Net-Leased Portfolio Commands $84M

ExchangeRight’s Essential Income REIT purchased 15 properties encompassing more than 200,000 square feet.

Tenants of ExchangeRight's fully subscribed net-leased portfolio 59 DST

Tenants of ExchangeRight’s fully subscribed net-leased portfolio 59 DST. Image courtesy of ExchangeRight

In a deal valued at $84 million, ExchangeRight’s Essential Income REIT has acquired a portfolio of 15 net-leased assets totaling 231,654 square feet.

More than 94 percent of the acquired portfolio’s base rent is generated from essential businesses, according to ExchangeRight. Among the tenants of these net-leased properties are CVS, Fresenius Medical Care, Pick’n Save and Tractor Supply.

The seller was not disclosed, and ExchangeRight did not reply to Commercial Property Executive’s query for this and other information about the deal.

READ ALSO: Net Lease Cap Rates Rise for 5th Straight Quarter

This acquisition brings the REIT’s acquired assets to 352 net-leased properties totaling 4.7 million square feet and diversified across 34 states and 37 creditworthy national tenants, primarily investment-grade tenants operating essential businesses in recession-resilient sectors, including health-care and necessity-based retail.

ExchangeRight reported that in connection with the acquisition, former investors of the seller performed a tax-deferred 721 exchange into the REIT’s Operating Partnership, resulting in the issuance of $18.2 million of OP Units by the Essential Income REIT to new investors.

In a prepared statement, Joshua Ungerecht, a managing partner at ExchangeRight, described the Essential Income REIT’s aggregation strategy as beginning with “a large, fully identified portfolio of rigorously vetted properties” and resulting in “a systematic pipeline of future acquisitions.”

That fully identified portfolio currently consists of nearly 950 net-leased properties nationwide.

Better times ahead?

In late July, ExchangeRight fully subscribed its Net-Leased Portfolio 59 DST, a $98.3 million offering with 15 properties totaling 261,644 square feet. All are net-leased to grocery, pharmacy, medical and other necessity-based national tenants: Mariano’s, Walgreens, CVS Pharmacy, Dollar General, Dollar Tree, Tractor Supply and Fresenius Medical Care.

A few months earlier, Alex Sharrin, senior managing director with JLL Capital Markets, had reviewed the recent developments affecting the liquidity, transaction volume and lender mix in the net-lease sector. He concluded that an “accelerated recovery” is likely later in the year.

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