ExchangeRight REIT Completes Two More Sponsor DST Acquisitions

ExchangeRight Essential Income REIT, a privately offered nontraded real estate investment trust, has acquired two more Delaware statutory trust portfolios previously sold by its sponsor, the company said. The deals used new operating partnership units that carry no redemption rights unless the REIT grants them, and the REIT created a separate unit class to acquire a single net-leased property from an unrelated third party.

On Oct. 5, the REIT’s operating partnership designated two new series of NLP common units, NLP 51 and NLP 53. The series correspond to two DST offerings ExchangeRight fully subscribed in 2022.

• Net-Leased Portfolio 51 DST raised more than $46.7 million from accredited investors to acquire 24 properties in 13 states for $91 million.
• Net-Leased Portfolio 53 DST raised $90.3 million to acquire 25 properties in 18 states for $176.3 million.

Joshua Ungerecht, a managing partner at ExchangeRight, said the REIT’s acquisitions of NLP 51 and NLP 53 have closed and that both were evaluated through ExchangeRight’s aggregation process, which includes an independent expansion valuation by its third-party valuation provider. He said the valuation evaluates the REIT together with any identified properties being acquired to confirm that the transactions are accretive to the REIT’s net asset value per share.

“In addition to creating value for REIT shareholders, each of these transactions resulted in DST investors achieving at least 100% of their original invested value at closing in addition to all cash flow received throughout their DST holding period,” Ungerecht said. “With the closing of NLP 51 and 53, the Essential Income REIT has now successfully closed on 30 DSTs, providing DST investors with at least 100% of their original invested value while also increasing the REIT’s diversification, scale, and net asset value per share.”

Holders of the NLP units will not have the right to redeem them or convert them into other securities. The REIT, as general partner, can grant redemption rights at any time. It also sets the amount of distributions paid on each series “in its sole and absolute discretion,” according to the company. The REIT’s trustee is managed by ExchangeRight. The terms match those of the NLP unit class the REIT created in March, when it designated eight earlier series.

Ungerecht said the REIT structured the acquisitions of NLP 51 and 53 so as not to put pressure on its quarterly redemption program for existing REIT shareholders.

ExchangeRight intends to provide redemption access and other exit options, including a future 1031 exchange, to NLP 51 and 53 investors over time as the REIT generates excess liquidity from its all-cash Essential Income DST acquisitions. Those all-cash placements now account for more than 80% of ExchangeRight’s DST equity placements, he said.

On Oct. 2, the operating partnership also created Class T common units to acquire one net-leased property.

“Class T OP Units were created in connection with our direct acquisition of a property from an unrelated third party in the open market,” Ungerecht said. He said the property, acquired through a 721 exchange, is a research and development facility with a long-term lease to DOW Chemical, which is rated BBB- by S&P and BBB by Fitch.

The class is fixed at about 1.82 million units, and its holders will receive fixed aggregate distributions of $3 million a year, paid monthly, or $1.650691 per unit. The rate moves up or down if the REIT changes its Class I dividend. The units can be redeemed for the REIT’s Class D shares and convert to Class D operating partnership units if the REIT lists or is sold in a listed transaction. Ungerecht said the fixed rate was based on the property’s cash flow and was set to maintain distribution coverage and make the deal accretive to the REIT’s adjusted funds from operations.

The acquisitions extend a strategy ExchangeRight has used throughout 2026.

• First half of 2026: The REIT acquired 79 properties in four transactions through mergers with DSTs previously managed by ExchangeRight. Those properties carried a combined relative fair value of $333.2 million, according to an AltsWire tally of figures in its second-quarter report.
• Consideration: The REIT assumed $178.7 million in mortgage debt and issued about 5.97 million operating partnership units. It said no acquisition fees were paid on those deals.

AltsWire reported the two first-quarter mergers in July. Those covered 39 properties valued at $159.3 million. Two more followed in June: 12 properties valued at $55.7 million and 28 valued at $118.2 million.

ExchangeRight has presented the route into the REIT as an exit for DST investors. Its recent DST offerings, including Net-Leased Portfolio 71, list a tax-deferred 721 exchange into the Essential Income REIT among the potential exit strategies. Its Essential Income DST series targets a two-year hold before such an exchange. Ungerecht said all of ExchangeRight’s DST portfolios are structured with the intention of eventual aggregation into the REIT, with timing dependent on each portfolio’s circumstances, market conditions, the REIT’s liquidity and capital position, and independent valuation.

After the second quarter, the REIT’s operating partnership also agreed to guarantee a 20-year master lease between ExchangeRight and one of its DSTs. The remaining payments under that lease totaled $93.9 million, and the guarantee ends if the DST is sold or merged, according to the company. The REIT said it had not been required to make any payments under the guarantee.

The Essential Income REIT owned 436 properties in 38 states as of June 30. Its NAV was $27.63 per share. The REIT had raised $546.7 million in its private offering through Aug. 31, according to the company. Its current distribution represents a 6.29% annualized rate on Class I shares.

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