Sponsored: ExchangeRight Essential Income REIT Achieves 9.84% to 14.33% Tax-Equivalent Yields on 2024 Distributions

ExchangeRight, one of the nation’s leading providers of diversified real estate investment trust and Delaware statutory trust 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% to 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% to 10.52%, as well as a bonus distribution of 3.58% to 3.81% to shareholders of record as of Nov. 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 adviser.

About: The Essential Income REIT, a Maryland statutory trust, is a self-administered real estate company, formed on Jan. 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% 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 company, through its operating partnership, ExchangeRight Income Fund Operating Partnership, LP, owns 362 properties in 34 states (collectively, the “Trust Properties”) as of Dec. 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 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 I shares.

“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, as defined by NAREIT measures a real estate company’s recurring/normalized funds from operations 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 advisers when considering any financial decision.

Past performance does not guarantee future results.

 ExchangeRight and its affiliates’ vertically integrated platform features more than $6.3 billion in assets under management that are diversified across over 1,300 properties, and 25 million square feet throughout 47 states, as of Dec. 31, 2024. ExchangeRight pursues its passion to empower people to be secure, free, and generous by providing REIT, fund, and 1031 DST portfolios to accredited investors that target secure capital, stable income, and strategic exits. All of ExchangeRight’s offerings have historically met or exceeded their return objectives since ExchangeRight’s inception. On behalf of more than 8,900 investors nationwide, the company structures and manages net-leased portfolios of assets backed primarily by investment-grade corporations that have successfully operated in the necessity-based retail and healthcare industries, as well as diversified value-add portfolios of inline and outparcel retail properties adjacent to strong-performing grocery tenants. Please visit www.exchangeright.com for more information.

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