PASADENA, Calif. - ExchangeRight, one of the nation’s leading providers of diversified real estate REIT and DST investments, has announced that the Essential Income REIT’s tax-equivalent yield on 2024 distributions was 9.84% for its Class A shares, 10.47% for Class I shares, and 13.47–14.33% for its Class ER shares. The company’s calculations of tax-equivalent yield assume an investment that would have been made for the full year at the REIT’s current offering price, with a 37% federal income tax rate, an 8% state income tax rate, and a 3.8% Medicare surtax.
The Essential Income REIT’s 2024 distributions to investors were reported as 62.24% nontaxable for federal and state income tax purposes (1099-DIV). The Section 199A deduction for REITs further decreased the federal income tax for 2024 by 20% of the 37.76% taxable amount.
The 2024 tax-equivalent yield for Class ER investors included a base tax-equivalent yield of 9.89–10.52% as well as a bonus distribution of 3.58–3.81% to shareholders of record as of November 1, 2024, for their helping to facilitate the acquisition of ExchangeRight’s Net-Leased Portfolio 28 by the REIT. In return for providing the Essential Income REIT with capital to accelerate acquisitions and growth, Class ER shares are eligible to participate in a first-year bonus from the Sponsor’s DST fees as well as other potential growth and Sponsor fee participation at the end of a targeted five-year hold period.
Based on the current offering price, the Essential Income REIT has provided stable and growing distributions, with tax-equivalent yields higher than 9.4% for Class A shares and higher than 10% for Class I shares every year since the offering’s inception. Exact tax-equivalent yield will vary depending on an investor’s actual federal and state tax bracket and closing date. Each investor should consult with their own tax advisor. Past performance is not a guarantee of future results.
About the 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 6.35% for its Class I shares, 5.97% for its Class A shares, and 6.00% monthly tax-efficient income 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 past performance of the REIT is no guarantee of future results. The Company, through its operating partnership, ExchangeRight Income Fund Operating Partnership, LP, owns 362 properties in 34 states (collectively, the “Trust Properties”) as of December 31, 2024. The Trust Properties are occupied by 39 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 Ishares.
The past performance of the REIT, its tenants, and ExchangeRight does not guarantee future performance. “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. Investors should consult their tax or legal advisors when considering any financial decision.
Media Contact
Lindsey Thompson
Senior Media Relations Officer
lthompson@exchangeright.com
(626) 773-3448