ExchangeRight Essential Income REIT, a non-traded real estate investment trust focused on net-leased properties operating in “necessity-based” retail and healthcare industries, reported solid operational results for the first quarter of 2025, supported by continued portfolio expansion and stable occupancy. The company declared and fully covered $9.82 million in cash distributions during the quarter through cash flows from operating activities – extending its record of uninterrupted monthly distributions.
Rental revenue rose to $21.97 million, a 7.3% increase from $20.47 million in the same quarter last year. The growth was primarily attributed to net acquisitions over the past year. As of March 31, the REIT’s portfolio consisted of 364 properties with 98.9% occupancy, up from 352 properties and 98.6% occupancy a year earlier.
The REIT reported funds from operations of $10.39 million, up 3.2% from $10.06 million in the first quarter of 2024. Adjusted funds from operations increased 7.1% year over year to $11.06 million. On a per-share basis, FFO was $0.41, compared to $0.42 in the prior-year period, while AFFO was $0.43, down slightly from $0.44, reflecting a higher share count.
As noted above, cash distributions for the quarter totaled $9.82 million and were fully covered by $10.99 million in net cash from operating activities. The REIT’s annualized distribution rate was 6.37%, based on a declared net asset value of $27.37 per share as of March 31, 2025, the same NAV as at the end of 2024.
Last fall, AltsWire reported that the REIT had increased its NAV for three consecutive quarters, reaching $27.29 per share based as of Sept. 30, 2024. This is a 0.11% increase over its $27.26 NAV in the prior quarter.
Net loss for the quarter was $617,000, compared to $589,000 in the same period last year. This likely was primarily due to higher interest and depreciation expenses tied to recent acquisitions. Net income from operations rose to $8.57 million, up from $7.24 million in the first quarter of 2024.
ExchangeRight acquired two properties during the quarter for a combined $7.38 million. Total NAV stood at approximately $700.5 million. The portfolio’s weighted average lease term remained strong at 5.8 years, with Walgreens and Dollar General comprising the two largest tenant exposures at 18% and 16% of base rent, respectively.
The REIT reported $82.5 million drawn on its $100 million revolving credit facility, with no balance outstanding on its secured credit line as of quarter-end. Management reiterated its focus on necessity-based retail, tenant credit quality, and conservative leverage as key pillars of its income and risk management strategy.
In December 2024, ExchangeRight said the REIT’s Class ER shares, launched earlier that year, were eligible to participate in a first-year bonus from the sponsor’s Delaware statutory trust fees, as well as other potential growth and sponsor fee participation at the end of a targeted five-year hold period. The ER shares, exclusively for broker-dealer representatives and their accredited investor clients, targeted a 10% internal rate of return net to investors.
ExchangeRight and its affiliates’ vertically integrated platform features more than $6.4 billion in assets under management that are diversified across over 1,300 properties and 25 million square feet throughout 47 states, as of March 31, 2025.
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