Origin Investments to Convert its IncomePlus Real Estate Fund to a Private REIT

Conversion Simplifies Tax Reporting for Investors

CHICAGO (December 6, 2024)—Origin Investments is announcing the conversion of its IncomePlus Fund to a private real estate investment trust (REIT), effective Jan. 1, 2025.

Origin is making the conversion primarily to simplify the tax reporting process for its more than 1,500 current Fund investors; this change in tax structure broadens the investment vehicle’s appeal to a wider cross section of registered investment advisors (RIAs)and has the potential to be a more attractive investment option for institutional investors.

Among the significant distinctions between a private real estate fund that is taxed as a partnership and a private REIT is the mechanism used for income tax filing purposes. Private REITs produce 1099 statements. Private fund partnerships produce K-1s, which typically take more time to prepare and can impact an investor’s tax filing timeline. 

“We want to do whatever is in our power to improve the investing experience and a big part of that is eliminating the pain points identified by our investment partners,” said Michael Episcope, Co-CEO, Origin Investments. “Moving to a private REIT structure allows us to be more efficient and expedient in the creation and delivery of investor tax-related materials.”

In creating more timely and efficient preparation and delivery of tax materials for investors, Origin believes it is making its IncomePlus Fund more attractive to RIAs.

“There are investment advisors who will not recommend or even consider alternative investment opportunities that don’t provide 1099 statements because of the tax-related issues they may cause for investors,” Episcope said. “Giving RIAs the ability to make investors’ lives simpler makes this conversion decision a no-brainer. “

Episcope said that the Fund already invests through a REIT subsidiary, and therefore the transition to a private REIT will not change the acquisition or asset management philosophies associated with the Fund. As it was originally introduced to investors in 2019, the IncomePlus Fund is for moderate-risk investors seeking income and appreciation in a single real estate investment vehicle. The Fund’s strategy is to build, buy and finance multifamily properties, in common and preferred equity positions, in its target markets.

The Fund’s REIT structure may also appeal to the institutional investment community. According to a recent survey by the National Association of Real Estate Investment Trusts (NAREIT), “82% of respondents view REITs as a long-term, strategic part of their portfolios, a sharp contrast to earlier views.” The report also noted that 84% of institutions that invest in REITs do so out of their real estate allocation. That gives further credence to the complementary status REITS have with private real estate investments.

Through the third quarter of 2024, the IncomePlus Fund had a net asset value (NAV) of approximately $479.7 million based on common and preferred equity investment positions in 32 investments in 10 states. As of September 30, 2024, on a per unit basis, the NAV is $11.11. The net distribution yield for the IncomePlus Fund now stands at 6.20%¹. That’s 40.0% more than the Ten-Year U.S. Treasury yield and 19.9% more than investment-grade bonds.²

Over the last two years, the IncomePlus Fund has consistently delivered stable and positive returns, even amid challenging real estate conditions, due to a strategic defensive investment focus. While this defensive strategy has been advantageous, the Fund is now shifting focus to maximize future returns.

As the Fund’s development portfolio moves towards stabilization, Origin remains committed to dedicating 20% of the Fund’s NAV to ground-up development while selectively acquiring stabilized properties.

1. The net distribution yield is as of 9/30/24 and is calculated as the (September 2024 distribution divided by the latest Fund net asset value) divided by the (30 days in the month divided by 365 days in the year).
2. As of 11/14/24, the distribution yield of the U.S. 10-Year Treasury Note was 4.43% and the distribution yield of Moody’s Seasoned AAA Corporate Bonds was 5.17%, according to YCharts.