ExchangeRight Reports Strong Leasing, Expanded Credit

New class offerings and stabilized distributions underscore the REIT’s continued growth strategy.

August 01, 2025

High Occupancy, Low Turnover

As of June 30, ExchangeRight held 359 properties across 34 states. The portfolio remained 99.1% leased, with long-term commitments in place from 39 primarily investment-grade tenants. The team completed 16 lease renewals and signed a new 15-year lease during the quarter—extending the weighted average lease term to just over six years. These leases are structured to pass through many operating expenses to tenants, giving the REIT a level of cost predictability even in a high-inflation environment.

ExchangeRight also continued to re-balance its holdings. It acquired nine properties in the first half of the year, including several that were previously managed on behalf of investors. On the disposition side, it sold 14 assets—most notably, two DST transactions with ExchangeRight entities totaling $28.5 million, and a smaller third-party sale. Altogether, net gains on real estate sales reached $5.2 million.

Financial Performance and Cash Flow

Revenue for the six-month period came in at $46.5 million, driven by base rents and tenant reimbursements. Net income attributable to common shareholders reached $2.6 million, up from a loss in the same period last year. While interest expense increased—up to $18.5 million —cash flow from operations more than covered distributions. Operating activities provided $21.6 million in cash, while distributions declared during the period totaled $22.3 million.

On a per-share basis, distributions held steady at $0.1449 per month for Class I, A, and ER-I shares. Based on the most recent NAV, that translates to a 6.40% annualized distribution rate for Class I shares. Importantly, those distributions continue to be fully supported by cash flow, with no reliance on asset sales.

Expanded Access to Credit

The REIT also strengthened its liquidity position. After two rounds of upsizing this spring, its revolving credit facility reached $135 million by quarter-end. In July, the facility was raised again, bringing total capacity to $150 million. At the end of Q2, ExchangeRight had drawn $108 million from the line, with a blended interest rate of 6.48%.

The credit agreement gives ExchangeRight flexibility in how it accesses debt, allowing it to choose between base rate, term SOFR, or daily simple SOFR loans. The facility includes standard covenants and a commitment fee on unused capital, depending on utilization levels. It also gives ExchangeRight the ability to request future increases—up to $400 million in total capacity—if new lending commitments are secured.

Capital Raising and Share Activity

ExchangeRight continues to raise capital through its ongoing private offering. It issued $11.5 million in new shares in Q2, along with an additional $1.2 million through its dividend reinvestment program. At the same time, it repurchased more than 330,000 shares —worth $9 million —through its shareholder liquidity program. These redemptions are part of a planned repurchase strategy, capped at 5% of outstanding shares annually.

In June, the company added four new share classes—Class D, ER-A, ER-S, and ER-D—and renamed its legacy ER shares as Class ER-I. While these new share classes were not yet issued as of June 30, they expand the firm’s flexibility in tailoring offerings for different investor types.

Navigating a Shifting Policy Landscape

ExchangeRight also addressed the potential implications of the One Big Beautiful Bill Act , which became law in early July. The bill includes tax provisions that directly affect REIT investors, including the permanent extension of the 20% deduction for ordinary REIT dividends. The legislation also makes the 37% top individual tax rate permanent, removing some of the uncertainty that had previously surrounded dividend taxation.

While the full impact of the legislation will depend on future rulemaking, the changes help clarify the tax picture for REIT shareholders in the near term.

Looking Ahead

Macro conditions remain uneven, with mortgage rates hovering near decade highs and the Fed’s next moves still uncertain. But ExchangeRight continues to focus on controllable factors—long leases, fixed-rate debt, disciplined acquisitions—and is positioned to adjust as conditions evolve. With 99% occupancy, stable distributions, and capacity to grow its balance sheet, the REIT is executing against plan while keeping its investors informed and aligned.