PASADENA, Calif. - ExchangeRight, the nation’s second largest sponsor of securitized 1031-exchangeable real estate investments, has brought Net-Leased Portfolio 12 DST full cycle on behalf of its investors. The offering invested in net-leased, necessity retail properties backed by investment-grade tenants, including Kroger, Dollar General, and Fresenius Medical Care. The properties have been acquired as part of the company’s aggregated portfolio exit strategy. ExchangeRight provided each DST investor with the option to perform another 1031 exchange, receive cash, or complete a tax-deferred 721 exchange into the acquiring portfolio, or any combination of these options.
Net-Leased Portfolio 12 comprised 19 single-tenant properties covering a total of 263,587 square feet and was diversified across 8 states. The portfolio’s acquisition cost, including reserves, was $46.43 million when the properties were purchased between January 2016 and May 2016. The portfolio sold in December for $53.82 million.
Taking into account returns from operating cash flows and the initial investment, the program’s total returns were over 125% for investors selecting the 1031 or cash out options. For 721 investors, the return was equivalent to over 135%, based on an independent valuation of the portfolio performed by KPMG. The portfolio’s average annual rate of return for cash and 1031 exchange investors was 7.01%, 14.06% higher than the company’s initial projections. For 721 investors who received operating units in the portfolio, the average annual returns were equivalent to 9.92%, 61.30% higher than the company’s initial projections, given KPMG’s valuation.
“Bringing Net-Leased Portfolio 12 full cycle continued the successful execution of ExchangeRight’s aggregated exit strategy,” said Warren Thomas, a managing member of ExchangeRight. “By aggregating this offering’s net-leased assets together with those from the three other 1031 programs we brought full cycle this past year, we have maximized value and options for investors who have trusted us with their wealth and have created new value for 721-exchange investors who continue to invest with us.”
“It has been a privilege to protect investors’ capital and to provide stable income consistently throughout the hold period, culminating in higher total returns than we originally projected,” said Joshua Ungerecht, a managing member of ExchangeRight. “We truly appreciate the trust that the representatives, advisors, broker-dealers, and their investors placed in us over the years and we are pleased that we were able to further our goal of empowering people to be secure, free, and generous with a successful exit for Net-Leased Portfolio 12 investors.”
About ExchangeRight Real Estate, LLC
ExchangeRight is a privately held firm based in Pasadena, California. Together with its affiliates, it has over $2.4 billion in assets under management. ExchangeRight pursues its mission to empower people to be secure, free, and generous by providing income funds and 1031-exchangeable investment offerings that target secure capital, stable income, and strategic exits. The company strategically acquires and manages 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.
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