DST Offering Detail

ExchangeRight Net Lease Portfolio 40 DST

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DST Offering Highlights

ExchangeRight Net Lease Portfolio 40 consists of 21 net lease essential retail properties located throughout the Midwest  and South. The properties are 100% leased to 9 high-quality tenants with proven track records and strong financials.  Importantly, all tenants included within this portfolio meet the definition of “essential retail” and are thus permitted to continue to operate during the shelter-in-place orders as a result of the Covid-19 pandemic. The portfolio offers a total of 352,003 rentable sq. ft. with a weighted average lease term of 13.8 years.
Property Status: Closed Offering
Property Type: Net Lease Retail
Property State:  Multiple States
Property City:  Multiple Cities
Properties: 21
Units:  N/A
Offering Size: $99,720,000
Equity Offering:  $45,520,000
Loan-to-Value: 54.35%
Loan Terms:  10-yr Fixed, 10-yr Interest Only, at 3.45%
Cash Flow: Call to Confirm

About ExchangeRight

Founded in 2012 and headquartered in Pasadena, ExchangeRight is a vertically integrated real estate investment firm with over $2.6 billion in assets under management. ExchangeRight strategically acquires and manages long-term, net-leased assets backed by investment-grade corporations that operate in the necessity-based retail and healthcare industries.

Benefits of a Delaware Statutory Trust

Delaware Statutory Trusts are a popular 1031 Exchange replacement property option that allows for fractional ownership of high-quality institutional properties acquired by and managed by large real estate firms, referred to as DST sponsors.  DSTs provide a unique and flexible solution to investment property owners who want to defer tax and continue to own investment property without the management requirements of directly owned property. Below are some of the benefits of investing in DST real estate.

  • Tax Savings: DSTs allow for the deferral of federal capital gains tax, state capital gains tax, net investment income tax, and depreciation recapture tax. The tax savings can be significant, especially in states where the potential tax liability can be as high as 42%.
  • Monthly Income Potential: DSTs are structured with an emphasis on cash flow for investors and typically include high-quality institutional property.
  • Eliminate Active Property Management: Ownership of a DST is entirely management free.
  • Eliminate Tax for Estate Beneficiaries: DSTs allow for a “step-up in basis” upon the passing of an owner (elimination of Capital Gains, Depreciation Recapture, and Net Investment Income Tax).
  • Low-Cost Non-Recourse Debt Matching: Most investors have debt that must be matched in their exchange, therefor many DSTs are structured with debt in place.
  • Low Risk of a Failed 1031 Exchange: Extensive DST property due diligence is prepared in advance and DST closings can occur quickly – in a matter of days.

DST Risks

DSTs offer many benefits however they are not suitable for everyone and come with risks. Therefore, DSTs are only available to accredited investors. Before deciding to invest in DST real estate, carefully consider the following considerations: Lack of liquidity, timing of exit, lack of control, and interest rates can affect financing, leasing, and appreciation. Additionally, loan modifications may not always be possible, cash flow is not guaranteed, and projected appreciation may not occur. There are also management costs and fees associated with owning DSTs which are disclosed in the prospectus. While not a precisely defined term, a high grade, institutional-grade, or institutional-quality property generally refers to a property of sufficient size and stature to merit attention from large national or international investors.