Origin Investments to Convert IncomePlus Fund to a Private REIT

Private real estate manager Origin Investments is converting its Origin IncomePlus Fund LLC to a private real estate investment trust, effective Jan. 1, 2025. The company said the change allows them to simplify the tax reporting process for the 1,500-plus current fund investors; and that the changed tax structure will likely broaden the investment vehicle’s appeal to a wider cross section of registered investment advisers and 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-chief executive officer of 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.”

Origin Investments builds, buys, and finances multifamily real estate projects that help high-net-worth investors, family offices and RIAs grow and preserve wealth by providing tax-efficient real estate solutions through private funds. 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 advisers 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.

Through the third quarter of 2024, the IncomePlus Fund had a total net asset value of approximately $479.7 million based on common and preferred equity investment positions in 32 investments in 10 states. This was a 11.4% increase from its $430.6 million at the end of September 2023.

As of Oct. 15, on a per unit basis, the REIT’s NAV was $11.11. The net distribution yield for the IncomePlus Fund – calculated as the August 2024 distribution divided by latest fund NAV, divided by 31 days in the month divided by 365 days – now stands at 6.20%.

According to the company, the IncomePlus Fund has delivered stable returns over the last two years, even amid challenging real estate conditions. While its previous defensive investment strategy has been advantageous, fund leadership said it is now shifting focus to maximize future returns. As the fund’s development portfolio moves toward stabilization, Origin said it remains committed to dedicating 20% of the fund’s NAV to ground-up development while selectively acquiring stabilized properties.

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. Its strategy is to build, buy, and finance multifamily properties, in common and preferred equity positions, in its target markets.

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