UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _____ TO ______

COMMISSION FILE NUMBER: 000-56543

EXCHANGERIGHT INCOME FUND

(Exact name of registrant as specified in its charter)

Maryland	36-7729360
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1055 E. Colorado Blvd, Suite 310
Pasadena, California	91106
(Address of principal executive offices)	(Zip Code)

(855) 317-4448

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2024, the issuer had the following shares of common stock outstanding: 10,220,011 Class A Common Shares, $0.01 par value per share; and 5,729,950 Class I Common Shares, $0.01 par value per share.

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Quarterly Report on Form 10-Q

Quarter ended March 31, 2024

Table of Contents

		Page
Cautionary Note Regarding Forward-Looking Statements		i
Part I. Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets - March 31, 2024 and December 31, 2023 (Unaudited)	1
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) - Three Months ended March 31, 2024 and 2023 (Unaudited)	2
	Condensed Consolidated Statements of Equity - Three Months ended March 31, 2024 and 2023 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows - Three Months ended March 31, 2024 and 2023 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
Part II. Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	40
Signatures		41

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Current Report on Form 10-Q other than historical facts may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and, as such, may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of ExchangeRight Income Fund (the “Company”) d/b/a the ExchangeRight Essential Income REIT (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 Current Report on Form 10-Q 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, occupancy, leasing rates and trends, liquidity and ability to meet future obligations, anticipated expenditures of capital and other matters. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the Securities and Exchange Commission.

Any such forward-looking statements are subject to unknown risks, uncertainties, and other factors, which in some cases are beyond our 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;

•current loans, or future loans, may be subject to certain unfavorable provisions or may not be able to be refinanced;

•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.

The foregoing list is only a summary of the principal risks that may materially adversely affect our business, financial condition, results of operations and cash flows. The foregoing should be read in conjunction with the complete discussion of risk factors we face, which are set forth in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on April 11, 2024.

i

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Condensed Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
	2024			2023
ASSETS
Real estate:
Land	$	209,073,000		$	209,073,000
Buildings and improvements		893,374,000			893,225,000
		1,102,447,000			1,102,298,000
Less accumulated depreciation		(69,441,000	)		(62,243,000	)
Real estate, net		1,033,006,000			1,040,055,000
Intangible lease assets, net		65,336,000			68,616,000
RSLCA notes receivable from affiliates		28,962,000			22,251,000
Restricted cash		11,270,000			12,275,000
Cash and cash equivalents		6,091,000			7,053,000
Receivables		9,496,000			8,990,000
Notes receivable from affiliates		6,017,000			6,017,000
Right-of-use asset		4,664,000			4,652,000
Other assets		1,479,000			1,095,000
Due from affiliates		-			536,000
TOTAL ASSETS	$	1,166,321,000		$	1,171,540,000
LIABILITIES AND EQUITY
Mortgage loans payable, net	$	580,144,000		$	589,962,000
Revolving credit facility		15,000,000			-
Intangible lease liabilities, net		23,854,000			24,595,000
Accounts payable, accrued expenses and other liabilities		8,423,000			10,083,000
Right-of-use liability		5,028,000			4,977,000
Pending trade deposits		1,988,000			1,386,000
Distributions payable		3,456,000			3,452,000
Due to affiliates		849,000			43,000
Total liabilities		638,742,000			634,498,000
Commitments and contingencies
Equity:
Class A common shares, $0.01 par value per share, 80,036,009 and 79,873,720 shares authorized, 10,199,215 and 10,017,613 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		102,000			100,000
Class I common shares, $0.01 par value per share, 80,036,009 and 79,873,720 shares authorized, 5,644,258 and 5,768,982 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		56,000			58,000
Class S common shares, $0.01 par value per share, 80,036,009 and 79,873,720 shares authorized, 0 and 0 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		-			-
Additional paid-in capital		409,958,000			408,358,000
Cumulative distributions in excess of net income		(65,664,000	)		(58,448,000	)
Accumulated other comprehensive (loss)		(31,000	)		(360,000	)
Total shareholders’ equity		344,421,000			349,708,000
Noncontrolling interests attributable to operating partnership		183,158,000			187,334,000
Total equity		527,579,000			537,042,000
TOTAL LIABILITIES AND EQUITY	$	1,166,321,000		$	1,171,540,000

See accompanying notes to condensed consolidated financial statements.

1

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Condensed Consolidated Statements of Operations and Comprehensive (Loss)

(Unaudited)

	Three months ended March 31,
	2024			2023
Revenues
Rental revenue	$	20,469,000		$	19,527,000
Interest income on notes receivable from affiliates		923,000			1,166,000
Other		28,000			6,000
Total revenues		21,420,000			20,699,000
Operating Expenses
Property operating expenses		2,905,000			2,870,000
Management fees to affiliates		324,000			621,000
General and administrative expenses		337,000			428,000
Depreciation and amortization		10,368,000			10,157,000
Provision for impairment		250,000			-
Total operating expenses		14,184,000			14,076,000
Income from Operations		7,236,000			6,623,000
Other Income (Expense)
Interest expense		(7,838,000	)		(7,232,000	)
Interest income		13,000			-
Total other income (expense)		(7,825,000	)		(7,232,000	)
Net (loss)		(589,000	)		(609,000	)
Net loss attributable to noncontrolling interests		199,000			206,000
Net (loss) attributable to common shareholders	$	(390,000	)	$	(403,000	)
Net (loss) per common share attributable to common shareholders, basic and diluted	$	(0.02	)	$	(0.03	)
Weighted average number of common shares outstanding, basic and diluted		15,705,274			14,786,099
Other comprehensive (loss):
Net (loss)	$	(589,000	)	$	(609,000	)
Other comprehensive (loss) - unrealized gain (loss) on change in fair value of cash flow hedges		497,000			(879,000	)
Comprehensive (loss)		(92,000	)		(1,488,000	)
Comprehensive loss attributable to noncontrolling interests		31,000			500,000
Comprehensive (loss) attributable to common shareholders	$	(61,000	)	$	(988,000	)

See accompanying notes to condensed consolidated financial statements.

2

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Condensed Consolidated Statements of Equity

Three months ended March 31, 2024

(Unaudited)

																												Noncontrolling
																			Cumulative			Accumulated						interest
	Common Shares															Additional			distributions			other			Total			attributable to
	Class A					Class I						Class S				paid-in			in excess			comprehensive			shareholders'			operating			Total
	Shares			Amount		Shares			Amount			Shares		Amount		capital			of net income			(loss)			equity			partnership			equity
Balance, December 31, 2023		10,017,613		$	100,000		5,768,982		$	58,000			-	$	-	$	408,358,000		$	(58,448,000	)	$	(360,000	)	$	349,708,000		$	187,334,000		$	537,042,000
Net (loss)		-			-		-			-			-		-		-			(390,000	)		-			(390,000	)		(199,000	)		(589,000	)
Unrealized gain on change in fair value of cash flow hedges		-			-		-			-			-		-		-			-			329,000			329,000			168,000			497,000
Issuance of common shares		214,923			2,000		85,569			1,000			-		-		8,479,000			-			-			8,482,000			-			8,482,000
Issuance of common shares under DRIP		19,638			-		16,573			-							968,000									968,000			-			968,000
Repurchase of common shares		(52,959	)		-		(251,315	)		(3,000	)		-		-		(8,060,000	)		-			-			(8,063,000	)		-			(8,063,000	)
Conversion of OP Units to common shares		-			-		24,449			-			-		-		661,000			-			-			661,000			(661,000	)		-
Offering costs		-			-		-			-			-		-		(448,000	)		-			-			(448,000	)		-			(448,000	)
Distributions		-			-		-			-			-		-		-			(6,826,000	)		-			(6,826,000	)		(3,484,000	)		(10,310,000	)
Balance, March 31, 2024		10,199,215		$	102,000		5,644,258		$	56,000			-	$	-	$	409,958,000		$	(65,664,000	)	$	(31,000	)	$	344,421,000		$	183,158,000		$	527,579,000

See accompanying notes to condensed consolidated financial statements.

3

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Condensed Consolidated Statements of Equity

Three months ended March 31, 2023

(Unaudited)

																													Noncontrolling
																				Cumulative			Accumulated						interest
	Common Shares																Additional			distributions			other			Total			attributable to
	Class A						Class I						Class S				paid-in			in excess			comprehensive			shareholders'			operating			Total
	Shares			Amount			Shares			Amount			Shares		Amount		capital			of net income			(loss)			equity			partnership			equity
Balance, December 31, 2022		9,268,108		$	93,000			5,193,941		$	52,000			-	$	-	$	371,459,000		$	(30,761,000	)	$	-		$	340,843,000		$	188,231,000		$	529,074,000
Net (loss)		-			-			-			-			-		-		-			(403,000	)		-			(403,000	)		(206,000	)		(609,000	)
Unrealized (loss) on change in fair value of cash flow hedges		-			-			-			-			-		-		-			-			(585,000	)		(585,000	)		(294,000	)		(879,000	)
Issuance of common shares		446,995			5,000			256,807			3,000			-		-		20,622,000			-			-			20,630,000			-			20,630,000
Redemption of common shares		(64,461	)		(1,000	)		(73,645	)		(1,000	)		-		-		(3,531,000	)		-			-			(3,533,000	)		-			(3,533,000	)
Offering costs		-			-			-			-			-		-		(995,000	)		-			-			(995,000	)		-			(995,000	)
Distributions		-			-			-			-			-		-		-			(6,423,000	)		-			(6,423,000	)		(3,275,000	)		(9,698,000	)
Balance, March 31, 2023		9,650,642		$	97,000			5,377,103		$	54,000			-	$	-	$	387,555,000		$	(37,587,000	)	$	(585,000	)	$	349,534,000		$	184,456,000		$	533,990,000

See accompanying notes to condensed consolidated financial statements.

4

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended March 31,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$	(589,000	)	$	(609,000	)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Depreciation and amortization		10,368,000			10,157,000
Provision for impairment		250,000			-
Amortization of deferred rent receivables/liabilities, net		(218,000	)		(252,000	)
Amortization of above/below-market lease intangibles, net		(624,000	)		(591,000	)
Amortization of assumed below/above-market debt, net		956,000			714,000
Amortization of lease incentives		64,000			53,000
Amortization of deferred financing costs		73,000			204,000
Amortization of deferred ground rent		40,000			40,000
Changes in assets and liabilities, net of assets acquired and liabilities assumed:
Receivables		(288,000	)		(486,000	)
Other assets		(419,000	)		247,000
Due from affiliates		536,000			(205,000	)
Accounts payable, accrued expenses and other liabilities		(1,164,000	)		106,000
Due to affiliates		806,000			464,000
Net cash provided by operating activities		9,791,000			9,842,000
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of real estate		-			(2,259,000	)
Improvements of real estate		(399,000	)		(239,000	)
Advances on notes receivable from affiliated parties		(1,000	)		(3,000	)
Advances on RSLCA notes receivable from affiliated party		(38,831,000	)		(33,762,000	)
Repayments on RSLCA notes receivable from affiliated party		32,120,000			23,050,000
Net cash used in investing activities		(7,111,000	)		(13,213,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Class A and Class I common shares		7,095,000			13,187,000
Offering costs from issuance of Class A and Class I common shares		(448,000	)		-
Repurchases of Class A and Class I common shares		(8,063,000	)		(3,533,000	)
Proceeds from pending trade deposits		1,988,000			3,375,000
Proceeds from mortgage loans payable		-			65,430,000
Repayments of mortgage loans payable		(10,831,000	)		(6,451,000	)
Proceeds from revolving credit facility		15,000,000			-
Repayments of revolving credit facilities		-			(73,311,000	)
Payments of financing costs		(53,000	)		(781,000	)
Class A and Class I common shares distributions		(5,974,000	)		(6,341,000	)
Noncontrolling interests distributions		(3,362,000	)		(3,283,000	)
Net cash used in financing activities		(4,648,000	)		(11,708,000	)
Net (decrease) in cash, cash equivalents and restricted cash		(1,968,000	)		(15,079,000	)
Cash, cash equivalents and restricted cash at beginning of year		19,329,000			36,645,000
Cash, cash equivalents and restricted cash at end of period	$	17,361,000		$	21,566,000

See accompanying notes to condensed consolidated financial statements.

5

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended March 31,
	2024		2023
Reconciliation to consolidated balance sheets:
Cash and cash equivalents	$	6,091,000	$	8,717,000
Restricted cash		11,270,000		12,849,000
Cash, cash equivalents and restricted cash at end of period	$	17,361,000	$	21,566,000
Supplemental disclosures of cash flow information:
Cash paid for interest	$	6,745,000	$	6,298,000
Supplemental disclosures of non-cash investing and financing activities:
Distributions payable	$	3,456,000	$	3,271,000
Distributions reinvested into Class A and Class I common shares	$	968,000	$	-
Conversion of OP Units to Class I common shares	$	661,000	$	-

See accompanying notes to condensed consolidated financial statements.

6

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

Note 1. Business and Organization

ExchangeRight Income Fund, doing business as ExchangeRight Essential Income REIT, a Maryland statutory trust (the “Trust” or the “Company”), is a self-administered real estate company, formed on January 11, 2019, focusing on investing in single-tenant, primarily investment-grade net-leased real estate. The Company, through its operating partnership, ExchangeRight Income Fund Operating Partnership, LP, a Delaware limited partnership of which the Company is the sole general partner (the “Operating Partnership”) owned 352 properties in 34 states (collectively, the “Trust Properties”) as of March 31, 2024. The Trust Properties are occupied by 36 different primarily national investment-grade necessity-based retail tenants and are additionally diversified by industry, geographic region and lease term.

Unless the context requires otherwise, references to (i) the “Company” or the “General Partner” refer to ExchangeRight Income Fund, d/b/a ExchangeRight Essential Income REIT, together with its subsidiaries, including ExchangeRight Income Fund Operating Partnership, LP, a Delaware limited partnership of which the Company is the sole general partner, together with its subsidiaries, (ii) “Operating Partnership” or the “Partnership” refers to ExchangeRight Income Fund Operating Partnership, LP, together with its subsidiaries, (iii) “Trustee” refers to a related party, ExchangeRight Income Fund Trustee, LLC, a Delaware limited liability company, which is the sole trustee of the Company, (iv) “ExchangeRight” or “Sponsor” refers to ExchangeRight Real Estate, LLC, a California limited liability company, which is the Company’s sponsor and the sole member and manager of the Trustee, together with its subsidiaries, (v) “ExchangeRight Income Fund GP, LLC” refers to a wholly-owned subsidiary of ExchangeRight which owns 600,000 of the Company’s Class I common shares and holds a special limited partnership interest in the Operating Partnership, which entitles ExchangeRight Income Fund GP, LLC to receive a promote interest in the profits of the Operating Partnership in accordance with the distribution waterfall set forth in the Operating Partnership’s limited partnership agreement, (vi) “Advisor” or “Advisors” refers to any person or persons, if any, appointed, employed or contracted with by the General Partner and responsible for directing or performing the day-to-day business affairs of the General Partner, including any person to whom the Advisor hereafter subcontracts substantially all of such functions, and (vii) “Advisory Agreement” refers to the agreement among the Partnership, the General Partner and any Advisor, pursuant to which any such Advisor will direct or perform the day-to-day business affairs of the General Partner and the Partnership.

The Company has elected and is qualified to be taxed as a real estate investment trust (“REIT”) for United States of America (“U.S.”) federal income tax purposes beginning with the taxable year ended December 31, 2019. The Company is the sole general partner and a limited partner of the Operating Partnership which was formed on January 9, 2019. Substantially all of the Company’s business is conducted through the Operating Partnership. The Trust Properties are owned and controlled by the Company and are managed by ExchangeRight Net-Leased Property Management, LLC (the “Property Manager”) and ExchangeRight Net-Leased Asset Management, LLC (the “Asset Manager”), which are both wholly-owned subsidiaries of ExchangeRight, pursuant to executed property management and asset management agreements with each respective entity.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and the instructions to Form 10-Q. These unaudited interim condensed consolidated financial statements, in the opinion of management, include all adjustments of a normal recurring nature necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows. The unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited annual consolidated financial statements and related notes included in Company's Form 10-K that was filed with the Securities and Exchange Commission on April 11, 2024. The consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, 2024.

7

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, its subsidiaries and any single member limited liability companies or other entities which are consolidated in accordance with GAAP. Intercompany transactions and balances have been eliminated upon consolidation.

The Company consolidates variable interest entities (“VIEs”) when it is the primary beneficiary. Generally, a VIE is an entity with one or more of the following characteristics: (1) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (2) as a group, the holders of the equity investment at risk (a) lack the power through voting or similar rights to make decisions about the entity’s activities that significantly impact the entity’s performance, (b) have no obligation to absorb the expected losses of the entity, or (c) have no right to receive the expected residual returns of the entity, or (3) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately fewer voting rights.

A VIE is required to be consolidated by its primary beneficiary. The primary beneficiary of a VIE has (1) the power to direct the activities that most significantly impact the entity’s economic performance, and (2) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Significant judgments related to these determinations include estimates about the current values, performance of real estate held by these VIEs, and general market conditions.

Use of Estimates

The preparation of the unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s most significant assumptions and estimates relate to the useful lives of real estate assets, real estate impairment assessments and allocation of fair value of purchase consideration. These estimates are based on historical experience and other assumptions which management believes are reasonable. The Company evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from those estimates.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash in banks and short-term investments with original maturities when purchased of less than ninety days. The Company did not have any cash equivalents as of March 31, 2024.

The terms of mortgage loans payable may require the Company to deposit certain replacement and other reserves with its lenders. Restricted cash was $ 11.3 million as of March 31, 2024, and represents funds held in reserve by lenders to cover real estate taxes, insurance, repairs, tenant improvements and leasing commissions of the underlying properties collateralized by the respective loan.

Note 3. Investments in Real Estate

The Company acquires, owns, and manages primarily single-tenant, investment-grade net-leased real estate. The Company owned 352 properties in 34 states as of March 31, 2024. As of March 31, 2024, the Company’s portfolio was 98.6% leased and is occupied by 36 different primarily national investment-grade necessity-based retail tenants, and is additionally diversified by industry, geographic region, and lease term.

Real estate activity for the three months ended March 31, 2024 is composed of the following:

8

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

Cost
Balance - beginning of year	$	1,102,298,000
Improvements		399,000
Provision for impairment		(250,000	)
Balance - end of period	$	1,102,447,000
Accumulated depreciation
Balance - beginning of year	$	(62,243,000	)
Depreciation expense		(7,198,000	)
Balance - end of period	$	(69,441,000	)
Net book value - end of period	$	1,033,006,000

Revenues

Substantially all of the Company’s tenants are subject to net-lease agreements where the tenant is generally responsible for minimum monthly rent and actual property operating expenses incurred, including property taxes, insurance and maintenance. In addition, certain of the Company’s tenants are subject to future rent increases based on fixed amounts or, in limited cases, increases in the consumer price index. In addition, certain leases provide for additional rent calculated as a percentage of the tenants’ gross sales above a specified level. The Company recorded no percentage rent revenue for the three months ended March 31, 2024 and 2023. Certain of the Company’s properties are subject to leases under which it retains responsibility for specific costs and expenses of the property. The Company’s leases typically provide the tenant one or more multi-year renewal options to extend their leases, subject to generally the same terms and conditions, including rent increases.

All lease-related income is reported as a single line item, rental revenue, in the condensed consolidated statements of operations and comprehensive income. Rental revenue is comprised of the following:

	Three months ended March 31,
	2024		2023
Base rents	$	17,021,000	$	16,030,000
Tenant reimbursables		2,606,000		2,434,000
Straight-line rent adjustments		218,000		252,000
Above/below market lease amortization, net		624,000		591,000
Lease termination income		-		220,000
	$	20,469,000	$	19,527,000

Concentration of Credit Risk

As of March 31, 2024, the Company’s portfolio is occupied by 36 different primarily national investment-grade necessity-based retail tenants, and is additionally diversified by industry, geographic region, and lease term. The following tenants contributed more than 10% of contractual base rents during the three months ended March 31, 2024:

Tenant	% of Total Base Rents
Dollar General	17.8%
Walgreens	16.0%

Note 4. Notes Receivable

RSLCA Notes Receivable From Affiliated Party

The Company has invested in a short-term mezzanine loan to ExchangeRight (“ExchangeRight Mezz Loans”) for ExchangeRight’s Delaware Statutory Trust (“DST”) programs under a Revolving Secured Line of Credit Agreement (“RSLCA”).

9

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

The loan agreement, as amended, matures on April 4, 2027, with a maximum of $250.0 million outstanding at any time, and bears interest at a rate equal to 12.0% per annum, while outstanding.

The Company’s notes receivable under the RSLCA are secured by interests in an affiliated party that indirectly owns net-leased necessity-based retail properties similar to the Company’s acquired properties, as well as a pledge agreement and subordination agreement provided by ExchangeRight. As a result, the risk profile of an investment in these notes is intended to be similar to ownership of the Company’s acquired properties while providing liquidity and an enhanced risk-adjusted return over investments with similar liquidity. The Company’s investment in the RSLCA notes receivable are held at amortized cost and totaled $29.0 million as of March 31, 2024.

Notes Receivable from Affiliated Parties

On August 25, 2022, the Company entered into a real estate note as the lender with a two-property net-leased DST managed by ExchangeRight. The real estate note matures on August 25, 2027, generates interest at a fixed-rate of 6.00% and requires monthly interest only payments from the borrower. The Company's receivable under this real estate note totaled $3.6 million as of March 31, 2024 and is included in notes receivable from affiliates in the condensed consolidated balance sheets.

On November 18, 2022, the Company entered into a junior unsecured line of credit agreement as the lender with a four property net-leased DST managed by ExchangeRight. The junior unsecured line of credit agreement is for a maximum of $2.6 million, matures on November 18, 2027, generates interest at a fixed-rate of 7.25% and requires monthly interest only payments from the borrower. The Company's receivable under this junior unsecured line of credit agreement totaled $2.4 million as of March 31, 2024 and is included in notes receivable from affiliates in the condensed consolidated balance sheets.

Note 5. Intangible Assets and Liabilities

Intangible assets and liabilities consisted of the following as of March 31, 2024:

								Weighted average
	Gross carrying		Accumulated			Net carrying		amortization
	amount		amortization			amount		period (years)
In-place leases	$	97,737,000	$	(34,626,000	)	$	63,111,000		7.2
Above-market leases		3,489,000		(1,264,000	)		2,225,000		6.0
Total intangible lease assets, net	$	101,226,000	$	(35,890,000	)	$	65,336,000
Below-market leases	$	32,184,000	$	(8,330,000	)	$	23,854,000		10.8

The Company records net amortization of above-market and below-market lease intangibles to rental revenue and records amortization of in-place lease assets to depreciation and amortization expense. Amortization of intangible assets and liabilities for the three months ended March 31, 2024 and 2023 were as follows:

	Three months ended March 31,
	2024		2023
Net adjustment to rental revenue	$	624,000	$	591,000
Amortization of in-place leases	$	3,162,000	$	3,451,000

The estimated future amortization of lease assets to amortization expense and the amortization of above-market and below-market lease intangibles to rental revenue are as follow:

10

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

	Amortization		Rental revenue
	In-place		Above-market			Below-market
	lease assets		leases			leases		Total
Remainder of 2024	$	8,993,000	$	(340,000	)	$	2,198,000	$	10,851,000
2025		11,400,000		(436,000	)		2,916,000		13,880,000
2026		10,271,000		(398,000	)		2,854,000		12,727,000
2027		8,452,000		(300,000	)		2,417,000		10,569,000
2028		6,305,000		(254,000	)		2,182,000		8,233,000
Thereafter		17,690,000		(497,000	)		11,287,000		28,480,000
Total	$	63,111,000	$	(2,225,000	)	$	23,854,000	$	84,740,000

Note 6. Fair Value Measurements

The carrying amounts of cash and cash equivalents, restricted cash, receivables, certain other assets, accounts payable, accrued expenses and other liabilities approximate their fair value due to their terms and/or short-term nature.

The fair value of the Company’s fixed-rate mortgage loans payable and revolving credit facilities, which were determined to be Level 3 within the valuation hierarchy, were estimated using available market information and discounted cash flow analyses based on borrowing rates the Company believes it could obtain with similar terms and maturities. As of March 31, 2024, the aggregate fair value of the Company’s fixed-rate mortgage loans payable were $544.7 million. As of March 31, 2024, the aggregate carrying value of the Company’s fixed-rate mortgage loans payable were $580.1 million. The fair value of the Company’s revolving credit facilities approximated its carrying value at March 31, 2024.

Under GAAP, transactions involving related and affiliated parties cannot be presumed to be carried out on an arm's length-basis, as the requisite conditions of competitive, free-market dealings may not exist. Therefore, in the opinion of management, the fair value of the RSLCA notes receivable from affiliated party and notes receivable from affiliates cannot be readily estimated, as the transactions are with related and affiliated parties. Other information about related and affiliated party transactions are provided, where applicable, elsewhere in these notes to the unaudited interim condensed consolidated financial statements.

Derivative Financial Instrument

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Charges and/or credits relating to the changes in the fair value of the interest rate swaps are made to accumulated other comprehensive income (loss), noncontrolling interests or operations (included in interest expense), as applicable. Over time, the unrealized gains and losses recorded in accumulated other comprehensive income (loss) will be reclassified into earnings as an increase or reduction to interest expense in the same periods in which the hedged interest payments affect earnings. During the next twelve months, the Company estimates that an additional $0.3 million will be reclassified as a decrease to interest expense.

The Company, through the Operating Partnership, entered into a five-year swap agreement on February 8, 2023 to fix Secured Overnight Financing Rate ("SOFR"), resulting in an all-in fixed rate of 5.80% relating to the $26.9 million mortgage loan, effective as of February 9, 2023. The Company designated the pay-fixed, receive-floating interest rate swap with the terms described in the table below as of the acquisition date as a cash flow hedge. The swap agreement matures on February 1, 2028. The derivative instrument qualified as a cash flow hedge for the three months ended March 31, 2024. The fair value of the interest rate swap applicable to the mortgage loan payable entered into in February 2023 is included in other assets on the condensed consolidated balance sheet as of March 31, 2024 (see Note 7. Debt, for further detail).

The following is a summary of the derivative financial instrument attributes held by the Company at March 31, 2024:

11

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

Designation/				Notional		Fair			Maturity	Balance sheet
Cash flow	Derivative	Count		amount		value			date	location
Qualifying	Interest rate swap		1	$	26,900,000	$	(47,000	)	Feb 2028	Accounts payable, accrued expenses and other liabilities

The valuation of the liability for the Company’s interest rate swap, which is measured on a recurring basis, was determined to be Level 2 within the valuation hierarchy and was based on independent values provided by a financial instrument valuation specialist. Such valuation was determined using widely accepted valuation techniques, including discounted cash flow analyses on the expected cash flows of the derivative. The analysis reflects the contractual term of the swap, including the period to maturity, and user-observable market-based inputs, including interest rate curves (“significant other observable inputs”). The fair value calculation also includes an amount for risk of non-performance using “significant unobservable inputs” such as estimates of current credit spreads to evaluate the likelihood of default. The Company has concluded that, as of March 31, 2024, the fair value associated with the “significant unobservable inputs” relating to the Company’s risk of non-performance was insignificant to the overall fair value of the interest rate swap agreement and, as a result, the relevant inputs for purposes of calculating the fair value of the interest rate swap agreements, in their entirety, were based upon “significant other observable inputs”.

Note 7. Debt

Mortgage Loans Payable

Mortgage loans payable are secured by the properties on which the debt was placed and were considered nonrecourse debt with limited customary exceptions at the time of loan origination. The Company was in compliance with all of its debt covenants related to its mortgage loans payable as of March 31, 2024. Fixed-rate mortgage loans payable are composed of the following as of March 31, 2024:

			March 31, 2024
		Maturity	Balance			Contractual
Description	Amortization	date	outstanding			interest rate
Fixed-rate mortgage	Interest-only	6/1/2024		18,008,000			4.71	%
Fixed-rate mortgage	Interest-only	10/1/2024		16,902,000			4.25	%
Fixed-rate mortgage	Interest-only	2/2/2025		21,550,000			3.97	%
Fixed-rate mortgage	Interest-only	5/1/2025		25,519,000			4.15	%
Fixed-rate mortgage	Interest-only	9/2/2025		24,420,000			4.38	%
Fixed-rate mortgage	Interest-only	12/1/2025		25,012,000			4.59	%
Fixed-rate mortgage (a)	Interest-only	5/10/2026		24,850,000			4.66	%
Fixed-rate mortgage (a)	Interest-only	9/1/2026		24,485,000			3.82	%
Fixed-rate mortgage (a)	Interest-only	12/1/2026		28,110,000			4.06	%
Fixed-rate mortgage	Interest-only	4/1/2027		31,200,000			4.38	%
Fixed-rate mortgage	Interest-only	6/6/2027		32,722,000			3.98	%
Fixed-rate mortgage	Interest-only	9/1/2027		36,860,000			3.99	%
Fixed-rate mortgage	Interest-only	12/1/2027		33,441,000			4.09	%
Fixed-rate mortgage	Interest-only	1/11/2028		35,840,000			4.05	%
Fixed-rate mortgage	Interest-only	2/1/2028		38,530,000			6.12	%
Fixed-rate mortgage (b)	Interest-only	2/1/2028		26,900,000			5.80	%
Fixed-rate mortgage	Interest-only	4/8/2028		37,795,000			4.27	%
Fixed-rate mortgage	Interest-only	7/1/2028		43,522,000			4.32	%
Fixed-rate mortgage	Interest-only	10/1/2029		30,231,000			3.13	%
Fixed-rate mortgage	Interest-only	1/1/2031		37,564,000			3.45	%
				593,461,000			4.30	%	(c)
Unamortized issuance costs, net				(1,040,000	)
Unamortized below market debt discount, net				(12,277,000	)
			$	580,144,000

(a)These fixed-rate mortgages became a recourse loan pursuant to their pre-defined loan terms in 2023.

12

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

(b)Mortgage bears interest at a variable-rate of 1.70% in excess of SOFR and concurrent with the closing of the mortgage, the Company entered into an interest rate swap agreement which effectively converted the variable-rate mortgage to a fixed-rate mortgage. Accordingly, this mortgage has been presented as a fixed-rate mortgage.

(c)The weighted average effective interest rate on mortgage loans payable was 5.02% as of March 31, 2024.

The Company repaid a $10.8 million mortgage loan payable by its contractual maturity date of March 1, 2024.

Revolving Lines of Credit

On May 19, 2021, ExchangeRight entered into a secured revolving line of credit in which the Company has access to utilize available capacity under this secured revolving line of credit. The Company is legally responsible for the specific borrowings related to the Company, whereas ExchangeRight is the guarantor on all outstanding borrowings in relation to this secured revolving line of credit. The secured revolving line of credit agreement, as amended in December 2023, now has a maturity date of December 22, 2026, with a maximum aggregate amount being borrowed by the Company and ExchangeRight totaling $80.0 million outstanding at any time and requires monthly payments. As of March 31, 2024, ExchangeRight borrowed $27.0 million under this secured revolving line of credit resulting in $53.0 million available for borrowing by the Company and ExchangeRight as of March 31, 2024. The Company had no outstanding borrowings under this revolving line of credit as of March 31, 2024.

Additionally, in January 2021, the Company entered into an unsecured revolving line of credit. The unsecured revolving line of credit agreement, as amended in December 2023, has a maturity date of January 15, 2025, and now bears interest at a rate per annum equal to the prime rate currently in effect with an interest rate floor of 6.00%, while outstanding (8.50% as of March 31, 2024). The unsecured revolving line of credit requires monthly interest only payments, while outstanding. On January 16, 2024, the Company borrowed $15.0 million on its unsecured revolving line of credit, which remained outstanding as of March 31, 2024.

Scheduled Principal Payments

Scheduled principal payments on the Company's outstanding debt are as follows:

	Mortgage loan payable
Year	balloon payments		Line of credit		Total
Remainder of 2024	$	34,910,000	$	-	$	34,910,000
2025		96,501,000		15,000,000		111,501,000
2026		77,445,000		-		77,445,000
2027		134,223,000		-		134,223,000
2028		182,587,000		-		182,587,000
Thereafter		67,795,000		-		67,795,000
	$	593,461,000	$	15,000,000	$	608,461,000

Note 8. Commitments and Contingencies

Litigation and Regulatory Matters

The Company is a party to certain legal actions arising in the normal course of business. Management does not expect there to be adverse consequences from these actions that would be material to the Company’s unaudited interim condensed consolidated financial statements.

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances, or petroleum product releases, at its properties. The owner may be liable to governmental entities or to third parties for property damage, and for investigation and cleanup costs incurred

13

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

by such parties in connection with any contamination. Generally, the Company’s tenants must comply with environmental laws and meet any remediation requirements. In addition, leases typically impose obligations on tenants to indemnify the Company from any compliance costs the Company may incur as a result of environmental conditions on the property caused by the tenant. However, if a lease does not require compliance, or if a tenant fails to or cannot comply, the Company could be forced to pay these costs. Management is unaware of any environmental matters that would have a material impact on the Company’s unaudited interim condensed consolidated financial statements.

Note 9. Equity and Noncontrolling Interests

Common Shares Detail

The Company’s common shares consist of Class A Common Shares, Class I Common Shares and Class S Common Shares, which are collectively referred to herein as “common shares.” The Class A, Class I and Class S Common Shares have identical rights and privileges, including identical voting rights, but have different upfront selling commissions and related fees. Each Class A Common Share and each Class S Common Share shall automatically and without any action on the part of the shareholder thereof convert into the same number of Class I Common Shares upon a listing of any class of common shares pursuant to our effective registration statement on any securities exchange registered with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, or any merger, consolidation, transfer of all or substantially all of the assets or other business combination of the Company, as a result of which all outstanding common shares are canceled in exchange for the right to receive cash or securities, or a combination thereof.

The Company is currently conducting a private placement offering on a continuous basis of up to $2.165 billion of common shares (the “Private Offering”). The Trustee may increase the maximum offering amount of the Private Offering as long as it is anticipated to be accretive to the Company’s shareholders, in the Trustee’s sole discretion. A wholly-owned subsidiary of the Sponsor, ExchangeRight Income Fund GP, LLC, owned 600,000 Class I Common Shares as of March 31, 2024 and December 31, 2023, respectively, which were purchased on the same terms as those available to the other investors at acquisition. The following table provides a summary of the Class I, Class A and Class S common shares offering price in effect for the three months ended March 31, 2024:

	Offering price
Effective date	Class I		Class A		Class S
January 1, 2024 through January 23, 2024	$	27.06	$	28.77	$	28.04
January 24, 2024 through March 31, 2024	$	26.99	$	28.70	$	27.97

Common Share Repurchase Program

The Company has adopted a share repurchase program whereby, subject to certain limitations, shareholders may request on a quarterly basis that the Company repurchases all or any portion of their shares. Shareholders are eligible to have their shares repurchased by the Company pursuant to the share repurchase program and the authorization of the Trustee. Holders of shares may request that the Company repurchase shares in an amount not to exceed five percent (5.0%) per fiscal year of the Company’s issued and outstanding shares. The Company may repurchase fewer shares than have been requested in any particular quarter to be repurchased under its share repurchase program, or none at all, at the Company’s full discretion. The Company also has no obligation to repurchase shares if the redemption would violate the applicable restrictions on distributions under Maryland law, which prohibits distributions that would cause the Company to fail to meet statutory tests of solvency. The Trustee may modify, suspend or terminate the share repurchase program if it deems such action to be in the Company’s best interest and the best interest of the Company’s shareholders. The 600,000 Class I Common Shares owned by ExchangeRight Income Fund GP, LLC are restricted to redemption and therefore not subject to the share repurchase program. During the three months ended March 31, 2024, the Company repurchased 251,315 Class I Common Shares and 52,959 Class A Common Shares totaling $8.1 million under the share repurchase program.

14

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

Distributions

The amount of distributions payable to the Company’s shareholders is determined by the Trustee and is dependent on a number of factors, including funds available for distribution, the Company’s financial condition, capital expenditure requirements, requirements of Maryland law and annual distribution requirements needed to qualify and maintain the Company’s status as a REIT. The Trustee has authorized, and the Company has declared, distributions through March 31, 2024. The distributions are payable on or around the 15th day following each month end to shareholders of record at the close of business on the last day of the prior month.

The following table provides a summary of the monthly distributions declared per share for the three months ended March 31, 2024:

	Three months ended
	March 31, 2024
	Class A		Class I
January	$	0.1449	$	0.1449
February	$	0.1449	$	0.1449
March	$	0.1449	$	0.1449
	$	0.4347	$	0.4347

Cumulative distributions relating to common shares and Operating Partnership units (“OP Units”) totaling $3.5 million were declared but not yet paid as of March 31, 2024 and have been included in distributions payable in the accompanying condensed consolidated balance sheet. The unpaid distributions as of March 31, 2024 were paid in cash or reinvested in the Company’s common shares in April 2024.

Noncontrolling Interests

The Operating Partnership had 8,014,496 Units outstanding as of March 31, 2024. The holders of OP Units have the right to cause their OP Units to be redeemed by the Operating Partnership for cash, unless the Company, in its sole discretion, elects to purchase such OP Units in exchange for Class I Common Shares of the Company, issuable on a 1:1 basis, subject to adjustment under certain circumstances. The Company currently intends to elect to pay the redemption price for all OP Units tendered for redemption in the form of Class I Common Shares. During the three months ended March 31, 2024, 24,449 OP Units were exchanged for the same number of Class I Common Shares.

Note 10. Related and Affiliated Party Transactions

Organization and Offering Costs

The Sponsor incurs certain organization and offering costs in connection with the offering of the common shares and OP Units and the organization of the Company. These costs include, but are not limited to, fees related to special purpose entity formation, legal and accounting fees, marketing expenses and other costs and expenses directly related to the offering and organization of the Company. All of these expenses are paid by the Sponsor or its affiliates. The Sponsor earns an amount equal to 1.00% of the net transaction price of sales of Class I, A and S Common Shares, which is expected to offset the organizational and offering costs incurred described above.

Offering costs of $0.1 million were included in total equity for the three months ended March 31, 2024 for which the Company was obligated to pay the Sponsor. In addition, Class A Common Shares incur broker dealer commissions as an offering cost, a portion of which could be eligible to be earned by an affiliate of the Company. These net commissions totaled $0.4 million and were included in total equity for the three months ended March 31, 2024.

15

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

Class I Common Share and Noncontrolling Interest Ownership Interests

ExchangeRight Income Fund GP, LLC, owned 600,000 Class I Common Shares as of March 31, 2024, which were purchased on the same terms as other investors at acquisition.

In addition, ExchangeRight has made an investment into OP Units on the same terms offered to OP Unit holders. ExchangeRight owns 77,308 OP Units as of March 31, 2024.

Performance Participation

In addition to distributions payable on the 600,000 Class I Common Shares that ExchangeRight Income Fund GP, LLC holds, ExchangeRight Income Fund GP, LLC also holds a special limited partnership interest in our Operating Partnership, which entitles it to receive an incentive fee in accordance with the following waterfall:

(1) First, 100% to the holders of OP Units (including OP Units held by the Company, with respect to common shares issued by the Company) until they have received distributions, in cash, equal to a seven percent (7.0%) cumulative, non-compounding annual return on all capital contributions made, or deemed to have been made, to the Operating Partnership;

(2) Second, 100% to the holders of OP Units, pro rata in accordance with their respective capital accounts, until all of the holders of OP Units have received cumulative distributions, in cash, equal to their respective capital contributions made, or deemed to have been made, to the Operating Partnership; and

(3) Third, (i) 80% to the holders of OP Units, pro rata in accordance with their respective capital accounts, and (ii) 20% to the special limited partner.

There was no performance participation earned or paid during the three months ended March 31, 2024 and 2023, respectively.

Asset Management and Property Management Fees

An annual asset management fee is payable by the Operating Partnership to the Asset Manager, pursuant to an asset management agreement between the Asset Manager and the Operating Partnership. The asset management fee is an amount equal to fifteen basis points (0.15%) of the Company’s assets under management. The asset management fee is payable quarterly (0.0375% each quarter) and in arrears. The asset management agreement has an initial term of five years and will automatically renew at the expiration of the initial or any subsequent five-year term for an additional five-year term.

An annual property management fee is payable by the Operating Partnership to the Property Manager pursuant to a property management agreement between the Operating Partnership and the Property Manager. The property management fee is equal to 1.10% of the gross revenues received by the Company from the Trust Properties and any other assets acquired by the Company, but excluding reimbursements relating to real estate taxes, insurance and common area maintenance charges and the fees earned by the Company from the RSLCA and noted receivable from affiliates. The current term of the property management agreement expires on February 28, 2025, and will automatically renew at the expiration of the term and any subsequent three-year term for an additional three-year term.

Asset management and property management fees for the three months ended March 31, 2024 and 2023 were as follows:

	Three Months Ended March 31,
	2024			2023
Asset management fees	$	137,000	(a)	$	444,000
Property management fees	$	187,000		$	177,000

(a) Asset management fees are net of $0.3 million in fees waived by the asset manager.

16

ExchangeRight Income Fund

(d/b/a ExchangeRight Essential Income REIT)

Notes to Condensed Consolidated Financial Statements

March 31, 2024

Asset management fees payable of $137,000 were included in due to affiliates on the Company's balance sheet as of March 31, 2024. Property management fees were paid in full as of March 31, 2024.

Note 11. (Loss) Earnings Per Share

Basic (loss) earnings per share (“EPS”) is calculated by dividing net loss attributable to the Company’s common shareholders by the weighted average number of common shares outstanding for the period including participating securities, if applicable. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares and then shared in the earnings of the Company. OP Units are convertible to Class I Common Shares of the Company on a 1-to-1 basis and are allocated income on the same basis as common shares of the Company. Therefore, the result of an assumed conversion of the OP Units would have neither a dilutive nor anti-dilutive effect on earnings per share. Accordingly, basic (loss) EPS is the same as diluted (loss) EPS for the three months ended March 31, 2024 and 2023, respectively. The following table provides a reconciliation of the numerator and denominator of the EPS calculations for the three months ended March 31, 2024 and 2023, respectively:

	Three months ended March 31,
	2024			2023
Numerator
Net (loss)	$	(589,000	)	$	(609,000	)
Net loss attributable to noncontrolling interests		199,000			206,000
Net (loss) attributable to common shareholders, basic and diluted	$	(390,000	)	$	(403,000	)
Denominator
Weighted average number of common shares outstanding, basic and diluted		15,705,274			14,786,099
Net (loss) per common share attributable to common shareholders, basic and diluted	$	(0.02	)	$	(0.03	)

Note 12. Subsequent Events

Management has evaluated subsequent events through the date the unaudited interim condensed consolidated financial statements were available to be issued. Management has determined that there are no material events that would require adjustment to, or additional disclosure in, the Company’s unaudited interim condensed consolidated financial statements, other than those disclosed throughout this report and below.

Common Share Activity

The Company issued 72,040 Class A Common Shares and 137,124 Class I Common Shares (excluding the 45,492 OP Units that were exchanged for same number of Class I Common Shares discussed below) totaling $5.8 million in proceeds from April 1, 2024 through the date of issuance of this report.

The Company repurchased 51,244 Class A Common Shares totaling $1.3 million and 51,432 Class I Common Shares totaling $1.3 million from April 1, 2024 through the date of this report. Additionally, 45,492 OP Units were exchanged for the same number of Class I Common Shares from April 1, 2024 through the issuance of this report.

The Company adjusted the offering price of its common shares effective April 17, 2024 as follows:

	Offering price
Effective date	Class I		Class A		Class S
April 17, 2024	$	27.14	$	28.86	$	28.12

17

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited interim condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2023 and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” related thereto included in the Company's Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on April 11, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategies for our business, includes forward-looking statements that involve risks and uncertainties. You should read “Item 1A. Risk Factors” of our Form 10-K that was filed with the Securities and Exchange Commission on April 11, 2024 and the “Cautionary Note Regarding Forward-Looking Statements” section of this Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements.

Company Overview

ExchangeRight Income Fund, doing business as ExchangeRight Essential Income REIT, a Maryland statutory trust, is a self-administered real estate company, formed on January 11, 2019, focusing on investing in single-tenant, primarily investment-grade net-leased real estate. The Company, through the Operating Partnership, owned 352 properties in 34 states as of March 31, 2024. These properties were 98.6% leased as of March 31, 2024 and are occupied by 36 different primarily national investment-grade necessity-based retail tenants and are additionally diversified by industry, geographic region and lease term.

The Company has elected and is qualified to be taxed as a REIT for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2019. The Company is the sole general partner and a limited partner of the Operating Partnership, a Delaware limited partnership formed on January 9, 2019. Substantially all of the Company’s business is conducted through the Operating Partnership. The Trust Properties are owned and controlled by the Company and are managed by the Property Manager and the Asset Manager, which are both wholly-owned subsidiaries of ExchangeRight, pursuant to executed management agreements with each respective entity.

Recent Developments

During the first quarter of 2024, global markets continued to experience volatility, driven by concerns over geopolitical conflicts in Eastern Europe and the Middle East, persistent inflation, elevated interest rate levels, and uneven economic growth. Inflation persisted at elevated levels compared to historical norms in many major economies around the world, prompting uncertainty over whether and to what extent central banks will ease monetary policy over the next several quarters of 2024, if at all.

Substantially all of the Company’s tenant leases contain provisions designed to partially mitigate the negative impact of inflation in the near term. Such lease provisions include clauses that require tenants to reimburse the Company for inflation-sensitive costs such as real estate taxes or insurance and many of the operating expenses it incurs. The Company has not been materially impacted in the current period by elevated interest rate levels as all of its mortgage debt is currently effectively fixed-rate financing as of March 31, 2024. Further inflation rate increases or elevated interest rates over a prolonged period of time may have a material adverse impact on the Company’s business. It remains difficult to predict the full impact of recent events and any future changes in interest rates or inflation.

Highlights for the Three Months Ended March 31, 2024

Operating Results

The March 2024 distribution marked the 60th consecutive month of providing stable distributions to our investors. We have increased the distribution we pay five times since our inception. The Company declared distributions totaling $10.3 million for the three months ended March 31, 2024. As of March 31, 2024, the Company’s cumulative inception-to-date cash flows from operating activities has funded 100% of our cumulative inception-to-date distributions. The Company’s current distributions represent a 6.41% annualized return, based on the $0.1449 per share distribution rate and $27.14 NAV per share as of March 31, 2024, respectively. The following table details the annualized distribution rate based on the $0.1449 per share distribution rate in effect as of March 31, 2024 and current offering price of the Company’s common shares:

18

	Class I			Class A			Class S
Offering price (effective April 17, 2024)	$	27.14		$	28.86		$	28.12
Annualized distribution rate (1)		6.41	%		6.02	%		5.33	%
Trailing 12 month total return (2)		2.48	%		-3.61	%	n/a
Three-year total annual return (2)		8.14	%		5.68	%	n/a
Inception-to-date total annual return (2)		8.75	%		7.02	%	n/a

(1) The annualized distribution rate is calculated by the March 31, 2024 distribution rate in effect of $0.1449 per share divided by the offering price per share in connection with the Company’s March 31, 2024 NAV declaration. The Company believes the annualized distribution rate is a useful measure of our overall investment performance.

(2) Total return is calculated as the change in NAV per share at the end of the respective period versus the respective share class offering price per share at the beginning of the respective period plus any distributions per share declared during the period. The Company believes total return is a useful measure of the overall investment performance of our shares.

The Company remained 100% collected on its rents across all of its tenants in the portfolio for the three months ended March 31, 2024, and through the inception of the Company to date.

Leasing

The Company executed two lease renewals during the three months ended March 31, 2024 with average lease extensions of 60 months and average new rents over rents prior to the renewal of 10.0% for the period. The Company’s portfolio is 98.6% leased and its weighted average lease term as of March 31, 2024 is 6.4 years.

Capital

The Company has experienced minimal immediate term impact from the current elevated interest rate environment as substantially all of its outstanding debt is effectively fixed as of March 31, 2024. The Company has experienced regular net inflows of shareholder capital. All redemption requests, representing approximately 3.8% of inception-to-date total equity raised through March 31, 2024, have been fully satisfied.

Real Estate Investments

The following table details information about our tenants as of March 31, 2024:

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																Weighted
	Number of leases								Annualized base rents							average lease
Tenant	NN (a)		NNN (b)		Total		GLA (c)		Total		% of total			Per sq. ft (d)		term (yrs) (e)
Dollar General		25		92		117		1,109,300	$	12,147,100		17.8	%	$	10.95		5.3
Walgreens		19		14		33		476,800		10,869,600		16.0	%	$	22.80		5.2
Tractor Supply		14		5		19		390,500		5,429,800		8.0	%	$	13.90		6.8
Family Dollar (f)		27		12		39		337,100		4,277,900		6.3	%	$	12.69		3.9
Hobby Lobby		8		1		9		513,400		4,075,200		6.0	%	$	7.94		5.7
Advance Auto Parts		27		5		32		233,900		3,554,900		5.2	%	$	15.20		4.3
Stop & Shop		-		1		1		102,100		2,940,000		4.3	%	$	28.80		12.7
Fresenius Medical Care		9		2		11		94,300		2,905,500		4.3	%	$	30.81		6.6
CVS Pharmacy		8		1		9		111,200		2,675,500		3.9	%	$	24.06		5.5
Pick n Save		1		1		2		123,500		1,988,100		2.9	%	$	16.10		5.6
Napa Auto Parts		-		18		18		155,000		1,850,300		2.7	%	$	11.94		12.1
Kroger		3		-		3		200,100		1,624,500		2.4	%	$	8.12		7.3
Publix		2		-		2		96,800		1,548,400		2.3	%	$	16.00		16.2
Hy-Vee		-		1		1		101,200		1,415,800		2.1	%	$	13.99		14.8
BioLife Plasma Services L.P. (g)		-		2		2		30,800		1,389,500		2.0	%	$	45.11		10.4
First Midwest Bank (h)		-		3		3		41,600		1,333,500		2.0	%	$	32.06		5.8
AutoZone		7		2		9		65,900		994,700		1.5	%	$	15.09		2.8
Dollar Tree		9		-		9		84,200		898,200		1.3	%	$	10.67		4.0
Giant Eagle		1		-		1		81,800		848,300		1.2	%	$	10.37		7.0
Walmart Neighborhood Market		-		1		1		41,800		738,600		1.1	%	$	17.67		7.5
Goodwill		2		-		2		42,800		653,200		1.0	%	$	15.26		6.1
Sherwin Williams		7		-		7		45,400		577,200		0.8	%	$	12.71		2.6
Verizon Wireless (i)		2		-		2		11,300		569,800		0.8	%	$	50.42		3.2
O'Reilly (j)		5		1		6		41,400		557,900		0.8	%	$	13.48		5.2
Ross Stores		1		-		1		25,800		354,800		0.5	%	$	13.75		4.8
Food Lion (k)		1		-		1		41,300		351,400		0.5	%	$	8.51		9.6
PNC Bank, N.A.		-		1		1		6,100		266,800		0.4	%	$	43.74		4.5
HomeGoods (l)		1		-		1		22,200		255,800		0.4	%	$	11.52		7.0
MedSpring		1		-		1		4,600		193,100		0.3	%	$	41.98		2.9
The Christ Hospital		-		1		1		9,300		181,300		0.3	%	$	19.49		3.8
Five Below		1		-		1		8,500		135,700		0.2	%	$	15.96		6.8
TCF National Bank (m)		-		1		1		4,500		116,700		0.2	%	$	25.93		2.8
BB&T Bank (n)		-		1		1		2,700		105,500		0.2	%	$	39.07		4.8
Aaron's		1		-		1		7,200		101,900		0.1	%	$	14.15		1.9
Athletico Physical Therapy		1		-		1		3,400		77,000		0.1	%	$	22.65		2.5
Archana Grocery		1		-		1		9,300		74,600		0.1	%	$	8.02		9.3
Total		184		166		350		4,677,100	$	68,078,100		100.0	%	$	14.56		6.4
Vacant								66,000
Total Portfolio								4,743,100

(a)“NN” or “Double Net” means leases where landlord will have some obligations for roof, parking lot, and/or building structure but where the tenant remains obligated for operating costs of property taxes, insurance, and property maintenance.

(b)“NNN” or “Triple Net” means leases where the tenant is obligated pursuant to its lease for the costs of property taxes, insurance, and property maintenance, often including both repairs and replacements.

(c)"GLA" means gross leasable area.

(d)Annualized base rent per square foot is calculated as the aggregate, annualized contractual minimum rent for all occupied spaces divided by the aggregate GLA of all occupied spaces as of March 31, 2024. Tenant concessions and abatements are reflected in this measure. Furthermore, from time to time, a limited number of short-term (generally one to three months) free rent concessions may be provided to tenants prior to initial occupancy or upon a renewal extension. As of March 31, 2024, no tenants were in a free rent concession period.

(e)Weighted based on annualized base rents.

(f)Family Dollar's leases are made primarily with Family Dollar Stores, Inc. This entity is a wholly owned subsidiary of Dollar Tree, Inc.

(g)BioLife Plasma Services L.P.'s leases are guaranteed by Takeda Pharmaceuticals U.S.A., Inc. This entity is a wholly owned subsidiary of Takeda Pharmaceutical Co. Ltd.

(h)Our leases were originally with First Midwest Bank as lessee. In February 2022 First Midwest Bancorp Inc., the former parent entity of First Midwest Bank, merged with Old National Bancorp. Subsequent to the merger, our leases are now with Old National Bank.

(i)Verizon Wireless's leases are entered into with Cellco Partnership. This entity is a wholly owned subsidiary of Verizon Communications, Inc. Verizon Communications, Inc. has provided a parent support agreement whereby it has agreed to guarantee certain of the payment obligations of Cellco Partnership.

(j)O'Reilly's leases are entered into with various wholly owned subsidiaries of O'Reilly Automotive Inc.

20

(k)Food Lion's lease is guaranteed by Delhaize America, Inc. This entity is a wholly owned subsidiary of Ahold Delhaize N.V.

(l)HomeGoods’ lease is guaranteed by HomeGoods, Inc. This entity is a wholly owned subsidiary of TJX Companies, Inc.

(m)Our lease was originally with TCF Bank as lessee. In June 2021 TCF Financial Corporation, the former parent entity of TCF Bank, merged with Huntington Bancshares Inc.

(n)Our lease was originally with BB&T Bank as lessee. In December 2019 BB&T Corporation, the former parent entity of BB&T Bank, merged with SunTrust Banks, Inc. in a merger of equals to form Truist Financial Corporation. Subsequent to the merger, our lease is now with Truist Bank.

The following table details the industries in which our tenants operate as of March 31, 2024:

	Number		GLA					Annualized base rents
Industry	of leases		Square feet		% of total			Dollars (a)		% of total
Discount Necessity Retail		165		1,530,600		32.3	%	$	17,323,200		25.4	%
Pharmaceutical Retailers		42		588,000		12.4	%		13,545,100		19.9	%
Grocery		13		797,900		16.8	%		11,529,700		16.9	%
Discount Automotive		65		496,200		10.5	%		6,957,800		10.2	%
Farm and Rural Supply		19		390,500		8.2	%		5,429,800		8.0	%
Discount Specialty Retail		13		586,900		12.4	%		5,119,900		7.5	%
Medical Care		12		98,900		2.1	%		3,098,600		4.6	%
Banking Services		6		54,900		1.2	%		1,822,500		2.7	%
Healthcare Providers		4		43,500		0.9	%		1,647,800		2.4	%
Paint and Supplies		7		45,400		1.0	%		577,200		0.8	%
Necessity Retail		2		11,300		0.2	%		569,800		0.8	%
Discount Apparel		1		25,800		0.5	%		354,800		0.5	%
Rental & Leasing Services		1		7,200		0.2	%		101,900		0.1	%
Total		350		4,677,100		98.6	%	$	68,078,100		100.0	%
Vacant				66,000		1.4	%
Total Portfolio				4,743,100		100.0	%

(a)Annualized base rents are calculated as the aggregate, annualized contractual minimum rent for all the space as of March 31, 2024. Tenant concessions and abatements are reflected in this amount. Furthermore, from time to time, a limited number of short-term (generally one to three months) free rent concessions may be provided to tenants prior to initial occupancy or upon a renewal extension. As of March 31, 2024, no tenants were in a free rent concession period.

The following table details our contractual lease expirations as of March 31, 2024 (assuming no exercise of contractual extension options):

	Number		GLA					Annualized base rents
Year	of leases		Square feet		% of total			Dollars		% of total			Per sq. ft. (a)
2024		6		49,000		1.0	%	$	592,700		0.9	%	$	12.10
2025		20		163,200		3.5	%		1,956,300		2.9	%	$	11.99
2026		42		487,200		10.4	%		5,780,600		8.5	%	$	11.86
2027		40		561,200		12.0	%		8,293,800		12.2	%	$	14.78
2028		59		612,300		13.1	%		10,049,800		14.8	%	$	16.41
2029		39		455,100		9.7	%		6,303,800		9.3	%	$	13.85
2030		33		474,300		10.1	%		7,397,600		10.9	%	$	15.60
2031		43		673,500		14.4	%		9,303,600		13.7	%	$	13.81
2032		29		456,100		9.8	%		6,199,100		9.1	%	$	13.59
2033		10		131,500		2.8	%		2,109,700		3.1	%	$	16.04
2034		5		135,400		2.9	%		1,439,000		2.1	%	$	10.63
2035		8		71,400		1.5	%		1,324,300		1.9	%	$	18.55
2036		6		140,500		3.0	%		3,521,400		5.2	%	$	25.06
2037		5		54,200		1.2	%		641,900		0.9	%	$	11.84
2038		2		14,200		0.3	%		200,300		0.3	%	$	14.11
2039		2		149,600		3.2	%		2,214,200		3.3	%	$	14.80
2040		1		48,400		1.0	%		750,000		1.1	%	$	15.50
Total		350		4,677,100		100.0	%	$	68,078,100		100.0	%	$	14.56

(a)Annualized base rent per square foot is calculated as the aggregate, annualized contractual minimum rent for all occupied spaces divided by the aggregate GLA of all occupied spaces as of March 31, 2024. Tenant concessions and abatements are reflected in this measure. Furthermore, from time to time, a limited number of short-term (generally one to three months) free rent concessions may be provided to tenants prior to initial occupancy or upon a renewal extension. As of March 31, 2024, no tenants were in a free rent concession period.

21

The following table details annualized base rents by state for our portfolio as of March 31, 2024:

	Number		GLA					Annualized base rents
State	of leases		Square feet		% of total			Dollars (a)		% of total
Illinois		38		382,400		8.1	%	$	7,269,700		10.7	%
Ohio		44		579,400		12.2	%		6,818,400		10.0	%
Texas		37		403,500		8.5	%		5,948,800		8.7	%
Louisiana		41		420,400		8.9	%		5,071,400		7.4	%
Wisconsin		20		342,800		7.2	%		5,025,100		7.4	%
Alabama		14		268,800		5.7	%		3,491,900		5.1	%
Florida		21		225,600		4.8	%		3,163,600		4.6	%
Georgia		14		264,300		5.6	%		3,039,400		4.5	%
Tennessee		16		207,400		4.4	%		2,955,500		4.3	%
Massachusetts		1		102,100		2.2	%		2,940,000		4.3	%
Indiana		11		245,000		5.2	%		2,682,400		3.9	%
North Carolina		14		210,000		4.4	%		2,536,600		3.7	%
South Carolina		15		186,100		3.9	%		2,512,800		3.7	%
Pennsylvania		13		129,200		2.7	%		2,109,800		3.1	%
Michigan		5		102,100		2.2	%		1,636,800		2.4	%
Minnesota		1		101,200		2.1	%		1,415,800		2.1	%
Missouri		7		72,700		1.5	%		1,357,800		2.0	%
Virginia		6		91,800		1.9	%		1,354,800		2.0	%
Nevada		2		31,100		0.7	%		1,082,800		1.6	%
Arizona		2		32,100		0.7	%		873,400		1.3	%
New Jersey		3		33,000		0.7	%		702,000		1.0	%
Oklahoma		5		53,800		1.1	%		685,300		1.0	%
Utah		2		44,700		0.9	%		618,200		0.9	%
Connecticut		3		38,000		0.8	%		547,300		0.8	%
California		2		35,000		0.7	%		499,100		0.7	%
Maryland		1		20,000		0.4	%		321,900		0.5	%
Iowa		3		29,300		0.6	%		309,300		0.5	%
Arkansas		3		29,400		0.6	%		261,900		0.4	%
Idaho		1		22,000		0.5	%		255,000		0.4	%
Wyoming		1		7,000		0.1	%		132,200		0.2	%
Rhode Island		1		8,400		0.2	%		131,400		0.2	%
Colorado		1		8,000		0.2	%		119,400		0.2	%
Mississippi		1		9,300		0.2	%		106,400		0.2	%
Kansas		1		7,200		0.2	%		101,900		0.1	%
Total Portfolio		350		4,743,100		100.0	%	$	68,078,100		100.0	%

(a)Annualized base rents are calculated as the aggregate, annualized contractual minimum rent for all the space as of March 31, 2024. Tenant concessions and abatements are reflected in this amount. Furthermore, from time to time, a limited number of short-term (generally one to three months) free rent concessions may be provided to tenants prior to initial occupancy or upon a renewal extension. As of March 31, 2024, no tenants were in a free rent concession period.

22

Activity for the Three months Ended March 31, 2024

RSLCA Notes Receivable from Related Party

The Company has invested in the ExchangeRight Mezz Loans for the DST programs under the RSLCA. The loan agreement, as amended, matures on April 4, 2027 and bears interest at a rate equal to 12.0% per annum, while outstanding. ExchangeRight structured the RSLCA, including the 12% interest rate, as a way to provide an enhanced risk-adjusted return to the Company. The current capacity under the RSLCA is a maximum of $250.0 million outstanding at any time. ExchangeRight had net borrowings of $6.7 million during the three months ended March 31, 2024 increasing the balance of the RSLCA notes receivable to $29.0 million at March 31, 2024.

Mortgage Loans Payable

The Company repaid a $10.8 million mortgage loan payable by its contractual maturity date of March 1, 2024.

Revolving Lines of Credit

On May 19, 2021, ExchangeRight entered into a secured revolving line of credit in which the Company has access to utilize available capacity under this secured revolving line of credit. The Company is legally responsible for the specific borrowings related to the Company, whereas ExchangeRight is the guarantor on all outstanding borrowings in relation to this secured revolving line of credit. The secured revolving line of credit agreement, as amended in December 2023, now has a maturity date of December 22, 2026, with a maximum aggregate amount being borrowed by the Company and ExchangeRight totaling $80.0 million outstanding at any time and requires monthly payments. As of March 31, 2024, ExchangeRight borrowed $27.0 million under this secured revolving line of credit resulting in $53.0 million available for borrowing by the Company and ExchangeRight as of March 31, 2024. The Company had no outstanding borrowings under this revolving line of credit as of March 31, 2024.

Additionally, in January 2021, the Company entered into an unsecured revolving line of credit. The unsecured revolving line of credit agreement, as amended in December 2023, has a maturity date of January 15, 2025, and now bears interest at a rate per annum equal to the prime rate currently in effect with an interest rate floor of 6.00%, while outstanding (8.50% as of March 31, 2024). The unsecured revolving line of credit requires monthly interest only payments, while outstanding. On January 16, 2024, the Company borrowed $15.0 million on its unsecured revolving line of credit, which remained outstanding as of March 31, 2024.

Common Shares and Noncontrolling Interests

The following table provides a summary of certain Class I, Class A and Class S Common Shares attributes during the three months ended March 31, 2024:

	Offering price
Effective date	Class I		Class A		Class S
January 1, 2024 through January 23, 2024	$	27.06	$	28.77	$	28.04
January 24, 2024 through March 31, 2024	$	26.99	$	28.70	$	27.97

The Company issued 102,142 Class I Common Shares and 234,561 Class A Common Shares resulting in an aggregate of $9.4 million in proceeds to the Company during the three months ended March 31, 2024. No Class S Common Shares were issued during the three months ended March 31, 2024.

The Company redeemed 251,315 Class I Common Shares and 52,959 Class A Common Shares totaling $8.1 million during the three months ended March 31, 2024.

There were no OP Units issued by the Operating Partnership during the three months ended March 31, 2024.

23

Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

As of March 31, 2024, the Company owned 352 properties that were 98.6% leased. As of March 31, 2023, the Company owned 337 properties that were 99.8% leased. The following table details the Company’s results of operations for the three months ended March 31, 2024 and 2023, respectively:

	Three Months Ended March 31,
	2024			2023			Change
Rental revenue	$	20,469,000		$	19,527,000		$	942,000
Interest income on notes receivable from affiliates		923,000			1,166,000			(243,000	)
Other		28,000			6,000			22,000
Property operating expenses		(2,905,000	)		(2,870,000	)		(35,000	)
Management fees to affiliates		(324,000	)		(621,000	)		297,000
General and administrative expenses		(337,000	)		(428,000	)		91,000
Depreciation and amortization		(10,368,000	)		(10,157,000	)		(211,000	)
Provision for impairment		(250,000	)		-			(250,000	)
Interest expense		(7,838,000	)		(7,232,000	)		(606,000	)
Interest income		13,000			-			13,000
Net (loss)	$	(589,000	)	$	(609,000	)	$	20,000

Rental revenues consist of base rents, tenant reimbursables, straight-line rent adjustments, above and below market lease amortization, net and lease termination income. Rental revenues increased $0.9 million, or 4.8%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to the acquisition of 15 properties on August 31, 2023. The rental revenues associated with these properties were $1.3 million and $0 for the three months ended March 31, 2024 and 2023, respectively. This increase was offset by a decrease in lease termination income for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Interest income on notes receivable from affiliates includes interest earned from (1) outstanding advances under the RSLCA which bears interest at a rate equal to 12.0% per annum, (2) a $3.6 million real estate note receivable from an affiliated party and (3) a $2.4 million note receivable from an affiliated party. Interest income from the RSLCA was $0.2 million lower during the three months ended March 31, 2024 as a result of an approximate $8.2 million decrease in the average daily outstanding balance of the RSLCA during the three months ended March 31, 2024 versus the three months ended March 31, 2023.

Property operating expenses remained consistent during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The small increase in property operating expenses for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily due to the expenses associated with the properties acquired on August 31, 2023, offset by decreases in general repairs and maintenance and snow removal costs.

Management fees to affiliates decreased $297,000, or 47.8%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Asset management fees decreased $307,000 and property management fees increased $11,000 during the three months ended March 31, 2024 compared to the three months ended March 31, 2023, respectively. Asset management fees for the three months ended March 31, 2024 consisted of $0.5 million of earned fees per the management agreement, net of $0.3 million of fees waived by the asset manager.

General and administrative expenses decreased $0.1 million, or 21.3%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease in general and administrative expenses was primarily due to a decrease in audit, tax and legal fees. During the three months ended March 31, 2023, the Company incurred additional audit and legal fees in connection with its Form 10 registration statement.

Depreciation and amortization increased $0.2 million, or 2.1%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase is mainly attributable to the acquisition of 15 properties on August 31, 2023. The depreciation and amortization associated with these properties totaled $0.7 million and $0 for the three months ended March 31, 2024 and 2023, respectively. This increase was offset by a decrease in depreciation and amortization expense as a result of certain intangible assets being fully depreciated.

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Provision for impairment during the three months ended March 31, 2024 related to the impairment of one property. The estimation and evaluation of this impairment charge relies on judgments and assumptions made by management in determining the impairment charge to record. It is possible that such judgments and/or estimates will change; if this occurs, we may recognize additional impairment charges for this property or other properties owned by the Company.

Interest expense increased during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 as a result of (1) the assumption of a $43.5 million mortgage loan payable from the acquisition of 15 properties via merger agreements with one former 1031-exchangeable portfolios on August 31, 2023, (2) an increase in interest expense of $0.3 million as the Company borrowed $15.0 million on its unsecured revolving line of credit and (3) an increase of $0.2 million in amortization of below market debt associated with the assumption of mortgage loans payable.

Liquidity and Capital Resources

The Company has historically funded, and expects to continue to fund, short-term liquidity requirements, including debt service and distributions to our shareholders and distributions to holders of noncontrolling interests, from its operations. The Company funds acquisitions and certain capital expenditures primarily from the sale of shares of its Class A and Class I Common Shares, the issuance of additional OP Units, and through the assumption or incurrence of debt. The Company believes that its current liquidity position is sufficient to meet its expected acquisition activity. We expect to fund our current liquidity requirements from a combination of cash on hand, cash flow generated from operations, secured financings or an unsecured line of credit.

The Company received payment of 100% of contractual base rents during the three months ended March 31, 2024. The Company’s strategy targets properties with net leases to insulate our shareholders from rising costs and surprise repair costs that affect other types of real estate investments. Longer lease terms primarily with investment-grade national tenants successfully operating in historically recession-resilient sectors are also intended to provide stable income that can help bridge economic cycles.

The Company has invested in the ExchangeRight Mezz Loans for the DST programs under the RSLCA. The loan agreement, as amended, matures on April 4, 2027 and bears interest at a rate equal to 12.0% per annum, while outstanding. ExchangeRight structured the RSLCA, including the 12% interest rate, as a way to provide an enhanced risk-adjusted return to the Company. The current capacity under the RSLCA is a maximum of $250.0 million outstanding at any time. ExchangeRight had net borrowings of $6.7 million during the three months ended March 31, 2024 increasing the balance of the RSLCA notes receivable to $29.0 million at March 31, 2024.

The Company’s notes receivable under the RSLCA are secured by interests in an entity that indirectly owns net-leased necessity-based retail properties similar to the Company’s acquired properties, as well as a pledge agreement and subordination agreement provided by ExchangeRight. As a result, the risk profile of an investment in this program is intended to be similar to ownership of the Company’s acquired properties while providing liquidity and an enhanced risk-adjusted return over investments with similar liquidity.

In order to continue qualifying as a REIT, the Company is required to distribute at least 90% of its “REIT taxable income”, as defined in the Code. The Company paid monthly distributions relating to its common shares during the three months ended March 31, 2024. While the Company intends to continue paying regular monthly distributions, future distribution declarations will continue to be at the discretion of the Trustee, and will depend on the cash flow and financial condition of the Company, capital requirements, annual distribution requirements under the REIT provisions of the Code and such other factors as the Trustee may deem relevant.

In January 2021, the Company entered into an unsecured revolving line of credit. The unsecured revolving line of credit agreement, as amended in December 2023, has a maturity date of January 15, 2025, and now bears interest at a rate per annum equal to the prime rate currently in effect with an interest rate floor of 6.00%, while outstanding (8.50% as of March 31, 2024). The unsecured revolving line of credit requires monthly interest only payments, while outstanding. On January 16, 2024, the Company borrowed $15.0 million on its unsecured revolving line of credit, which remained outstanding as of March 31, 2024.

On May 19, 2021, ExchangeRight entered into a secured revolving line of credit in which the Company has access to utilize available capacity under this secured revolving line of credit. The Company is legally responsible for the specific borrowings related to the Company, whereas ExchangeRight is the guarantor on all outstanding borrowings in relation to this secured revolving line of credit. The secured revolving line of credit agreement, as amended in December 2023, now has a maturity date of December 22, 2026, with a maximum aggregate amount being borrowed by the Company and ExchangeRight

25

totaling $80.0 million outstanding at any time and requires monthly payments. As of March 31, 2024, ExchangeRight borrowed $27.0 million under this secured revolving line of credit resulting in $53.0 million available for borrowing by the Company and ExchangeRight as of March 31, 2024. The Company had no outstanding borrowings under this revolving line of credit as of March 31, 2024.

Repayment terms for each borrowing note within the secured line of credit were as follows:

Loan to cost %	Repayment terms
80%	Three months interest only followed by a 25-year amortization
75%	Six months interest only followed by a 30-year amortization
70% or less	12 months interest only followed by a 30-year amortization

The interest only period bore interest at a rate equal to the prime rate. The amortization principal period required payments at the current interest rate.

Fixed-rate mortgage loans payable are composed of the following as of March 31, 2024:

			March 31, 2024
		Maturity	Balance			Contractual
Description	Amortization	date	outstanding			interest rate
Fixed-rate mortgage	Interest-only	6/1/2024		18,008,000			4.71	%
Fixed-rate mortgage	Interest-only	10/1/2024		16,902,000			4.25	%
Fixed-rate mortgage	Interest-only	2/2/2025		21,550,000			3.97	%
Fixed-rate mortgage	Interest-only	5/1/2025		25,519,000			4.15	%
Fixed-rate mortgage	Interest-only	9/2/2025		24,420,000			4.38	%
Fixed-rate mortgage	Interest-only	12/1/2025		25,012,000			4.59	%
Fixed-rate mortgage (a)	Interest-only	5/10/2026		24,850,000			4.66	%
Fixed-rate mortgage (a)	Interest-only	9/1/2026		24,485,000			3.82	%
Fixed-rate mortgage (a)	Interest-only	12/1/2026		28,110,000			4.06	%
Fixed-rate mortgage	Interest-only	4/1/2027		31,200,000			4.38	%
Fixed-rate mortgage	Interest-only	6/6/2027		32,722,000			3.98	%
Fixed-rate mortgage	Interest-only	9/1/2027		36,860,000			3.99	%
Fixed-rate mortgage	Interest-only	12/1/2027		33,441,000			4.09	%
Fixed-rate mortgage	Interest-only	1/11/2028		35,840,000			4.05	%
Fixed-rate mortgage	Interest-only	2/1/2028		38,530,000			6.12	%
Fixed-rate mortgage (b)	Interest-only	2/1/2028		26,900,000			5.80	%
Fixed-rate mortgage	Interest-only	4/8/2028		37,795,000			4.27	%
Fixed-rate mortgage	Interest-only	7/1/2028		43,522,000			4.32	%
Fixed-rate mortgage	Interest-only	10/1/2029		30,231,000			3.13	%
Fixed-rate mortgage	Interest-only	1/1/2031		37,564,000			3.45	%
				593,461,000			4.30	%	(c)
Unamortized issuance costs, net				(1,040,000	)
Unamortized below market debt discount, net				(12,277,000	)
			$	580,144,000

(a)These fixed-rate mortgages became a recourse loan pursuant to their pre-defined loan terms in 2023.

(b)Mortgage bears interest at a variable-rate of 1.70% in excess of SOFR and concurrent with the closing of the mortgage, the Company entered into an interest rate swap agreement which effectively converted the variable-rate mortgage to a fixed-rate mortgage. Accordingly, this mortgage has been presented as a fixed-rate mortgage.

(c)The weighted average effective interest rate on mortgage loans payable was 5.02% as of March 31, 2024.

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The following table details the Company’s scheduled debt maturities as of March 31, 2024:

	Mortgage loan payable
Year	balloon payments		Line of credit		Total
Remainder of 2024	$	34,910,000	$	-	$	34,910,000
2025		96,501,000		15,000,000		111,501,000
2026		77,445,000		-		77,445,000
2027		134,223,000		-		134,223,000
2028		182,587,000		-		182,587,000
Thereafter		67,795,000		-		67,795,000
	$	593,461,000	$	15,000,000	$	608,461,000

The mortgage loans payable mature at various dates from June 2024 through January 2031. The Company intends to repay the mortgage debt maturing in 2024 with either available cash, proceeds from repayments under the RSLCA, secured debt financing, unsecured debt financing, or a combination of these options. Mortgage loans payable may require the Company to deposit certain replacement and other reserves with its lenders. Such “restricted cash” is generally available only for property-level requirements for which the reserves have been established and is not available to fund other property-level or Company-level obligations. The Company had $11.3 million in restricted cash as of March 31, 2024.

Cash Flows

The sources and uses of cash reflected in the Company's consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 are summarized below:

	Three months ended March 31,
	2024			2023
Cash flows provided by (used in):
Operating activities	$	9,791,000		$	9,842,000
Investing activities	$	(7,111,000	)	$	(13,213,000	)
Financing activities	$	(4,648,000	)	$	(11,708,000	)

Operating Activities

Net cash from operating activities was $9.8 million and $9.8 million for the months ended March 31, 2024 and 2023, respectively. Cash flows from operations remained consistent during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due the results for the 15 properties acquired on August 31, 2023, which was offset by an increase in cash paid for interest of $0.4 million and a decrease in interest income of $0.2 million from the RSLCA and notes receivable from affiliated parties.

Investing Activities

Net cash flows used in investing activities were primarily the result of the net advances/repayments on the RLSCA, a property acquisition, and leasehold improvements. During the three months ended March 31, 2024, the Company had $6.7 million in net advances under the RSLCA and incurred expenditures of $0.4 million for improvements of real estate. During the three months ended March 31, 2023, the Company acquired a property for a total cash outlay of $2.3 million, had $10.7 million in net advances under the RSLCA and incurred expenditures of $0.2 million for improvements of real estate.

Financing Activities

During the three months ended March 31, 2024, the Company had a balloon mortgage loan payable repayment of $10.8 million, redemptions of $8.1 million of Class A and Class I Common Shares, distributions of $6.0 million to the holders of Class A and Class I Common Shares, distributions of $3.4 million to the holders of OP Units, which was offset by borrowings of $15.0 million from its revolving credit facility, net proceeds of $6.6 million from the issuance of Class A and Class I Common Shares and pending trade deposits of $2.0 million.

During the three months ended March 31, 2023, the Company had net repayments of $73.3 million from its revolving credit facilities, mortgage loans payable repayments of $6.5 million, distributions of $6.3 million to the holders of Class A and Class I Common Shares, redemptions of $3.5 million of Class A and Class I Common Shares, distributions of $3.3 million to the

27

holders of OP Units and financing costs of $0.8 million relating to the two mortgage loans payable entered into in February 2023 offset by proceeds of $65.4 million relating to two mortgage loans payable entered into in February 2023, proceeds of $13.2 million from the issuance of Class A and Class I Common Shares and pending trade deposits of $3.4 million.

Distributions

The amount of distributions payable to the Company’s shareholders is determined by the Trustee and is dependent on a number of factors, including funds available for distribution, the Company’s financial condition, capital expenditure requirements, requirements of Maryland law and annual distribution requirements needed to qualify and maintain its status as a REIT. Our distribution policy is for our inception-to-date cash flow from operations to always exceed our distributions that have been declared or paid, rather than making distributions out of investor equity or financing, subject only to REIT qualification requirements or to avoid incurring federal income tax. The Trustee has authorized, and the Company has declared, distributions through March 31, 2024. The distributions are payable on approximately the 15th day following each month end to shareholders of record at the close of business on the last day of the prior month. Distributions in the aggregate amount of $3.5 million were declared but not yet paid as of March 31, 2024. The unpaid distributions as of March 31,2024 were paid in cash or settled in common shares under the Company's Dividend Reinvestment and Direct Share Purchase Plan (“DRIP”) during April 2024.

The following table provides a summary of the monthly distributions declared and paid per Class A Common Share and Class I Common Share for the three months ended March 31, 2024 and 2023, respectively:

	Three months ended
	March 31, 2024				March 31, 2023
	Class A		Class I		Class A		Class I
January	$	0.1449	$	0.1449	$	0.1449	$	0.1449
February	$	0.1449	$	0.1449	$	0.1449	$	0.1449
March	$	0.1449	$	0.1449	$	0.1449	$	0.1449
	$	0.4347	$	0.4347	$	0.4347	$	0.4347

On October 19, 2023, the Trustee approved the DRIP. The following table lists the Class I Common Shares, Class A Common Shares and Class S Common Shares issued and total distributions reinvested under the DRIP during the three months ended March 31, 2024:

	Common Shares			Total
Share Class	Issued			Reinvestment
Class I		16,573	(a)	$	443,000	(a)
Class A		19,638			525,000
Class S		-			-
Total		36,211		$	968,000

(a) Includes the issuance of 4,651 Class I Common Shares totaling $124,000 in connection with OP Unitholder distributions being reinvested back into the Company's Class I Common Shares based on OP Unitholders’ election.

The following table details the sources of our distributions during the three months ended March 31, 2024 and 2023:

	Three months ended March 31,
	2024		2023
	Amount		Amount
Cash Distributions
Class A and Class I Common Shares	$	5,974,000	$	6,341,000
Noncontrolling interests		3,362,000		3,283,000
Total cash distributions	$	9,336,000	$	9,624,000
Sources of Distributions
Cash flows from operating activities (a)	$	9,336,000	$	9,624,000
Cash flows from operating activities	$	9,791,000	$	9,842,000
Funds from Operations (“FFO”) (b)	$	10,063,000	$	9,572,000
Adjusted FFO (b)	$	10,320,000	$	9,716,000

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(a)As of March 31, 2024, the Company’s cumulative inception-to-date cash flows from operating activities funded 100% of the Company's cumulative inception-to-date cash distributions.

(b)A reconciliation of net (loss) attributable to common shareholders’ to FFO and Adjusted FFO (both non-GAAP measures) for the three months ended March 31, 2024 and 2023, respectively, is provided beginning on page 33 below.

Contractual Obligations

The following table sets forth the Company’s significant debt repayments, interest payments and operating lease obligations at March 31, 2024:

	Mortgage loans		Line of		Interest		Operating ground
Year	payable		credit		payments (a)		lease obligation		Total
2024	$	34,910,000	$	-	$	19,460,000	$	214,000	$	54,584,000
2025		96,501,000		15,000,000		22,091,000		285,000		133,877,000
2026		77,445,000		-		18,670,000		285,000		96,400,000
2027		134,223,000		-		14,225,000		285,000		148,733,000
2028		182,587,000		-		3,912,000		285,000		186,784,000
Thereafter		67,795,000		-		3,302,000		28,745,000		99,842,000
Total	$	593,461,000	$	15,000,000	$	81,660,000	$	30,099,000	$	720,220,000

(a)The interest rates used in this calculation are the rates in effect for all debt obligations as of March 31, 2024.

Related and Affiliated Party Transactions and Agreements

The Company has entered into agreements with ExchangeRight and its affiliates whereby we have paid, and may continue to pay, certain fees to, or reimburse certain expenses of, ExchangeRight or its affiliates for acquisition fees and actual incurred out-of-pocket expenses, but specifically excluding reimbursement related to employee compensation. The Company is also subject to a fee arrangement with ExchangeRight and its affiliates for organization and offering costs and asset and property management fees.

ExchangeRight incurs certain organization and offering costs in connection with the Company’s current private securities offering of its common shares and the organization of the Company. These costs include, but are not limited to, fees related to special purpose entity formation, legal and accounting fees, valuation fees related to any expansion of the offering, marketing expenses and other costs and expenses directly related to the offering and organization of the Company. All of these expenses are paid by ExchangeRight or its affiliates. ExchangeRight earns a percentage of the gross proceeds from the offering which is expected to offset the organizational and offering costs incurred described above. This amount is equal to 1.00% of the net transaction price of sales of common shares. Offering costs of $0.1 million were included in total equity for the three months ended March 31, 2024, for which the Company was obligated to reimburse ExchangeRight.

Off-Balance Sheet Arrangements

Other than the items disclosed in the Contractual Obligations section above, the Company had no off-balance sheet arrangements as of March 31, 2024 that are reasonably likely to have a current or future material effect on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The Company’s most critical accounting policies are summarized below. Other accounting policies are summarized in Note 2, “Summary of Significant Accounting Policies,” to the Company’s condensed consolidated financial statements as of and for the year ended December 31, 2023 included in the Company's Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on April 11, 2024. There have been no material changes in such critical accounting policies during the three months ended March 31, 2024.

Principles of Consolidation

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The unaudited interim condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, its subsidiaries and any single member limited liability companies or other entities which are consolidated in accordance with GAAP. The Company consolidates variable interest entities (“VIEs”) when it is the primary beneficiary. Generally, a VIE is an entity with one or more of the following characteristics: (1) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (2) as a group, the holders of the equity investment at risk (a) lack the power through voting or similar rights to make decisions about the entity’s activities that significantly impact the entity’s performance, (b) have no obligation to absorb the expected losses of the entity, or (c) have no right to receive the expected residual returns of the entity, or (3) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately fewer voting rights. A VIE is required to be consolidated by its primary beneficiary. The primary beneficiary of a VIE has (1) the power to direct the activities that most significantly impact the entity’s economic performance, and (2) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Significant judgments related to these determinations include estimates about the current values, performance of real estate held by these VIEs, and general market conditions.

Use of Estimates

The preparation of the unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s most significant assumptions and estimates relate to the useful lives of real estate assets, lease accounting, real estate impairment assessments and allocation of fair value of purchase consideration. These estimates are based on historical experience and other assumptions which management believes are reasonable. The Company evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from those estimates.

Investment in Real Estate

Real estate assets are stated at cost, less accumulated depreciation and amortization. Assets are recognized at fair value at acquisition date.

The Company evaluates each acquisition transaction to determine whether the acquired asset meets the definition of a business and therefore accounted for as a business combination or if the acquisition transaction should be accounted for as an asset acquisition. Under Accounting Standards Update (“ASU”) 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”), an acquisition does not qualify as a business when substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. Transaction costs related to acquisitions that qualify as asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs for acquisitions that are deemed to be acquisitions of a business are expensed as incurred.

The Company allocates the purchase price of acquired properties accounted for as asset acquisitions to tangible and identifiable intangible assets or liabilities based on their relative fair values. Tangible assets may include land, buildings, site improvements and tenant improvements. Intangible assets include the value of in-place leases and above-market leases and intangible liabilities include below-market leases. The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the relative fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions as well as costs to execute similar leases based on the specific characteristics of each tenant’s lease. The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including tenant improvements, leasing commissions, legal and other related expenses.

The values of acquired above-market and below-market leases are recorded based on the present values (using discount rates which reflect the risks associated with the leases acquired) of the differences between the contractual amounts to be received and management’s estimate of market lease rates, measured over the terms of the respective leases that management deemed appropriate at the time of the acquisitions. Such valuations include consideration of the noncancelable terms of the respective leases as well as any applicable renewal periods. The fair values associated with below-market rental renewal options are determined based on the Company’s experience and the relevant facts and circumstances that existed at the time of the

30

acquisitions. The values of the above-market and below-market leases are amortized over the term of the respective leases, including certain renewal options (as applicable), as an adjustment to rental revenue on the Company’s consolidated statements of operations and comprehensive income. The value of other intangible assets (including leasing commissions, tenant improvements, etc.) is amortized to expense over the applicable terms of the respective leases. If a lease were to be terminated prior to its stated expiration or not renewed, all unamortized amounts relating to that lease would be recognized in operations at that time. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources and also considers information and other factors including market conditions, the industry that the tenant operates in, characteristics of the real estate; e.g., location, size, demographics, value and comparative rental rates; tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business. Additionally, the Company considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the relative fair value of the tangible and intangible assets and liabilities acquired. The Company’s methodology for measuring and allocating the fair value of real estate acquisitions includes both observable market data (categorized as level 2 on the three-level valuation hierarchy of Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement), and unobservable inputs that reflect the Company’s own internal assumptions (categorized as level 3 under ASC Topic 820). Given the significance of the unobservable inputs the Company believes the allocations of fair value of real estate acquisitions should be categorized as level 3 under ASC Topic 820.

Management reviews each real estate investment for impairment whenever events or circumstances indicate that the carrying value of a real estate investment may not be recoverable. The review of recoverability of real estate investments held for use is based on an estimate of the future cash flows that are expected to result from the real estate investment’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, capital expenditures, competition and other factors. If an impairment event exists due to the projected inability to recover the carrying value of a real estate investment, an impairment loss is recorded to the extent that the carrying value exceeds estimated fair value.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. The Company considers the period of future benefit of each respective asset to determine its appropriate useful life. The estimated useful lives of the Company’s real estate assets by class are generally as follows:

Description	Depreciable life
Buildings	39 years
Building and site improvements	Ranging from 5 to 20 years
Tenant improvements	Shorter of the term of the related lease or useful life
Intangible lease assets and liabilities	Term of the related lease

Expenditures for improvements that substantially extend the useful lives of the assets are capitalized. Expenditures for maintenance, repairs and betterments that do not substantially prolong the normal useful life of an asset are expensed as incurred.

Revenue Recognition and Receivables

Management has determined that predominantly all of the Company’s leases with its various tenants are operating leases. The Company recognizes minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases on a straight-line basis over the term of the related leases when collectability is reasonably assured and records amounts expected to be received in later years as deferred rent receivable. Deferred rent receivable represents rent earned in excess of rent received as a result of straight-lining rents over the terms of the leases, in accordance with the guidance and is included in receivables on the accompanying consolidated balance sheets. Deferred rent liability represents rent received in excess of rent earned as a result of straight-lining rents over the terms of the leases. The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes and other recoverable costs in the period the related expenses are incurred.

A limited number of operating leases contain contingent rent provisions under which tenants are required to pay, as additional rent, a percentage of their sales in excess of a specified amount. The Company defers recognition of contingent rental income until those specified sales targets are met. Revenues also may include items such as lease termination fees, which tend to fluctuate more than rents from year to year. Termination fees are fees that the Company has agreed to accept in consideration for permitting certain tenants to terminate their lease prior to the contractual expiration. The Company recognizes lease termination income when the following conditions are met: (1) the lease termination agreement has been executed, (2) the lease termination

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fee is determinable, (3) all the Company’s landlord services pursuant to the terminated lease have been rendered, and (4) collectability of the lease termination fee is assured.

If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or by the Company. When the Company is the owner of the tenant improvements, the tenant is typically not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed.

When the tenant is the owner of the tenant improvements, any tenant improvement allowance that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:

•whether the lease stipulates how a tenant improvement allowance may be spent;

•whether the amount of a tenant improvement allowance is in excess of market rates;

•whether the tenant or landlord retains legal title to the improvements at the end of the lease term;

•whether the tenant improvements are unique to the tenant or general-purpose in nature; and

•whether the tenant improvements are expected to have any residual value at the end of the lease.

Noncontrolling Interests

The Company presents noncontrolling interests, which represents OP Units, and classifies such interests as a component of equity, separate from the Company’s shareholders’ equity. Noncontrolling interests were created as part of contribution and merger agreements with former 1031-exchangeable portfolios that were previously managed by ExchangeRight on behalf of investors and recognized at fair value as of the date of the transaction. The holders of OP Units have the right to exchange their OP Units for the same number of the Company’s Class I Common Shares.

Income Taxes

The Company has elected and is qualified to be taxed as a REIT, as it complies with the related provisions under the Internal Revenue Code of 1986, as amended. Accordingly, the Company generally is not and will not be subject to U.S. federal income tax to the extent of its distributions to shareholders and as long as certain asset, income and share ownership tests are met. To qualify as a REIT, the Company must annually distribute at least 90% of its REIT taxable income to its shareholders and meet certain other requirements. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. The Company may also be subject to certain state, local and franchise taxes. If the Company fails to meet these requirements, it will be subject to U.S. federal income tax, which could have a material adverse impact on its results of operations and amounts available for distributions to its shareholders. Application of tax laws and regulations to various types of transactions is susceptible to varying interpretations. Therefore, amounts reported in the consolidated financial statements could be changed at a later date upon examination and final determination by the taxing authorities. No such examinations by taxing authorities are presently in process.

The Company provides for uncertain tax positions based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. Management is required to determine whether a tax position is more likely than not to be sustained upon examination by tax authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Because assumptions are used in determining whether a tax benefit is more likely than not to be sustained upon examination by tax authorities, actual results may differ from the Company’s estimates under different assumptions or conditions.

Inflation

During the first quarter of 2023, global markets continued to experience volatility, driven by concerns over geopolitical conflicts in Eastern Europe and the Middle East, persistent inflation, elevated interest rate levels, and uneven economic growth. Inflation persisted at elevated levels compared to historical norms in many major economies around the world, prompting uncertainty over whether and to what extent central banks will ease monetary policy over the next several quarters of 2024, if at all.

Substantially all of the Company’s tenant leases contain provisions designed to partially mitigate the negative impact of inflation in the near term. Such lease provisions include clauses that require tenants to reimburse the Company for inflation-sensitive costs such as real estate taxes or insurance and many of the operating expenses it incurs. The Company has not been

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materially impacted in the current period by elevated interest rate levels as all of its mortgage debt is currently effectively fixed-rate financing as of March 31, 2024. Further inflation rate increases or elevated interest rates over a prolonged period of time may have a material adverse impact on the Company’s business. It remains difficult to predict the full impact of recent events and any future changes in interest rates or inflation.

Non-GAAP Financial Measures

FFO and Adjusted FFO

FFO is a widely recognized supplemental non-GAAP measure utilized to evaluate the financial performance of a REIT. The Company presents FFO in accordance with the definition adopted by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT generally defines FFO as net income (determined in accordance with GAAP), excluding gains (losses) from sales of real estate properties, impairment write-downs on real estate properties directly attributable to decreases in the value of depreciable real estate, plus real estate related depreciation and amortization, and adjustments for partnerships and joint ventures to reflect FFO on the same basis. The Company considers FFO to be an appropriate measure of its financial performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than other depreciable assets.

The Company also considers Adjusted Funds From Operations (“Adjusted FFO”) to be an additional meaningful financial measure of financial performance as it provides supplemental information concerning our operating performance, exclusive of certain non-cash items and other costs. The Company believes Adjusted FFO further assists in comparing the Company’s performance across reporting periods on a consistent basis by excluding such items.

FFO and Adjusted FFO should be reviewed with net (loss) attributable to common shareholders, the most directly comparable GAAP financial measure, when trying to understand the Company’s operating performance. FFO and Adjusted FFO do not represent cash generated from operating activities and should not be considered as an alternative to net (loss) income attributable to common shareholders or to cash flow from operating activities. The Company’s computations of FFO and Adjusted FFO may differ from the computations utilized by other REITs and, accordingly, may not be comparable to such REITs.

A reconciliation of net (loss) attributable to common shareholders to FFO and Adjusted FFO for the three months ended March 31, 2024 and 2023, is as follows:

	Three months ended March 31,
	2024			2023
Net (loss) attributable to common shareholders	$	(390,000	)	$	(403,000	)
Depreciation and amortization		10,402,000			10,181,000
Provision for impairment		250,000			-
Net (loss) attributable to noncontrolling interests		(199,000	)		(206,000	)
FFO applicable to diluted common shares		10,063,000			9,572,000
Adjustments:
Straight-line rent adjustments		(218,000	)		(252,000	)
Above/below market lease amortization, net		(624,000	)		(591,000	)
Amortization of deferred financing costs		73,000			204,000
Above/below market debt amortization, net		956,000			714,000
Straight-line ground rent adjustments		40,000			40,000
Amortization of tax incentive financing arrangement		30,000			29,000
Adjusted FFO applicable to diluted common shares	$	10,320,000		$	9,716,000
FFO per diluted common shares	$	0.42		$	0.43
Adjusted FFO per diluted common shares	$	0.44		$	0.43
Weighted average number of diluted common shares (a):
Common shares		15,705,274			14,786,099
OP Units		8,014,764			7,554,863
		23,720,038			22,340,962

(a) The weighted average number of diluted common shares used to compute FFO and Adjusted FFO applicable to diluted common shares includes OP Units that are excluded from the computation of diluted EPS as the result of an assumed conversion of the OP Units would have neither a dilutive nor anti-dilutive effect on earnings per share.

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Net Asset Value

The Company calculates NAV per share in accordance with the valuation guidelines that have been approved by our Trustee. Our Trustee has adopted valuation procedures, as amended from time to time, that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV. To calculate our NAV for the purpose of establishing a purchase and redemption price for our shares, our Trustee has adopted a model which adjusts the value of certain of our investments in real estate assets from historical cost to fair value. Our Trustee oversees the process of determining our estimated NAV per share, which includes considering estimated values of our commercial real estate assets and investments, including related liabilities, based upon, in certain instances, reports of the discounted cash flows generated by the underlying real estate provided by an independent valuation firm. The Trustee, upon its receipt and review of such valuation report, will determine a reasonable range for our estimated NAV per share and an estimated NAV per share. The independent valuation firm is not responsible for, and does not prepare, our NAV per share. The final determination of our NAV per share is made by our Trustee. The estimated NAV per share will represent approximately the mid-point of the range of values reflecting the effect of using different discount rates and terminal capitalization rates in the sensitivity analysis. Such NAV may be declared prior to the finalization, and ultimate issuance, of our quarterly or annual financial statements which may result in an immaterial variance in the declared NAV per share to the final reconciliation of NAV per share after the review and issuance of such financial statements is completed. If any such variance was ever determined to be material, our Trustee would declare a revised NAV per share for the quarter. Our Trustee has used the mid-point of the independent valuation firm’s real estate value range in setting the NAV per share since our formation.

We will cause our real property portfolio to be valued quarterly by an independent valuation firm, which will apply the fair value methodologies detailed within the Financial Accounting Standards Board ASC Topic 820, Fair Value Measurements and Disclosures. An independent valuation firm will review information provided by our Trustee regarding the properties we own as of the end of the quarter including location, building size, tenancy, lease rates, lease term and various other relevant metrics. The independent valuation firm will also research and analyze market data and valuation benchmarks in connection with each quarterly valuation. The independent valuation firm will principally focus on the income approach with each quarterly valuation and may perform the following actions in connection with its quarterly valuations:

•Hold interviews with the employees of our Trustee regarding historical valuation methodology, expertise of the portfolio, and industry expertise;

•Independently research comparable portfolio transactions and individual property transactions;

•Review third-party market reports; and

•Perform a discounted cash flow (“DCF”) approach on our portfolio.

In performing each quarterly valuation, our Trustee will provide the independent valuation firm with certain data, including but not limited to the following:

•Real property listing: a master list of all leased properties including all relevant details of each such property including location, lease terms, and other relevant factors.

•Leases and lease amendments: the lease files provide data such as property type, address, lease terms and rent details for the leased real property.

•Estoppels and move-in notices: the documents utilized to verify commencement of leases for build-to-suit properties.

•Property surveys: the documents that verify the size of each leased premise.

The Company’s total NAV presented in the following tables includes the NAV of our Class A, I and S Common Shares, as well as the OP Units as of March 31, 2024 and per share/unit is identical for Class A, I and S Common Shares and OP Units. The following table provides a breakdown of the major components of the Company’s NAV as of March 31, 2024 and December 31, 2023:

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Components	March 31, 2024			December 31, 2023
Investments in real estate	$	1,197,200,000		$	1,192,250,000
RSLCA notes receivable from affiliates		28,962,000			22,251,000
Notes receivable from affiliates		6,017,000			6,017,000
Cash and cash equivalents		6,091,000			7,053,000
Restricted cash		11,270,000			12,275,000
Receivables		6,900,000			6,612,000
Other assets		903,000			496,000
Mortgage loans payable		(580,144,000	)		(589,962,000	)
Revolving credit facility		(15,000,000	)		-
Pending trade deposits		(1,988,000	)		(1,386,000	)
Accounts payable, accrued expenses and other liabilities		(8,370,000	)		(9,533,000	)
Distributions payable		(3,456,000	)		(3,452,000	)
Due (to)/from affiliates, net		(849,000	)		493,000
NAV	$	647,536,000		$	643,114,000
Class A Common Shares		10,199,215			10,017,613
Class I Common Shares		5,644,258			5,768,982
Class S Common Shares		-			-
OP Units		8,014,496			8,038,944
Total outstanding Common Shares/OP Units		23,857,969			23,825,539
NAV per share/unit	$	27.14		$	26.99

The following table reconciles shareholders’ equity per the Company’s condensed consolidated balance sheet to the Company’s NAV as of March 31, 2024 and December 31, 2023:

Reconciliation of Shareholders’ Equity to NAV	March 31, 2024		December 31, 2023
Total shareholders’ equity	$	344,421,000	$	349,708,000
Noncontrolling interests attributable to operating partnership		183,158,000		187,334,000
Total equity per GAAP		527,579,000		537,042,000
Adjustment:
Fair value adjustment of real estate investments		119,957,000		106,072,000
NAV	$	647,536,000	$	643,114,000

The Company’s investments in real estate are presented under historical cost in our consolidated financial statements. As such, any increases or decreases in the fair market value of the Company’s investments in real estate are not recorded in the Company’s GAAP results other than in the event of an impairment or upon a sale. The Company’s mortgage loans payable and revolving credit facilities are valued at GAAP carrying value in the Company’s NAV calculation for any financings that are anticipated to be held to maturity. In addition, because the Company plans to utilize interest rate hedges to stabilize interest payments (i.e. to fix all-in interest rates through interest rate swaps or to limit interest rate exposure through interest rate caps) on individual loans and intends to hold each interest rate hedge until maturity, each interest rate hedge will be valued at par and thus its market value in accordance with GAAP will be excluded from the calculation of NAV. The Company entered into an interest rate swap agreement concurrent with the closing of the $26.9 million mortgage entered into in February 2023. At March 31, 2024, $47,000 is included in accounts payable, accrued expenses and other liabilities relating to the fair value of this interest rate swap agreement, which was not included for the calculation of NAV.

While the Company believes that the independent valuation firm’s assumptions and inputs are reasonable, a change in these assumptions and inputs may significantly impact the fair value of the real estate properties and the Company’s estimated NAV per share. For purposes of determining the Company’s NAV, the Company’s investments in real estate as of (1) March 31, 2024 are recorded at fair value using a weighted average discount rate of 6.60% with a range of 6.50% to 6.70% and weighted average exit capitalization rate of 5.75% with a range of 5.65% to 5.85% and (2) December 31, 2023 are recorded at fair value using a weighted average discount rate of 6.60% with a range of 6.50% to 6.70% and weighted average exit capitalization rate of 5.75% with a range of 5.65% to 5.85%. Assuming all other factors remain unchanged, the tables below present the estimated

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increase or decrease to the Company’s March 31, 2024 and December 31, 2023 NAV for the changes in the weighted average discount and exit capitalization rate.

		NAV per share/unit
Input	Hypothetical change	March 31, 2024		December 31, 2023
Discount rate (weighted average)	25 bps decrease	$	28.07	$	27.92
Discount rate (weighted average)	25 bps increase	$	26.20	$	26.06
Exit capitalization rate (weighted average)	25 bps decrease	$	28.46	$	28.31
Exit capitalization rate (weighted average)	25 bps increase	$	25.90	$	25.76

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

ITEM 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules, forms and regulations and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

Our management carries out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer regarding the effectiveness of our disclosure controls and procedures as of the end of each fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2024.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

We and our Trustee may from time to time be a party to legal proceedings which arise in the ordinary course of our business. The Company’s management is not aware of any current or pending legal proceedings to which we or any of our subsidiaries, or the Trustee, are a party or to which any of our property is subject, the outcome of which would, in management’s judgment based on information currently available, have a material adverse effect on our results of operations or financial condition, nor is management aware of any such legal proceedings contemplated by governmental authorities.

ITEM 1A. Risk Factors

The risk factors affecting the Company are described in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 11, 2024. There have been no material changes from these previously disclosed risk factors for the three months ended March 31, 2024.

ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

Unregistered Sales of Equity Securities

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Private Offering of Common Shares

On February 28, 2019, we commenced private placement offerings of our Class I and Class A Common Shares, the terms of which have been updated from time to time (the “Private Offering”). Upon the receipt of investment proceeds from the offering of our common shares, we transfer the net investment proceeds to our Operating Partnership in exchange for OP Units to be held by the Company. The offerings had an initial aggregate offering amount of $100,000,000, which has since been increased by the Trustee to the current aggregate offering amount of $2.165 billion. The common shares are being sold only for cash. The offering does not have a defined expiration date and will be left open to investors until the Trustee determines to terminate the offering. We also have offered the common shares at various offering prices, as determined by the Trustee, effective at various intervals. From the inception of the Private Offering until July 5, 2023, we offered the common shares in the Private Offering in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder. Commencing on July 6, 2023, we began conducting the Private Offering under Rule 506(c) of Regulation D, and began accepting subscriptions for investments under those terms for purchases closing on or after August 1, 2023. As of that date, subscriptions will be accepted solely from “accredited investors,” as defined in Rule 501(a) of Regulation D, whose accredited investor status has been verified by us. Under Rule 506(c), general solicitation and advertisement of offerings is permitted, however all purchasers in the offering must be accredited investors and the Company must take reasonable steps to verify the accredited investor status of each purchaser, among other requirements.

During the three months ended March 31, 2024, we sold common shares in the Private Offering, as set forth in the following table:

Class	Shares Sold		Average Price Per Share		Aggregate Offering Price
Class I Common Shares		85,569	$	27.03	$	2,313,000
Class A Common Shares		214,923	$	28.70		6,169,000
Class S Common Shares		-	$	-		-
Total		300,492			$	8,482,000

We have engaged broker-dealers who are registered with the SEC and members of the FINRA to act as our exclusive placement agents in connection with the Private Offering. During the three months ended March 31, 2024, we paid aggregate selling commissions to these placement agents in connection with the Private Offering of $371,000, allocable among the various classes of our common shares as follows: $4,000 with respect to the Class I Common Shares; and $367,000 with respect to the Class A Common Shares.

Issuance of Common Shares to OP Unitholders

The holders of the Operating Partnership’s Class I Common Units have the right to cause their Class I Common Units to be redeemed by the Operating Partnership for cash, unless the Company, in its sole discretion, elects to purchase such Class I Common Units in exchange for Class I Common Shares of the Company, issuable on a 1:1 basis, subject to adjustment under certain circumstances. The Company currently intends to elect to pay the redemption price for all Class I Common Units tendered for redemption in the form of Class I Common Shares.

During the three months ended March 31, 2024, holders of 24,449 Class I Common Units elected to cause the Operating Partnership to redeem their Class I Common Units, and the Company elected to purchase those units in exchange for the issuance of 24,449 Class I Common Shares. The Company did not pay any selling commissions in connection with the issuance of those common shares during the three months ended March 31, 2024.

Share Repurchases

The Company has a share repurchase program to provide eligible shareholders with limited, interim liquidity by enabling them to sell shares back to the Company, subject to restrictions and applicable law, if such repurchases do not impair the capital or operations of the Company. The Company is structured to provide partial liquidity to investors through redemptions on a quarterly basis of up to 5% of the Company’s issued and outstanding shares per fiscal year pursuant to the share repurchase program. Affiliates may seek to have their shares repurchased on the same terms and limitations as the common shareholders. However, notwithstanding the foregoing, ExchangeRight’s $15.0 million investment in Class I Common Shares is not eligible for redemption pursuant to the share repurchase program. All shareholder requests to the Company for repurchases have been honored since the inception of the Company.

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During the three months ended March 31, 2024, the Company repurchased common shares in the following amounts:

	Total Number of Shares Repurchased				Average Price Paid Per Share				Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs(1)				Maximum Number of Shares That May Yet Be Repurchased Under the Plans or Programs(2)
Period	Class I		Class A		Class I		Class A		Class I		Class A		Class I	Class A
January 2024		251,315		52,959	$	26.62	$	25.93		251,315		52,959	N/A	N/A
February 2024		-		-	$	-	$	-		-		-	N/A	N/A
March 2024		-		-	$	-	$	-		-		-	N/A	N/A
Total		251,315		52,959						251,315		52,959

(1)The Company established its share repurchase program upon the Company’s formation in January 2019. There is no expressed expiration date for the program.

(2)There is no maximum number of shares or dollar amount of shares that may be repurchased under the Company’s share repurchase program.

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ITEM 3. Defaults Upon Senior Securities

None.
 

ITEM 4. Mine Safety Disclosures

Not applicable.
 

ITEM 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number	Exhibit Description
31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*	Filed herewith.

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SIGNATURES

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 thereunto duly authorized.

	EXCHANGERIGHT INCOME FUND
May 3, 2024	/s/ David Fisher
Date	David Fisher
	Executive Managing Principal
	(Principal Executive Officer)
May 3, 2024	/s/ David Van Steenis
Date	David Van Steenis
	Chief Financial Officer and Chief Investment Officer
	(Principal Financial Officer)

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