Net-Leased Portfolio 7
AEI Net Lease Portfolio 7 is an investment into three single tenant net leased properties located in three different states. Each of the properties is net-leased to the tenants. This investment is an all-cash investment not encumbered by a loan.
- Year 1 Cash Flow 7.75%
- Initial Occupancy 100.00%
- Est. Time Horizon None
- Yr 1. Cap Rate to Investors 6.12%
- Investor Purchase Price $31,232,000
- Total Offering Size $14,330,000
- Yr. 1 DSCR None
- Loan-to-Value 54.12%
- Hold Period DSCR 2.62
The population across this portfolio is strong with over 100,000 residents in the 5-mile radius. The growth projections for the areas is projected to slightly outpace the national average. The 5-mile projected growth is 1.33%.
This investment does not have foreclosure risk as the properties are not encumbered by any debt.
Two of the three properties have newer construction, which should decrease the amount of capital expenditures that may be needed to maintain the properties.
The remaining lease term on these properties is 13.4 years with no tenant having a lease set to expire in less than 13 years.
PetSmart, which represents 1/3 of the portfolio is a non-investment grade tenant.
The population near the Tractor Supply Company tenant is weak and shows negative growth. However, the target market of TSC is farmers and rural areas. This property is located in Clarendon County which has over 420 farms totaling over 175,000 acres of land. This fits into the target demographics of TSC very well.
The BioLife tenant has a lease guaranteed by Baxalta, which has an investment grade credit rating of Baa3 from Moody's and BBB- from Standard and Poor's.
Tractor Supply Co has a right of first refusal on the properties which may hinder or delay a potential sale.
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."