ExchangeRight Fully Subscribes $17.8M All-Cash Retail DST
ExchangeRight has fully subscribed Net-Leased All-Cash 20 DST, a $17.8 million debt-free retail portfolio that expands the potential acquisition pipeline for its Essential Income REIT.
The Delaware statutory trust owns six properties totaling 75,237 square feet across Texas, South Carolina and Alabama. Tenants include Tractor Supply, Dollar General, NAPA Auto Parts, Dollar Tree and O’Reilly Auto Parts.
The portfolio has an initial weighted-average lease term of 9.9 years. Monthly distributions currently carry a 5.2% annualized rate, which ExchangeRight said is entirely covered by existing lease revenue. The offering is closed to new investors.
A 20-year master lease from ExchangeRight’s Essential Income Operating Partnership provides an additional component of the structure.
“Net-Leased All-Cash 20 DST underscores investors’ continued preference for debt-free ownership of necessity-based real estate that has proven resilient across market cycles,” said Joshua Ungerecht, managing partner at ExchangeRight.
The offering provides several potential exit options, including a Section 721 exchange into Essential Income REIT, refinancing, a Section 1031 exchange, a cash exit or a combination.
Subject to successful future financing, ExchangeRight intends to distribute more than 20% of investors’ initial capital through a cash-out refinancing, followed by a Section 721 exchange of approximately 80% of the remaining, unfinanced equity into the REIT.
The company describes the proposed transactions as tax-deferred. Their completion depends on future financing and execution, and the offering’s objectives and exit strategies are not guaranteed.
The approach pairs debt-free ownership at inception with the possibility of introducing leverage later to facilitate an investor distribution and transition into the REIT.
The closing follows eight other recently subscribed ExchangeRight offerings.
ExchangeRight and its affiliates reported more than $7.8 billion in assets under management as of Sept. 30, spanning more than 1,400 properties and 31 million square feet across 47 states.