate or limit redemptions," said Ungerecht. "The Essential Income REIT has been able to satisfy all redemption requests without exception and continues to enjoy net inflows in a challenging market because it covers its distributions 100% from operations and has been able to provide the attractive and consistent cash flow investors need in a manner that has been sustainable.

"With the successful conversions to a publicly filing company and a 506(c) offering, we're even better positioned to serve the needs of representatives and advisors of accredited investors. As the U.S. and global economies face unprecedented uncertainty, people need access to recession-resilient solutions designed to target capital preservation, stable income, and long-term growth potential now more than ever."

About the ExchangeRight Essential Income REIT

The ExchangeRight Essential Income REIT, a Maryland statutory trust, is a self-administered real estate company, formed on January 11, 2019, focusing on investing in single-tenant, primarily investment-grade net-leased real estate. The REIT pays an annualized distribution rate on new investments of 6.27% for its Class I shares and 5.89% for Class A shares and has fully covered its dividend with Adjusted Funds from Operations since its inception and through its most recently reported period. The Company, through its operating partnership, ExchangeRight Income Fund Operating Partnership, LP, owned 337 properties in 34 states (collectively, the "Trust Properties") as of March 31, 2023. The Trust Properties are occupied by 37 different national primarily investment-grade necessity-based retail tenants and are additionally diversified by industry, geographic region, and lease term. The Company has elected and is qualified to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes. For more information, please visit the Class A website for broker-dealers, registered representatives, and their investors, or the Class I website for RIAs, advisors, family offices, institutions, and their investors. Past performance of the REIT and ExchangeRight does not guarantee future performance. There is no guarantee that the Trust will meet any of its investment, aggregation, or return objectives.

Media Contact
Lindsey Thompson
Senior Media Relations Officer
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(626) 773-3448

SOURCE ExchangeRight