Net-Leased Portfolio 6
AEI Net Lease Portfolio 6 is an investment in 5 single tenant retail properties that are leased to 4 different companies and located in 3 different states. Each of the properties has either a NN or NNN lease.
- Year 1 Cash Flow 7.51%
- Initial Occupancy 100.00%
- Est. Time Horizon None
- Yr 1. Cap Rate to Investors 6.26%
- Investor Purchase Price $33,743,322
- Total Offering Size $15,735,000
- Yr. 1 DSCR None
- Loan-to-Value 53.37%
- Hold Period DSCR 2.48
The average population across the portfolio is strong. Especially in the 5 mile radius where the average population across all properties is 100,585. Growth outpaces the national average and is projected to be around 1.45%
This offering is not encumbered by any debt, this eliminates the risk of foreclosure from the bank.
Four of the five properties were built in 2015 making them less likely to need upgrades or capital expenditures.
There are no tenants with leases that will expire during the projected hold term of 10 years. The first lease to expire will do so in 11 years and the average remaining lease term is 13.25 years.
Three of these properties have a NN lease which leaves the trust responsible for part of the regular maintenance. However, AEI has placed sufficient funds into reserves to help cover these costs.
Fresenius Medical Care, Tractor Supply Company, and PetSmart are not investment grade tenants. FMC has a parent corporation that is investment grade, however they are not the guarantor of the lease on this property.
The properties are leased 100% to single tenants. This makes the success of this investment reliant upon the success of each of these tenants at these locations.
There is no Master Lease in place on this investment. This could lead to difficulties should one of the tenants leave the property. The trust will not be able to re-tenant the location without a Master Lease.
According to the sponsor's website: "ExchangeRight Real Estate, founded in 2012, is a private real estate investment firm focused on the acquisition and management of single-tenant properties throughout the United States. With over $1.2 billion in assets under management diversified across 425 properties in 28 states, we focus on investment-grade, necessity-based retail and Class B/B+ value-added multifamily.
We believe that investors deserve an investment strategy that provides them with stable cash flow, capital preservation, and value-added return potential in the face of uncertain economic and financial conditions. We have implemented a strategy designed to directly address this so that we can preserve our investors' capital and provide attractive income on their capital until the timing is right to execute a strategic exit to maximize their returns."