ExchangeRight has announced that the Essential Income REIT was the only growth or stabilizing equity non-traded REIT (“NTR”) that was ranked in the highest grade for all three performance profile categories in Blue Vault’s non-traded REIT Industry Review for Q2 2024: “Operating Performance”, “Financing Outlook”, and “Cumulative MFFO Payout”.
The REIT’s high grade in the “Cumulative MFFO Payout” category indicates that its cumulative Modified Funds from Operations (“MFFO”) exceeded its cumulative cash distributions to common shareholders from inception through Q2 2024. This achievement represents the REIT’s consistent track record of fully funding its cash distributions solely from its real estate operations. The Essential Income REIT’s Adjusted Funds from Operations (“AFFO”) to distribution coverage inception-to-date is 104.99% as of September 30, 2024.
Blue Vault’s Q2 Report on the Essential Income REIT
• Sustained and Elevated Debt Service Coverage: In Q2 2024, the Essential Income REIT was one of two NTRs in its comparison class with an interest coverage ratio greater than 2.0 times and that has less than 20% of its debt maturing in the next two years or at unhedged variable rates. For the trailing 12 months ended September 30, 2024, the Essential Income REIT featured a 2.52 times Cash Interest Coverage Ratio. These distinctive features represent the REIT’s resilient ability to cover its financing costs without disturbing investors’ income or diminishing their investment capital. Past performance is no guarantee of future results.
• Continued NAV/Share Increases in 2024: The Essential Income REIT was one of only two NTRs that experienced an increase in Net Asset Value (“NAV”) per share from Q1 2024 to Q2 2024. The Essential Income REIT’s NAV per share has increased for three consecutive quarters, reaching $27.29 per share based in part on an independent real estate valuation of the REIT’s real estate by KPMG combined with its other assets and liabilities as of September 30, 2024.
• Minimal Redemptions: In Q2 2024, the Essential Income REIT was one of only three comparable NTRs with redemptions less than 1.00%, with redemptions totaling 0.62% of weighted average shares per units outstanding. In contrast, the other 11 NTRs averaged 3.99%, more than 6 times the rate experienced by the Essential Income REIT.
The past performance of the REIT is not an assurance of future results. All comparative claims about growth or stabilizing equity non-traded REITs are based on Blue Vault’s Q2 2024 Non-traded REIT Industry Review, Non-Traded REIT Fee Study (4th ed.), pp. 52-86.
“We are proud to see the Essential Income REIT ranked as the only NTR in all three top categories for Operating Performance, Financing Outlook, and Cumulative MFFO Payout, in Blue Vault’s latest report,” said Warren Thomas, a managing partner of ExchangeRight. “Blue Vault’s third-party analysis is a welcome confirmation of how the Essential Income REIT’s fundamentals have remained stable and its performance has stood out among comparable non-traded REITs.”
About ExchangeRight’s Essential Income REIT
The Essential Income REIT, a Maryland statutory trust, is a self-administered real estate company, formed on January 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 6.37% for its Class I shares, 5.99% for its Class A shares, and 6.00% 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 353 properties in 34 states (collectively, the “Trust Properties”) as of September 30, 2024. The Trust Properties are occupied by 37 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 real estate investment trust (“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.
The past performance of the REIT, its tenants, and ExchangeRight does not guarantee future performance. “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 (AFFO) as defined by NAREIT measures a real estate company’s recurring/normalized FFO 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.
Media Contact
Lindsey Thompson
Senior Media Relations Officer
lthompson@exchangeright.com
(626) 773-3448
