PASADENA, Calif. — ExchangeRight, one of the nation’s leading providers of diversified real estate DST and REIT investments, has announced that the Essential Income REIT was the only growth or stabilizing equity non-traded REIT (“NTR”) that fully covered its distributions with Adjusted Funds from Operations (“AFFO”) or Modified Funds from Operations (“MFFO”) in the first quarter, as reported in Blue Vault’s Non-traded REIT Industry Review for Q1 2024.
Per the report, ExchangeRight’s REIT was also one of only four NTRs that were ranked in the top “Operating Performance” category, as measured by the 12-month average return on assets and the positive impact of favorable financing in elevating investor returns.
Blue Vault’s Report on the Essential Income REIT
- Increased NAV/Share: From Q4 2023 to Q1 2024, the Essential Income REIT performed exceptionally well, as one of only three comparable NTRs that experienced an increase in Net Asset Value (“NAV”) per share. As of March 31, 2024, the REIT’s NAV was increased to $27.14 per share.
- Healthy Debt Service Coverage: In Q1 2024, the Essential Income REIT was one of only five comparable NTRs with an interest coverage ratio greater than 2.0 times, representing its ability to pay down financing costs without negatively impacting investors. For the trailing 12 months ended March 31, 2024, the REIT featured a 2.56 times Cash Interest Coverage Ratio.
- Minimal Redemptions: In Q1 2024, the Essential Income REIT was one of only three comparable NTRs with redemptions less than 1.50% of weighted average shares/units outstanding. In contrast, the other 11 NTRs compared saw average redemptions of 3.98%, more than 2.65 times the rate that ExchangeRight’s REIT experienced.
The past performance of the REIT is not an assurance of future results. All comparative claims about growth or stabilizing equity non-traded REITs are based on Blue Vault’s Q1 2024 Non-traded REIT Industry Review, Non-Traded REIT Fee Study (4th ed.), pp. 50-84.
Joshua Ungerecht, a managing partner at ExchangeRight, shared that Blue Vault’s latest industry review provides third-party confirmation of the Essential Income REIT’s strong fundamentals and favorable market position.
“Blue Vault’s report confirms that the Essential Income REIT has been distinct in its ability to pay distributions from actual operating performance, as measured by AFFO and MFFO,” said Ungerecht. “Rather than paying any portion of investors’ distributions out of investor equity or debt proceeds, our REIT’s distributions have been, and are required to be, fully covered by actual operating cash flows of the REIT. This includes covering all dividends reinvested during the period by investors participating in our REIT’s dividend reinvestment program. The REIT’s performance is rooted in historically recession-resilient and primarily investment-grade tenants, which successfully operate in necessity-based industries. Investors deserve to know that their income can be generated by operations without eroding their capital or increasing their debt, and we are gratified to have Blue Vault’s third-party report attest to the fact that our REIT is a top performer and well positioned as we steward wealth on behalf of investors, representatives, and advisors whom we serve.”
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. The REIT is available to accredited investors only and focuses 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 June 30, 2024. The Trust Properties are occupied by 36 different primarily national 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.
The past performance of the REIT, its tenants, and ExchangeRight does not guarantee future performance. The REIT is available to accredited investors only. “Investment-grade” refers to tenants whose long-term corporate debt rating is considered investment grade by Standard & Poor’s, Moody’s, and/or Fitch. An investment-grade rating is a rating that indicates that a corporate bond has a relatively lower risk of default than a corporate bond with a speculative grade. Adjusted Funds From Operations (AFFO) as defined by NAREIT measures a real estate company’s recurring/normalized FFO after deducting recurring capital improvement funding that is typically capitalized by REITs and the adjustment to GAAP revenue related to “straight-line” rents. There is no guarantee that the REIT’s objectives will continue to be achieved. The REIT is subject to the regular risks associated with real estate. Please review the offering memorandum to understand the REIT’s business plan, risks, and potential benefits.
Media Contact
Lindsey Thompson
Senior Media Relations Officer
lthompson@exchangeright.com
(626) 773-3448