DST Offering Detail

ExchangeRight Value-Add Portfolio 2 DST

ExchangeRight DST VAP 2

DST Offering Highlights

ExchangeRight Value-Add Portfolio 2 is a diversified portfolio consisting of 51 adjacent or on-site retail tenants shadow-anchored by long-term net-lease grocery. The properties offer a total of 287,601 leasable square feet among 12 shopping centers in nine different states. The current average occupancy is 86.4%. ExchangeRight began acquiring the grocery-anchored shopping centers in August 2021 and structured ground leases for the adjacent non-grocery retail. The grocery stores will continue to be managed by ExchangeRight and held within their traditional Net Lease Portfolios. The DST plans to add value to the properties through tenant improvements and implementing strategic leasing initiatives.
Property Status: Closed Offering
Property Type: Net Lease Retail
Property State:  Multiple States
Property City:  Multiple Cities
Properties: 51
Units:  N/A
Offering Size: $40,750,000
Equity Offering:  $28,200,000
Loan-to-Value: 30.80%
Loan Terms:  10-yr Fixed, 10-yr Interest Only at 5.41%
Cash Flow: Call to Confirm

About ExchangeRight

Founded in 2012, ExchangeRight is a vertically integrated real estate investment firm that targets secure capital, stable income, and strategic exits to protect and grow wealth. ExchangeRight strategically acquires and manages long-term, net-leased assets backed by investment-grade corporations that operate essential businesses successfully 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.