| Related Party Transactions | Related Party Transactions Due to Affiliates The following table details the components of due to affiliates: $ in thousands March 31, 2024 December 31, 2023 Advanced general and administrative expenses $ 7,891 $ 9,448 Advanced offering costs 6,376 6,134 Distributions payable 2,504 2,501 Accrued stockholder servicing fee 2,428 2,112 Advanced organization expenses 1,474 1,474 Accrued affiliate service provider expenses 1,035 16 Accrued management fee 310 309 Total $ 22,018 $ 21,994 Management Fee and Performance Participation Interest We are externally managed by the Adviser, a registered investment adviser and an indirect, wholly-owned subsidiary of Invesco. The Adviser is at all times subject to the supervision and oversight of our board of directors and has only such functions and authority as we delegate to it. We pay the Adviser a management fee equal to 1.0% of NAV for Class T shares, Class S shares, Class D shares and Class I shares per annum calculated and payable monthly. We will not pay a management fee on Class E shares. Commencing on January 16, 2030, ten years after the commencement of the Class N Private Offering, we will pay the Adviser a management fee equal to 1.0% of NAV for Class N shares per annum payable monthly. In addition, we will pay the Adviser 1.0% per annum payable monthly of the total consideration received by us for selling interests in the DST Program to third-party investors, which will be allocated among each class of shares based on each class’s relative percentage of aggregate NAV. The Adviser may elect to receive its management fee in cash, shares of our Class I common stock, shares of our Class E common stock, INREIT OP Class I units or INREIT OP Class E units. During the three months ended March 31, 2024 and 2023, we incurred management fees of $0.5 million and $0.4 million, respectively. As of March 31, 2024 and December 31, 2023, we accrued $0.3 million of management fees, respectively, as components of due to affiliates on our condensed consolidated balance sheets. During the three months ended March 31, 2024 and 2023, we issued 15,574 and 12,336 Class E shares, respectively, as payment for the management fees earned. The shares issued to the Adviser for payment of the management fee were issued at the applicable NAV per share at the end of each month for which the fee was earned. During the three months ended March 31, 2024, the Adviser submitted 8,461 Class E shares for repurchase by the Company, for a total repurchase amount of $0.3 million. During the three months ended March 31, 2023, we did not repurchase any Class E shares from the Adviser as no repurchase requests were made. The Special Limited Partner holds a performance participation interest in INREIT OP that entitles it to receive an allocation from INREIT OP equal to (1) with respect to all INREIT OP units other than Class N units and Class E units, 12.5% of the Total Return, subject to a 6.0% Hurdle Amount and a High Water Mark, with a Catch-Up (each such term as defined in the limited partnership agreement of INREIT OP), and (2) with respect to Class N units, 10.0% of the Class N Total Return, subject to a 7.0% Class N Hurdle Amount and a Class N High Water Mark, with a Catch-Up (each such term as defined in the limited partnership agreement of INREIT OP). The performance participation interest is calculated and payable on an annual basis. The Special Limited Partner may elect to receive payment of the performance participation interest in cash, INREIT OP Class I units or INREIT OP Class E units. For the three months ended March 31, 2024 and 2023, the Special Limited Partner did not earn a performance participation interest. During the three months ended March 31, 2024, the Special Limited Partner submitted 28,982 Class E units for repurchase by the Company, for a total repurchase amount of $0.9 million. During the three months ended March 31, 2023, we did not repurchase any Class E units from the Special Limited Partner as no repurchase requests were made. Reimbursement of Expenses Incurred by Adviser The Adviser and its affiliates provide us with our management team, including our officers and appropriate support personnel. Each of our officers is an employee of the Adviser or one of its affiliates. We do not have any employees. In addition, the Adviser and its affiliates facilitate the payment of certain operational costs and bundled contracts to third-party vendors that directly relate to the ongoing management operations of the Company. These expenses may include costs for third-party software, tenant relations, property management assessment, regulatory compliance and IT support. The Adviser and its affiliates also facilitate the payment of travel expenses incurred by the management team and support personnel on behalf of the Company. During the three months ended March 31, 2024 and 2023, we incurred $0.3 million for these expenses, respectively, that were provided by the Adviser. Stockholder Servicing Fees and Other Selling Commissions Invesco Distributors, Inc. (“the Dealer Manager”) is a registered broker-dealer affiliated with the Adviser and is entitled to receive selling commissions, dealer manager fees and stockholder servicing fees for Class T, Class S and Class D shares sold in the Offering. The Dealer Manager reallows (pays) all or a portion of the stockholder servicing fees to participating broker-dealers and servicing broker-dealers for ongoing stockholder services performed by such broker-dealers and will waive stockholder servicing fees to the extent a broker-dealer is not eligible to receive it for failure to provide such services. We accrue the full amount of stockholder servicing fees payable as an offering cost at the time each Class T, Class S and Class D share is sold during the Primary Offering. As of March 31, 2024 and December 31, 2023, we have paid approximately $95,000 and $0.3 million, respectively, of commissions, dealer manager fees and stockholder servicing fees with respect to the outstanding Class T, Class S and Class D shares. The following table presents the upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees per annum for each class of shares sold in the Offering: Class T Class S Class D Class I Class E Maximum Upfront Selling Commissions up to 3.0% (1) up to 3.5% up to 1.5% — — Maximum Upfront Dealer Manager Fees 0.5% (1) — — — — Stockholder Servicing Fee 0.85% (2) 0.85% 0.25% — — (1) For Class T shares sold in the Offering (other than as part of our distribution reinvestment plan), investors will pay upfront selling commissions of up to 3.0% of the transaction price and upfront dealer manager fees of 0.5% of the transaction price, however such amounts may vary at certain participating broker-dealers, provided that the sum will not exceed 3.5% of the transaction price. (2) Consists of a representative stockholder servicing fee (0.65% per annum) and a dealer stockholder servicing fee (0.20% per annum). We will cease paying the stockholder servicing fee with respect to any Class T share, Class S share or Class D share held in a stockholder’s account at the end of the month in which the Dealer Manager, in conjunction with the transfer agent, determines that total upfront selling commissions, dealer manager fees and stockholder servicing fees paid with respect to the shares held by such stockholder within such account would exceed, in the aggregate, 8.75% (or, in the case of Class T shares sold through certain participating broker-dealers, a lower limit as set forth in the applicable agreement between the Dealer Manager and a participating broker-dealer at the time such Class T shares were issued) of the gross proceeds from the sale of such shares (including the gross proceeds of any shares issued under our distribution reinvestment plan upon the reinvestment of distributions paid with respect thereto or with respect to any shares issued under our distribution reinvestment plan directly or indirectly attributable to such shares). At the end of such month, each such Class T share, Class S share or Class D share will convert into a number of Class I shares (including any fractional shares), with an equivalent aggregate NAV as such share. DST Program Fees and Expenses Invesco Distributors, Inc. serves as the dealer manager for the DST Program. Invesco Real Estate Exchange LLC, an indirect wholly owned subsidiary of the Company (the “DST Sponsor”), pays the dealer manager upfront selling commissions of up to 5.0% of Interests sold, upfront dealer manager fees of up to 1.0% of Interests sold and placement fees of up to 1.0% of the Interests sold, some or all of which may be waived or reallowed to participating broker-dealers. For the three months ended March 31, 2024, we incurred upfront selling commissions, upfront dealer manager and placement fees of approximately $32,000. An affiliate of Invesco currently receives an organizational and offering expense reimbursement of 0.5% of Interests sold. For the three months ended March 31, 2024, we incurred organizational and offering expense reimbursement fees of approximately $28,000. Our Operating Partnership receives a closing cost reimbursement equal to 0.5% of Interests sold . For the three months ended March 31, 2024, we recorded income from closing cost reimbursements of approximately $28,000 recorded as a component of other revenue on our condensed consolidated statement of operations . Invesco DST Manager LLC, which is indirectly owned by the Adviser and is an affiliate of the Sponsor, serves as the manager for the DST Program and receives a management fee equal to 0.15% per annum of Interests sold . The Dealer Manager receives an investor servicing fee equal to 0.25% per annum of Interests sold. For the three months ended March 31, 2024, the expense incurred for management and investor servicing fees of approximately $10,000. For the three months ended March 31, 2023, we did not incur upfront selling commissions, upfront dealer manager, placement, organizational and offering expense reimbursement, management or investor servicing fees as the DST program commenced in February 2023 and the first sale of beneficial interest in the DST occurred in September 2023. See additional information on the DST Program in Note 15 — “DST Program.” Related Party Share Ownership The table below shows the amount of shares and the total purchase price of those shares which have been purchased by affiliates as of March 31, 2024. Any share repurchases or exchanges are not a component of the table but have been described in further detail below. $ in thousands, except share amounts Class T Class S Class D Class I Class E Class N Total Purchase Price MassMutual (1) — — — — — 16,485,652 $ 486,133 Invesco Global Property Plus Fund (2) — — — — 1,994,164 1,992,224 119,500 Invesco Realty, Inc. (3) 165,126 165,126 165,126 416,893 — 738,701 48,216 Members of our board of directors and employees of our Adviser (4) — — — 195 24,648 75,128 2,742 165,126 165,126 165,126 417,088 2,018,812 19,291,705 $ 656,591 (1) In accordance with MassMutual’s subscription agreement, we have repurchased 2,537,790 of MassMutual Shares for $74.8 million. The amount presented is inclusive of the shares subsequently repurchased. (2) Invesco Global Property Plus Fund (“IGP+”) purchased 1,992,224 of Class N shares for $61.0 million, and we subsequently exchanged these Class N shares for 2,028,086 Class I shares. Additionally, we have repurchased a total of 1,711,078 Class E shares and Class I shares from IGP+ for $54.0 million. The amount presented is inclusive of the shares subsequently repurchased. (3) Invesco Realty, Inc. purchased 738,701 of Class N shares for $20.0 million, and we subsequently exchanged these Class N shares for 186,731 Class T shares, 186,731 Class S shares, 186,731 Class D shares and 186,208 Class I shares. Additionally, we have repurchased 291,818 Class I shares from Invesco Realty, Inc. for $9.2 million. The amount presented is inclusive of the shares subsequently repurchased. (4) Members of our board of directors and employees of our Adviser who are officers of the Company or serve on the Company’s steering committee purchased 75,128 Class N shares for $2.0 million, and we subsequently exchanged these Class N shares for 75,128 Class E shares. Organization and Offering Expenses The Adviser advanced all of our organization and offering expenses (other than upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees) incurred through December 31, 2022. W e will begin reimbursement of advanced organization and offering expen ses on the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2027 . We will reimburse the Adviser for all of our advanced expenses ratably over the 60 months following such date. Additionally, we will reimburse the Adviser for any organization and offering expenses incurred subsequent to December 31, 2022 that were paid on our behalf. In January 2023, we began reimbursing the Adviser on a quarterly basis for organization and offering expenses incurred subsequent to December 31, 2022. As of March 31, 2024 and December 31, 2023, the Adviser and its affiliates have advanced organization costs and offering expenses of $7.9 million and $7.6 million, respectively, on our behalf in connection with the Offering and Private Offerings that are recorded as a component of due to affiliates on our condensed consolidated balance sheets . Operating Expenses Reimbursement The Adviser has advanced all of our operating expenses (excluding the organizational and offering expenses discussed above) on our behalf through December 31, 2021. From January 2022 to September 2022, we began ratably reimbursing the Adviser over 60 months for the operating expenses incurred prior to December 31, 2021 and will recommence reimbursements to the Adviser following the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2027. Additionally, we will reimburse the Adviser for any operating expenses incurred subsequent to December 31, 2022 that were paid on our behalf. In January 2022, we began reimbursing the Adviser on a quarterly basis for operating expenses incurred subsequent to December 31, 2021. As of March 31, 2024 and December 31, 2023 , the Adviser advanced on our behalf $7.9 million and $9.4 million , respectively, for general and administrative expenses. The amount due to the Adviser is recorded as a component of due to affiliates on our condensed consolidated balance sheets. Under our charter, we may reimburse the Adviser, at the end of each fiscal quarter, for total operating expenses paid by the Adviser. However, we may not reimburse the Adviser at the end of any fiscal quarter for total operating expenses (as defined in our charter) that, in the four consecutive fiscal quarters then ended, exceed the greater of 2% of average invested assets or 25% of net income determined without reduction for any additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of our assets for that period (the “2%/25% Guidelines”). We may reimburse the Adviser for expenses in excess of the 2%/25% Guidelines if a majority of our independent directors determines that such excess expenses (an “Excess Amount”) are justified based on unusual and non-recurring factors. Operating expenses for the four consecutive fiscal quarters ended March 31, 2024 did not exceed the charter-imposed limitation. Accrued Affiliate Service Provider Expenses We have engaged and expect to continue to engage Pine Tree Commercial Realty, LLC (“Pine Tree”), a wholly owned subsidiary of PTCR Holdco, LLC, in which we have a preferred equity investment, to provide property management services (including leasing, revenue management, accounting, legal and contract management, expense management and capital expenditure project services) for Cortlandt Crossing. The cost for such services is a percentage of the gross receipts and project costs, respectively. During the three months ended March 31, 2024 and 2023, we incurred approximately $42,000 and $35,000, respectively, of expenses due to Pine Tree for services in connection with the property management of Cortlandt Crossing. All property management fees paid to Pine Tree are included in rental property operating expenses on our condensed consolidated statements of operations. Co-Investments with Affiliated Products We formed a joint venture with Invesco U.S. Income Fund L.P., an affiliate of Invesco, to acquire an 85% interest in the Sunbelt Medical Office Portfolio. INREIT OP and Invesco U.S. Income Fund L.P. each hold a 50% interest in the joint venture. We hold a 50% ownership interest in a real estate operating company focused on the aggregation and asset management of manufacturing housing through Homestead Communities, LLC. Invesco U.S. Income Fund L.P. owns the remaining 50% ownership interest. We hold our interest in Everly Roseland through a 60% consolidated ownership interest in Everly Roseland Co-Invest, a co-investment between INREIT OP and Invesco Real Estate Atlas US Everly LLC, an affiliate of Invesco and a majority owned subsidiary of IGP+. The Everly Roseland Co-Invest holds a 95% consolidated ownership interest in a joint venture with a third-party. See additional discussion in Note 4 — “Investments in Unconsolidated Entities.” Investment in Affiliated Fund As of March 31, 2024, we have an investment of $27.2 million in Invesco Commercial Mortgage Income - U.S. Fund, L.P. (“CMI”), an affiliate of Invesco managed by our Adviser. CMI invests primarily in mortgage loans that are collateralized by commercial residential real estate throughout the United States. Other We have a $30.0 million commitment from Invesco Realty, Inc. that collateralizes our Revolving Credit Facility. We may be required to call capital under this commitment to repay outstanding obligations under our Revolving Credit Facility in the event of default, however this commitment is not available to fund our operating or investing activities. As of March 31, 2024, we have not called any of the $30.0 million commitment. |
