James Sprow | Blue Vault |
Warren Thomas, a co-founder and managing partner of ExchangeRight, a sponsor of REIT, fund, and 1031 DST portfolios focused on long-term, net-leased properties backed by investment-grade corporations, delivered a keynote presentation at the 2023 Blue Vault-Bowman Summit in Atlanta Tuesday morning, March 7. In his presentation “The Right Alts for the Right Clients at the Right Time”, Warren explained how his company grew out of his experience as a CPA, helping his older clients find investments that would provide capital preservation and secure income.
Warren began by sharing his extended family’s photo and the experience he went through when his wife suffered a debilitating stroke. Family and faith are at the center of Warren’s life and put all else into perspective for him. Warren’s son is a financial advisor in Lodi, California, and recently surveyed his clients. The results of this survey and a national 2019 study of 10,000 millionaires by Ramsey Solutions brought forth some striking insights. For example, a high percentage of the wealthiest among his clients were self-made rather than recipients of inheritances. They did not use consumer debt and they saved a high percentage of their incomes. They were also relatively conservative in their choices regarding the sizes of their homes and the values of their automobiles. They were generous with their wealth, supporting charitable organizations via donations.
The results of these surveys appear to parallel the findings in a book published in 1996, “The Millionaire Next Door.” ExchangeRight’s programs seem to fit well with the conservative strategies favored by many self-made millionaires. The firm’s REIT and DST program offerings are designed to preserve capital and provide income as top priorities. The DSTs allow clients to invest capital from the sale of real estate holdings and defer capital gains taxes, while diversifying into a portfolio of net-leased, necessity retail properties backed by some of America’s most creditworthy corporations. These strategies successfully weathered the pandemic, the company maintaining 100% rent collection on all their net lease assets and providing stable income to investors despite economic volatility. In fact, ExchangeRight has maintained 100% rent collection on its net-leased assets since its inception.
ExchangeRight announced earlier this month that investors fully subscribed their $40.75-million Value-Add Portfolio 2 DST, the second DST offering launched from its value-add platform. During 2022 ExchangeRight completed 10 full-cycle events with returns ranging from 6.67% to 11.25%. The company’s assets under management currently exceed $5.4 billion. All 85 of its current and past offerings have served investors with uninterrupted cash flows that have met or exceeded distribution projections every month.
Along with providing capital preservation and dependable income, ExchangeRight structures its DST portfolios to offer investors several strategic exit opportunities, including rolling their DST investment via a 721 exchange, or UPREIT, allowing an investor to increase the liquidity and diversification of their real estate investments while deferring costly capital gains and depreciation recapture taxes.
Warren and the ExchangeRight team believe in giving back. He didn’t mention it in his keynote presentation, but ExchangeRight partners with charitable organizations including those that focus on rescuing and restoring children and families out of slavery and sex trafficking, providing shelter and food to families facing homelessness, and helping orphans and under-resourced children with education, adoption, healthcare, and special programs.
