UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act: None
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 7.01 Regulation FD Disclosure.
Private Offering Information Provided to Investors
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On November 3, 2023, ExchangeRight Income Fund, doing business as ExchangeRight Essential Income REIT (the “Company”), provided an updated presentation to investors containing financial and other information regarding the Company in connection with the Company’s ongoing private placement offering of up to $2.165 billion of common shares of beneficial interest (“Common Shares”) (the “Private Offering”). A copy of the investor presentation provided in connection with the Private Offering is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01. The Company also posted the investor presentation on the Company’s website at www.exchangeright.com/the-essential-income-reit/class-i-shares/.
The information included in this Item 7.01, including the Exhibit 99.1 attached hereto, is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The filing of this information pursuant to Item 7.01 shall not been deemed an admission as to the materiality of any information in this Item 7.01 that is required to be disclosed solely by reason of Regulation FD. The information contained in this Item 7.01 and in the accompanying Exhibit 99.1 shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
Item 8.01 Other Events.
October 2023 Distributions
On October 31, 2023, the Company declared distributions in the amount of $0.1449 per share for each class of its outstanding Common Shares. The distributions for each class of Common Shares are payable to shareholders of record immediately following the close of business on October 31, 2023 and will be paid in cash or reinvested in the Company's Common Shares through the Company's Dividend Reinvestment and Direct Share Purchase Plan (the “DRIP”) on or around November 15, 2023.
Dividend Reinvestment and Direct Share Purchase Plan
On October 19, 2023, the Trustee approved the DRIP for investors. For the October 31, 2023 declared distributions described above, holders of Common Shares and holders of Class I common units of limited partnership interest (the “OP Units”) in ExchangeRight Income Fund Operating Partnership, LP, the Company’s operating partnership (the “Operating Partnership”), have elected 8.3% of the aggregate declared distributions on Common Shares and OP Units to be reinvested back into the Company's Common Shares based on elections by the individual shareholders and unitholders. These distributions will be reinvested in the Company's Common Shares on or around November 15, 2023.
The DRIP generally permits shareholders of the Company to elect to have some or all of their cash distributions in respect of the shareholder’s Common Shares to be automatically reinvested in additional Common Shares. Any cash distributions attributable to the class of Common Shares owned by participants in the DRIP will be reinvested in Common Shares on behalf of the participant on the business day such distribution would have been paid to such investor. In addition, holders of the OP Units may elect to reinvest their cash distributions from the Operating Partnership and make optional cash purchases of our Class I Common Shares.
Rent Collection
The Company has collected 100% of its rents due from all of its tenants through October 2023. The Company has now received 100% of the rent due from its tenants since its inception.
Status of Private Offering
As indicated above, the Company is currently conducting a private placement offering on a continuous basis of up to $2.165 billion of Common Shares. Pursuant to the Private Offering, the Company is offering its Class I, Class A, and Class S Common Shares. As of October 31, 2023, the Company has issued an aggregate of 15,963,779 Common Shares in the Private Offering for total consideration of $433.7 million. Of these issued Common Shares, 5,716,374 Class I Common Shares and 9,845,092 Class A Common Shares remained outstanding as of October 31, 2023. The following table lists the Common Shares issued and total consideration received to date in the Private Offering for each class of Common Shares:
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Common Shares |
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Total |
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Issued |
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Consideration |
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Class I |
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5,924,154 |
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154,992,577 |
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Class A |
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10,039,625 |
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278,673,064 |
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Class S |
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- |
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- |
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Total for Private Offering |
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15,963,779 |
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433,665,640 |
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As of October 31, 2023, there was up to $1.522 billion of Common Shares available for future issuance in the Private Offering, before selling commissions and expenses after calculating capital raised from other sources and the issuance of common units of limited partnership interest in the Operating Partnership. The Company intends to continue selling Common Shares in the Private Offering on a monthly basis.
Forward-Looking Statements
Certain statements contained in this Current Report on Form 8-K other than historical facts may be considered “forward-looking statements,” and, as such, may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. For these statements, the Company claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “may”, “will”, “should”, “estimates”, “projects”, “anticipates”, “believes”, “expects”, “intends”, “future” and words of similar import, or the negative thereof. Forward-looking statements in this report include information about possible or assumed future events, including, among other things, discussion and analysis of our future financial condition, results of operations, our strategic plans and objectives, and other matters. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.
Any such forward-looking statements are subject to unknown risks, uncertainties and other factors, which in some cases are beyond the Company’s control and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations, provide distributions to shareholders and maintain the value of our real estate properties, may be significantly hindered.
Factors that could cause actual results, performance or achievements to differ materially from current expectations include, but are not limited to: risks inherent in the real estate business, including tenant defaults, illiquidity of real estate investments, potential liability relating to environmental matters and potential damages from natural disasters; general business and economic conditions; the accuracy of our assessment that certain businesses are e-commerce resistant and recession-resilient; the accuracy of the tools we use to determine the creditworthiness of our tenants; concentration of our business within certain tenant categories; ability to renew leases, lease vacant space or re-lease space as existing leases expire; our ability to successfully execute our acquisition strategies; the degree and nature of our competition; inflation and interest rate fluctuations; failure, weakness, interruption or breach in security of our information systems; our failure to generate sufficient cash flows to service our outstanding indebtedness; continued volatility and uncertainty in the credit markets and broader financial markets; our ability to maintain our qualification as a real estate investment trust (“REIT”) for federal income tax purposes; our limited operating history as a REIT, which may adversely affect our ability to make distributions to our shareholders; changes in, or the failure or inability to comply with, applicable laws or regulations; and future sales or issuances of our Common Shares or other securities convertible into our Common Shares, or the perception thereof, could cause the value of our Common Shares to decline and could result in dilution.
Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s reports (such as the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s Internet website (www.sec.gov). All subsequent written and oral forward-looking statements concerning the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
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Description |
99.1* |
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Supplemental Information Provided to Investors in Private Offering |
104* |
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Cover Page Interactive Data File (embedded within the Inline XBRL Document) |
* The above exhibits are being furnished with this Current Report on Form 8-K.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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EXCHANGERIGHT INCOME FUND |
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Date: |
November 3, 2023 |
By: |
/s/ David Fisher |
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David Fisher |
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