Make portfolio construction less taxing

Important Information

NA5862936

Diversification does not guarantee a profit or eliminate the risk of loss.

There is no guarantee that the Fund's income will be exempt from federal and state income taxes.

Invesco does not offer tax advice. Please consult your tax professional for information regarding your own personal tax situation.

All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. As with all investments there are associated inherent risks. This should not be considered a recommendation to purchase any investment product. This does not constitute a recommendation of any investment strategy for a particular investor. Investors should consult a financial professional before making any investment decisions if they are uncertain whether an investment is suitable for them. Please obtain and review all financial material carefully before investing.

Invesco Managed Accounts LLC (IMA) is the investment adviser for these SMAs and is an indirect, wholly owned subsidiaries of Invesco Ltd.

These materials are being provided for informational purposes only. The information contained herein is obtained from multiple sources that are believed to be reliable. However, such information has not been verified by the sponsor and may be different from the information included in documents and materials created by the sponsor firm in whose investment program a client participates. Some sponsor firms may require that these materials are preceded or accompanied by investment profiles or other documents or materials prepared by such sponsor firms, which will be provided upon a client’s request. For additional information, documents and/or materials, please contact your financial professional.

The Investment Advisers Act of 1940 requires investment advisory firms, such as Invesco Managed Accounts, LLC, to file and keep current with the Securities and Exchange Commission a registration statement of Form ADV. Part II of Form ADV contains information about the background and business practices of Invesco Managed Accounts, LLC. Under the Commission’s rules, we are required to offer to make available annually Part II of Form ADV to our clients along with our privacy policy. Accordingly, if you would like to receive a copy of this material, please write to: Invesco Managed Accounts, LLC, 1700 7th Ave, Suite 1130, Seattle, WA 98101.

Important information about 1031 exchanges:

This is provided for educational and informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. An offer is made only by the applicable confidential offering memorandum. 1031 Exchange programs are highly speculative and involves a high degree of risk and is intended only for investors who do not require immediate liquidity. Prospective investors should be able to bear the complete loss of their investment. The information provided herein does not constitute tax advice. Because each investor’s tax position is different, the benefits listed may not be realized. A change in U.S. tax laws could also have impact on the benefits of investing in real estate. Investors should always consult with a tax professional regarding their own personal tax situation before making any investment decisions. Invesco does not offer tax advice.

A DST’s ability to meet its obligations depends on the Master Tenant’s performance and timely payment of rent under the Master Lease. The financial stability of both the Master Tenant and the Guarantor is crucial. If the Master Tenant defaults on rent or other obligations, enforcing the DST’s rights could be costly and time-consuming. Terminating the Master Lease might make it difficult to re-lease the property on similar terms, adversely affecting returns to investors. If a new master lease cannot be secured, the DST may need to engage in leasing activities, potentially leading to adverse tax consequences. Without insolvency or bankruptcy of the Master Tenant, the DST may not be able to execute a replacement master lease.

A bankruptcy or insolvency of the Guarantor, inability of the Guarantor to meet or perform its obligations under the Guaranty, or assignment of the Guaranty by the Guarantor may adversely affect the return on an interest. The Master Tenant has no significant assets, and the DST depends up on the ability of the Master Tenant or the Guarantor to perform under the long-term Master Lease. If the Guarantor cannot meet or perform its obligation under the Guaranty or if the Guarantor assigned its obligations under the Guaranty to an affiliate with inferior creditworthiness and/or financial resources, this would increase the risk of a default by the Master Tenant and adversely affect the investors.

Investing in a DST is not diversified in terms of asset class or location, as a DST is restricted to acquiring only specified properties and cannot invest in other assets. Similarly, an investment in a DST represents an investment concentrated in a limited number of properties located in a specific region or state. A decline in the market in which the properties are located, or the occurrence of any one of many other adverse circumstances, could substantially and adversely affect the performance of a properties and return to the investors. 

An interest may not qualify under Code Section 1031 for tax-deferred exchange treatment, and even if it does a portion of the proceeds from an Investor's sale of their real property to be relinquished (“Relinquished Property”) could constitute taxable “boot” (as defined herein). Whether any particular acquisition of an interest will qualify as a tax-deferred exchange under Code Section 1031 depends on the specific facts involved, including, without limitation, the nature and use of the Relinquished Property and the method of its disposition, the use of a qualified intermediary and a qualified exchange escrow and the lapse of time between the sale of the Relinquished Property and the identification and acquisition of the replacement property (“Replacement Property”). Neither the Sponsor nor its affiliates, counsel or agents are examining or analyzing any prospective investor's circumstances to determine whether such investor's acquisition of Replacement Property qualifies as a Section 1031 Exchange. If the factors surrounding a prospective investor's disposition of the Relinquished Property and their acquisition of the interests do not meet the requirements of Code Section 1031, the disposition of the Relinquished Property will be taxed as a sale and the IRS will assess interest and possible penalties for failure to timely pay such taxes. Also, merely designating an interest in connection with an investor's Section 1031 Exchange does not assure the prospective investor that there will be interests available to purchase when such investor executes the applicable subscription documents and actually causes his, her, or its qualified intermediary to transfer funds to complete the purchase of the interests.

Any personal property that may be part of the properties, amounts used to establish reserves and impositions or other items not attributable to the purchase of real estate will not be treated as an interest in real estate and may be treated as “boot.” It’s possible that such amounts will not be treated as boot and that reserves, if any, will be treated as cash boot. The IRS could take the position that the increase in the purchase price of the property paid by investors would not be considered as an interest in real estate and may be treated as “boot.” In the event any item is determined to be “boot,” the taxpayer will have current income for any such “boot” up to the amount of gain on the exchange of the real property.

If, in a Section 1031 Exchange, money is received or deemed received in addition to the like-kind property (referred to as “boot”), then gain on the Relinquished Property is recognized up to the amount of boot. Although there is no direct authority on point (other than certain potentially favorable authority that allows taxpayers to treat certain transaction expenses as reducing amounts otherwise taxable as boot in a Section 1031 Exchange), prospective investors should be aware that the IRS may take the position that certain costs paid or deemed paid from money received from the sale of the Relinquished Property are boot and, therefore, income to investors. For example, the IRS may contend that some amounts paid into a trust reserve and amounts paid in connection with an offering constitute boot received by investors and not a reinvestment in real estate.

Potential changes to Section 1031 Exchange rules may limit or eliminate the ability to defer taxes on gains from real property or DST interests, which could adversely affect an investor’s exit strategy.

Important DST terms: 

Guarantor & Guaranty: The Operating Partnership, as guarantor (in such capacity, the "Guarantor"), will enter into a guaranty agreement whereby the Guarantor will guaranty (the "Guaranty") to the DST the performance of the Master Tenant's obligations under the Master Lease.

Master Tenant & Master Lease: Each property will be 100% master leased to a special purpose entity, wholly owned by the Operating Partnership (the "Master Tenant"), pursuant to a triple net master lease agreement (a "Master Lease") with the Master Tenant. The Master Tenant will be the sub-lessor of the property to the tenant(s) occupying the space.