New ER Share Class Introduced for ExchangeRight’s Essential Income REIT

PASADENA, Calif. — ExchangeRight, one of the nation’s leading providers of diversified real estate DST and REIT investments, has announced that it has successfully launched a new share class for its Essential Income REIT, exclusively for broker-dealer representatives and their clients.

The newly introduced ER shares provide a distinctive way of participating in the Essential Income REIT that targets a 10% internal rate of return net to investors. The shares’ internal rate of return is supported by a current monthly tax-efficient income of 6.00% annualized and additional growth potential generated by participation in the REIT’s value in addition to ExchangeRight’s incentive fees and Sponsor DST fees. Please review the PPM for a complete description of the potential benefits and risks of the new ER share class.

The Class ER shares’ baseline 6.00% annual return target is anchored by the performance of the Essential Income REIT’s $1.2 billion real estate portfolio, which is diversified across 353 properties, 34 states, and 36 historically recession-resilient and primarily investment-grade credit tenants as of May 31, 2024. The REIT has fully covered its dividend since inception and has collected 100% of rents regardless of economic volatility to date. Past performance does not guarantee future results.

As the REIT acquires additional net-leased properties, ER share investors participate in ExchangeRight’s performance-based incentive fee at two times their Class ER pro rata ownership in the REIT. Class ER investors may also share a portion of the company’s DST fees earned upon the REIT’s acquisition of ExchangeRight’s Net-Leased Portfolios.

The acquisitions enabled by ER shares’ capital raise are anticipated to enhance the Essential Income REIT’s diversification, Adjusted Funds From Operations, and long-term investment capital from DST investors who complete a tax-deferred 721 exchange into the REIT. Class ER share investors may directly benefit from this potential enhancement of the REIT’s portfolio and value, given their right to participate in a portion of ExchangeRight’s fees and the expected conversion of Class ER shares into Class I shares on a 1:1 basis at a future date.

“Our new ER shares are structured to achieve a special win-win arrangement for the Essential Income REIT’s investors and ExchangeRight,” said Joshua Ungerecht, a managing partner at ExchangeRight. “In exchange for providing longer-term capital to accelerate the REIT’s acquisitions and value enhancement, Class ER investors may directly share in the additional potential profits resulting from these acquisitions. Moreover, ER share investors may benefit from significant tax efficiencies throughout the targeted five-year hold period and additional tax-deferral options upon an eventual ER share conversion. We are excited by this unique share structure that is available exclusively to broker-dealer representatives and their clients, as we seek to provide them with tax-advantaged income and upside potential in order to advance the REIT’s long-term aggregation and investment strategy.”

There is no guarantee that the new ER share class Offering will achieve its investment objectives. Returns are not guaranteed and may change. Past performance of the Essential Income REIT is no guarantee of future results. This Offering is for accredited investors only. Potential investors should consult their tax or legal professional to understand how the tax strategies may affect their specific situation. Potential investors must review the Offering Memorandum in its entirety to understand the potential benefits and risks of this Offering.

About ExchangeRight’s Essential Income REIT

The 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 currently pays an annualized distribution rate on new investments of 6.41% for its Class I shares and 6.02% for its Class A shares, and targets 6.00% monthly tax-efficient income with a 10% total annual internal rate of return for its Class ER shares. The REIT 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, owns 353 properties in 34 states (collectively, the “Trust Properties”) as of May 31, 2024. The Trust Properties are occupied by 36 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. Please visit the REIT’s website to learn more about its Class ER, Class A, and Class I shares. Past performance of the REIT and ExchangeRight does not guarantee future performance.

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