ExchangeRight Net Leased Portfolio 65 DST Lawsuit | Investor Claims
The White Law Group is investigating potential claims involving ExchangeRight Net-Leased Portfolio 65 DST, a Delaware statutory trust that sold about $49.2 million in investor equity to buy a 13-property portfolio of net-leased retail buildings. The DST closed to new investors in 2024. Investors weighing a ExchangeRight Net-Leased Portfolio 65 DST lawsuit can review the offering terms below and learn how FINRA arbitration works for DST investors.
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What Is ExchangeRight Net-Leased Portfolio 65 DST?
ExchangeRight Net-Leased Portfolio 65 DST is sponsored by ExchangeRight, a Pasadena, California, real estate firm. ExchangeRight says the portfolio covers 416,735 square feet across 10 states. A 1031 marketplace listing names the tenants as FedEx, Dollar General, Family Dollar, Dollar Tree, and Tractor Supply. ExchangeRight announced in August 2024 that the offering was fully subscribed.
ExchangeRight Net-Leased Portfolio 65 DST Offering Terms
ExchangeRight marketed this as an $82.28 million offering. That figure includes mortgage debt. The investor equity reported on the trust’s SEC Form D is smaller:
- Exemption claimed: Rule 506(b) of Regulation D
- Date of first sale: November 13, 2023
- Minimum investment: $100,000
- Equity sold: $49,180,000 (fully sold)
- Number of investors: 110
- Estimated sales commissions: $2,459,000, or 5% of the equity raised
- Financing: According to ExchangeRight, a 40.23% loan-to-value, non-recourse, interest-only loan at a fixed 5.82% rate over a five-year term
- Distributions: ExchangeRight reported a 5.00% annualized rate when the offering closed
Broker-Dealers That Sold ExchangeRight Net-Leased Portfolio 65 DST
The Form D names these firms, among others, as receiving sales compensation:
- Arkadios Capital
- Aurora Securities
- Concorde Investment Services, LLC
- Emerson Equity LLC
- Great Point Capital LLC
- Harbour Investments, Inc.
- IBN Financial Services, Inc.
- McDermott Investment Services, LLC
- NEXT Financial Group, Inc.
- Realized Financial, Inc.
- Saxony Securities, Inc.
- SCF Securities, Inc.
Broker Due Diligence on Leveraged DSTs
Before selling a DST, a brokerage firm must look closely at the offering, including its debt. A loan that only pays interest and comes due in five years creates a refinancing question that the broker should have explained. Regulation Best Interest requires brokers to consider those costs and risks against each customer’s goals before recommending the investment.
Risks of ExchangeRight Net-Leased Portfolio 65 DST and Similar Private Placements
DST interests are illiquid, and investors have little say in how or when the properties are sold. Specific risks here include:
- Leverage: lenders are paid before investors, which magnifies any drop in property value.
- Refinancing: an interest-only loan pays down no principal, so the full balance must be refinanced or repaid when it comes due.
- Tenant concentration: several of the listed tenants are discount retailers, so the portfolio’s income leans on one retail segment.
- Restricted trustee powers: DST rules generally bar the trust from raising new money or renegotiating leases.
ExchangeRight Net-Leased Portfolio 65 DST Lawsuit and Recovery Options
Investors who lose money on a DST typically pursue the brokerage firm that recommended it. Common claims include unsuitability, failure to disclose risks such as leverage, and inadequate due diligence. The White Law Group is investigating potential claims for investors in ExchangeRight Net-Leased Portfolio 65 DST.
Contact The White Law Group
The White Law Group is a firm of national securities fraud attorneys with offices in Chicago and Seattle. Call (888) 637-5510 for a free consultation about your ExchangeRight Net-Leased Portfolio 65 DST investment, or contact us online. Read more about our FINRA arbitration attorneys.
Frequently Asked Questions About ExchangeRight Net-Leased Portfolio 65 DST
How do I file a claim over my ExchangeRight Net-Leased Portfolio 65 DST investment?
The usual path is a FINRA arbitration claim against the brokerage firm that recommended the DST. Most brokerage account agreements typically include a pre-dispute arbitration clause, often without the investor realizing it, so claims like these generally go through FINRA arbitration instead of a courtroom. Arbitration can still lead to a monetary recovery.
Why does the debt in ExchangeRight Net-Leased Portfolio 65 DST matter to investors?
Debt raises the risk to investor equity. Because the loan is interest-only with a five-year term, the full balance will need to be refinanced or repaid, possibly at a higher rate. A broker who presented this DST as a low-risk income product without explaining the loan may have made a misleading or unsuitable recommendation.
Can the firm that sold me this DST be held liable?
A3: Yes, in some cases. Brokerage firms must supervise their brokers and investigate the private placements they approve for sale. A firm that failed at either may be liable for the resulting losses.
