IncomePlus Fund

Origin IncomePlus Fund LLC is a continuously offered real estate fund that invests in income-producing real estate and real estate-related securities. The Fund aims to generate current income while also seeking long-term appreciation and tax efficiency.

The Fund’s objective is to:

• Generate consistent monthly income through dividends.
• Preserve invested capital while delivering appreciation in NAV.
• Provide investors access to institutional-quality real estate.

The Fund is structured as a limited liability company (LLC) with a private real estate investment trust (REIT) subsidiary. You will make your investment in the LLC which owns 100% of the REIT. The REIT subsidiary enables you to invest in the Fund with your IRA or 401k without having to worry about unrelated business income tax (UBIT). Properties are owned by the REIT and cash flow passes from the property to the REIT subsidiary, which pays dividends to the Fund, which then makes distributions to you based on the number of units you own.

An evergreen structure means the Fund has no expiration date.

The Fund was created in 2019 to deliver both current income and appreciation in a tax-efficient manner. The Fund’s strategy is to build, buy and finance multifamily properties in our target markets. This multi-strat approach enables the Fund to perform in all market cycles by strategically managing the portfolio allocation to seek the best risk-adjusted returns in a given environment. Tactical allocation of the Fund’s three sleeves: debt investments, core-plus multifamily and built-to-core multifamily, are dependent upon external factors such as interest rates. For example, in a high-interest-rate environment, we will overweight the portfolio to preferred equity which will provide stable cash flow for investors while we wait for development costs to reduce.

The Fund has no target equity limit but only add properties that meet the Fund’s risk and return objectives. Origin intends to hold between 30 and 50 assets in the Fund at any given time and the mix of assets will depend on the market cycle.

Origin benefits from the intellectual capital of its diverse team members, who together have over 70 years of real estate investing experience. Each week, Origin has an investment committee meeting in which all acquisition and investment management personnel meet to discuss the existing business plans of portfolio assets and any potential portfolio acquisitions. Origin evaluates each opportunity based on a risk/return spectrum and approves deals that exhibit superior risk-adjusted returns. Pricing models are used to determine whether a potential acquisition will meet the Fund’s investment objectives, and each assumption in the pricing models is analyzed and questioned by team members. New acquisition pricing strategies, hold/sell analyses, and modifications to existing business plans are formally presented and discussed.

Origin’s investment process is a crucial tool in achieving the Fund’s investment objectives. Investment opportunities will be preliminarily screened, fully underwritten, thoroughly reviewed, documented and approved in the process outlined below. Senior Management will lead the process while Origin’s Principals will be involved and provide feedback throughout each step.

• Deal Screening. Before making an investment, opportunities are screened and reviewed in a manner that we deem reasonable and appropriate based on the facts and circumstances applicable to each investment. The review process may entail a broad evaluation of significant business, tax, accounting and legal issues, which evaluation is further refined to varying degrees based on the type of investment. Whether an opportunity merits further consideration will be determined based upon this evaluation. Outside consultants, legal advisors, brokers, accountants, prospective venture partners and other third parties may be involved during this screening process.
• Desktop Analysis. Acquisition officers, in conjunction with acquisition analysts, will build a model to price the opportunity to determine applicable pricing parameters.
• Market Research. For real property assets, the acquisition team will perform a site inspection (if not performed during the deal screening process) and obtain/review in-depth market information from various resources, including local brokers and Origin’s regional offices. The Investment Manager will also employee Origin Multilytics®, a proprietary suite of machine-learning models that generate rent growth projections in the Fund’s target markets. In addition, the opportunity will be previewed with prospective lender partners. • Preliminary Approval. The investment committee (“Investment Committee”) will review the initial phase of the analysis, which will include a desktop valuation, projected cash flows, market information, upside and downside scenario analysis, property and market tours by acquisition officers and Senior Management and guidance from prospective senior loan partners.
• Full Underwriting. Investment underwriting is performed by the acquisitions and investment management teams. Argus financial models are used for all underwriting except when completing apartment analysis. In collaboration with Realogic Analytics, Origin has developed a proprietary Excel financial model for apartment underwriting. A variety of assumptions are used to derive property value in the apartment Excel model and the Argus model, including, but not limited to, the following: market rents, free rent, renewal probability, targeted physical and economic occupancy, downtime prior to securing a new tenant, tenant improvements, leasing and sale, commissions, capital improvements, reserves, growth rates, initial cap rates, residual cap rates, closing costs, holding period, debt, cash on cash yields (leveraged and un-leveraged), internal rates of return (leveraged and un-leveraged) and multiple returns on invested capital (leveraged and un-leveraged).
• Investment Management Testing. The investment management team and its analysts test the defensibility of the acquisition team’s assumptions about future rents, capital expenditures, interest rates and exit capitalization rates. The investment management team is responsible for implementing these model business plans after acquisition and are a check and balance on the acquisition team.
• Final Investment Committee Approval. Upon completion of full underwriting, the investment team will prepare a final investment memorandum which confirms or highlights any variances from the preliminary Investment Committee approval. Following Investment Committee approval, the investment is approved with funding subject to attorney verification of terms negotiated in the respective legal documentation.

The Fund primarily focuses on:

• Multifamily properties in high-growth U.S. markets.
• Joint-venture investments in commercial real estate.
• Senior and subordinate debt investments collateralized by real estate.
• Preferred equity positions in real estate-related entities.

$100,000

Accredited investors can invest in the Fund. This is a threshold set by the federal government. To be an accredited investor, you must meet one of the following criteria:

• Have an individual net worth, or joint net worth with your spouse, that exceeds $1 million (excluding the value of your primary residence).
• Have individual income exceeding $200,000 in each of the past two years and expect to reach the same this year.
• Have combined income with your spouse exceeding $300,000 in each of the past two years and expect to reach the same this year.
• Invest on behalf of a business or investment company with more than $5 million in assets and/or all of the equity owners are accredited.

You can indicate your interest by contacting your dedicated Origin investment representative via email or phone. If you don’t know your dedicated representative, you can log in to your Origin account and select “Contact” then “Investor Relations.” Your representative will walk you through the investment process. We will provide an electronic subscription agreement and a form to verify your accreditation status. We may also need certain additional documents if you plan to invest through a Trust, Self-Directed IRA, LLC, Corporation, or other related entity.

You must qualify as an “accredited investor” under Rule 501(a) of Regulation D to purchase units of the Fund. You can verify your accredited investor status by forwarding Origin’s certification form to a licensed attorney, CPA or financial advisor that is privy to your financial status as an accredited investor.

The licensed individual will then need to complete the form on your behalf. You can also utilize a third-party service provider, such as VerifyInvestor, to verify your accreditation status. The accreditation form must be completed for the entity the investor invests in. For example, if your name is John Smith, then the accreditation form must refer to you as “John Smith.” If you invest through an LLC called “John Smith Investments, LLC,” the accreditation form must state “John Smith Investments, LLC.”

Yes, you can invest in the IncomePlus Fund as an individual, jointly with your spouse or other related person, through several different types of retirement accounts, or through an LLC, Corporation, Trust, and many other types of entities. There’s no penalty for how you choose to invest in the Fund, as long as you coordinate with your custodian appropriately.

The Fund intends to provide investors with monthly net distributions representing an amount equivalent to an annual rate in the range of 5-7% and will endeavor to produce an annualized total net return of paid and accrued distributions, plus changes in NAV, in the range of 9-11%.

Our goal is to fund the payment of distributions through cash flow from operations; however, we may fund any distributions from other sources including, without limitation, the sale of assets, borrowings, return of capital or sales of Units, and we have no limits on the amounts we may pay from such sources. The extent to which we pay distributions from sources other than cash flow from operations will depend on various factors, including the level of participation in our distribution reinvestment plan, the extent to which the Investment Manager elects to receive its Management Fee, how quickly we invest the proceeds from this and any future offering and the performance of our investments, including our real estate-related securities portfolio.

Distributions are paid twelve times per year to IncomePlus Fund members who are owners of record on the payment date. The distribution is typically made 30 days after the record date. It’s important to note that you must be invested for the entire month to receive the distribution. For example, if you fund your capital call on July 15th you will be assigned a trade date of August 1st. Although you funded your commitment in July, your trade date of August 1st and record date of August 31st means you will not receive a distribution until the end of September. As such, you will have a payment date of September 30th.

No. Distributions depend on portfolio performance, market conditions and REIT compliance.

You can receive your distribution in cash and we will send it straight to your bank account, or you can take advantage of compounding returns through our distribution reinvestment plan (DRIP). Distributions will be automatically reinvested if you opt into the DRIP when completing your subscription agreement. The DRIP allows you to use the distribution proceeds to automatically acquire new units each quarter. There are no fees associated with the DRIP program.

The IncomePlus Fund’s distribution reinvestment plan means that you can automatically elect to reinvest your monthly distributions rather than taking them in cash. If you opt into the DRIP you will see your total units increase each quarter as a result. The distributions that are reinvested will be used by the Fund to improve existing properties or will be invested in new properties.

Yes. You can opt in or out of the distribution reinvestment plan at any time by emailing your Origin investment contact.

The unit price is the determined valuation in the month prior to the applicable record date. If you opt in for the DRIP, you can expect to have your distribution reinvested on a monthly basis at the unit price established in the month preceding the record date. For example, a record date of August 31st means you will receive the corresponding payment on September 30th, at the unit price established at the end of July.

The Fund’s goal is to maintain a regular annual distribution yield of 5-7% based on the net asset value of your account.

The Fund elects to be taxed as a Real Estate Investment Trust (REIT) to avoid corporate-level taxes, provided is distributes at least 90% of taxable income to investors. The REIT structure offers the following benefits:

• No corporate income tax if it meets REIT qualifications
• Pass-through taxation of rental income to investors
• Potential 20% deduction on qualified REIT dividends under the Tax Cuts and Jobs Act.

The Fund will be investing through its REIT subsidiary, and distributions received from the REIT will be treated as either ordinary income, return of capital or capital gains. Distributions, to the extent that they are from current or accumulated earnings and profits, will generally be taxed as ordinary income. However, we anticipate that the depreciation available to the REIT subsidiary will reduce the amount of its taxable income and profit, and that this reduction will enable the REIT subsidiary to make distributions that will be treated as a return of capital. Any portion of the distribution that is in excess of current and accumulated earnings and profits is considered a return of capital for U.S. federal income tax purposes and will reduce the tax basis of the investment. Once your tax basis has been reduced to zero, any further distributions will result in capital gains.

Since the Fund’s distributions all originate at the REIT subsidiary, investors are subject to a special deduction that allows you to deduct up to 20% of your taxable distributions from the Fund on an annual basis. An investor in the highest tax bracket who is eligible for this deduction can effectively reduce the federal tax rate on this income from 37% to 29.6%. Below is an example:

Yes. Investors in the Fund for more than one year will generally be eligible for a long-term capital gains tax rate on the capital gains achieved by the Fund.

The Fund intends to invest primarily through and derive income from dividends paid by its REIT subsidiary. Dividends from a REIT are excluded from UBTI. However, to the extent the Fund invests in an asset outside of the REIT subsidiary, you may realize UBTI as a result of your investment.

Your distributions from the Fund will be reported on an Internal Revenue Service Form 1099. Our Form 1099s will be issued by end of January of each year.

You will receive your 1099 for the preceding year by the end of January.

The IncomePlus Fund has the right but not the obligation to acquire assets through the Origin Exchange program. If the IncomePlus Fund does not execute its fair market value option to acquire the DST, the expectation is that the asset will continue to be held by DST investors until it is sold. At that time, the investor could elect to complete another 1031 exchange or take cash and pay taxes on the investment.

1031 Exchange: Investors can defer capital gains tax by exchanging a property for a Delaware Statutory Trust (DST) interest.

721 Exchange: DST investors may later convert their DST interest into Fund ownership units through a tax-deferred 721 exchange.

The IncomePlus Fund’s trade date occurs on the first day of each month. The trade date is the date when you officially become a member of the Fund from an accounting standpoint. This is the date you will begin to pay fees and accrue a preferred return and dividend. For example, if you fund your investment on July 15th, you will be assigned a trade date of August 1st. Between the time of the investment date and the trade date, you will not pay any fees and won’t accrue a dividend.

The record date is the last day of the month and establishes when you are eligible to receive a distribution. Investors who are official members as of the record date (“owners of record”) will receive a distribution on the payment date which is 30 days after the record date. You become an official member when your subscription agreement is signed, and your capital has been funded. Simply committing to the Fund does not make you an official member and you will not be assigned a trade date, investment date, record date or unit price.

The IncomePlus Fund’s unit price is the price per each share in the Fund. Each share is representative of a unit of ownership in the Fund’s properties. The unit price is determined by the fair market value of the underlying Fund assets and is updated monthly. Your unit price will be determined based on the month that precedes your investment date. For example, if your capital is called on July 15th, you will acquire units at the price established on June 30th which will be finalized around the third week of July. You will know the price of your units and the number of units no later than the trade date. On an ongoing basis, the unit price is the determined valuation in the month prior to the applicable record date.

The net asset value of the IncomePlus Fund will be calculated by our Asset Management team as of the last day of each calendar month and finalized two to three weeks thereafter. The valuation of your account will be determined by your respective unit holdings. Net asset value is calculated by utilizing best practice valuation methods to value the Fund’s assets, including real estate, credit related investments, cash, and other various assets that may be owned by the Fund.

The IncomePlus Fund and associated net asset value will be audited by a third-party accounting firm in the beginning of each calendar year.

After you complete the subscription process, you will lock in your place in the funding queue. Our Investor Relations team will keep you updated on the estimated timing of your capital call. You will have at least seven business days to fund once the capital call is issued. The date your money is received for a capital call marks your official “investment date”.

After you complete the subscription process and when you get to the front of the funding queue, you will fund 100% of your commitment at once.

Yes. You can increase your commitment to the IncomePlus Fund at any time by contacting your dedicated investment contact. There’s no minimum amount required to increase your commitment to the Fund.

• You will receive monthly emails on Fund performance which will include benchmark comparisons, updates to the unit price, NAV, distribution yield and brief analysis.
• Comprehensive quarterly reports will be sent to you. The first report of the year will be based on a full Fund audit by a third-party firm.
• As mentioned, you can expect an annual audited financial statement.
• Origin will host 4-6 Fund webinars a year.
• Online updates and relevant thought leadership pieces will be posted to both the IncomePlus Fund page and the Education Center.

Preferred equity and mezzanine debt investments function differently than typical equity ownership of a property. They are typically less risky than equity investments and come with regular interest payments from the borrower. Thus, these investments are included in the IncomePlus Fund’s portfolio to diversify risk and supplement each property’s cash flow with its associated interest income.

The IncomePlus Fund will target sole ownership of the properties it acquires. However, the Fund may also enter into joint ventures or other co-investment opportunities with third parties for the acquisition and management of properties. Joint ventures and co-investments may allow the Fund to access unique resources and expertise of partners, gain access to projects and assets that it would not otherwise have, acquire assets at prices lower than they would transact in a marketed process, and share the risk of an investment with such partners. In situations in which the Fund enters into a joint venture, we will conduct an extensive analysis of each prospective partner’s management organization, performance in prior or existing transactions, and its current and past borrowing relationships. The Fund will retain substantive management and control rights in any joint venture vehicle.

The Fund will target a 60% to 70% loan-to-value ratio for multifamily equity investments in the Fund.

The Fund’s preferred equity investments are structured as interests in entities that own real estate investments, either directly or indirectly. The Fund’s interests are senior with respect to distributions, redemption rights, and liquidation rights compared to the entities’ common equity. In the event of a default, a change-of-control event occurs, allowing the Fund to assume control of the property-owning entity. Consequently, the common equity owners lose their operational input rights and become passive investors.

An acquisition fee of 0.50% percent is paid to us at the time a deal is acquired by the Fund. For example, if an asset were acquired for $40 million, the acquisition fee we earn would be $200,000. This fee is paid by the Fund and is used to cover costs and expenses incurred by us in pursuit of Fund properties.

The acquisition fee only applies to the acquisition of real property. In terms of debt investments, we are entitled to 50% of any origination fee paid by the borrower on a loan and the Fund receives the other 50%. For example, if a loan of $10 million were made with a 1% upfront fee payable by the borrower, then we would receive $50,000 and the Fund would receive the other $50,000. The Fund will receive 100% of the interest payments from the loan.

The administrative fee is used to pay our investor relations, marketing and technology costs associated with onboarding new investors. The administrative fee ranges between 0% and 2% depending on the size of the investment. We show every fee upfront because we want you to know what you are paying and believe the value we provide far exceeds the cost. We don’t pay third-party marketers because we believe it’s important to have a direct line of communication with our investment partners and it’s another example of how we keep fees to a minimum while also controlling the quality of the experience. Note that the administrative fee is taken off the front end of your investment. For example, if your investment is $100,000 with a 2% administrative fee, then the preferred return and dividend will be based on an investment value of $98,000.

The up-front administrative fee is charged when we collect your capital commitment.

The administrative fee is drawn directly from your capital account. All other fees are Fund-level fees and reflected in the net asset value of the Fund’s units.

We are compensated based on the performance of the Fund. On an annual basis, we are entitled to receive a percentage of net increase in the net asset value of Fund units, but only after the Fund investors have received a 6% return on their beginning net asset value for that year. The performance allocation is designed to provide us with 10% of the Fund’s increase in value, but only after delivering the 6% return to investors and subject to a “high water mark.”

The “catch-up” provision is a means by which we recoup the 10% performance allocation that was forgone to ensure the 6% return is met. After the 6% return is made to investors, 50% of the Fund’s profits are allocated to us until we have received an amount that equals 10% of the total increase in net asset value for that year. Once our performance allocation is “caught-up,” 90% of the increase in value is retained by the Fund for allocation to investors and 10% is allocated to us.

The “high water mark” assures that we only participate in net new incremental increases in the Fund’s net asset value. For example, if the Fund returns 10% in year one and -3% in year two, there is no catch up or performance allocation in year three until the Fund first returns 9% (6% annual return for the current year, plus the 3% shortfall from prior year) to investors.

The IncomePlus Fund intends to make quarterly tender offers to investors that elect to sell their investment back to the Fund at the investment’s net asset value through these offerings. The tender offers are subject to certain restrictions and limitations that are detailed in the IncomePlus Fund Private Placement Memorandum.

Investors who wish to have their units repurchased may notify their Origin investment contact in accordance with the written notice of the tender offer.

You may not tender any units for a period of 12 months after such units were purchased. Units held for less than five years will be subject to a discount, ranging from 2.5% to 10%, depending on the amount of time such units were held.

The Fund intends to limit the amount of each tender offer to 5% of the Fund’s net asset value, determined as of the end of the calendar quarter prior to the tender date.

With the Origin Incentive Referral program, if you invest in the Origin IncomePlus Fund or QOZ Fund and refer another investor, we will consider your investment amounts in aggregate so that you’re potentially able to reduce a one-time upfront administrative fee such that the person you refer and you will both benefit.

The administrative fee-break thresholds are:

For example, if you invest $200,000 in the Fund, then your investment would be subject to the 2% admin fee rate. However, if you refer an investor who invests $100,000, then your aggregate investment amount would be treated as a $300,00 investment and you’d both receive the 1.0% fee.

The investments don’t have to be made at the same time period either. We will credit your administrative fee back at any time in the future when you do refer someone.