Overview
A debt-free portfolio of three single-tenant, necessity-based net-leased retail properties (122,149 SF total; 10.7-year WALT) acquired in early 2026 and held free and clear, sponsored by ExchangeRight Real Estate, LLC. The portfolio comprises a ~68,459 SF Fred Meyer (a wholly-owned Kroger Co. subsidiary; Kroger S&P BBB) on ~11.65 acres in Shelton WA on a double-net (NN) lease (~58% of NOI; grocery plus fuel), a 50,354 SF Hobby Lobby in Scottsboro AL leased through 2040 (~29% of NOI; three 5-year options), and a 3,336 SF Verizon Wireless (Cellular Sales of Illinois, LLC) in Roscoe IL leased through 2035 (~13% of NOI; two 5-year options). Going-in cash flow is 5.15%, escalating to 5.49% by year 10 (~5.26% average) on contractual rent. The all-equity structure removes refinancing and maturity risk. The exit is ExchangeRight's REIT aggregation strategy: the Essential Income REIT is targeted to acquire the DST interests within ~10 years via an optional Section 721 exchange, with cash-out and combination elections available. The $26,950,000 offering is 100 Class 1 interests at $269,500 ($100,000 minimum equity).
Highlights
The three-property portfolio is held free and clear with no mortgage, eliminating refinancing, maturity, rate-cap, and foreclosure risk and the equal-or-greater-debt 1031 requirement. Tenants operate in historically recession-resilient, necessity-based retail (grocery, discount craft retail, wireless), supporting income durability through cycles.
Fred Meyer (a wholly-owned Kroger subsidiary; Kroger Co. S&P BBB) anchors ~58% of NOI on a grocery-plus-fuel format, providing an investment-grade credit backbone. The same fact concentrates the majority of income in a single tenant on a double-net (NN, not absolute-NNN) lease that leaves the trust with certain structural and capital responsibilities.
A 10.7-year weighted-average lease term with staggered expirations (Verizon 2035, Hobby Lobby 2040) plus renewal options across all three tenants underpins durable contractual income across the targeted hold. Income growth is modest and contractual, lifting cash-on-cash only from 5.15% to 5.49% over ten years.
The offering is engineered as a feeder into ExchangeRight's Essential Income REIT, which targets acquiring the DST interests within ~10 years. Investors may elect a tax-deferred Section 721 exchange into the REIT operating partnership, a cash-out, or a combination, providing a defined (if sponsor- and REIT-capital-dependent) exit path.
Total upfront load is comparatively low at ~9.46% of equity (7.23% selling/offering plus a 1.98% acquisition fee and a 0.25% reallowance), modest for an all-cash DST, with ~1.48% of proceeds funded into reserves for operations and asset management.
Analysis
Insights
ExchangeRight Net-Leased All-Cash 19 is a debt-free, income-oriented core net-lease vehicle whose return is almost entirely contractual: a 5.15%-to-5.49% cash-on-cash schedule (~5.26% average) sourced from three single-tenant necessity-retail leases with a 10.7-year WALT, with no leverage and no value-add component. The credit profile is anchored by investment-grade Kroger (via Fred Meyer, ~58% of NOI) but is concentrated in two effective credits across three assets, and the Fred Meyer NN lease plus a short-dated, specialized Verizon unit are the principal asset-level vulnerabilities. The defining structural feature is ExchangeRight's REIT aggregation model: the offering is designed as a feeder whose likely terminal path is a Section 721 roll-up into the non-traded Essential Income REIT rather than a third-party sale - attractive for tax-deferral continuity and stable income, but ceding control, liquidity, and valuation transparency to a sponsor-managed NAV REIT and contingent on that REIT's capital. The debt-free design is genuinely defensive in a higher-for-longer environment and the ~9.46% load is comparatively low for an all-cash DST, but the modest, largely flat going-in yield and the absence of leverage cap total return, leaving terminal value and tenant retention at the 2035/2040 expirations as the dominant sensitivities. No tax-equivalent yield is disclosed.
Advantages
A debt-free, three-property single-tenant net-lease portfolio of necessity-based retail (Fred Meyer/Kroger grocery, Hobby Lobby, Verizon) with a 10.7-year WALT and a 5.15% going-in cash flow escalating to 5.49% (~5.26% average), sponsored by ExchangeRight, a scaled net-lease DST/REIT platform (1,400+ properties across 47 states at the platform level). The unlevered structure removes all refinancing, maturity, and foreclosure risk and the equal-or-greater-debt 1031 requirement, and the largest tenant (Fred Meyer) is backed by investment-grade Kroger (S&P BBB) at ~58% of NOI. The total load is comparatively low at ~9.46%, and the offering provides a defined exit through ExchangeRight's REIT aggregation strategy with an optional Section 721 tax-deferred rollover into the Essential Income REIT plus cash-out and combination elections.
Concerns
Income is concentrated in three assets and effectively two credits, with Fred Meyer/Kroger alone at ~58% of NOI, so a single vacancy or non-renewal is materially binary to portfolio cash flow; the Fred Meyer lease is double-net (NN), not absolute-triple-net, leaving the trust with certain structural, roof, and parking-lot capital responsibilities funded only from a modest ~1.48% reserve. The Verizon lease is the shortest (2035 expiry) on the smallest, most specialized 3,336 SF unit, creating earlier rollover exposure, and the lessee is a Verizon dealer (Cellular Sales of Illinois) rather than Verizon Communications itself. Going-in cash flow is modest at 5.15% with only ~0.34% of cumulative escalation over ten years (largely flat, contractual income with no value-add or operational upside), and the absence of leverage caps levered return. The targeted REIT-aggregation/721 exit is not guaranteed and depends on the ExchangeRight Essential Income REIT's capital availability and willingness to acquire the interests; any 721 consideration would be units in a non-traded, sponsor-controlled REIT operating partnership with sponsor-set NAV and limited liquidity. The portfolio is small ($26.95M), and the Sponsor's affiliated equity-financing/bridge arrangement is repaid from offering proceeds.
