PASADENA, Calif. - ExchangeRight, the nation’s second largest sponsor of securitized 1031-exchangeable real estate investments, has brought two net-leased portfolios full cycle. The offerings were invested in necessity retail net-leased properties backed by investment-grade tenants that have been acquired as part of ExchangeRight’s aggregated portfolio exit strategy. ExchangeRight’s exit strategy provided each DST investor the option to perform another 1031 exchange, receive cash, or complete a tax-deferred 721 exchange into the acquiring portfolio, or any combination thereof.
Taking into account returns to investors from operating cash flows, the total return for the two programs, including initial investment, were 145% and 164% for investors selecting the 1031 or cash out options. For 721 investors, the return was equivalent to over 151% and 176%, based on an independent valuation of the combined portfolio performed by KPMG. The portfolios’ average annual rate of return was 9.24%, over 26% higher than the company’s initial projections. For 721 exchange investors who received operating units in the aggregated portfolio, the average annual returns were 10.90%, given the net asset value of the combined portfolio based on KPMG’s valuation.
“We are thrilled with the successful execution of ExchangeRight’s aggregated exit strategy,” said Joshua Ungerecht, managing member of ExchangeRight. “We are most proud of delivering on our mission to empower others to be secure, free, and generous by completing the strategic exit that we said we would on investors’ behalf, protecting their capital and income throughout their hold period, and maximizing their value and options at exit. And this is just the beginning. We are completing additional net-leased portfolio exits in the near future utilizing the same aggregated exit to maximize investor value and optionality.”
“We are proud to have faithfully stewarded our clients’ capital over these last seven years, while providing higher total returns than we originally projected,” said Warren Thomas, managing member of ExchangeRight. “We are also excited that, in addition to serving investors who have reinvested into our 1031 offerings, we continue to offer value to investors who completed a tax-deferred 721 exchange by providing them with greater diversification through the aggregation of similar recession-resilient assets valued by KPMG over 10% higher than the basis that they rolled into the combined portfolio.”
About ExchangeRight Real Estate, LLC
ExchangeRight is a privately held firm based in Pasadena, California; together with its affiliates, it has over $2.1 billion in assets under management. ExchangeRight pursues its mission to empower people to be secure, free, and generous by providing REIT and 1031-exchangeable investment offerings that target secure capital, stable income, and strategic exits. The company is known for consistently delivering broadly diversified income funds and 1031-exchangeable portfolios of long-term, net-leased assets backed by investment-grade corporations that operate successfully in the necessity-based retail and healthcare industries. For more information, visit www.exchangeright.com.