ExchangeRight Essential Income REIT Launches ER Share Subclasses
ExchangeRight Essential Income REIT, a non-traded real estate investment trust sponsored by ExchangeRight and focused on net-leased properties operating in “necessity-based” retail and healthcare industries, has announced the launch of new subclasses for its ER shares.
These subclasses are designed to increase accessibility through custodians and investment platforms while preserving what ExchangeRight says are “the distinct benefits that make Class ER a compelling option for investors.”
“The launch of our ER Share subclasses reflects ExchangeRight’s ongoing commitment to aligning investor interests with our long-term performance,” said Warren Thomas, a managing partner at ExchangeRight. “Through the ER Shares structure, investors participate pro rata in 35% of the profits generated by the very acquisitions they help to fund as well as enjoying the monthly tax-advantaged cash flow of the REIT and long-term performance fees that ExchangeRight may earn from the REIT. This gives investors a direct stake in the value we aim to create.”
Class ER shares are structured to provide investors with the REIT’s tax-efficient monthly income and long-term growth potential, a year-one bonus distribution, and participation in ExchangeRight’s performance fee after a targeted five-year hold. According to the company, existing ER share investors who invested shortly after the new share class was launched have enjoyed year-one tax-equivalent yields ranging between 13% to 14% for 2024.
To support these enhancements and provide broader access via custodians and platforms, ExchangeRight has consolidated all ER share subclasses into a single private placement memorandum and set of offering and subscription documents. This update aligns with its recent consolidation of its Class I, D, S, and A shares.
The Essential Income REIT, formed in January 2019, currently pays an annualized distribution rate on new investments of 6.35% for its Class I shares, 6.1% for its Class D shares, 5.28% for its Class S shares, 5.97% for its Class A shares, and 6% to 6.38% monthly tax-efficient income for its Class ER shares.
The new subclasses’ targeted internal rate of return as of July 7, 2025, is 10.01% for Class ER-A shares, 11.39% for Class ER-D shares, and 11.64% for Class ER-I 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 364 properties in 34 states as of March 31, 2025. The 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.
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