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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________________________
FORM 10-Q
_______________________________________________________________
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                  TO                 
Commission File Number: 333-254931
_______________________________________________________________

Invesco Real Estate Income Trust Inc.
(Exact name of Registrant as specified in its charter)
_______________________________________________________________
Maryland 83-2188696
(State or other jurisdiction of
incorporation or organization) 		(I.R.S. Employer
Identification No.)
2001 Ross Avenue
Suite 3400
Dallas, Texas
(address of principal executive office)
75201
(Zip Code)
Registrant’s telephone number, including area code: (972)715-7400
_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class Trading Symbol(s) Name of each exchange on which registered


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  
Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer x Smaller reporting company ¨
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    Yes  x    No  ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes  ¨    No  x
As of November 15, 2021, the issuer had the following shares outstanding: 91 shares of Class T common stock, 91 shares of Class S common stock, 91 shares of Class D common stock, 504 shares of Class I common stock, 2,239,698 shares of Class E common stock and 6,704,582 shares of Class N common stock.




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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
Invesco Real Estate Income Trust Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
$ in thousands except share amounts September 30, 2021 December 31, 2020
ASSETS
Investments in real estate, net $ 276,196  $ 60,773 
Investments in unconsolidated entities 99,494  89,284 
Investments in real estate-related securities, at fair value 4,515  877 
Intangible assets, net 21,430  7,600 
Cash and cash equivalents 4,581  2,968 
Restricted cash 942  750 
Other assets 9,301  586 
Total assets $ 416,459  $ 162,838 
LIABILITIES
Revolving credit facility $ 89,500  $ 67,700 
Mortgage notes payable, net 96,857  — 
Due to affiliates 14,082  4,868 
Accounts payable, accrued expenses and other liabilities 2,842  1,844 
Total liabilities 203,281  74,412 
Commitments and contingencies (See Note 14) —  — 
Redeemable common stock, $0.01 par value per share, 6,857,829 and 3,247,457 shares issued and outstanding, respectively
203,532  83,194 
EQUITY
Preferred stock, $0.01 par value per share, 100,000,000 shares authorized; 125 shares issued and outstanding ($500.00 per share liquidation preference)
41  41 
Common stock, Class T shares, $0.01 par value per share, 600,000,000 shares authorized; 91 and no shares issued and outstanding, respectively
—  — 
Common stock, Class S shares, $0.01 par value per share, 600,000,000 shares authorized; 91 and no shares issued and outstanding, respectively
—  — 
Common stock, Class D shares, $0.01 par value per share, 600,000,000 shares authorized; 91 and no shares issued and outstanding, respectively
—  — 
Common stock, Class I shares, $0.01 par value per share, 600,000,000 shares authorized; 499 and no shares issued and outstanding, respectively
—  — 
Common stock, Class E shares, $0.01 par value per share, 600,000,000 shares authorized; 958,831 and no shares issued and outstanding, respectively
10  — 
Common stock, Class N shares, $0.01 par value per share, 600,000,000 shares authorized; 738,701 and 361,374 shares issued and outstanding, respectively
7  4 
Additional paid-in capital 24,716  9,276 
Accumulated deficit and cumulative distributions (16,259) (4,089)
Total stockholders' equity 8,515  5,232 
Non-controlling interests in consolidated joint ventures 1,131  — 
Total equity 9,646  5,232 
Total liabilities, redeemable common stock and equity $ 416,459  $ 162,838 
See accompanying notes to condensed consolidated financial statements.
1

Invesco Real Estate Income Trust Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
$ in thousands except share amounts 2021 2020 2021 2020
Revenues    
Rental revenue $ 2,748  $ —  $ 7,315  $ — 
Other revenue 88  —  268  — 
Total revenues 2,836  —  7,583  — 
Expenses
Rental property operating 623  —  1,734  — 
General and administrative 893  686  3,033  2,242 
Performance participation allocation 1,446  —  2,237  — 
Depreciation and amortization 1,417  —  4,979  — 
Total expenses 4,379  686  11,983  2,242 
Other income (expense), net
Income from unconsolidated entities, net 182  35  1,686  35 
Income from real estate-related securities 19  —  83  — 
Interest expense (730) (18) (1,813) (18)
Total other income (expense), net (529) 17  (44) 17 
Net loss attributable to Invesco Real Estate Income Trust Inc. (2,072) (669) (4,444) (2,225)
Dividends to preferred stockholders $ (2) $ —  $ (6) $ — 
Net income attributable to non-controlling interests in consolidated joint ventures (4) —  (4) — 
Net loss attributable to common stockholders $ (2,078) $ (669) $ (4,454) $ (2,225)
Loss per share:
Net loss per share of common stock, basic and diluted $ (0.32) $ (9.22) $ (0.73) $ (75.00)
Weighted average shares of common stock outstanding, basic and diluted 6,544,739  72,534  6,103,685  29,668 
See accompanying notes to condensed consolidated financial statements.

2

Invesco Real Estate Income Trust Inc.
Condensed Consolidated Statements of Changes in Equity and Redeemable Common Stock
(Unaudited)
$ in thousands Series A
Preferred Stock 		Class T
Common Stock 		Class S
Common Stock 		Class D
Common Stock 		Class I
Common Stock 		Class E
Common Stock 		Class N
Common Stock 		Additional Paid-in Capital Accumulated
Deficit and Cumulative Distributions 		Total Stockholders'
Equity 		Non-controlling interests in consolidated joint ventures Total
Equity 		Class N Redeemable
Common Stock
Balance at December 31, 2020 $ 41  $ —  $ —  $ —  $ —  $ —  $ 4  $ 9,276  $ (4,089) $ 5,232  $ —  $ 5,232  $ 83,194 
Proceeds from issuance of common stock, net of offering costs —  —  —  —  —  —  3  9,315  —  9,318  —  9,318  61,726 
Distribution reinvestment —  —  —  —  —  —  —  1  —  1  —  1  — 
Share-based compensation —  —  —  —  —  —  —  19  —  19  —  19  — 
Net income —  —  —  —  —  —  —  —  36  36  —  36  — 
Preferred stock dividends —  —  —  —  —  —  —  —  (2) (2) —  (2) — 
Common stock distributions —  —  —  —  —  —  —  —  (2,378) (2,378) —  (2,378) — 
Balance at March 31, 2021 $ 41  $ —  $ —  $ —  $ —  $ —  $ 7  $ 18,611  $ (6,433) $ 12,226  $ —  $ 12,226  $ 144,920 
Proceeds from issuance of common stock, net of offering costs (see Note 11) — — — — — — — (6) — (6) —  (6) —
Distribution reinvestment — — — — — — — 26 — 26 — 26 —
Share-based compensation — — — — — — — 19 — 19 —  19  —
Net loss — — — — — — — — (2,408) (2,408) — (2,408) —
Exchange of common stock — — — — — 2  (2) — — — —  —  —
Preferred stock dividends — — — — — — — — (2) (2) —  (2) —
Common stock distributions — — — — — — — — (2,659) (2,659) —  (2,659) —
Adjustment to carrying value of redeemable common stock —  —  —  —  —  —  —  (10,249) —  (10,249) —  (10,249) 10,249 
Balance at June 30, 2021 $ 41  $ —  $ —  $ —  $ —  $ 2  $ 5  $ 8,401  $ (11,502) $ (3,053) $ —  $ (3,053) $ 155,169 
Proceeds from issuance of common stock, net of offering costs —  —  —  —  —  8  2  24,939  —  24,949  —  24,949  61,687 
Common stock repurchased —  —  —  —  —  —  —  —  —  — — — (22,000)
Distribution reinvestment —  —  —  —  —  —  —  33  —  33 — 33 — 
Share-based compensation —  —  —  —  —  —  —  19  —  19 — 19 — 
Net loss —  —  —  —  —  —  —  —  (2,076) (2,076) 4  (2,072) — 
Preferred stock dividends —  —  —  —  —  —  —  —  (2) (2) —  (2) — 
Common stock distributions —  —  —  —  —  —  —  —  (2,679) (2,679) —  (2,679) — 
Adjustment to carrying value of redeemable common stock —  —  —  —  —  —  —  (8,676) —  (8,676) —  (8,676) 8,676 
Contributions from non-controlling interests —  —  —  —  —  —  —  —  —  —  1,127 1,127 — 
Balance at September 30, 2021 $ 41  $ —  $ —  $ —  $ —  $ 10  $ 7  $ 24,716  $ (16,259) $ 8,515  $ 1,131  $ 9,646  $ 203,532 
See accompanying notes to condensed consolidated financial statements.
3

Invesco Real Estate Income Trust Inc.
Condensed Consolidated Statements of Changes in Equity and Redeemable Common Stock
(Unaudited)
$ in thousands Series A
Preferred Stock 		Class T
Common Stock 		Class S
Common Stock 		Class D
Common Stock 		Class I
Common Stock 		Class E
Common Stock 		Class N
Common Stock 		Additional Paid-in Capital Accumulated
Deficit and Cumulative Distributions 		Total Stockholders'
Equity 		Non-controlling interests in consolidated joint ventures Total
Equity 		Class N Redeemable
Common Stock
Balance at December 31, 2019 $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ 200  $ —  $ 200  $ —  $ 200  $ — 
Net loss —  —  —  —  —  —  —  —  (1,203) (1,203) —  (1,203) — 
Balance at March 31, 2020 $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ 200  $ (1,203) $ (1,003) $ —  $ (1,003) $ — 
Net loss —  —  —  —  —  —  —  —  (353) (353) —  (353) — 
Balance at June 30, 2020 $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ 200  $ (1,556) $ (1,356) $ —  $ (1,356) $ — 
Proceeds from issuance of common stock, net of offering costs —  —  —  —  —  —  2  4,589  —  4,591  —  4,591  43,973 
Net loss —  —  —  —  —  —  —  —  (669) (669) —  (669) — 
Balance at September 30, 2020 $ —  $ —  $ —  $ —  $ —  $ —  $ 2  $ 4,789  $ (2,225) $ 2,566  $ —  $ 2,566  $ 43,973 
See accompanying notes to condensed consolidated financial statements.
4

Invesco Real Estate Income Trust Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
$ in thousands 2021 2020
Cash flows from operating activities:
Net loss $ (4,444) $ (2,225)
Adjustments to reconcile net loss to net cash provided by operating activities:
Performance participation allocation 2,237  — 
Income from unconsolidated entities, net (1,686) (35)
Depreciation and amortization 4,979  — 
Share-based compensation 58  — 
Straight-line rents (412) — 
Amortization of below-market leases (146) — 
Amortization of deferred financing costs 495  — 
Unrealized gain on real estate-related securities, net (3) — 
Distributions of earnings from investments in unconsolidated entities 701  — 
Other items 51  — 
Change in assets and liabilities, net of assets and liabilities acquired in acquisitions:
Increase in other assets (786) (956)
Increase in due to affiliates 3,380  3,944 
Increase in accounts payable, accrued expenses and other liabilities 530  4 
Net cash provided by operating activities 4,954  732 
Cash flows from investing activities:
Investments in unconsolidated entities (13,806) (56,963)
Acquisitions of real estate (237,848) — 
Capital improvements to real estate (2,923) — 
Purchase of real estate-related securities (5,909) — 
Proceeds from sale of real estate-related securities 2,222  — 
Distributions of capital from investments in unconsolidated entities 4,580  — 
Net cash used in investing activities (253,684) (56,963)
Cash flows from financing activities:
Proceeds from issuance of redeemable common stock 123,475  43,973 
Repurchase of redeemable common stock (22,000) — 
Proceeds from issuance of common stock 37,303  4,591 
Proceeds from revolving credit facility 133,500  8,100 
Repayment of revolving credit facility (111,700) — 
Borrowings from mortgages payable 98,000  — 
Payment of deferred financing costs (2,003) — 
Common stock distributions (7,163) — 
Preferred stock dividends (4) — 
Contributions from non-controlling interests 1,127  — 
Net cash provided by financing activities 250,535  56,664 
Net change in cash and cash equivalents and restricted cash 1,805  433 
Cash and cash equivalents and restricted cash, beginning of period 3,718  200 
Cash and cash equivalents and restricted cash, end of period $ 5,523  $ 633 
5

Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents $ 4,581  $ 633 
Restricted cash 942  — 
Total cash and cash equivalents and restricted cash $ 5,523  $ 633 
Supplemental disclosures:
Interest paid $ 1,046  $ 4 
Non-cash investing and financing activities:
Assumption of assets and liabilities in conjunction with acquisitions of real estate, net $ 526  $ 180 
Acquired non-controlling interests $ 4  $ — 
Accrued capital expenditures $ 85  $ — 
Accrued preferred dividends $ 2  $ — 
Distributions payable $ 996  $ — 
Distribution reinvestment $ 60  $ — 
Accrued offering costs due to affiliates $ 3,105  $ — 
Adjustment to carrying value of redeemable common stock $ 18,925  $ — 
See accompanying notes to condensed consolidated financial statements.
6

Invesco Real Estate Income Trust Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1.Organization and Business Purpose
Invesco Real Estate Income Trust Inc. (the “Company” or “we”) is focused on investing in stabilized, income-oriented commercial real estate in the United States. To a lesser extent, we also invest in real estate-related securities to provide a source of liquidity for our share repurchase plan, cash management and other purposes. We own, and expect to continue to own, all or substantially all of our assets through Invesco REIT Operating Partnership L.P. (“INREIT OP”), of which we are the sole general partner.
We were incorporated in October 2018 as a Maryland corporation and commenced real estate operations in September 2020. The Company qualified as a real estate investment trust (“REIT”) for U.S. federal income tax purposes for the taxable year ended December 31, 2020. We are externally managed by Invesco Advisers, Inc. (the “Adviser”), a registered investment adviser and an indirect, wholly-owned subsidiary of Invesco Ltd. (“Invesco”), a leading independent global investment management firm.
On May 14, 2021 our Registration Statement on Form S-11 (File No. 333-254931) with respect to our public offering was declared effective by the Securities and Exchange Commission (“SEC”). We have registered with the SEC a public offering of up to $3.0 billion in shares of common stock, consisting of up to $2.4 billion in shares in our primary offering (the “Primary Offering”) and up to $600 million in shares under our distribution reinvestment plan (collectively, the “Offering”). We are offering to sell any combination of five classes of shares of our common stock in the Offering: Class T shares, Class S shares, Class D shares, Class I shares and Class E shares, with a dollar value up to the maximum offering amount. The share classes have different upfront selling commissions and dealer manager fees and different ongoing stockholder servicing fees.
We are also conducting a private offering exempt from registration under the Securities Act of 1933, as amended (the “Class N Private Offering”), of up to $500 million in shares of our Class N common stock (“Class N shares” or “Class N common stock”).

2.Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and consolidate the financial statements of the Company and its controlled subsidiaries. All significant intercompany transactions, balances, revenues and expenses are eliminated upon consolidation. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for a fair statement of our financial condition and results of operations for the periods presented. The unaudited condensed consolidated financial statements should be read in conjunction with the December 31, 2020 consolidated financial statements and notes thereto included in our Registration Statement on Form S-11 (File No. 333-254931).
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.
The extent to which the ongoing COVID-19 pandemic impacts our results will depend on future developments, many of which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, future action plans and vaccination distribution and efficacy. Despite recent market rebounds across many asset classes, the ongoing COVID-19 pandemic has caused continued negative economic impacts, market volatility, and business disruption, which could negatively impact our tenants’ ability to pay rent, our ability to lease vacant space and our ability to undertake development and redevelopment projects. These consequences, in turn, could materially impact our results of operations. The estimates and assumptions underlying these condensed consolidated financial statements are based on the information available as of September 30, 2021, including judgments about the financial market and economic conditions which may change over time.
7

Consolidation
We consolidate entities in which the Company has a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity, we consider whether the entity is a variable interest entity (“VIE”) and whether we are the primary beneficiary. We are the primary beneficiary of a VIE when we have both the power to direct the most significant activities impacting the economic performance of the VIE and the obligation to absorb losses or receive benefits significant to the VIE.
For consolidated joint ventures, the non-controlling partner’s share of the assets, liabilities and operations of each joint venture is included in non-controlling interests in consolidated joint ventures as equity of the Company on our condensed consolidated balance sheets. The non-controlling partner’s interest is generally computed as the joint venture partner’s ownership percentage. Certain of the joint ventures formed by the Company provide the joint venture partner a profits interest based on certain internal rate of return hurdles being achieved. Any profits interest due to the joint venture partner is reported within non-controlling interests in consolidated joint ventures.
We apply the equity method of accounting if we have significant influence over an entity, typically when we hold 20 percent or more of the voting common stock (or equivalent) of an investee but do not have a controlling financial interest. In certain circumstances, such as with investments in limited liability companies or limited partnerships, we apply the equity method of accounting when we own as little as three to five percent. See Note 4 — “Investments in Unconsolidated Entities” for further information about our investments in partially owned entities.
Cash and Cash Equivalents
We consider all highly liquid investments that have original maturity dates of three months or less when purchased to be cash equivalents. We may have bank balances in excess of federally insured amounts. We mitigate our risk of loss by maintaining cash deposits with high credit-quality institutions and actively monitoring our counterparties to minimize credit risk exposure.
Restricted Cash
As of September 30, 2021, restricted cash primarily consists of an interest reserve that we are contractually required to maintain on deposit under the terms of our preferred membership interest in a limited liability company. Restricted cash also includes amounts in escrow for taxes and insurance related to mortgages at certain properties, as well as security deposits.
Investments in Real Estate
In accordance with the guidance for business combinations, we determine whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired is not a business, we account for the transaction as an asset acquisition. As of September 30, 2021, we have accounted for all of our property acquisitions as asset acquisitions.
Whether the acquisition of a property acquired is considered a business combination or asset acquisition, we recognize the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity. For transactions that are business combinations, we also evaluate the existence of goodwill or a gain from a bargain purchase. We expense acquisition-related costs associated with business combinations as they are incurred. We capitalize acquisition-related costs associated with asset acquisitions.
When a transaction is determined to be an asset acquisition, we assess the fair value of acquired tangible and intangible assets and liabilities (including land, buildings, tenant improvements, above-market and below-market leases, acquired in-place leases, other identified intangible assets and assumed liabilities) and allocate the purchase price to the acquired assets and assumed liabilities. The cost of the acquisition is then allocated to the assets acquired and liabilities assumed based on their relative estimated fair values. We assess relative fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that we deem appropriate, as well as other available market information. We estimate future cash flows based on a number of factors including historical operating results, known and anticipated trends and market and economic conditions.
8

The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. We also consider an allocation of purchase price to acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including but not limited to the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals.
We record acquired above-market and below-market leases at their fair values (using a discount rate that reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid under each in-place lease and (2) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. Other intangible assets acquired include amounts for in-place lease values that are based on our evaluation of the specific characteristics of each tenant’s lease. Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. When estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. When estimating costs to execute similar leases, we consider leasing commissions, legal and other related expenses.
Intangible assets and intangible liabilities are recorded gross on our condensed consolidated balance sheets. Intangible liabilities are presented as a component of other liabilities. The amortization of acquired above-market and below-market leases is recorded as an adjustment to rental revenue on our condensed consolidated statements of operations. The amortization of in-place leases is a component of depreciation and amortization expense on our condensed consolidated statements of operations.
The cost of buildings and improvements includes the purchase price of our properties and any acquisition-related costs, along with any subsequent improvements to such properties. Our investments in real estate are stated at cost and are generally depreciated on a straight-line basis over the estimated useful lives of the assets as follows:
Description Depreciable Life
Building
30 - 40 years
Building and land improvements
1 - 10 years
Furniture, fixtures and equipment
1 - 7 years
Lease intangibles and leasehold improvements Over lease term
Significant improvements to properties are capitalized. When assets are sold or retired, their costs and related accumulated depreciation or amortization are removed from the accounts with the resulting gains or losses reflected in net income or loss for the period.
Repairs and maintenance are expensed to operations as incurred and are included in rental property operating expense on our condensed consolidated statements of operations.
We review our real estate properties for indicators of impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. We assess recoverability based on the estimated undiscounted future cash flows expected to be generated from the operation and eventual disposition of our properties over the period we expect to hold the properties. If the carrying amount of the real estate investment is no longer recoverable and exceeds the fair value of our investment, we recognize an impairment loss. The impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value, or fair value less cost to sell if classified as held for sale. If we change our strategy or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized and such loss could be material to our results. We did not record an impairment loss for the three and nine months ended September 30, 2021.
9

Investments in Unconsolidated Entities
We account for our investments in unconsolidated entities under the equity method of accounting. Under the equity method of accounting, we record our initial investment in an unconsolidated real estate entity at cost and subsequently adjust the cost for our share of the real estate entity's income or loss and cash contributions and distributions each period. We evaluate the carrying amount of our investment in an unconsolidated real estate entity for potential indicators of impairment if the carrying amount of our investment exceeds its fair value. We record an impairment charge when we determine an impairment is other-than-temporary. To determine whether an impairment is other-than-temporary, we consider whether we have the ability and intent to hold the investment until the carrying amount is fully recovered. The evaluation of an investment in an unconsolidated real estate entity for potential impairment can require us to exercise significant judgment. We did not record any impairment losses on our investments in unconsolidated entities for the three and nine months ended September 30, 2021.
Distributions received from equity method investments are classified in the condensed consolidated statements of cash flows as either operating or investing activities based on the cumulative earnings approach. Under the cumulative earnings approach, we compare distributions received to our cumulative equity method earnings since inception. Any distributions received up to the amount of cumulative equity earnings are considered a return on investment and classified in operating activities. Any excess distributions are considered a return of investment and classified in investing activities. The income or loss from equity method investments is included in income from unconsolidated entities, net in our condensed consolidated statements of operations.
Investments in Real Estate-Related Securities
We invest in debt and equity securities of real estate companies. We have elected the fair market value option for accounting for investments in debt securities. We record changes in fair value of debt securities, interest income on debt securities, and bond premium and discount amortization as income from real estate-related securities in our condensed consolidated statement of operations.
We record equity securities with readily determinable market values at fair value. We record dividend income on equity securities when declared. We record changes in fair value of equity securities and dividend income as income from real estate-related securities in our condensed consolidated statement of operations.
Fair Value Measurements
Under normal market conditions, the fair value of an investment is the amount that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price). Additionally, there is a hierarchical framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment and the state of the marketplace, including the existence and transparency of transactions between market participants. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Investments measured and reported at fair value are classified and disclosed in one of the following levels within the fair value hierarchy:
Level 1 — quoted prices are available in active markets for identical investments as of the measurement date. The Company does not adjust the quoted price for these investments.
Level 2 — quoted prices are available in markets that are not active or model inputs are based on inputs that are either directly or indirectly observable as of the measurement date.
Level 3 — pricing inputs are unobservable and include instances where there is minimal, if any, market activity for the investment. These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.
10

Valuation
Our investments in real estate-related securities are reported at fair value. We generally determine the fair value of our real estate-related securities by utilizing third-party pricing service providers and broker-dealer quotations on the basis of last available bid price. The carrying amount of the revolving credit facility and mortgage notes approximates fair value. Cost approximates fair value for all other assets and liabilities.
In determining the fair value of a particular investment, pricing service providers may use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models to determine the reported price. The pricing service providers’ internal models for securities such as real estate-related securities generally consider the attributes applicable to a particular class of the security (e.g., credit rating or seniority), current market data, and estimated cash flows for each class and incorporate deal collateral performance such as prepayment speeds and default rates, as available.
The following table details our assets measured at fair value on a recurring basis:
$ in thousands September 30, 2021 December 31, 2020
Assets: Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Investments in real estate-related securities $ 509  $ 4,006  $ —  $ 4,515  $ 11  $ 866  $ —  $ 877 
Total $ 509  $ 4,006  $ —  $ 4,515  $ 11  $ 866  $ —  $ 877 
Redeemable Common Stock
Certain shares of our Class N common stock are classified as redeemable common stock on our condensed consolidated balance sheet because the holder of these shares, Massachusetts Mutual Life Insurance Company (“MassMutual”), has the contractual right to redeem the shares under certain circumstances as described in Note 10 — “Redeemable Common Stock”.
We report our redeemable common stock on our condensed consolidated balance sheet at MassMutual’s redemption value. MassMutual’s redemption value is determined based on our Net Asset Value (“NAV”) per Class N share as of our balance sheet date. We calculate NAV as GAAP stockholders’ equity adjusted for the redemption value of our redeemable common stock; certain organization and offering costs and certain operating expenses; unrealized real estate appreciation; accumulated depreciation and amortization; straight-line rent receivable and other assets. For purposes of determining our NAV, the fair value of our investments in real estate is determined based on third party valuations prepared by licensed appraisers in accordance with standard industry practice.
Deferred Financing Costs
Direct costs associated with entering into our revolving credit facility are recorded as other assets on the condensed consolidated balance sheet and are being amortized on a straight-line basis, which approximates the effective interest method, over the term of the agreement. Direct costs associated with entering into our mortgage notes are recorded as an offset to the related liability and are being amortized over the term of the mortgage notes.
Revenue Recognition
We recognize rental revenue on our leases based on a number of factors, including the initial determination that the contract is or contains a lease. Generally, all of our contracts are, or contain leases, and therefore revenue is recognized when the lessee takes possession of or controls the physical use of the leased assets. In most instances this occurs on the lease commencement date. At the inception of a new lease, including new leases that arise from amendments, we assess the terms and conditions of the lease to determine the proper lease classification.
11

A lease is classified as an operating lease if none of the following criteria are met: (i) ownership transfers to the lessee at the end of the lease term, (ii) the lessee has a purchase option that is reasonably expected to be exercised, (iii) the lease term is for a major part of the economic life of the leased property, (iv) the present value of the future lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the leased property, and (v) the leased property is of such a specialized nature that it is expected to have no future alternative use to the Company at the end of the lease term. If one or more of these criteria are met, the lease will generally be classified as a sales-type lease, unless the lease contains a residual value guarantee from a third party other than the lessee, in which case it would be classified as a direct financing lease under certain circumstances.
Rental revenue primarily consists of fixed contractual base rent arising from tenant leases at our properties under operating leases. Revenue under operating leases that are deemed probable of collection is recognized as revenue on a straight-line basis over the non-cancelable term of the related leases. For leases that have fixed and measurable rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded in the condensed consolidated balance sheets. For leases that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. Our estimate of collectability includes, but is not limited to, factors such as the tenant’s payment history, financial condition, industry and geographic area. These estimates could differ materially from actual results.
Our contracts may contain nonlease components (e.g., charges for management fees, common area maintenance, and reimbursement of third-party maintenance expenses) in addition to lease components (i.e., monthly rental charges). Services related to nonlease components are provided over the same period of time as, and billed in the same manner as, monthly rental charges. We do not segregate the lease components from the nonlease components when accounting for operating leases. Since the lease component is the predominant component under each of these leases, combined revenues from both the lease and nonlease components are reported as rental revenues in the accompanying condensed consolidated statements of operations.
In April 2020, the Financial Accounting Standards Board (“FASB”) staff issued a question and answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. In accordance with the Lease Modification Q&A, we have made a policy election to not account for concessions as a lease modification if the total cash flows after the lease concessions are substantially the same, or less than, the cash flows in the original lease. However, if in the future, a concession is granted that modifies the terms and significantly alters the cash flows of the original lease, we will account for the changes as a lease modification. We did not make any lease concessions in the nine months ended September 30, 2021 as a result of the COVID-19 pandemic.
Income Taxes
We qualified as a REIT under the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”) for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2020. As long as we qualify for taxation as a REIT, we will generally not be subject to federal income tax as long as we distribute at least 100% of our taxable income each year. REITs are subject to a number of organizational and operational requirements. As a REIT, we may still be subject to certain state and local taxes on our income and property, and federal income and excise taxes on our undistributed income. We may elect to treat certain of our corporate subsidiaries as taxable REIT subsidiaries (“TRSs”). In general, a TRS may perform additional services for our tenants and generally may engage in any real estate or non-real estate-related business. A TRS is subject to federal, state and local corporate income tax. As of September 30, 2021, we are holding several of our subsidiaries under a TRS; however, our TRS did not have material deferred tax assets or liabilities as of September 30, 2021. As of September 30, 2021, our tax years 2018 through 2020 remain subject to examination by the United States tax authorities.
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Organization and Offering Expenses
The Adviser has agreed to advance all of our organization and offering expenses (other than upfront selling commissions, dealer manager fees, and ongoing stockholder servicing fees) incurred through the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2022, at which time we will reimburse the Adviser for all of our advanced expenses ratably over 60 months. We will reimburse the Adviser for any subsequent organization and offering expenses as incurred.
As of September 30, 2021, the Adviser and its affiliates incurred organization expenses of $1.2 million and offering expenses of $1.0 million (December 31, 2020: $1.2 million and $0.9 million, respectively) on our behalf for the Class N Private Offering that are recorded as a component of due to affiliates on our condensed consolidated balance sheets. Class N Private Offering organization and offering expenses became a liability of the Company on January 16, 2020, the date on which the Class N Private Offering commenced. We recorded the organization expenses associated with the Class N Private Offering as general and administrative expenses and recorded the offering expenses as an offset to Class N common stock based on the relative proceeds raised in the Class N Private Offering.
As of September 30, 2021, the Adviser and its affiliates have incurred organization expenses of $0.3 million and offering expenses of $3.0 million on our behalf for the Offering that are recorded as a component of due to affiliates on our condensed consolidated balance sheets. Organization and offering expenses related to the Offering became a liability of the Company on May 14, 2021, the date on which the Offering commenced. We record organization expenses associated with the Offering as general and administrative expenses on our condensed consolidated statements of operations. Offering expenses associated with the Offering are recorded as an offset to additional paid-in capital on our condensed consolidated balance sheets. As of December 31, 2020, the Adviser incurred organization and offering expenses on our behalf for the Offering of $0.2 million and $1.6 million, respectively; however, we did not record organization and offering expenses related to the Offering in our consolidated financial statements as of December 31, 2020, because these expenses were not our obligation until the Offering commenced on May 14, 2021.
Invesco Distributors, Inc. (the “Dealer Manager”) is serving as the dealer manager for the Primary Offering. See Note 12 — “Related Party Transactions” for more information on our relationship to the Dealer Manager and a description of selling commissions and dealer manager fees.
Earnings (Loss) per Share
We calculate basic earnings (loss) per share by dividing net earnings (loss) attributable to common stockholders for the period by the weighted average number of common shares outstanding during the period, including redeemable common stock. All classes of common stock are allocated net earnings (loss) at the same rate per share and receive the same gross distribution per share. We calculate diluted net earnings (loss) per share by dividing net income (loss) attributable to common stockholders for the period by the weighted average number of common shares and common share equivalents outstanding (unless their effect is antidilutive) for the period. As of September 30, 2021 and 2020, there are no common share equivalents outstanding that would have a dilutive effect as a result of our net income, and accordingly, the weighted average number of common shares outstanding is identical for the period for both basic and diluted shares.
Share-Based Compensation
Under the terms of our 2019 Equity Incentive Plan, our independent directors are eligible to receive awards of fully-vested common stock as part of their compensation for services as directors. In addition, we may compensate the officers and employees of our Adviser and its affiliates with share-based awards under the terms of our Advisory Agreement; however, as of September 30, 2021, we have not compensated any officers or employees of our Adviser and its affiliates with share-based awards. See Note 11 — “Equity” for additional information regarding share-based compensation.
Share-based compensation arrangements may include options, stock appreciation rights, restricted stock and other share-based awards. We recognize compensation expense related to share-based awards to our independent directors in our condensed consolidated financial statements based on the fair value of the award on the date of grant.
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Pending Accounting Pronouncements
In January 2021, the FASB expanded existing accounting guidance for evaluating the effects of reference rate reform on financial reporting. The new guidance expands the temporary optional expedients and exceptions to GAAP for contract modifications, hedge accounting and other relationships that reference the London Interbank Offered Rate (“LIBOR”) to apply to all derivative instruments affected by the market-wide change in the interest rates used for discounting, margining or contract price alignment (commonly referred to as the discounting transition). The guidance can be applied as of January 1, 2020. We will evaluate our contracts that are eligible for modification relief and may apply the elections prospectively as needed. We have not adopted any of the optional expedients or exceptions as of September 30, 2021. We are currently evaluating what impact the guidance will have on our condensed consolidated financial statements.
3.Investments in Real Estate, net
Investments in real estate, net consist of:
$ in thousands September 30, 2021 December 31, 2020
Building and improvements $ 229,793  $ 44,317 
Land and land improvements 45,350  16,483 
Furniture, fixtures and equipment 3,294  — 
Total 278,437  60,800 
Accumulated depreciation (2,241) (27)
Investments in real estate, net $ 276,196  $ 60,773 
The following table details the properties acquired during the nine months ended September 30, 2021:
$ in thousands
Property Name Ownership Interest Number of
Properties 		Segment Acquisition Date
Purchase
Price(1)
Cortona Apartments 100% 1 Multifamily January 2021 $ 71,083 
Meridian Business 940 95% 1 Industrial September 2021 29,615 
Bixby Kennesaw 98% 1 Student housing September 2021 78,663 
Salem Self Storage 100% 3 Self-storage September 2021 47,872 
South Loop Storage 100% 1 Self-storage September 2021 11,141 
7 $ 238,374 
(1)Purchase price is inclusive of acquisition-related costs.
The following table summarizes the allocation of the total cost for the properties acquired during the nine months ended September 30, 2021:
$ in thousands Amount
Building and building improvements $ 182,488 
Land and land improvements 28,866 
Lease intangibles (1)
14,996 
Capitalized tax abatement (2)
7,427 
Furniture, fixtures and equipment 3,276 
Above-market lease intangibles 1,321 
Total purchase price (3)
$ 238,374 
(1)Lease intangibles consist of in-place leases and leasing commissions.
(2)We obtained a tax abatement in conjunction with our purchase of the Cortona Apartments with an expiration date of December 31, 2038 and are amortizing the tax abatement over the remaining useful life of the tax abatement.
(3)Includes acquisition-related costs.
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The weighted-average amortization periods for intangible assets acquired in connection with our acquisitions during the nine months ended September 30, 2021 were as follows:
In-place lease intangibles Leasing commissions Above-market lease intangibles
Weighted-average amortization periods (in years) 2.95 13.88 14.03
4.Investments in Unconsolidated Entities
Vida JV LLC
We formed a joint venture with Invesco U.S. Income Fund L.P., an affiliate of Invesco, (the “Invesco JV”) to acquire an interest in a portfolio of medical office buildings located throughout the United States (the “Sunbelt Medical Office Portfolio”). As of September 30, 2021, the Invesco JV owns an 85% interest in a joint venture (“Vida JV LLC”) with an unaffiliated third party. As of September 30, 2021, Vida JV LLC owns a portfolio of twenty separate medical office buildings. We own a 42.5% interest in Vida JV LLC through our ownership in the Invesco JV and account for our investment using the equity method of accounting.
San Simeon Holdings
As of September 30, 2021, we own an investment in San Simeon Holdings LLC (“San Simeon Holdings”), a limited liability company that owns a multifamily property. Our investment is structured as a preferred membership interest. Our preferred membership interest is mandatorily redeemable on December 15, 2023, although there are certain conditions that may accelerate the redemption date. The common member of San Simeon Holdings has two one-year options that extend the mandatory redemption date of our preferred membership interest to December 15, 2025. The redemption amount includes the preferred investment outstanding balance, the preferred accrued return and any unpaid accrued interest. The investment yields a current pay rate of 6.00%, increasing 0.50% annually during the initial term and 0.25% during each extension term, as well as a preferred accrued return of 4.00% due upon redemption. We account for our investment using the equity method of accounting. See Note 14 — “Commitments and Contingencies” for additional information regarding our future capital commitment to San Simeon Holdings.
As our investment San Simeon Holdings is structured as a preferred membership interest and our membership interest is structured to receive a fixed return, we do not participate in any economic upside or downside of San Simeon Holdings. Further, because there is a mandatory redemption feature associated with our preferred membership interest, our future involvement with San Simeon Holdings is limited. We have concluded that San Simeon Holdings is a VIE and that we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact San Simeon Holding’s economic performance. Our economic risk with respect to our investment is limited to our equity ownership and any uncollected distributions.
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The following tables provide summarized balance sheets of our investments in unconsolidated entities and a reconciliation to our equity investment:
September 30, 2021
$ in thousands Vida JV LLC San Simeon Holdings Total
Total assets $ 411,059  $ 120,894  $ 531,953 
Total liabilities (221,050) (79,764) (300,814)
Total equity of unconsolidated entities 190,009  41,130  231,139 
INREIT's share 80,754  18,493  99,247 
INREIT outside basis 247  —  247 
INREIT investment in unconsolidated entities $ 81,001  $ 18,493  $ 99,494 
December 31, 2020
$ in thousands Vida JV LLC San Simeon Holdings Total
Total assets $ 366,482  $ 112,594  $ 479,076 
Total liabilities (187,882) (76,322) (264,204)
Total equity of unconsolidated entities 178,600  36,272  214,872 
INREIT's share 75,914  13,118  89,032 
INREIT outside basis 252  —  252 
INREIT investment in unconsolidated entities $ 76,166  $ 13,118  $ 89,284 
The following tables provide summarized operating data of our investments in unconsolidated entities along with a reconciliation to the net income (loss) from unconsolidated entities:
Three Months Ended September 30, 2021
$ in thousands Vida JV LLC San Simeon Holdings Total
Total revenue of unconsolidated entities $ 9,397  $ 2,003  $ 11,400 
Income (loss) of unconsolidated entities (766) 1,093  327 
INREIT's share (326) 510  184 
Amortization of INREIT outside basis (2) —  (2)
INREIT's income (loss) from unconsolidated entities $ (328) $ 510  $ 182 

Nine Months Ended September 30, 2021
$ in thousands Vida JV LLC San Simeon Holdings Total
Total revenue of unconsolidated entities $ 27,236  $ 6,381  $ 33,617 
Income of unconsolidated entities 622  374  996 
INREIT's share 264  1,428  1,692 
Amortization of INREIT outside basis (6) —  (6)
INREIT's income from unconsolidated entities $ 258  $ 1,428  $ 1,686 
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5.Investments in Real Estate-Related Securities
The following tables summarize our investments in real estate-related debt securities by asset type:
September 30, 2021
$ in thousands Principal Balance Unamortized Premium (Discount) Amortized Cost Unrealized Gain (Loss), Net Fair Value Period-end Weighted Average Yield Weighted-Average Maturity Date
Non-agency CMBS $ 2,846  $ 141  $ 2,987  $ (3) $ 2,984  2.53  % 11/30/2033
Corporate debt 1,125  86  1,211  14  1,225  1.90  % 5/3/2024
Total $ 3,971  $ 227  $ 4,198  $ 11  $ 4,209 
December 31, 2020
$ in thousands Principal Balance Unamortized Premium (Discount) Amortized Cost Unrealized Gain (Loss), Net Fair Value Period-end Weighted Average Yield Weighted-Average Maturity Date
Non-agency CMBS $ 716  $ 11  $ 727  $ 2  $ 729  3.39  % 1/22/2032
Corporate debt 125  9  134  3  137  2.55  % 1/15/2025
Total $ 841  $ 20  $ 861  $ 5  $ 866 
As of September 30, 2021 and December 31, 2020, we also hold investments in preferred stock of real estate investment trusts with a fair value of $0.3 million and approximately $11,000, respectively, and a period-end weighted average yield of 6.83% and 6.52%, respectively.
6.Intangibles
The gross carrying amount and accumulated amortization of our intangible assets and liabilities are:
September 30, 2021
$ in thousands Total Cost Accumulated Amortization Intangible Assets, net
Intangible assets, net:
In-place lease intangibles $ 19,689  $ (2,325) $ 17,364 
Leasing commissions 2,919  (174) 2,745 
Above-market lease intangibles 1,321  —  1,321 
Total intangible assets, net $ 23,929  $ (2,499) $ 21,430 
Total Cost Accumulated Amortization Intangible Liabilities, net
Intangible liabilities, net:
Below-market lease intangibles $ 1,605  $ (146) $ 1,459 
Total intangible liabilities, net $ 1,605  $ (146) $ 1,459 
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December 31, 2020
$ in thousands Total Cost Accumulated Amortization Intangible Assets, net
Intangible assets, net:
In-place lease intangibles $ 5,475  $ (7) $ 5,468 
Leasing commissions 2,136  (4) 2,132 
Total intangible assets, net $ 7,611  $ (11) $ 7,600 
Total Cost Accumulated Amortization Intangible Liabilities, net
Intangible liabilities, net:
Below-market lease intangibles $ 1,605  $ —  $ 1,605 
Total intangible liabilities, net $ 1,605  $ —  $ 1,605 
The estimated future amortization of our intangibles for each of the next five years and thereafter as of September 30, 2021 is:
$ in thousands In-place Lease
Intangibles 		Leasing Commissions Above-market Lease Intangibles Below-market
Lease Intangibles
2021 (remainder) $ 3,788  $ 72  $ 24  $ (49)
2022 7,453  285  94  (194)
2023 746  285  94  (194)
2024 746  285  94  (194)
2025 746  285  94  (194)
2026 746  282  94  (194)
Thereafter 3,139  1,251  827  (440)
$ 17,364  $ 2,745  $ 1,321  $ (1,459)
7.Other Assets
The following table summarizes the components of other assets:
$ in thousands September 30, 2021 December 31, 2020
Capitalized tax abatement, net (1)
$ 7,151  $ — 
Deferred financing costs, net 805  440 
Prepaid expenses 833  130 
Deferred rent 423  11 
Other 89  5 
Total $ 9,301  $ 586 
(1)We obtained a tax abatement in conjunction with our purchase of the Cortona Apartments with an expiration date of December 31, 2038 and are amortizing the tax abatement over the remaining useful life of the tax abatement as a component of depreciation and amortization in the condensed consolidated statements of operations. As of September 30, 2021, accumulated amortization of the capitalized tax abatement was $0.3 million, and the estimated annual amortization is $0.4 million.
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8.Mortgage Notes and Revolving Credit Facility
The following tables summarize certain characteristics of our mortgage notes and revolving credit facility:
September 30, 2021
$ in thousands Principal Balance Outstanding Weighted Average Interest Rate
Weighted Average Maturity Date(3)
Maximum Facility Size(4)
Variable rate loans:
Variable rate mortgage loans $ 98,000  2.56 % 7/3/2027 N/A
Variable rate revolving credit facility(1)(2)
89,500  1.73 % 1/22/2024 $ 100,000 
Total variable rate loans 187,500  2.17 %
Deferred financing costs, net(5)
(1,143)
Mortgage notes and revolving credit facility, net $ 186,357 
December 31, 2020
$ in thousands Principal Balance Outstanding Weighted Average Interest Rate
Weighted Average Maturity Date(3)
Maximum Facility Size
Variable rate loans:
Variable rate revolving credit facility(1)(2)
$ 67,700  2.00  % 9/22/2021 $ 75,000 
Deferred financing costs, net — 
Mortgage notes and revolving credit facility, net $ 67,700 
(1)During the nine months ended September 30, 2021, we entered into a new revolving credit facility (“Revolving Credit Facility”) and repaid our previous revolving credit facility.
(2)Borrowings under the Revolving Credit Facility bear interest at a rate equal to one-month LIBOR or a base rate, where the base rate is the highest of (1) federal funds rate plus 0.5%, (2) the rate of interest as publicly announced by Bank of America as its “prime rate” or (3) the one-month LIBOR rate plus 1.0%, in each case, plus an applicable margin that is based on our leverage ratio.
(3)For loans where the Company, at its sole discretion, has extension options, the maximum maturity date has been assumed.
(4)INREIT OP may increase the maximum aggregate principal amount of the Revolving Credit Facility to up to $150 million in accordance with the terms of the Revolving Credit Facility. As of September 30, 2021, the borrowing capacity on the Revolving Credit Facility is $6.6 million. We have the ability to increase the borrowing capacity in connection with the acquisition of additional investments in real estate, which allows us to utilize the full maximum facility size up to $100 million or $150 million, as applicable.
(5)Deferred financing costs relate to the variable rate mortgage loans.
The following table presents the future principal payment due under our mortgage notes and Revolving Credit Facility as of September 30, 2021:
Year ($ in thousands) Amount
2021 (remaining) $ — 
2022 — 
2023 — 
2024 89,500 
2025 — 
2026 53,000 
Thereafter 45,000 
Total $ 187,500 
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On May 25, 2021, we entered into a seven-year mortgage loan with an unaffiliated lender for $45.0 million (the “Cortona Loan”) secured by the Cortona Apartments. The Cortona Loan bears interest at the greater of (a) 2.65% or (b) the sum of (i) 2.40% plus (ii) one-month LIBOR and matures on June 1, 2028. The Cortona Loan contains customary conditions to funding and various affirmative and negative financial covenants.
On September 24, 2021, a consolidated subsidiary of the Company entered into a five-year mortgage loan with an unaffiliated lender for $53.0 million (the “Bixby Loan”) secured by our Bixby Kennesaw property. The Bixby Loan bears interest at the sum of (i) 1.60% plus (ii) one-month LIBOR and matures on September 24, 2026. The Bixby Loan contains various affirmative and negative financial covenants.
We are subject to various financial and operational covenants under the executed mortgage notes and Revolving Credit Facility agreement. These covenants require the Company to maintain certain financial ratios, which may include leverage, debt yield, and debt service coverage, among others. As of September 30, 2021, the Company is in compliance with all of its loan covenants that could result in a default under such agreements.
9.Accounts Payable, Accrued Expenses and Other Liabilities
The following table summarizes the components of accounts payable, accrued expenses and other liabilities:
$ in thousands September 30, 2021 December 31, 2020
Intangible liabilities, net $ 1,459  $ 1,605 
Accrued interest expense 344  73 
Real estate taxes payable 335  — 
Tenant security deposits 264  130 
Accounts payable and accrued expenses 221  36 
Prepaid rental income 219  — 
Total $ 2,842  $ 1,844 
10.Redeemable Common Stock
As of September 30, 2021, MassMutual has committed to purchase up to $400.0 million of Class N shares in the Class N Private Offering (the “MassMutual Capital Commitment”). MassMutual is an affiliate of Invesco. The initial purchase price per Class N share was $25.00. The price per Class N share for subsequent purchases is based on our NAV per Class N share at the time of purchase.
As of September 30, 2021, MassMutual had purchased 7,387,008 Class N shares for $200.0 million under its Initial Subscription Agreement, as defined below, and 255,846 Class N shares for $7.5 million under its Subscription Agreement, as defined below. In accordance with the Subscription Agreement, on August 5, 2021, we repurchased 785,025 of MassMutual Shares for $22.0 million.
In July 2021, MassMutual entered into a subscription agreement (the “Subscription Agreement”) to purchase up to $200.0 million of Class N shares of our common stock in the Class N Private Offering upon our request at one or more closings held prior to January 29, 2023. MassMutual had previously agreed to purchase up to $200.0 million of Class N Shares under its initial subscription agreement with us (as amended, the “Initial Subscription Agreement”). We called the entirety of MassMutual’s commitment under the Initial Subscription Agreement before issuing any capital calls under the Subscription Agreement. All MassMutual shares, whether under the Subscription Agreement or the Initial Subscription Agreement, will be classified as redeemable common stock because MassMutual has the contractual right to redeem the shares under certain circumstances as described below.
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We will repurchase Class N Shares acquired by MassMutual under the Subscription Agreement or the Initial Subscription Agreement on a monthly basis at a price per share that will generally be equal to the NAV per Class N Share as of the last day of the month preceding the Determination Date. “Determination Date” means the date that is five business days prior to the first calendar day of the month in which the repurchase occurs. The aggregate amount of MassMutual Shares that we are required to repurchase in any month will be equal to the sum of (a) 100% of monthly net proceeds from the sale of shares of common stock to Invesco Global Property Plus Fund (the “IGP+ Fund”), a fund managed by an affiliate of the Adviser plus (b) between 50% and 100% (at our discretion) of our monthly net proceeds from the sale of shares of our common stock to investors other than IGP+ Fund. We will not be required to repurchase more than $70.0 million of MassMutual Shares during any Fundraising Period. “Fundraising Period” means each of (1) the period beginning on May 14, 2021, and ending on May 31, 2022, (2) the period beginning on June 1, 2022 and ending on May 31, 2023, and (3) the period beginning on June 1, 2023 and ending on May 31, 2024. In our sole discretion, we may repurchase an amount of MassMutual Shares that exceeds $70.0 million in any Fundraising Period. In any month, MassMutual may elect to forego the next monthly repurchase. We will not be required under any circumstances to repurchase more than $200.0 million in Class N Shares over the course of the three Fundraising Periods. We will limit our monthly repurchases as necessary to ensure that the aggregate NAV of MassMutual Shares is not less than $50.0 million.

Upon (i) the expiration of the Lock-Up Period (as defined below) and (ii) our repurchase of $200.0 million in MassMutual Shares in accordance with the automatic repurchase rights described above, MassMutual will have the right to request that we repurchase any outstanding MassMutual Shares, subject to the terms set forth below. The repurchase price will generally be equal to the NAV per Class N share as of the last day of the preceding month. The aggregate amount of MassMutual Shares that we are required to repurchase in any month is limited to the lesser of (a) 15% of the net proceeds from the sale of shares of common stock in the Primary Offering to persons other than MassMutual and its affiliates in the month prior to the month in which MassMutual submits its repurchase request, and (b) 1.5% of our aggregate NAV as of the last day of the month prior to the month in which MassMutual submits its repurchase request. The “Lock-Up Period” is defined as the period beginning on September 28, 2020 and ending upon the earlier of (1) May 14, 2024 (the third anniversary of the date that the SEC declared effective the Company’s registration statement with respect to its initial public offering of common stock), and (2) the date that the Company’s aggregate NAV is at least $1.5 billion.

The repurchase rights granted to MassMutual under the Subscription Agreement, as described above, supersede and replace the repurchase rights originally granted to MassMutual under the terms of the Initial Subscription Agreement. MassMutual's repurchase rights are not transferable.
We began to recognize changes in the value of the MassMutual Shares when redemption of the shares became probable. The redemption of the MassMutual shares became probable when the SEC declared our Registration Statement on Form S-11 (File No. 333-254931) effective on May 14, 2021. As of September 30, 2021, we recorded an increase to redeemable common stock and a decrease to additional paid-in capital of $18.9 million to adjust the value of the MassMutual Shares to our September 30, 2021 NAV per Class N share. We will limit any adjustment in the carrying amount of the redeemable common stock to the initial amount reported as redeemable common stock on the condensed consolidated balance sheet. The change in the redemption value does not affect income available to common stockholders.
We have entered into an exchange rights and registration agreement with MassMutual (the “Registration Rights Agreement”). After September 28, 2025, MassMutual may require us to exchange all or a portion of its Class N shares for any class of shares of our common stock being sold in the Primary Offering and file and maintain an effective registration statement with the SEC (for no longer than three years) registering the offer and sale of the new shares issued in the exchange. MassMutual's rights under the Registration Rights Agreement will terminate when its shares of our common stock have an aggregate NAV of less than $20.0 million.
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11.Equity
Preferred Stock
On November 20, 2020, we sold 125 shares of 12.5% Series A Redeemable Cumulative Preferred Stock (“Series A Preferred Stock”) for $500.00 per share in a private placement exempt from registration under the Securities Act of 1933, as amended. No additional shares have been sold as of September 30, 2021. The offering was effected for the purpose of the Company having at least 100 stockholders to satisfy one of the requirements for qualification as a REIT under the Internal Revenue Code. Total proceeds from the sale of the Series A Preferred Stock were $62,500 before issuance costs of $21,900. Holders of the Series A Preferred Stock are entitled to receive dividends at an annual rate of 12.5% of the liquidation preference of $500.00 per share, or $62.50 per share per annum. Dividends are cumulative and payable semi-annually commencing with the first dividend payment date on December 31, 2020. We have the option to redeem shares of our Series A Preferred Stock in whole or in part at any time for the price of $500.00 per share, plus any accrued and unpaid dividends through the date of redemption. If a redemption occurs on or before December 31, 2022, we will pay an additional $50.00 per share redemption premium.
Common Stock
The following tables detail the movement in the Company’s outstanding shares of common stock:
Nine Months Ended September 30, 2021
Class T
Shares 		Class S
Shares 		Class D
Shares 		Class I
Shares 		Class E
Shares 		Class N
Shares 		Total
Balance at December 31, 2020
—  —  —  —  —  3,608,830  3,608,830 
Issuance of common stock —  —  —  —  —  2,636,645  2,636,645 
Distribution reinvestment —  —  —  —  —  32  32 
Balance at March 31, 2021 —  —  —  —  —  6,245,507  6,245,507 
Issuance of common stock 91  91  91  —  —  1,154  1,427 
Exchange of common stock(1)
—  —  —  —  156,066  (156,066) — 
Distribution reinvestment(2)
—  —  —  492  —  —  492 
Balance at June 30, 2021 91  91  91  492  156,066  6,090,595  6,247,426 
Issuance of common stock —  —  —  —  801,593  2,290,960  3,092,553 
Common stock repurchased(3)
—  —  —  —  —  (785,025) (785,025)
Distribution reinvestment(2)
—  —  —  7  1,172  —  1,179 
Balance at September 30, 2021 91  91  91  499  958,831  7,596,530  8,556,133 

Nine Months Ended September 30, 2020
Class T
Shares 		Class S
Shares 		Class D
Shares 		Class I
Shares 		Class E
Shares 		Class N
Shares 		Total
Balance at December 31, 2019 —  —  —  —  —  8,000  8,000 
Balance at March 31, 2020 —  —  —  —  —  8,000  8,000 
Balance at June 30, 2020 —  —  —  —  —  8,000  8,000 
Issuance of common stock —  —  —  —  —  1,979,054  1,979,054 
Balance at September 30, 2020 —  —  —  —  —  1,987,054  1,987,054 
(1)On May 14, 2021, we exchanged 156,066 Class N shares of our common stock held by our directors and employees of the Adviser and its affiliates, for no additional consideration, on a one-for-one basis into Class E shares of our common stock.
(2)During the nine months ended September 30, 2021, certain of our directors and employees of the Adviser and its affiliates who held Class E shares elected distribution reinvestment which were granted in Class I shares.
(3)In accordance with MassMutual’s Subscription Agreement, on August 5, 2021, we repurchased 785,025 of MassMutual Shares for $22.0 million.
As discussed in Note 10 — “Redeemable Common Stock”, 6,857,829 of our Class N shares have been classified as redeemable common stock as of September 30, 2021 (December 31, 2020: 3,247,457 shares) because the stockholder, MassMutual, has the contractual right to redeem the shares under certain circumstances. The remaining 738,701 Class N shares that were issued as of September 30, 2021 (December 31, 2020: 361,374 shares) have been recorded as common stock.
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As of September 30, 2021, MassMutual has committed to purchase an additional $192.5 million of Class N common stock, as discussed in Note 10 — “Redeemable Common Stock”. Our investor commitments exclude 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.
Distributions
We generally intend to distribute substantially all of our taxable income to our stockholders each year to comply with the REIT provisions of the Internal Revenue Code. Taxable income does not necessarily equal net income as calculated in accordance with GAAP.
For the three and nine months ended September 30, 2021, we declared distributions of $2.7 million and $7.7 million, respectively. We accrued $1.0 million and $0.5 million for distributions payable as a component of due to affiliates in our condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020, respectively. We did not declare any distributions for the three and nine months ended September 30, 2020.
The following tables detail the aggregate distributions declared per share for each applicable class of stock for the three and nine months ended September 30, 2021:
Three Months Ended September 30, 2021
Series A
Preferred Stock 		Class T
Common Stock 		Class S
Common Stock 		Class D
Common Stock 		Class I
Common Stock 		Class E
Common Stock 		Class N
Common Stock
Aggregate distributions declared per share $ —  $ 0.4076  $ 0.4076  $ 0.4076  $ 0.4076  $ 0.4076  $ 0.4076 
Stockholder servicing fee per share(1)
—  (0.0602) (0.0602) (0.0178) —  —  — 
Net distributions declared per share $ —  $ 0.3474  $ 0.3474  $ 0.3898  $ 0.4076  $ 0.4076  $ 0.4076 
Nine Months Ended September 30, 2021
Series A
Preferred Stock 		Class T
Common Stock 		Class S
Common Stock 		Class D
Common Stock 		Class I
Common Stock 		Class E
Common Stock 		Class N
Common Stock
Aggregate distributions declared per share $ 31.2500  $ 0.5396  $ 0.5396  $ 0.5396  $ 0.6698  $ 0.6698  $ 1.2598 
Stockholder servicing fee per share(1)
—  (0.0797) (0.0797) (0.0235) —  —  — 
Net distributions declared per share $ 31.2500  $ 0.4599  $ 0.4599  $ 0.5161  $ 0.6698  $ 0.6698  $ 1.2598 
(1)See Note 12 — “ Related Party Transactions” for a discussion of our stockholder servicing fee.
Distribution Reinvestment Plan
We have adopted a distribution reinvestment plan whereby stockholders (other than stockholders residing in certain states, as discussed below) will have their cash distributions automatically reinvested in additional shares of common stock unless they elect to receive their distributions in cash. Stockholders residing in Alabama, Idaho, Kansas, Kentucky, Maryland, Massachusetts, Nebraska, New Jersey, North Carolina, Ohio, Oregon, Vermont and Washington will automatically receive their distributions in cash unless they elect to have their cash distributions reinvested in additional shares of common stock. The per share purchase price for shares purchased under the distribution reinvestment plan will be equal to the offering price before upfront selling commissions and dealer manager fees (the “transaction price”) at the time the distribution is payable. The transaction price will generally be equal to our prior month’s NAV per share for that share class. Stockholders will not pay upfront selling commissions or dealer manager fees when purchasing shares under the distribution reinvestment plan. The stockholder servicing fees for shares of our Class T shares, Class S shares and Class D shares are calculated based on the NAV for those shares and may reduce the NAV or, alternatively, the distributions payable with respect to shares of each such class, including shares issued in respect of distributions on such shares under the distribution reinvestment plan.
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Share Repurchase Plan
We have adopted a share repurchase plan. On a monthly basis, our stockholders may request that we repurchase all or any portion of their shares. We may choose, in our discretion, to repurchase all, some or none of the shares that have been requested to be repurchased at the end of any month, subject to any limitations in the share repurchase plan. The total amount of share repurchases under the plan is limited to 2% of our aggregate NAV per month and 5% of our aggregate NAV per calendar quarter. Shares will be repurchased at a price equal to the transaction price on the applicable repurchase date, subject to any early repurchase deduction. Our transaction price will generally equal our prior month's NAV per share for that share class. Shares repurchased within one year of the date of issuance will be repurchased at 95% of the current transaction price (the “Early Repurchase Deduction”). The Early Repurchase Deduction will not apply to shares acquired through the distribution reinvestment plan, and we may waive the Early Repurchase Deduction in the case of repurchases resulting from a stockholder’s death, qualifying disability or divorce. Due to the illiquid nature of investments in real estate, we may not have sufficient liquid resources to fund repurchase requests, and we have established limitations on the amount of funds we may use for repurchases during any calendar month and quarter. Our board of directors may modify or suspend the share repurchase plan.
Share-Based Compensation Plan
For the three months ended September 30, 2021, we awarded independent members of our board of directors 690 Class E shares under our 2019 Equity Incentive Plan (the “Incentive Plan”) and recognized approximately $19,000 of compensation expense related to these awards. For the nine months ended September 30, 2021, we awarded independent members of our board of directors 2,112 shares of our common stock (consisting of 1,422 Class N shares and 690 Class E shares) under the Incentive Plan and recognized approximately $58,000 of compensation expense related to these awards. As of July 1, 2021, the independent members of our board of directors began receiving compensation in the form of Class E shares. As of September 30, 2021, 192,763 shares of common stock remain available for future issuance under the Incentive Plan.
12.Related Party Transactions
Due to Affiliates
The following table details the components of due to affiliates:
$ in thousands September 30, 2021 December 31, 2020
Other general and administrative expenses $ 5,319  $ 2,205 
Advanced offering costs 4,037  931 
Performance participation allocation 2,237  — 
Advanced organization expenses 1,474  1,210 
Distributions payable 996  503 
Share-based compensation payable 19  19 
Accrued management fee(1)
—  — 
Total $ 14,082  $ 4,868 
(1)As of September 30, 2021, the accrued management fee is not presented due to rounding.
On May 14, 2021, our Registration Statement on Form S-11 (File No. 333-254931) with respect to our Offering was declared effective by the SEC. At that time, we recorded organization expenses of $0.3 million and offering costs of $2.4 million related to the Offering that were advanced by our Adviser as an increase in due to affiliates on our condensed consolidated balance sheet. As discussed in Note 2 — “Summary of Significant Accounting Policies”, these costs were not our obligation until the Offering commenced.
Management Fee and Performance Participation Allocation
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.
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We will 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 the Class E shares issued in the Offering. 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. 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.
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. The Adviser is not obligated to dedicate any of its employees exclusively to us, nor is the Adviser obligated to dedicate any specific portion of time to our business. The Adviser or the Adviser's affiliates may provide us services that would otherwise be performed by third parties. Such services may include accounting and internal audit services, account management services, corporate and secretarial services, data management services, directorship services, information technology services, finance/budget services, human resources, judicial processes, legal services, operational services, risk management services, tax services, treasury services, loan management services, construction management services, property management services, leasing services, transaction support services, transaction consulting services and other similar operational matters. In such event, we will reimburse the Adviser or the Adviser's affiliate, as applicable, the cost of performing such services (including employment costs and related expenses allocable thereto) provided that such reimbursements will not exceed the amount that would be payable if such services were provided by a third party in an arms-length transaction. During the three and nine months ended September 30, 2021, we incurred $0.2 million and $0.6 million, respectively, for costs of support personnel that were provided by the Adviser.
Invesco REIT Special Limited Partner L.L.C. (the “Special Limited Partner”), a wholly-owned subsidiary of Invesco, 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 allocations started to accrue in March 2021 and are calculated and payable on an annual basis. As of September 30, 2021, we accrued $2.2 million for the Special Limited Partner's performance participation interest. 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.
Accrued Stockholder Servicing Fee
The Dealer Manager is a registered broker-dealer affiliated with the Adviser. We have entered into an agreement (the “Dealer Manager Agreement”) with the Dealer Manager in connection with the Primary Offering. The Dealer Manager is entitled to receive selling commissions and stockholder servicing fees for certain classes of shares. As of September 30, 2021, we have not incurred any selling commissions or stockholder servicing fees.
The following table presents the upfront selling commissions and dealer manager fees for each class of shares sold in the Offering, and the stockholder servicing fee per annum based on the aggregate outstanding NAV:
Class T
Shares 		Class S
Shares 		Class D
Shares 		Class I
Shares 		Class E
Shares
Maximum Upfront Selling Commissions
(% of Transaction Price)
up to 3.0%
up to 3.5%
up to 1.5%
— —
Maximum Upfront Dealer Manager Fees
(% of Transaction Price) 		0.50% — — — —
Stockholder Servicing Fee
(% of NAV)
0.85%(1)
0.85% 0.25% — —
(1)Consists of an advisor stockholder servicing fee (0.65% per annum) and a dealer stockholder servicing fee (0.20% per annum).
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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. We accrue the cost of the stockholder servicing fee as an offering cost at the time each Class T, Class S and Class D share is sold during the Primary Offering. There is not a stockholder servicing fee with respect to Class I and Class E shares.
Related Party Share Ownership
As of September 30, 2021, affiliates had purchased the following amounts of our common stock:
$ in thousands, except share amounts Class T
Shares 		Class S
Shares 		Class D
Shares 		Class I
Shares 		Class E
Shares 		Class N
Shares 		Total Purchase Price
MassMutual (1)
—  —  —  —  —  7,642,853  $ 207,526 
IGP + Fund —  —  —  —  783,032  —  22,000 
Invesco Realty, Inc. 91  91  91  —  —  738,701  20,007 
Members of our board of directors and employees of our Adviser
—  —  —  160  93,374  —  2,570 
91  91  91  160  876,406  8,381,554  $ 252,103 

(1)In accordance with MassMutual’s Subscription Agreement, on August 5, 2021, we repurchased 785,025 of MassMutual Shares for $22.0 million. The amount presented is inclusive of the shares repurchased.

As of September 30, 2021, MassMutual has committed to purchase an additional $192.5 million of Class N common stock. Our investor commitments exclude 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.

Operating Expenses Reimbursement

The Adviser has agreed to advance all of our operating expenses on our behalf through the earlier of (1) the date that our NAV reaches $500 million and (2) December 31, 2021, at which time we will reimburse the Adviser for our advanced operating expenses ratably over 60 months. We will reimburse the Adviser for any subsequent offering expenses as incurred. As of September 30, 2021, the Adviser has advanced $5.3 million of general and administrative expenses on our behalf.

Under our charter, we may reimburse the Adviser, at the end of each fiscal quarter, for total operating expenses paid by the Adviser. However, commencing with the quarter ended September 30, 2021, 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.
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For the four fiscal quarters ended September 30, 2021, total operating expenses were $5.7 million which exceeded the 2%/25% Guidelines by $1.3 million. Our independent directors determined that the Excess Amount of total operating expenses for the four quarters ended September 30, 2021 was justified, and therefore will be reimbursed to the Advisor, because (1) the amounts reflect legitimate operating expenses necessary for the operation of our business, (2) we are currently in the initial acquisition stage of the business and our average invested assets were low as we closed on six investments from September 2020 to February 2021 and four additional investments in late September 2021, (3) the expenses incurred as a result of being a public company (including expenses for audit and legal services, director and officer liability insurance and fees for directors) are significant and disproportionate to our average invested assets and net income and (4) we have experienced outsized performance during this period resulting in increased performance participation allocation expense.
13.Economic Dependency
We are dependent on the Adviser and its affiliates for certain essential services, including the sale of shares of our common stock, acquisition and disposition decisions, and certain other responsibilities. If the Adviser and its affiliates are unable to provide such services, we would be required to find alternative service providers.
14.Commitments and Contingencies
Commitments and contingencies may arise in the ordinary course of business. Our material off-balance sheet commitments and contingencies as of September 30, 2021 are discussed below.
As discussed in Note 4 — “Investments in Unconsolidated Entities”, we have committed to fund improvements to a multifamily property owned by San Simeon Holdings. We are required to fund our commitment as requested through December 31, 2023. As of September 30, 2021, our undrawn capital commitment was $6.1 million.
We have also committed to fund up to $3.5 million of tenant improvements at our Willows Facility through December 31, 2021. As of September 30, 2021, we have funded $3.1 million.
As of September 30, 2021 and December 31, 2020, we were not subject to any material litigation or aware of any pending or threatened material litigation.
15.Tenant Leases
Our real estate properties are leased to tenants under operating lease agreements that expire on various dates. Certain leases have the option to extend or terminate at the tenant’s discretion and have termination options that may result in additional fees due to the Company.
Rental revenue is recognized on a straight-line basis over the life of the lease, including any rent steps or abatement provisions. The leases do not have material variable payments, material residual value guarantees or material restrictive covenants.
The following table details the components of operating lease income from leases in which the Company is the lessor:
Three Months Ended September 30, Nine Months Ended September 30,
$ in thousands 2021 2020 2021 2020
Fixed lease payments $ 2,448  $ —  $ 6,451  $ — 
Variable lease payments 300  —  864  — 
Rental revenue $ 2,748  $ —  $ 7,315  $ — 
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Aggregate minimum annual rentals for our consolidated real estate investments through the non-cancelable lease term are as follows:
$ in thousands
Year Future Minimum Rents
2021 (remainder) $ 1,144 
2022 4,621 
2023 4,739 
2024 4,861 
2025 4,987 
2026 5,114 
Thereafter 29,594 
Total $ 55,060 
Certain leases provide for additional rental amounts based upon the recovery of actual operating expenses in excess of specified base amounts or contractual increases as defined in the lease agreement. These contractual contingent rentals are not included in the table above.
16.Segment Reporting
As of September 30, 2021, we operated in six reportable segments: healthcare properties, office properties, industrial properties, self-storage properties, multifamily properties and student housing properties. In September 2021, we invested in two self storage properties and a student housing property (see Note 3 — “Investments in Real Estate, net”). As such, self-storage and student housing were identified as segments during the third quarter of 2021. We allocate resources and evaluate results based on the performance of each segment individually. We believe that segment net operating income is the key performance metric that captures the unique operating characteristics of each segment. We define segment net operating income as real estate revenues and property operating expenses and the net of revenues and property operating expenses of unconsolidated entities that is allocable to the Company's ownership interest.
The following table summarizes our total assets by segment:
$ in thousands September 30, 2021 December 31, 2020
Healthcare $ 81,001  $ 76,166 
Office 38,302  35,788 
Industrial 60,419  31,143 
Self-Storage 59,235  — 
Multifamily 86,863  13,118 
Student Housing 79,060  — 
Corporate and other 11,579  6,623 
Total assets $ 416,459  $ 162,838 

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The following table summarizes our financial results by segment for the three months ended September 30, 2021:
$ in thousands Healthcare Office Industrial Self-Storage Multifamily Student Housing Corporate and Other Total
Revenues:
Rental revenue $ —  $ 683  $ 612  $ 91  $ 1,239  $ 123  $ —  $ 2,748 
Other revenue —  —  —  —  88  —  —  88 
Total revenues —  683  612  91  1,327  123  —  2,836 
Expenses:
Rental property operating —  113  129  —  381  —  —  623 
Total expenses —  113  129  —  381  —  —  623 
Income from unconsolidated entities 4,745  —  —  —  510  —  —  5,255 
Income from real estate-related securities —  —  —  —  —  —  19  19 
Segment net operating income $ 4,745  $ 570  $ 483  $ 91  $ 1,456  $ 123  $ 19  $ 7,487 
Depreciation and amortization $ (5,073) $ (298) $ (214) $ —  $ (905) $ —  $ —  $ (6,490)
General and administrative (893)
Interest expense (730)
Performance participation allocation (1,446)
Net loss attributable to Invesco Real Estate Income Trust Inc. $ (2,072)
Dividends to preferred stockholders $ (2)
Net income attributable to non-controlling interests in consolidated joint ventures (4)
Net loss attributable to common stockholders $ (2,078)
The following table reconciles our segment income from unconsolidated entities to loss from unconsolidated entities, net on our condensed consolidated statement of operations for the three months ended September 30, 2021:
$ in thousands
Segment income from unconsolidated entities $ 5,255 
Depreciation and amortization attributable to unconsolidated entities (5,073)
Income from unconsolidated entities $ 182 
The following table reconciles our segment depreciation and amortization to depreciation and amortization on our condensed consolidated statement of operations for the three months ended September 30, 2021:
$ in thousands
Segment depreciation and amortization $ (6,490)
Depreciation and amortization attributable to unconsolidated entities 5,073 
Depreciation and amortization $ (1,417)
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The following table summarizes our financial results by segment for the nine months ended September 30, 2021:
$ in thousands Healthcare Office Industrial Self-Storage Multifamily Student Housing Corporate and Other Total
Revenues:
Rental revenue $ —  $ 2,061  $ 1,744  $ 91  $ 3,296  $ 123  $ —  $ 7,315 
Other revenue —  —  —  —  268  —  —  268 
Total revenues —  2,061  1,744  91  3,564  123  —  7,583 
Expenses:
Rental property operating —  330  411  —  993  —  —  1,734 
Total expenses —  330  411  —  993  —  —  1,734 
Income from unconsolidated entities 15,288  —  —  —  1,428  —  —  16,716 
Income from real estate-related securities —  —  —  —  —  —  83  83 
Segment net operating income $ 15,288  $ 1,731  $ 1,333  $ 91  $ 3,999  $ 123  $ 83  $ 22,648 
Depreciation and amortization $ (15,030) $ (893) $ (639) $ —  $ (3,447) $ —  $ —  $ (20,009)
General and administrative (3,033)
Interest expense (1,813)
Performance participation allocation (2,237)
Net loss attributable to Invesco Real Estate Income Trust Inc. $ (4,444)
Dividends to preferred stockholders $ (6)
Net income attributable to non-controlling interests in consolidated joint ventures (4)
Net loss attributable to common stockholders $ (4,454)
The following table reconciles our segment income from unconsolidated entities to income from unconsolidated entities, net on our condensed consolidated statement of operations for the nine months ended September 30, 2021:
$ in thousands
Segment income from unconsolidated entities $ 16,716 
Depreciation and amortization attributable to unconsolidated entities (15,030)
Income from unconsolidated entities $ 1,686 
The following table reconciles our segment depreciation and amortization to depreciation and amortization on our condensed consolidated statement of operations for the nine months ended September 30, 2021:
$ in thousands
Segment depreciation and amortization $ (20,009)
Depreciation and amortization attributable to unconsolidated entities 15,030 
Depreciation and amortization $ (4,979)
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17.Subsequent Events
Private Offering
Subsequent to September 30, 2021, we received total proceeds of $11.0 million from the issuance of Class N common stock in the Class N Private Offering.
On October 7, 2021, we commenced a private offering exempt from registration under the Securities Act of 1933, as amended, of up to $20 million in shares of our Class E common stock (the “Class E Private Offering”). Subsequent to September 30, 2021, we received total proceeds of $2.2 million from the issuance of Class E common stock in the Class E Private Offering.
Public Offering
Subsequent to September 30, 2021, we received total net proceeds of $36.5 million from the issuance of common stock in our public offering.
Repurchases
In accordance with MassMutual’s Subscription Agreement, on November 5, 2021, we repurchased $37.6 million of MassMutual’s Class N shares.
Investment in Unconsolidated Entity
On October 28, 2021, we formed a joint venture, ITP Investments LLC (“ITP LLC”) with TriPost Capital Partners, LLC (“TriPost”), in which we invested $10.6 million for an 85% interest in ITP LLC. TriPost holds the remaining 15% interest. ITP LLC was formed to invest in PTCR Holdco, LLC (“PTCR Holdco”), which runs a fully integrated retail platform operating company, with Borzak-PT, LLC (“Borzak”). On October 28, 2021, ITP LLC invested $7.6 million into PTCR Holdco as a preferred equity investment. ITP LLC also invests in PT Co-GP Fund (“GP Fund”), which was formed to obtain minority general partner interest investments in retail properties. ITP LLC holds a 90% interest in GP Fund and Borzak holds the remaining 10% interest. On October 28, 2021, ITP LLC invested $4.4 million into GP fund to obtain general partner interests ranging from 3.2% to 8.9% in five retail properties.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this quarterly report on Form 10-Q, or this “Quarterly Report,” we refer to Invesco Real Estate Income Trust Inc. and its consolidated subsidiaries as “we,” “us,” “our Company,” or “our,” unless we specifically state otherwise or the context indicates otherwise. We refer to our external manager, Invesco Advisers, Inc., as our “Adviser,” and we refer to the indirect parent company of our Adviser, Invesco Ltd. together with its consolidated subsidiaries (which does not include us), as “Invesco”.
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes to our unaudited condensed consolidated financial statements, which are included in Item 1 of this Quarterly Report.
Forward Looking Statements
We make forward-looking statements in this Quarterly Report and other filings we make with the Securities and Exchange Commission (“SEC”) within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. These forward-looking statements include information about possible or assumed future results of our business, investment strategies, financial condition, liquidity, results of operations, plans and objectives. When we use the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “project,” “forecast” or similar expressions and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” and any other statement that necessarily depends on future events, we intend to identify forward-looking statements. Factors that could cause actual results to differ from those expressed in our forward-looking statements include, but are not limited to:
•ongoing spread and economic and operational impact of the COVID-19 pandemic;
•economic and regulatory changes that impact the real estate market in general;
•our business and investment strategy;
•our ability to achieve our investment objective;
•our investment portfolio and pipeline;
•our ability to raise a substantial amount of capital on an ongoing basis;
•our ability to deploy capital quickly to capitalize on potential investment opportunities;
•increases in interest rates and lack of availability of financing;
•valuations and appraisals of our real properties, real estate-related securities and any property-level and entity-level debt, and their impact on NAV;
•difference between actual operating results and what was budgeted for that period;
•our intention and ability to make distributions, including our ability to fund distributions from sources other than cash flow from operations, including without limitation, the sale of or repayments under our assets, borrowing, or offering proceeds;
•our ability to satisfy repurchase requests;
•the adequacy of our cash flow from operations and borrowings to meet our short-term liquidity needs;
•our ability to maintain sufficient liquidity to meet our short-term liquidity needs; and
•our reliance on the Adviser to conduct our operations.
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The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. You should not place undue reliance on these forward-looking statements. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these factors are described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Executive Summary
We are a Maryland corporation focused on investing in stabilized, income-oriented commercial real estate in the United States. To a lesser extent, we also invest in real estate-related securities to provide a source of liquidity for our share repurchase plan, cash management and other purposes. We own, and expect to continue to own, all or substantially all of our assets through Invesco REIT Operating Partnership L.P. (“INREIT OP”), of which we are the sole general partner.
We are externally managed and advised by our Adviser, a registered investment adviser and an indirect, wholly-owned subsidiary of Invesco Ltd., a leading independent global investment management firm. Our Adviser utilizes the personnel and global resources of Invesco Real Estate to provide investment management services to us. We qualified to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes for the taxable year ended December 31, 2020. To maintain our REIT qualification, we are generally required to distribute at least 90% of our REIT taxable income to our stockholders annually. We operate our business in a manner that permits our exclusion from the definition of “Investment Company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
On May 14, 2021, the SEC declared our Registration Statement on Form S-11 (File No. 333-254931) for our public offering of common stock effective. We have registered a public offering of up to $3.0 billion in shares of common stock, consisting of up to $2.4 billion in shares in our primary offering (the “Primary Offering”) and up to $600 million in shares under our distribution reinvestment plan (collectively, the “Offering”). We are offering to sell any combination of five classes of shares of our common stock, Class T shares, Class S shares, Class D shares, Class I shares and Class E shares in the Offering, with a dollar value up to the maximum offering amount. The share classes have different upfront selling commissions and dealer manager fees and different ongoing stockholder servicing fees. The purchase price per share for each class of our common stock sold in the Offering will vary and will generally equal our prior month’s net asset value (“NAV”) per share for such class, as determined monthly, plus any applicable upfront selling commissions and dealer manager fees. As of the date of this Quarterly Report, we have received aggregate proceeds of approximately $58.5 million from the Offering and we have also received proceeds of $2.2 million from the Class E Private Offering, as defined below. We used the proceeds from the Offering and the Class E Private Offering to repurchase $59.6 million of Class N shares, as defined below. All of the Class N shares that were repurchased were classified as redeemable common stock on our condensed consolidated balance sheets. We intend to continue selling shares on a monthly basis.
We are conducting private offerings of up to $500 million in shares of our Class N common stock (“Class N shares” or “Class N common stock”) (the “Class N Private Offering”) and up to $20 million in shares of our Class E common stock (the “Class E Private Offering) (collectively, the “Private Offerings”). As of the date of this Quarterly Report, we issued 8,750,522 shares of Class N common stock in the Class N Private Offering for total net proceeds of $237.5 million after deducting offering costs of $1.1 million. As of the date of this Quarterly Report, there are outstanding commitments to purchase an additional $181.5 million of Class N common stock, excluding a $30 million commitment from Invesco Realty, Inc. that collateralizes our revolving credit facility. As of the date of this Quarterly Report, we issued 72,439 shares of Class E common stock in the Class E Private Offering for total proceeds of $2.2 million.
We commenced real estate operations in September 2020. As of September 30, 2021, we own or have invested in 31 properties. See “—Real Estate” below for additional information on these investments. As of September 30, 2021, we also own real estate-related securities.
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Q3 2021 Highlights
Operating Results
•Declared monthly net distributions totaling $2.7 million for the three months ended September 30, 2021, comprised of net distributions of $0.3474 per share for Class T, $0.3474 per share for Class S, $0.3898 per share for Class D, $0.4076 per share for Class I, $0.4076 per share for Class E and $0.4076 per share for Class N.
•Year-to-date total return through September 30, 2021, without upfront selling commissions, was 8.8% for Class T, 8.8% for Class S, 9.0% for Class D, 10.0% for Class I, 11.9% for Class E and 15.8% for Class N. Year-to-date total return through September 30, 2021, assuming maximum upfront selling commissions, was 5.0% for Class T, 5.0% for Class S, 7.4% for Class D, 10.0% for Class I, 11.9% for Class E and 15.8% for Class N.(1)(2)
•Inception-to-date total return through September 30, 2021, without upfront selling commissions, was 8.8% for Class T, 8.8% for Class S, 9.0% for Class D, 10.0% for Class I, 11.9% for Class E and 26.0% for Class N. Inception-to-date total return through September 30, 2021, assuming maximum upfront selling commissions, was 5.0% for Class T, 5.0% for Class S, 7.4% for Class D, 10.0% for Class I, 11.9% for Class E and 26.0% for Class N.(1)(2)
Capital Activity and Financings
•Entered into a five-year mortgage loan with an unaffiliated lender for $53.0 million during the three months ended September 30, 2021.
Investments
•Purchased one industrial, four self-storage and one student housing property across four transactions with a total purchase price of $167.3 million during the three months ended September 30, 2021. The acquisitions are consistent with our strategy of acquiring income-producing commercial real estate assets in growth markets across the U.S.
(1) The inception date was June 1, 2021 for Class T, S and D shares; May 21, 2021 for Class I shares; May 14, 2021 for Class E shares and September 28, 2020 for Class N shares.
(2) Total return is calculated as the change in NAV per share during the respective periods plus any distributions per share declared in the period and assumes any distributions are reinvested in accordance with our distribution reinvestment plan.
Investment Portfolio
Summary of Portfolio
The following table summarizes the allocation of our investment portfolio based on fair value as of September 30, 2021:
Asset Allocation Percentage
Real Estate 97  %
Real Estate-Related Securities 1  %
Cash and Cash Equivalents 2  %
Total 100  %
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The following tables describe the diversification of our investments in real estate based on fair value as of September 30, 2021:
By Property Type (1)
Percentage
Healthcare 36  %
Office 8  %
Industrial 12  %
Self-storage 11  %
Multifamily 18  %
Student housing 15  %
Total 100  %
By Geography (1)
Percentage
South 52  %
West 28  %
East —  %
Midwest 20  %
Total 100  %

(1)The tables herein include our investments in both consolidated and unconsolidated real estate. The Sunbelt Medical Office Portfolio is included at our pro rata share (42.5%) of the underlying real estate. For San Simeon Apartments, we included the fair value of our investment in San Simeon Holdings. See “—Real Estate” below for additional information on these investments.

As of September 30, 2021, we have acquired an ownership interest in 31 properties for a total purchase price of $405.4 million, inclusive of closing costs. Our diversified portfolio of income producing assets primarily consists of healthcare, office, industrial, self-storage, multifamily and student housing properties, concentrated in growth markets across the United States.
The following table provides a summary of our portfolio as of September 30, 2021:
Segment Number of
Properties 		Sq. Feet /
Units /Beds 		Occupancy
Rate
Gross Asset Value ($ in thousands) (1)
Segment
Revenue
($ in thousands)(2)
Percentage of
Total Segment
Revenue
Healthcare 20 1,030,397 sq. ft. 95% $ 185,386  $ 15,288  63%
Office 1 80,980 sq. ft. 100% 40,813  2,061  8%
Industrial 3 351,549 sq. ft. 100% 63,429  1,744  7%
Self-Storage 4 306,743 sq. ft. 96% 59,013  91  —%
Multifamily 2 709 units 97% 95,887  4,992  21%
Student Housing 1 656 beds 100% 78,663  123  1%
Total 31     $ 523,191  $ 24,299  100%

(1)Based on fair value as of September 30, 2021. The Gross Asset Value includes investments in both consolidated and unconsolidated real estate. The Sunbelt Medical Office Portfolio is included at our pro rata share (42.5%) of the underlying real estate. For San Simeon Apartments, we included the fair value of our investment in San Simeon Holdings. See “—Real Estate” below for additional information on these investments.
(2)Segment revenue is presented for the nine months ended September 30, 2021. Healthcare and Multifamily segment revenue includes income from unconsolidated entities.
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Real Estate
The following table provides information regarding our portfolio of real estate as of September 30, 2021:
Segment and Investment Number of Properties Location(s) Acquisition Date(s) Ownership Interest Purchase Price ($ in thousands) Sq. Feet /
Units /Beds 		Occupancy
Healthcare:
Sunbelt Medical Office Portfolio (1)
20 CA, CO, FL, TN, TX September 2020 / December 2020 / February 2021 42.5% $ 86,416  1,030,397  sq. ft. 95%
Total Healthcare 20 86,416  1,030,397  sq. ft.
Office:
Willows Facility 1 Redmond, WA December 2020 100% 35,729  80,980  sq. ft. 100%
Total Office 1 35,729  80,980  sq. ft.
Industrial:
Excelsior Warehouse 1 Norwalk, CA December 2020 100% 18,594  53,527  sq. ft. 100%
Industry Warehouse 1 Pico Rivera, CA December 2020 100% 12,483  40,480  sq. ft. 100%
Meridian Business 940 1 Aurora, IL September 2021 95% 29,615  257,542  sq. ft. 100%
Total Industrial 3 60,692  351,549  sq. ft.
Self-Storage:
Salem Self Storage 3 Salem, OR September 2021 100% 47,872  239,762  sq. ft. 95%
South Loop Storage 1 Houston, TX September 2021 100% 11,141  66,981  sq. ft. 98%
Total Self Storage 4 59,013  306,743  sq. ft.
Multifamily:
Cortona Apartments 1 St. Louis, MO January 2021 100% 71,083  278  units 97%
San Simeon Apartments (2)
1 Houston, TX December 2020 51% 13,789  431  units 97%
Total Multifamily 2 84,872  709  units
Student Housing
Bixby Kennesaw 1 Kennesaw, GA September 2021 98% 78,663  656  beds 100%
Total Student Housing 1 78,663  656  beds
Total Investment Properties 31 $ 405,385 
 
(1)We hold our interest in the Sunbelt Medical Office Portfolio through a 50% ownership interest in the Invesco JV, a joint venture between INREIT OP and Invesco U.S. Income Fund L.P., an affiliate of Invesco. The Invesco JV holds an 85% ownership interest in a joint venture with Welltower, Inc., the prior owner of the Sunbelt Medical Office Portfolio. We account for our investment using the equity method of accounting. The dates of acquisition and aggregate purchase price in the table above reflect the dates of our investments and the total amount of our investment in the Invesco JV.
(2)We own an investment in San Simeon Holdings LLC (“San Simeon Holdings”), a limited liability company that owns San Simeon Apartments. Our investment is structured as a preferred membership interest and we account for our investment in the San Simeon Apartments using the equity method of accounting. The acquisition date and purchase price in the table above reflect the date and amount of our equity investment in San Simeon Holdings. Purchase price represents our initial equity investment into San Simeon Holdings and includes an interest reserve held in restricted cash of $0.8 million.
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Investments in Real Estate-Related Securities
As of September 30, 2021, our Real Estate-Related Securities portfolio consisted of investments in commercial mortgage backed securities (“CMBS”), corporate debt and preferred stock in real estate investment trusts. The following table details our investments in real estate-related debt securities as of September 30, 2021:
September 30, 2021
$ in thousands Principal Balance Unamortized Premium (Discount) Amortized Cost Unrealized Gain (Loss), Net Fair Value Period-end Weighted Average Yield Weighted-Average Maturity Date
Non-agency CMBS $ 2,846  $ 141  $ 2,987  $ (3) $ 2,984  2.53  % 11/30/2033
Corporate debt 1,125  86  1,211  14  1,225  1.90  % 5/3/2024
Total $ 3,971  $ 227  $ 4,198  $ 11  $ 4,209 
As of September 30, 2021, we also hold investments in preferred stock of real estate investment trusts with a fair value of $0.3 million and a period-end weighted average yield of 6.83%.
Lease Expirations
The following schedule details the expiring leases at our healthcare, office and industrial properties by annualized base rent and square footage as of September 30, 2021:
Year Number of
Expiring Leases
Annualized
Base Rent ($ in thousands) (1)(2)
% of Total
Annualized Base
Rent Expiring 		Square
Feet 		% of Total Square
Feet Expiring
2021 (remaining) 15 $ 1,173  4% 37,295 3%
2022 39 2,679 8% 93,159 7%
2023 39 2,562 8% 101,859 7%
2024 37 3,435 11% 137,125 10%
2025 14 971 3% 42,927 3%
2026 14 4,480 14% 133,348 10%
2027 8 1,109 3% 42,438 3%
2028 7 2,972 9% 77,746 6%
2029 3 3,359 10% 113,651 8%
2030 5 1,837 6% 86,273 6%
Thereafter 11 7,838 24% 529,338 37%
Total 192 $ 32,415  100% 1,395,159 100%
(1)Annualized base rent is determined from the annualized September 30, 2021 base rent per leased square foot of the applicable year and excludes tenant recoveries, straight-line rent and above-market and below-market lease amortization.
(2)Includes 100% of the Sunbelt Medical Office Portfolio.

Factors Affecting Our Operating Results
Our results of operations are affected by a number of factors and depend on the rental income we generate from the properties that we acquire, the timing of lease expirations, operating expenses, income or loss from unconsolidated entities, general market conditions and the competitive environment for real estate assets.
Rental Property Operating Results
We generate rental property income primarily from rental revenue received by the properties that we acquire. The amount of rental revenue depends upon a number of factors, including our ability to enter into leases with above or at market value rents for the properties that we acquire, and rent collection, which primarily relates to each future tenant’s financial condition and ability to make rent payments to us on time. Rental property operating expenses include real estate taxes, property insurance, repairs and maintenance, property management fees, utilities and other costs associated with owning real estate.
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General and Administrative
Our operating expenses include general and administrative expenses, including legal, accounting, and other expenses related to corporate governance, public reporting and compliance with the various provisions of securities laws. Increases or decreases in our operating expenses will impact our overall financial performance.
Income From Unconsolidated Entities, Net
We have two investments in unconsolidated entities that are accounted for using the equity method of accounting. Our income or loss from these investments is reported in our condensed consolidated statement of operations as income (loss) from unconsolidated entities, net.
Market Conditions
The COVID-19 pandemic has slowed global economic activity, caused significant volatility in financial markets and negatively impacted most commercial real estate property types. The responses of many countries, including the United States, to the pandemic have included mandatory quarantines, restrictions on business activities, including construction activities, restrictions on group gatherings, restrictions on travel and mandatory closures. These actions are creating disruption in the global economy and supply chains and adversely impacting many industries, including owners of real estate. Moreover, there is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. economy and consumer confidence. There is continued uncertainty regarding the trajectory of a continuing recovery, particularly given the strength of variants of COVID-19. Accordingly, this recovery remains uneven with dispersion across sectors and regions. Occupier demand and property valuations are dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, rent levels and availability of competing space. The extent to which COVID-19 impacts our results will depend on future developments, many of which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the implementation of vaccines to combat and eventually bring an end to the COVID-19 pandemic. Business disruption resulting from the COVID-19 pandemic could negatively impact our tenants’ ability to pay rent, our ability to lease vacant space, and our ability to complete development and redevelopment projects. These consequences, in turn, could materially impact our results of operations.
Competitive Environment
We face competition from a diverse mix of market participants, including but not limited to, other REITs, pension funds, insurance companies, investment funds and companies, partnerships and developers. Competition from others may diminish our opportunities to acquire a desired investment on favorable terms or at all. In addition, the competition we face may put pressure on us to reduce the rental rates for the properties that we acquire below those that we expect to charge, which would adversely affect our financial results.
Proposed Changes to the London Interbank Offered Rate (“LIBOR”)
In 2017, the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of the LIBOR benchmark after 2021. This announcement indicates that the continuation of LIBOR will not be guaranteed after 2021. The Alternative Reference Rates Committee (“ARRC”), which was convened by the Federal Reserve Board and the New York Fed to help ensure a successful transition from LIBOR, has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to LIBOR for use in derivatives and other financial contracts that are currently indexed to LIBOR. ARRC has proposed a paced market transition plan to SOFR from LIBOR, and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to LIBOR. Further, on March 5, 2021, the FCA announced that December 31, 2021 will be the cessation date for one week and two month U.S. Dollar (“USD”) LIBOR. The FCA also set June 30, 2023 as the cessation date for the other five tenors (overnight and one, three, six and twelve months) of USD LIBOR.
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On April 6, 2021, New York State (“NYS”) put into law legislation to help address challenges surrounding legacy LIBOR contracts that have no effective means to transition away from LIBOR and to incentive the selection of SOFR-based fallback rates in other contracts. The law applies to existing USD LIBOR contracts governed by NYS law that use LIBOR as a benchmark and contain no fallback provisions or contain fallback provisions that result in a benchmark replacement that is based in any way on any LIBOR value. For these in scope contracts, the NYS law provides that on and after “LIBOR Replacement Date” (the date that USD LIBOR ceases to be published or to be representative), USD LIBOR is replaced by operation of law with the relevant SOFR-based rate plus the spread adjustment recommended for that contract type by the US Federal Reserve or the ARRC, and any LIBOR-based fallback provisions are permanently overridden. Additionally, the law applies to existing USD LIBOR contracts governed by NYS law that contain fallback provisions that permit or require a party to select a benchmark replacement that is based in any way on any LIBOR value or otherwise in its discretion. For such contracts, the law authorizes and safe harbors the selection by such party of the relevant SOFR-based rate plus the spread adjustment recommended for that contract type by the Fed or the ARRC to apply on and after the “LIBOR Replacement Date”.
SOFR is an overnight rate unlike LIBOR which is a forward-looking term rate, making SOFR an inexact replacement for LIBOR. There is currently no perfect way to create robust, forward-looking, SOFR term rates. The ARRC has announced that they will not recommend a forward-looking SOFR term rate by mid-2021, as previously announced, due to insufficient development of the SOFR derivatives markets. Market participants are still considering how various types of financial instruments and securitization vehicles should react to a discontinuation of LIBOR. It is possible that not all of our assets and liabilities will transition away from LIBOR at the same time or to the same alternative reference rate, in each case increasing the difficulty of hedging. Switching existing financial instruments and hedging transactions from LIBOR to SOFR requires calculations of a spread and there is no assurance that the spread adjustment will avoid negative financial impacts on our portfolio at the time of transition.
We have contracts that are indexed to LIBOR and are monitoring this activity and evaluating the related risks. However, it is not possible to predict the effect of any of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR could result in adverse consequences related to contracts that are indexed to LIBOR.
In October 2019, the IRS and Treasury proposed regulations that are expected to provide taxpayers relief from adverse impacts resulting from the transition away from LIBOR to an alternative reference rate. The proposed regulations make clear that a change in the reference rate (and associated alterations to payment terms) of a financial instrument is generally not considered a taxable event, provided the fair value of the modified instrument is substantially equivalent to the fair value of the unmodified instrument.
The Financial Accounting Standards Board has also issued accounting guidance that provides optional expedients and exceptions to contracts, hedging relationships and other transactions impacted by LIBOR transition if certain criteria are met.
Qualification as a REIT
We qualified as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2020. We believe that we have been organized and are operating in such a manner to continue to qualify for taxation as a REIT under the applicable provisions of the Code so long as our board of directors determines that REIT qualification remains in our best interest. Many of the requirements for taxation as a REIT are highly technical and complex. We will monitor the business and transactions that may potentially impact our REIT status. As a REIT, we will not be subject to federal income tax with respect to the portion of our income that meets certain criteria and is distributed annually to stockholders. However, if we were to fail to meet these requirements, we could be subject to federal income tax on our taxable income at regular corporate rates. We would not be able to deduct distributions paid to stockholders in any year in which we fail to qualify as a REIT. We would also be disqualified for the four taxable years following the year during which REIT qualification was lost unless we were entitled to relief under specific statutory provisions.
Results of Operations
We commenced real estate operations in September 2020. Accordingly, our results of operations for the three and nine months ended September 30, 2021 and 2020 are not comparable and we have not described the increases (decreases) from the corresponding 2020 period when we had no real estate operations. We expect revenues and expenses to increase during the year ending December 31, 2021 because we will have a full year of operations in 2021 and expect to continue making additional investments.
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The following table sets forth the results of our operations:
Three Months Ended September 30, Nine Months Ended September 30,
$ in thousands 2021 2020 2021 2020
Revenues    
Rental revenue $ 2,748  $ —  $ 7,315  $ — 
Other revenue 88  —  268  — 
Total revenues 2,836  —  7,583  — 
Expenses    
Rental property operating 623  —  1,734  — 
General and administrative 893  686  3,033  2,242 
Performance participation allocation 1,446  —  2,237  — 
Depreciation and amortization 1,417  —  4,979  — 
Total expenses 4,379  686  11,983  2,242 
Other income (expense), net    
Income from unconsolidated entities, net 182  35  1,686  35 
Income from real estate-related securities 19  —  83  — 
Interest expense (730) (18) (1,813) (18)
Total other income (expense), net (529) 17  (44) 17 
Net loss attributable to Invesco Real Estate Income Trust Inc. (2,072) (669) (4,444) (2,225)
Dividends to preferred stockholders $ (2) $ —  $ (6) $ — 
Net income attributable to non-controlling interests in consolidated joint ventures (4) —  (4) — 
Net loss attributable to common stockholders $ (2,078) $ (669) $ (4,454) $ (2,225)
Rental Revenue and Rental Property Operating Expenses
Our rental revenue primarily consists of fixed contractual base rent from our tenants and is recognized on a straight-line basis over the non-cancelable terms of the related leases. Our rental property operating expenses generally include the costs of ownership of real estate, including insurance, utilities, real estate taxes and repair and maintenance expense. During the nine months ended September 30, 2021, we acquired seven properties and assumed the underlying tenant leases when we acquired the properties.
General and Administrative Expenses
During the three and nine months ended September 30, 2021, general and administrative expenses were $0.9 million and $3.0 million, respectively, and consisted primarily of organization costs related to our Class N Private Offering, accounting, audit and tax fees, legal fees, other professional services fees and directors expenses. During the nine months ended September 30, 2021, we incurred $0.3 million in organization costs related to the Offering. During the three and nine months ended September 30, 2020, general and administrative expenses were $0.7 million and $2.2 million, respectively, and consisted primarily of organization costs related to our Class N Private Offering.
Income from Unconsolidated Entities, Net
During the three and nine months ended September 30, 2021, we incurred net income from unconsolidated entities of $0.2 million and $1.7 million, respectively.
Performance Participation Allocation
During the three and nine months ended September 30, 2021, the performance participation allocation accrual was $1.4 million and $2.2 million, respectively.
Depreciation and Amortization
During the three and nine months ended September 30, 2021, depreciation and amortization expenses were $1.4 million and $5.0 million, respectively, driven by depreciation and amortization on our consolidated properties.
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Interest Expense
For the three and nine months ended September 30, 2021, we incurred interest expense of $0.7 million and $1.8 million, respectively, that primarily consists of interest expense on our mortgage notes and revolving credit facility. Interest expense also includes amortization of deferred financing costs related to obtaining our mortgage loans and revolving credit facility. See “— Liquidity and Capital Resources” below as well as Note 8 — “Mortgage Notes and Revolving Credit Facility” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of our borrowing arrangements.
Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution
We believe funds from operations (“FFO”) is a meaningful non-GAAP measure. Our condensed consolidated financial statements are presented in accordance with GAAP under historical cost accounting which, among other things, requires depreciation of real estate investments to be calculated on a straight-line basis. As a result, our operating results imply that the value of our real estate investments will decrease evenly over a set time period. However, we believe that the value of our real estate investments will fluctuate over time based on market conditions and as such, depreciation under historical cost accounting may be less informative. FFO is a standard REIT industry metric defined by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as net income or loss (computed in accordance with GAAP), excluding (i) gains or losses from sales of depreciable real property, (ii) impairment write-downs on depreciable real property, plus (iii) real estate-related depreciation and amortization and (iv) similar adjustments for non-controlling interests and unconsolidated entities. We did not sell any real estate property or record any impairment during the three and nine months ended September 30, 2021.
We also believe that adjusted FFO (“AFFO”) is a meaningful non-GAAP measure of our operating results. AFFO further adjusts FFO for our operating results to reflect the specific characteristics of our business by adjusting for items we believe are not related to our core operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) straight-line rental income, (ii) amortization of below-market lease intangibles, (iii) organization costs and certain operating expenses advanced by the Adviser, (iv) unrealized losses (gains) from changes in fair value of real estate-related securities, (v) non-cash performance participation allocation or other non-cash incentive compensation even if repurchased by us and (vi) similar adjustments for non-controlling interests and unconsolidated entities. We may add additional adjustments from FFO to arrive at AFFO as appropriate.
We also believe funds available for distribution (“FAD”) is a meaningful non-GAAP measure that provides useful information for considering our operating results and certain other items relative to the amount of our distributions by removing the impact of certain non-cash items from our operating results. FAD is calculated as AFFO excluding (i) realized gains (losses) on investments in real estate-related securities and (ii) management fees paid in shares of our common stock or INREIT OP units even if repurchased by us, and including deductions for (a) recurring tenant improvements, leasing commissions, and other capital projects, (b) stockholder servicing fees paid during the period and (c) similar adjustments for non-controlling interests and unconsolidated entities. FAD is not indicative of cash available to fund our cash needs and does not represent cash flows from operating activities in accordance with GAAP, as it excludes adjustments for working capital items and actual cash receipts from interest income recognized on investments in real estate debt. Cash flows from operating activities in accordance with GAAP would generally be adjusted for such items. Furthermore, FAD is adjusted for stockholder servicing fees and recurring tenant improvements, leasing commissions and other capital expenditures, which are not considered when determining cash flows from operating activities in accordance with GAAP.
FFO, AFFO, and FAD should not be considered to be more relevant or accurate than the GAAP methodology in calculating net income (loss) or in evaluating our operating performance. In addition, FFO, AFFO, and FAD should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO, AFFO, and FAD are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders. In addition, our methodology for calculating AFFO and FAD may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported AFFO and FAD may not be comparable to the AFFO and FAD reported by other companies.
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The following table presents a reconciliation of FFO, AFFO and FAD to net income attributable to our stockholders:
Three Months Ended September 30, Nine Months Ended September 30,
$ in thousands 2021 2021
Net loss attributable to our stockholders $ (2,078) $ (4,454)
Adjustments to arrive at FFO:
Real estate depreciation and amortization 1,417  4,979 
Amount attributed to unconsolidated entities for above adjustment 2,156  6,424 
FFO attributable to our stockholders 1,495  6,949 
Adjustments to arrive at AFFO:
Straight-line rental income (101) (412)
Amortization of below-market lease intangibles (48) (146)
Organization costs (1)
—  264 
Accrued preferred return from preferred membership interest (252) (739)
Unrealized gains from changes in the fair value of real estate-related securities 10  (3)
Non-cash share based compensation awards 20  58 
Non-cash performance participation allocation 1,446  2,237 
Other operating expenses (2)
908  2,933 
Amount attributed to unconsolidated entities for unrealized losses (gains) on derivatives 14  (1,263)
Amount attributed to unconsolidated entities for above adjustments (172) (689)
AFFO attributable to our stockholders 3,320  9,189 
Adjustments to arrive at FAD:
Recurring tenant improvements, leasing commissions and other capital expenditures(3)
(93) (93)
Recurring capital expenditures attributed to unconsolidated entities(3)
(267) (1,160)
FAD attributable to our stockholders $ 2,960  $ 7,936 
(1)The Adviser has agreed to advance all of our organization costs incurred through the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2022. We will reimburse the Adviser for all of our advanced expenses ratably over the 60 months following the earlier of (1) the date our NAV reaches $1.0 billion and (2) December 31, 2022. We will reimburse the Adviser for any subsequent organization costs as incurred.
(2)The Adviser has agreed to advance all of our operating expenses on our behalf through the earlier of (1) the date that our aggregate NAV is at least $500 million and (2) December 31, 2021. We will reimburse the Adviser for all such advanced expenses ratably over the 60 months following the earlier of (1) the date that our aggregate NAV is at least $500 million and (2) December 31, 2021.
(3)Recurring capital expenditures are required to maintain our investments. Capital expenditures exclude underwritten tenant improvements, leasing commissions and capital expenditures with useful lives over 10 years.
Net Asset Value
The purchase price per share for each class of our common stock will generally equal our prior month’s NAV per share, as determined monthly, plus any applicable selling commissions and dealer manager fees. Our NAV for each class of shares is based on the net asset values of our investments (including securities investments), the addition of any other assets (such as cash on hand) and the deduction of any other liabilities, including the allocation/accrual of any performance participation and any stockholder servicing fees applicable to such class of shares. NAV is not a measure used under GAAP and the valuations of and certain adjustments made to our assets and liabilities used in the determination of NAV will differ from GAAP. You should not consider NAV to be equivalent to stockholders’ equity or any other GAAP measure.
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The following table reconciles stockholders’ equity per our condensed consolidated balance sheet to our NAV:
$ in thousands September 30, 2021
Stockholders' equity $ 8,515 
Adjustments:
Redeemable common stock (1)
203,532 
Organization costs, offering costs and certain operating expenses (2)
10,830 
Unrealized real estate appreciation (3)
21,773 
Accumulated depreciation and amortization (4)
13,301 
Straight-line rent receivable
(1,431)
Other assets (2)
(1,126)
NAV $ 255,394 
(1)MassMutual's Class N shares are redeemable common stock and we include the value of these shares as a component of our NAV. MassMutual’s Class N shares have been classified as redeemable common stock on our condensed consolidated balance sheets because MassMutual has the contractual right to redeem the shares under certain circumstances. MassMutual's redemption rights are not transferable.
(2)The Adviser has agreed to advance all of our organization and offering expenses (other than upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees) incurred through the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2022. We will reimburse the Adviser for all of our advanced expenses ratably over the 60 months following the earlier of (1) the date our NAV reaches $1.0 billion and (2) December 31, 2022. We will reimburse the Adviser for any subsequent organization and offering expenses as incurred.
The Adviser has agreed to advance all of our operating expenses on our behalf through the earlier of (1) the date that our aggregate NAV is at least $500 million and (2) December 31, 2021. We will reimburse the Adviser for all such advanced expenses ratably over the 60 months following the earlier of (1) the date that our aggregate NAV is at least $500 million and (2) December 31, 2021. These costs include certain prepaid expenses that are classified as other assets in our GAAP condensed consolidated financial statements that has also been excluded from our NAV.
Under GAAP, organization and operating costs are expensed as incurred and offering costs are charged to equity as such amounts are incurred. For NAV, all such costs will be recognized as a reduction to NAV as they are reimbursed ratably over 60 months.
(3)Our investments in real estate are presented under historical cost in our GAAP condensed consolidated financial statements. As such, any increases or decreases in the fair market value of our investments in real estate are not recorded in our GAAP results. For purposes of determining our NAV, our investments in real estate are recorded at fair value.
(4)We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization, including depreciation and amortization related to our investments in unconsolidated entities, is excluded for purposes of determining our NAV.
The following table provides a breakdown of the major components of our total NAV as of September 30, 2021:
$ in thousands, except share data
Components of NAV September 30, 2021
Investments in real estate $ 318,517 
Investments in real estate-related securities 4,515 
Investments in unconsolidated entities 117,922 
Cash and cash equivalents 4,581 
Restricted cash 942 
Other assets 1,040 
Mortgage notes and revolving credit facility (186,357)
Other liabilities (2,398)
Accrued performance participation allocation (2,237)
Subscriptions received in advance (1,131)
Net Asset Value $ 255,394 
Number of outstanding shares of common stock 8,556,133 
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We calculate our total NAV per share as follows as of September 30, 2021:
NAV Per Share ($ in thousands, except per share data) Class T Shares Class S Shares Class D Shares Class I Shares Class E Shares Class N Shares Total
Net asset value $ 3  $ 3  $ 3  $ 15  $ 28,896  $ 226,474  $ 255,394 
Number of outstanding shares of common stock 91  91  91  499  958,831  7,596,530  8,556,133 
NAV Per Share as of September 30, 2021
$ 29.5218  $ 29.5218  $ 29.5218  $ 29.6059  $ 30.1371  $ 29.8129 
Our real estate properties are valued by an independent advisor using a discounted cash flow methodology. The following table summarizes the weighted averages of the key unobservable inputs used in the September 30, 2021 valuations:
Property Type(1)
Discount Rate Exit Capitalization Rate
Healthcare 6.1% 5.4%
Office 6.5% 5.5%
Industrial 6.3% 5.0%
Multifamily 6.1% 5.0%
(1)In September 2021, we purchased industrial, self-storage and student housing properties. Management believes the cost of the properties represents fair value as they were purchased in September 2021 and our policy is to have an initial appraisal within the first full two months of acquisition. As such, the acquisitions in September 2021 were not valued by an independent advisor as of September 30, 2021 and those properties are not included in the table above.
These assumptions are determined by Capright and reviewed by the Adviser. A change in these assumptions would impact the calculation of the value of our property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:
Input Hypothetical
Change 		Healthcare
Investment
Values 		Office
Investment
Values 		Multifamily
Investment
Values 		Industrial
Investment
Values
Discount Rate 0.25% decrease +2.0% +2.0% +1.9% +2.0%
(weighted average) 0.25% increase (1.9)% (2.0)% (1.9)% (2.0)%
Exit Capitalization Rate 0.25% decrease +3.1% +3.2% +3.3% +3.5%
(weighted average) 0.25% increase (2.9)% (2.9)% (3.0)% (3.2)%
Distributions
In November 2020, we began declaring monthly distributions. The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the applicable distributor. The table below details the net distribution for each of our share classes for the nine months ended September 30, 2021:
Declaration Date Class T
Shares 		Class S
Shares 		Class D
Shares 		Class I
Shares 		Class E
Shares 		Class N
Shares
January 31, 2021 $ —  $ —  $ —  $ —  $ —  $ 0.1364 
February 28, 2021 —  —  —  —  —  0.1428 
March 31, 2021 —  —  —  —  —  0.1488 
April 30, 2021 —  —  —  —  —  0.1620 
May 31, 2021 —  —  —  0.1302  0.1302  0.1302 
June 30, 2021 0.1125  0.1125  0.1263  0.1320  0.1320  0.1320 
July 31, 2021 0.1136  0.1136  0.1275  0.1333  0.1333  0.1333 
August 31, 2021 0.1132  0.1132  0.1273  0.1333  0.1333  0.1333 
September 30, 2021 0.1206  0.1206  0.1350  0.1410  0.1410  0.1410 
Total $ 0.4599  $ 0.4599  $ 0.5161  $ 0.6698  $ 0.6698  $ 1.2598 

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For the three and nine months ended September 30, 2021, we declared distributions in the amount of $2.7 million and $7.7 million, respectively.
The following table summarizes our distributions declared during the three and nine months ended September 30, 2021. We did not make any distributions prior to commencing operations in September 2020.
Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2021
$ in thousands Amount Percentage Amount Percentage
Distributions        
Payable in cash $ 2,646  99  % $ 7,647  99  %
Reinvested in shares 33  1  % 60  1  %
Total distributions $ 2,679  100  % $ 7,707  100  %
Sources of Distributions
Cash flows from operating activities $ 1,307  49  % $ 4,954  65  %
Distributions of capital from investments in unconsolidated entities 1,339  51  % 2,693  35  %
Total sources of distributions $ 2,646  100  % $ 7,647  100  %
Cash flows from operating activities $ 1,307  $ 4,954 
Funds from Operations (1)
$ 1,495  $ 6,949 
Adjusted Funds from Operations (1)
$ 3,320  $ 9,189 
Funds Available for Distribution (1)
$ 2,960  $ 7,936 

(1)See “—Funds from Operations, Adjusted Funds from Operations and Funds Available for Distribution” above for descriptions of Funds from Operations (FFO), Adjusted Funds from Operations (AFFO), and Funds Available for Distribution (FAD), for reconciliations of them to GAAP net income attributable to INREIT stockholders, and for considerations on how to review these metrics.
Liquidity and Capital Resources
Our primary needs for liquidity and capital resources are to fund our investments, to make distributions to our stockholders, to repurchase shares of our common stock under our share repurchase plan, to pay our offering costs and operating fees and expenses and to pay interest on our borrowings. We will obtain the funds required to purchase investments and conduct our operations from the net proceeds of our Private Offerings, our Primary Offering and any future offerings we may conduct, from secured and unsecured borrowings from banks and other lenders and from any undistributed funds from operations. Generally, cash needs for items other than asset acquisitions are met from operations, and cash needs for asset acquisitions are funded by our Private Offerings, the Offering and debt financings. However, there may be a delay between the sale of our shares and our purchase of assets that could result in a delay in the benefits to our stockholders, if any, of returns generated from our investment operations.
Our target leverage ratio after we have raised substantial offering proceeds and acquired a broad portfolio of real estate investments is approximately 50% to 60%. We calculate our “leverage ratio” by dividing (1) the sum of our consolidated property-level debt, entity-level debt, and allocation of debt from investments in real estate funds managed by the Adviser or its affiliates in which we may invest, net of cash and restricted cash, by (2) the asset value of our real estate investments and equity in our real estate-related securities portfolio (in each case measured using the greater of fair market value and cost of gross real estate), including our investments in unconsolidated entities. Our leverage ratio calculation does not include (i) indebtedness incurred in connection with funding a deposit in advance of the closing of an investment, (ii) indebtedness incurred as other working capital advances, (iii) indebtedness on our real estate securities investments, or (iv) the pro rata share of debt within our unconsolidated investments. Our charter prohibits us from borrowing more than 300% of our net assets, which approximates borrowing 75% of the cost of our investments. We may exceed this limit if a majority of our independent directors approves each borrowing in excess of the limit and we disclose the justification for doing so to our stockholders.
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If we are unable to raise substantial funds in the Offering, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments we make and the value of an investment in us will fluctuate with the performance of the specific assets we acquire. Further, we have certain fixed operating expenses, including certain expenses as a publicly offered REIT, regardless of whether we are able to raise substantial funds in the Offering. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.
Our offering and operating fees and expenses include, among other things, the management fee we pay to the Adviser, the performance participation allocation that INREIT OP will pay to the Special Limited Partner, stockholder servicing fees we will pay to the Dealer Manager, legal, audit and valuation expenses, federal and state filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution expenses and fees related to acquiring, financing, appraising and managing our properties. The Adviser and its affiliates provide us with our management team, including our officers and appropriate support personnel. The Adviser or the Adviser's affiliates may provide us services that would otherwise by performed by third parties. In such event, we will reimburse the Adviser or the Adviser's affiliate the cost of performing such services provided that such reimbursements will not exceed the amount that would be payable if such services were provided by a third party in an arms-length transaction.
The Adviser has agreed to advance all of our operating expenses on our behalf through the earlier of (1) the date that our NAV reaches $500 million and (2) December 31, 2021, at which time we will reimburse the Adviser for our advanced operating expenses ratably over 60 months. We will reimburse the Adviser for any subsequent offering expenses as incurred. As of September 30, 2021, the Adviser has advanced $5.3 million of general and administrative expenses on our behalf.
The Adviser has agreed to advance all of our organization and offering expenses on our behalf (other than upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees) through the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2022, at which time we will reimburse the Adviser for all of our advanced expenses ratably over 60 months. We will reimburse the Adviser for any subsequent organization and offering expenses as incurred. As of September 30, 2021, the Adviser had incurred offering expenses of $1.0 million and organization costs of $1.2 million on our behalf in connection with the private offering of our Class N shares that are recorded as a component of due to affiliates on our condensed consolidated balance sheet. The Adviser and its affiliates have also incurred organization and offering expenses of $3.3 million on our behalf in connection with the Offering that are recorded as a component of due to affiliates on our condensed consolidated balance sheet.
Under our charter, we may reimburse the Adviser, at the end of each fiscal quarter, for total operating expenses paid by the Adviser. However, commencing with the quarter ended September 30, 2021, 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.
For the four fiscal quarters ended September 30, 2021, total operating expenses were $5.7 million which exceeded the 2%/25% Guidelines by $1.3 million. Our independent directors determined that the Excess Amount of total operating expenses for the four quarters ended September 30, 2021 was justified because (1) the amounts reflect legitimate operating expenses necessary for the operation of our business, (2) we are currently in the initial acquisition stage of the business and our average invested assets were low as we closed on six investments from September 2020 to February 2021 and four additional investments in late September 2021, (3) the expenses incurred as a result of being a public company (including expenses for audit and legal services, director and officer liability insurance and fees for directors) are significant and disproportionate to our average invested assets and net income and (4) we have experienced outsized performance during this period resulting in increased performance participation allocation expense.
As of September 30, 2021, our indebtedness included two mortgages secured by their corresponding properties and a line of credit.
On May 25, 2021, we entered into a seven-year mortgage loan with an unaffiliated lender for $45.0 million (the “Cortona Loan”) secured by the Cortona Apartments. The Cortona Loan bears interest at the greater of (a) 2.65% or (b) the sum of (i) 2.40% plus (ii) one-month LIBOR and matures on June 1, 2028. The Cortona Loan contains customary conditions to funding and various affirmative and negative financial covenants.
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On September 24, 2021, a consolidated subsidiary of the Company entered into a five-year mortgage loan with an unaffiliated lender for $53.0 million (the “Bixby Loan”) secured by our Bixby Kennesaw property. The Bixby Loan bears interest at the sum of (i) 1.60% plus (ii) one-month LIBOR and matures on September 24, 2026. The Bixby Loan contains various affirmative and negative financial covenants.
See Note 8 — “Mortgage Notes and Revolving Credit Facility” to our condensed consolidated financial statements for a discussion of our borrowing arrangements.
Other potential future sources of capital include incremental secured or unsecured financings from banks or other lenders and proceeds from the sale of assets. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures. We have not yet identified any sources for these types of financings.
At September 30, 2021, we had cash and cash equivalents of $4.6 million and restricted cash of $0.9 million. Our restricted cash primarily consists of an interest reserve that we are contractually required to maintain on deposit under the terms of our preferred membership interest in a limited liability company. Restricted cash also includes amounts in escrow for taxes and insurance related to mortgages at certain properties, as well as security deposits.
We hold a preferred membership interest in an unconsolidated limited liability company that owns the San Simeon Apartments and have committed to fund improvements to the San Simeon Apartments. We are required to fund these commitments as requested through December 31, 2023. As of September 30, 2021, our undrawn capital commitment was $6.1 million.
We have committed to fund up to $3.5 million of tenant improvements at our Willows Facility through December 31, 2021. As of September 30, 2021, we have funded $3.1 million.
We believe that our current level of cash and borrowing capacity under our Revolving Credit Facility, together with expected future cash flows from our Offering, Private Offerings and future operations, will be sufficient to meet the needs of our existing operations and planned requirements for the foreseeable future.
Cash Flows
The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash:
Nine Months Ended September 30,
$ in thousands 2021 2020
Cash flows provided by operating activities $ 4,954  $ 732 
Cash flows used in investing activities (253,684) (56,963)
Cash flows provided by financing activities 250,535  56,664 
Net increase in cash and cash equivalents and restricted cash $ 1,805  $ 433 
Operating Activities — Net cash provided by operating activities of $5.0 million for the nine months ended September 30, 2021 consists of our net loss of approximately $4.4 million adjusted for non-cash items and changes in assets and liabilities. The change in our assets and liabilities is primarily due to the timing of cash receipts and cash payments, including amounts we owe our affiliates.
Investing Activities — We used net cash of $253.7 million during the nine months ended September 30, 2021, primarily to make investments of $260.5 million in real estate, capital improvements to real estate, unconsolidated entities and real-estate related securities. Cash used to fund these investments was partially offset by cash distributions from unconsolidated entities of $4.6 million and sales of real-estate related securities of $2.2 million.
Financing Activities — Our financing activities provided net cash of $250.5 million for the nine months ended September 30, 2021. Our primary sources of cash from financing activities were net proceeds from the issuance of our common stock of $160.8 million, proceeds from borrowings under the Revolving Credit Facility of $133.5 million and proceeds from mortgages at our properties of $98.0 million. These cash inflows were offset by the repayment of the previous credit facility of $67.7 million, repayment of the Revolving Credit Facility of $44.0 million, repurchases of our common stock of $22.0 million, distributions paid of $7.2 million and the payment of financing costs of $2.0 million.
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Critical Accounting Policies
Below is a discussion of our critical accounting policies. We consider these policies critical because they involve significant judgments and assumptions and require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. Our accounting policies have been established to conform with GAAP. The preparation of the financial statements in accordance with GAAP requires us to use judgments in the application of such policies. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.
Principles of Consolidation and Variable Interest Entities
We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity, we consider whether the entity is a variable interest entity (“VIE”) and whether we are the primary beneficiary. We are the primary beneficiary of a VIE when we have both the power to direct the most significant activities impacting the economic performance of the VIE and the obligation to absorb losses or receive benefits significant to the VIE.
For consolidated joint ventures, the non-controlling partner’s share of the assets, liabilities and operations of each joint venture is included in non-controlling interests as equity of the Company. The non-controlling partner’s interest is generally computed as the joint venture partner’s ownership percentage. Certain of the joint ventures formed by the Company provide the other partner a profits interest based on certain internal rate of return hurdles being achieved. Any profits interest due to the other partner is reported within non-controlling interests.
We apply the equity method of accounting if we have significant influence over an entity, typically when we hold 20 percent or more of the voting common stock (or equivalent) of an investee but do not have a controlling financial interest. In certain circumstances, such as with investments in limited liability companies or limited partnerships, we apply the equity method of accounting when we own as little as three to five percent.
We have an investment in a limited liability company that is structured as preferred membership interest, and our equity interest is structured to receive a fixed return. Accordingly, we do not participate in any economic upside or downside of the limited liability company. Further, because there is a mandatory redemption feature associated with our preferred membership interest, our future involvement with the limited liability company is limited. We have concluded that the limited liability company is a VIE and that we are not the primary beneficiary because we do not have the power to direct the activities of the VIE that most significantly impact its economic performance. Our economic risk with respect to our investment is limited to our equity ownership and any uncollected distributions.
Purchase Price Allocation of Acquired Real Estate
We generally account for the acquisition of real estate as an asset acquisition which requires that we assess the fair value of acquired tangible and intangible assets and liabilities (including land, buildings, tenant improvements, above-market and below-market leases, acquired in-place leases, other identified intangible assets and assumed liabilities) and allocate the purchase price to the acquired assets and assumed liabilities. The cost of the acquisition is then allocated to the assets acquired and liabilities assumed based on their relative estimated fair values. We assess relative fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that we deem appropriate, as well as other available market information. We estimate future cash flows based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions.
The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. We also consider an allocation of purchase price to acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including but not limited to the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals.
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We record acquired above-market and below-market leases at their fair values (using a discount rate that reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid under each in-place lease and (2) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. Other intangible assets acquired include amounts for in-place lease values that are based on our evaluation of the specific characteristics of each tenant’s lease. Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. When estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. When estimating costs to execute similar leases, we consider leasing commissions, legal and other related expenses.

Impairment of Investments in Real Estate
We review our real estate properties for indicators of impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. We assess recoverability based on the estimated undiscounted future cash flows expected to be generated from the operation and eventual disposition of our properties over the period we expect to hold the properties. Our estimate of undiscounted future cash flows includes, but is not limited to, factors such as market conditions, rental prices, hold period and occupancy levels. These assumptions could differ materially from actual results. If the carrying amount of the real estate investment is no longer recoverable and exceeds the fair value of our investment, we recognize an impairment loss. The impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value, or fair value, less cost to sell, if classified as held for sale. If we change our strategy or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material to our results. If we determine that an impairment has occurred, we reduce the affected assets to their fair value or fair value, less cost to sell if classified as held for sale.
Impairment of Investments in Unconsolidated Entities
We evaluate the carrying amount of our investment in an unconsolidated real estate entity for potential indicators of impairment if the carrying amount of our investment exceeds its fair value. We record an impairment charge when we determine an impairment is other-than-temporary. To determine whether impairment is other-than-temporary, we consider whether we have the ability and intent to hold the investment until the carrying amount is fully recovered. The evaluation of an investment in an unconsolidated real estate entity for potential impairment can require us to exercise significant judgment.
Redeemable Common Stock
Certain shares of our Class N common stock are classified as redeemable common stock on our condensed consolidated balance sheet because the holder of these shares, Massachusetts Mutual Life Insurance Company (“MassMutual”), has the contractual right to redeem the shares under certain circumstances as described in Note 10 — “Redeemable Common Stock”.
We report our redeemable common stock on our condensed consolidated balance sheet at MassMutual’s redemption value. MassMutual’s redemption value is determined based on our Net Asset Value (“NAV”) per Class N share as of the month end preceding our balance sheet date. We calculate NAV as U.S. GAAP stockholders’ equity adjusted for the redemption value of our redeemable common stock; certain organization and offering costs and certain operating expenses; unrealized real estate appreciation; accumulated depreciation and amortization; straight-line rent receivable and other assets. For purposes of determining our NAV, our investments in real estate are recorded at fair value based on third party valuations prepared by licensed appraisers in accordance with standard industry practice.
Rental Revenue and Collectability
We recognize rental revenue on our leases based on a number of factors, including the initial determination that the contract is or contains a lease. Generally, all of our contracts are, or contain leases, and therefore revenue is recognized when the lessee takes possession of or controls the physical use of the leased assets. In most instances this occurs on the lease commencement date. At the inception of a new lease, including new leases that arise from amendments, we assess the terms and conditions of the lease to determine the proper lease classification.
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A lease is classified as an operating lease if none of the following criteria are met: (i) ownership transfers to the lessee at the end of the lease term, (ii) the lessee has a purchase option that is reasonably expected to be exercised, (iii) the lease term is for a major part of the economic life of the leased property, (iv) the present value of the future lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the leased property, and (v) the leased property is of such a specialized nature that it is expected to have no future alternative use to us at the end of the lease term. If one or more of these criteria are met, the lease will generally be classified as a sales-type lease, unless the lease contains a residual value guarantee from a third party other than the lessee, in which case it would be classified as a direct financing lease under certain circumstances.
Rental revenue primarily consists of fixed contractual base rent arising from tenant leases at our healthcare, office and industrial properties under operating leases. Revenue under operating leases that are deemed probable of collection, is recognized as revenue on a straight-line basis over the non-cancelable term of the related leases. For leases that have fixed and measurable rent escalations, the difference between such rental income earned and the cash rent due under the provisions of the lease is recorded in the condensed consolidated balance sheets. For leases that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. Our estimate of collectability includes, but is not limited to, factors such as the tenant’s payment history, financial condition, industry and geographic area. These estimates could differ materially from actual results.
Pending Accounting Pronouncements
See Note 2 — “Summary of Significant Accounting Policies” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of pending accounting pronouncements.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial condition, revenues or results of operations, liquidity, capital expenditures or capital resources other than those described in the table below.
Contractual Obligations
The following table aggregates our contractual obligations and commitments with payments due subsequent to September 30, 2021:
$ in thousands
Obligations Total Less than
1 year 		1-3 years 3-5 years More than
5 years
Indebtedness(1)
$ 187,500  $ —  $ 89,500  $ 53,000  $ 45,000 
Interest expense(2)
15,754  911  9,309  3,845  1,689 
Commitment to fund property improvements(3)
6,062  3,668  2,394  —  — 
Tenant improvement allowance(4)
425  425  —  —  — 
Total $ 209,741  $ 5,004  $ 101,203  $ 56,845  $ 46,689 

(1)Represents principal payments based on the fully extended maturity date. See Note 8 — “Mortgage Notes and Revolving Credit Facility” to our condensed consolidated financial statements in this Quarterly Report for a discussion of our borrowing arrangements.
(2)Represents interest payments based on the fully extended maturity date and interest rates in effect at September 30, 2021.
(3)We hold a preferred membership interest in the unconsolidated limited liability company that owns the San Simeon Apartments and have committed to fund an additional $6.1 million to the San Simeon Apartments. Under the terms of the limited liability company agreement, we are required to fund our commitment as requested through December 31, 2023. We have attributed the total undrawn capital commitment based on the capital expenditure budget for the property. See Note 4 — “Investments in Unconsolidated Entities” and Note 14 — “Commitments and Contingencies” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of our preferred membership interest and capital commitment.
(4)We have committed to fund up to $3.5 million of tenant leasehold improvements at our Willows Facility through December 31, 2021. As of September 30, 2021, we have funded $3.1 million.
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The Adviser has advanced $5.3 million of general and administrative expenses on our behalf as of September 30, 2021. Additionally, the Adviser advanced $2.2 million of organization and offering expenses with respect to the Class N Private Offering and $3.3 million of organization and offering costs related to the Offering on our behalf through September 30, 2021. We will reimburse the Adviser for such advanced operating expenses ratably over the 60 months following the earlier of (1) the date that our NAV reaches $500 million and (2) December 31, 2021. We will reimburse the Adviser for all such advanced organization and offering expenses ratably over the 60 months following the earlier of (1) the date that our NAV reaches $1.0 billion and (2) December 31, 2022. We have excluded the amounts due to the Adviser from the table above as these obligations do not have fixed and determinable payments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary components of our market risk are related to interest rates, credit and real estate values. While we do not seek to avoid risk completely, we believe that risk can be quantified from historical experience, and we seek to actively manage that risk, to earn sufficient compensation to justify taking those risks and to maintain capital levels consistent with the risks we undertake.
For additional discussion of market risk associated with the COVID-19 pandemic see the discussion in “Risk Factors” in our SEC Registration Statement on Form S-11 (File 333-254931) and elsewhere in this quarterly report on Form 10-Q.
Interest Rate Risk
Interest rate risk is highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. We are subject to interest rate risk in connection with floating rate debt secured by our properties, the Revolving Credit Facility and our investments in real estate securities. We are also subject to interest rate risk through our investments in unconsolidated entities that have been financed with floating rate debt. We seek to manage our exposure to interest rate risk by utilizing a combination of fixed- and floating-rate financing with staggered maturity dates. Additionally, we may hedge our interest rate risk by using derivative contracts to fix or cap the interest expense on a portion of our floating-rate debt.
As of September 30, 2021, we had borrowed $187.5 million under our mortgage notes and Revolving Credit Facility, which are variable rate and indexed to one-month U.S. Dollar denominated LIBOR (“Reference Rate”). For the three and nine months ended September 30, 2021, a 10% increase in the Reference Rate would have resulted in approximately $1,000 and $16,000 increase in interest expense, respectively.
We have invested a portion of our portfolio in fixed rate real estate debt securities and intend to invest in both fixed and floating rate real estate debt securities in the future. On floating-rate securities, our net income will increase or decrease depending on interest rate movements. Additionally, interest rate movement can impact the valuation of debt securities depending on various aspects of the instrument, including, but not limited to, the credit rating, duration and structure of the interest rate payments.
Credit Risk
We are exposed to credit risk with respect to the tenants that occupy properties we own. To mitigate this risk, we undertake a credit evaluation of major tenants prior to making an investment. This analysis includes extensive due diligence of a potential tenant’s creditworthiness and business, as well as an assessment of the strategic importance of the property to the tenant’s core business operations.
Additionally, we are exposed to credit risk in the real estate-related debt investments that we make with respect to a borrower’s ability to make required interest and principal payments on scheduled due dates. We manage this risk by conducting a credit analysis prior to making an investment and by actively monitoring our portfolio and the underlying credit quality, including subordination and diversification of our real estate-related debt portfolio. In addition, we re-evaluate the credit risk inherent in our investments on a regular basis under fundamental considerations such as gross domestic product, unemployment, interest rates, retail sales, store closing/openings, corporate earnings, housing inventory, affordability and regional home price trends.
Finally, we may be exposed to counterparty credit risk under the terms of a derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk. We will seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties.
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Real Estate Market Value Risk
Commercial property values are subject to volatility and may be adversely affected by a number of factors, including but not limited to: national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report was made under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by SEC rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of September 30, 2021, we were not involved in any material legal proceedings.
ITEM 1A. RISK FACTORS
Except as set forth below, there were no material changes during the period covered by this Quarterly Report to the risk factors previously disclosed in our Registration Statement on Form S-11 (File 333-254931) that was declared effective by the Securities and Exchange Commission on May 14, 2021.
We may invest in operating companies.
We may selectively invest in real estate-related operating companies, such as development companies or property managers, which in turn may develop or service the assets of, or provide technology or services to, (i) our Company, (ii) the Adviser or its affiliates, (iii) Other Invesco Accounts or (iv) third parties. We may make such investments in order to provide access to real estate investments within our investment strategy or to enhance our financial performance. Our investments in real estate-related operating companies may take the form of preferred equity or other non-controlling interests, including debt interests. The nature of our interest in a real estate-related operating company may not permit us to actively manage or control the operations of such real estate-related operating company. A real estate-related operating company in which we invest may not be profitable at the time of our investment, or at any time. As a result of the foregoing risks and the risks inherent in an investment in any business, we may not be able to fully recover our investment in an operating company.
Other Invesco Accounts means collective investment funds, REITs, vehicles, separately managed accounts, products or other similar arrangements sponsored, advised, or managed by Invesco or one of its affiliates, including the affiliated funds, whether currently in existence or subsequently established (in each case, including any related successor funds, alternative vehicles, supplemental capital vehicles, seed funds, co-investment vehicles and other entities formed in connection with Invesco or its affiliates side-by-side or additional general partner investments with respect thereto).
The Adviser may face conflicts of interest related to the Company’s investments in operating companies.
The Company may invest in real estate-related operating companies, including property managers and development companies, that service owners and operators of real estate (each, a “Service Company”). A Service Company may be engaged by the Adviser, Other Invesco Accounts or their affiliates to service or develop assets in which the Adviser or Other Invesco Accounts hold an interest. The Adviser (and the Service Company as a result of its relationship with the Adviser) may have an incentive to provide lower pricing to Other Invesco Accounts. In addition to pricing, conflicts of interest may arise in determining the scope of services to be provided by a Service Company to an Other Invesco Account and the terms of any such engagement, including indemnification provisions. The Adviser (and the Service Company) also may face conflicts of interest in determining whether and the extent to which to exercise remedies against a defaulting Other Invesco Account, which may adversely impact the returns on the Company’s investment in the Service Company.
Similarly, Other Invesco Accounts may invest in real estate-related operating companies, including property managers, development companies or other real estate service providers (each, a “Related Service Company”). The Adviser may be incentivized to direct work for its clients and affiliates, including the Company and assets owned by the Company, towards such Related Service Companies, both to nurture these businesses and due to the compensation received as a result of the Other Invesco Accounts’ interest in such Related Service Companies. Conflicts may arise in determining whether the Company should engage a Related Service Company to service an asset and in determining the terms of such engagement, including price and other terms, such as indemnification provisions. The Adviser also may be conflicted in determining whether a Related Service Company has adequately performed its obligations to the Company and whether to impose any penalties available for failure to do so, which may adversely impact the assets serviced by a Related Service Company.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
On August 1, 2021, we granted our independent directors an aggregate of 690 shares of Class E common stock in accordance with our equity incentive plan.
The transaction described above was exempt from the registration provisions of the Securities Act by virtue of Section 4(a)(2) thereof because it was not part of any public offering and did not involve any general solicitation or general advertising.
Use of Offering Proceeds
On May 14, 2021, our Registration Statement on Form S-11 (File No. 333-254931) for the Offering was declared effective under the Securities Act. As of September 30, 2021, we have issued and sold in the offering (1) 783,305 shares of our common stock (consisting of 91 Class T shares, 91 Class S shares, 91 Class D shares and 783,032 Class E shares) in the Primary Offering for total proceeds of $22.0 million and (2) 1,671 shares of our common stock (consisting of 499 Class I shares and 1,172 Class E shares) under our distribution reinvestment plan for a total value of approximately $59,000. We intend to use the net proceeds from such sales for the purposes set forth in the prospectus for the Offering and in a manner within the investment guidelines approved by our board of directors, who serve as fiduciaries to our stockholders.
Share Repurchases
During the three months ended September 30, 2021, we repurchased shares of our common stock in the following amounts:
Month of:
Total Number of Shares Repurchased(1)
Average Price Paid per Share
Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs(2)
Maximum Number of Shares Pending Repurchase Pursuant to Publicly Announced Plans or Programs
July 2021 —  $ —  —  — 
August 2021 785,025  28.02  —  — 
September 2021 —  —  —  — 
785,025  $ 28.02  —  — 
(1)Shares repurchased were under MassMutual’s Subscription Agreement. See Note 10 — “Redeemable Common Stock” to our condensed consolidated financial statements for details of the repurchases made.
(2)Total number of shares repurchased as part of publicly announced plans or programs include share repurchases under our share repurchase plan, if any.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
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ITEM 6. EXHIBITS

Exhibit
Number 		Exhibit Description
3.1
3.2
4.1+
10.1+
10.2+
10.3*
31.1*
31.2*
32.1*
32.2*
 + Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
 * Filed herewith

The agreements and other documents filed as exhibits to this quarterly report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Invesco Real Estate Income Trust Inc.
/s/ R. Scott Dennis
R. Scott Dennis
Chairperson of the Board, President and Chief Executive Officer
(Principal Executive Officer)
/s/ R. Lee Phegley, Jr.
R. Lee Phegley, Jr.
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
Date: November 15, 2021

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INVESCO REAL ESTATE INCOME TRUST INC.

INSTRUCTIONS TO SUBSCRIPTION AGREEMENT

This subscription agreement (including all appendices hereto, this “Subscription Agreement”) relates to the offering of shares of Class N common stock of Invesco Real Estate Income Trust Inc., a Maryland corporation (the “Company”). Prior to completing this Subscription Agreement, you should read the Confidential Private Placement Memorandum of the Company, dated January 16, 2020 (as amended or supplemented from time to time, including all schedules, exhibits and attachments thereto, the “Memorandum”).

You must take the following steps to subscribe for shares of Class N common stock of the Company:

1.    Carefully review the Memorandum (including the Privacy Notice attached as Appendix B to the Memorandum) and this Subscription Agreement.

2.    Execute a signature page to this Subscription Agreement.

3.    Complete and sign an appropriate U.S. Internal Revenue Service (“IRS”) tax form (subscribers should consult an independent tax advisor to determine which IRS form is appropriate).

4.    Provide appropriate certified resolutions, or other appropriate evidence of authorization, authorizing this subscription and identifying the persons empowered to sign the applicable subscription documents. In addition to the foregoing, investors may be reasonably requested to furnish other or additional documentation evidencing the authority to invest in the Company.

5.    Return each of (i) an executed signature page to this Subscription Agreement, (ii) an appropriate IRS tax form, (iii) the appropriate evidence of authorization, and (iv) any other materials reasonably requested pursuant to this Subscription Agreement (collectively, the “Subscription Documents”), by email as a .PDF file to the person set forth below. The completed Subscription Documents should include all of the pages thereof, whether or not you have filled in any unmarked information on each page and should include all necessary attachments and supplemental information.

Christopher B. Fischer
Assistant General Counsel
Invesco
1555 Peachtree Street, N.E.
Atlanta, Georgia 30309
T: (404) 439-3218
chris.fischer@invesco.com

Inquiries regarding the Subscription Documents should be directed to Christopher B. Fischer at (404) 439-3218 (email: chris.fischer@invesco.com).
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INVESCO REAL ESTATE INCOME TRUST INC.

SUBSCRIPTION AGREEMENT

July 29, 2021

Invesco Real Estate Income Trust Inc.
1555 Peachtree Street, N.E.
Atlanta, Georgia 30309

1.     Commitment to Purchase Shares.

1.1    The undersigned subscriber (the “Subscriber”) hereby irrevocably and unconditionally subscribes for and agrees to purchase shares of the Company’s Class N common stock, par value $0.01 per share (“Class N Shares”), with an aggregate purchase price of up to $200,000,000 (the Class N Shares to be purchased hereby, the “Shares,” and such subscription, the “Capital Commitment”), subject to the terms and conditions set forth in this Subscription Agreement.

1.2    The Subscriber shall purchase the Shares at one or more closings (“Closings”) held by the Company during the period beginning on the date hereof and ending on the eighteen (18) month anniversary of the date of this Subscription Agreement (such period, the “Commitment Period”). The Company shall deliver written notice to the Subscriber of each Closing during the Commitment Period at least five (5) Business Days (as defined below) prior to the date of such Closing (a “Purchase Notice”). Each Purchase Notice shall set forth at a minimum (i) the date of the Closing to which the Purchase Notice relates, (ii) the aggregate purchase price of the Shares to be purchased by the Subscriber at the Closing to which the Purchase Notice relates, (iii) the per Share purchase price of the Shares to be purchased by the Subscriber at the Closing to which the Purchase Notice relates, and (iv) the account to which the purchase price should be wired. For the avoidance of doubt, there shall be no limit on the number of Closings held during the Commitment Period, provided that in no event shall the aggregate purchase price of the Shares purchased pursuant hereto exceed the Capital Commitment. As used herein, “Business Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.

1.3    Subscriber and the Company are party to that certain Subscription Agreement, dated August 7, 2020 (the “Prior Subscription Agreement”), pursuant to which the Subscriber has committed to purchase up to $200,000,000 in Class N Shares during a period ending on September 28, 2021 (the “Prior Commitment”). As of the date hereof, Subscriber has purchased an aggregate of $145.7 million in Class N Shares pursuant to the terms of the Prior Subscription Agreement. The Company will call the entirety of the Prior Commitment pursuant to the terms of the Prior Subscription Agreement prior to issuing any Purchase Notices pursuant to this Agreement.

1.4    The purchase price per Share for the Shares purchased at each Closing (as set forth in the Purchase Notice delivered with respect to such Closing) will equal the Company’s net asset value (“NAV”) per Class N Share as of the end of the immediately prior month, as


determined monthly in accordance with the guidelines and procedures adopted by the Company (as set forth in the Memorandum); provided, however, that if the Company determines that there has been a material change to the NAV per Class N Share since the end of the prior month, the purchase price per Share shall be equal to such changed NAV per Class N Share and in such cases the Company shall deliver documentation and a written explanation of such determination to the Subscriber. The aggregate purchase price payable for the Shares acquired at each Closing shall be payable to the Company by wire transfer of immediately available funds in U.S. dollars (in accordance with the written wire transfer instructions specified in advance by the Company in a Purchase Notice) or such other means approved by the Company in writing at or prior to the Closing. No selling commissions, dealer manager fees or other fees or compensation will be paid in connection with the Shares purchased pursuant to this Subscription Agreement.

2.    Representations and Warranties of the Subscriber. The Subscriber hereby represents and warrants to the Company as set forth in this Section 2. The Subscriber acknowledges that all representations and warranties made in this Section 2 shall be deemed made as of the date hereof and as of the date of each purchase of Shares by the Subscriber pursuant to this Subscription Agreement, unless otherwise indicated herein.

2.1    The Subscriber is a legal entity duly organized, validly existing and in good standing under the laws of the state, commonwealth or other jurisdiction wherein it was organized or established. The Subscriber has all requisite power and authority to purchase the Shares, execute and deliver this Subscription Agreement and to perform all the obligations required to be performed by the Subscriber hereunder, and such purchase and performance will not violate or contravene any law, rule or regulation binding on or applicable to the Subscriber or any investment guideline or restriction applicable to the Subscriber. The person executing this Subscription Agreement on behalf of the Subscriber is duly authorized to do so in the capacity in which such person is executing this Subscription Agreement. This Subscription Agreement and any other documents executed and delivered by the Subscriber in connection herewith have been duly authorized, executed, and delivered by the Subscriber, and are the legal, valid, and binding obligations of the Subscriber, enforceable against the Subscriber in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws of general application related to or affecting creditors’ rights and by general equitable principles.

2.2    The Subscriber has carefully reviewed this Subscription Agreement and the Memorandum and, to the extent it deemed necessary, has discussed this Subscription Agreement and the Memorandum with its counsel and advisers. The Subscriber acknowledges that, prior to executing this Subscription Agreement, the Subscriber has had the opportunity to ask questions of and receive answers or obtain additional information necessary to verify the accuracy of information furnished by the Company from representatives of the Company concerning the Company and the terms and conditions of an investment in the Shares.

2.3    The Subscriber acknowledges that the purchase of the Shares involves various risks, including the risks outlined in the Memorandum and in this Subscription Agreement, and that the Subscriber is able to bear any loss associated with an investment in the Shares.

2.4    The Subscriber is not relying on any communication (written or oral) of the Company, Invesco Advisers, Inc. (the “Adviser”) or any of their respective affiliates as investment or tax advice or as a recommendation to purchase the Shares. The Subscriber
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acknowledges that information provided in the Memorandum or otherwise by the Company, the Adviser or any of their respective affiliates shall not be considered investment or tax advice or a recommendation to purchase the Shares, and that none of the Company, the Adviser or their respective affiliates is acting or has acted as an advisor to the Subscriber in deciding to invest in the Shares. The Subscriber acknowledges that no U.S. federal or state or non-U.S. agency has passed upon the merits or risks of an investment in the Shares or made any finding or determination concerning the fairness or advisability of an investment in the Shares. Neither the Company, the Adviser nor any of their respective affiliates has exercised any discretionary authority or control with respect to the Subscriber’s purchase of the Shares as contemplated by this Subscription Agreement or rendered any investment advice to the Subscriber based upon the Subscriber’s financial circumstances, goals, investment policies, strategy or overall portfolio composition or diversification.

2.5    The Subscriber, either individually or together with the Subscriber’s financial advisors in this transaction, has such knowledge, skill and experience in business, financial and investment matters that the Subscriber is capable of evaluating the merits and risks of an investment in the Shares and making an informed investment decision with respect thereto. With the assistance of the Subscriber’s professional advisors, to the extent that the Subscriber has deemed appropriate, the Subscriber has made an independent legal, tax, accounting and financial evaluation of the merits and risks of an investment in the Shares. The Subscriber is able to bear the substantial economic risks related to an investment in the Shares for an indefinite period of time, has no need for liquidity in such investment, and can afford a complete loss of such investment.

2.6    The Subscriber is acquiring the Shares solely for the Subscriber’s own beneficial account, for investment purposes only, and not with a view towards, or with any intention of, any distribution or resale of the Shares, except in compliance with applicable securities laws.

2.7    The Subscriber acknowledges that the Company has not registered the Shares under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws (the “State Acts”) in reliance upon exemptions from such registration provided by the Securities Act and the State Acts, and that the Company’s reliance upon such exemptions from registration depends, in part, upon the representations, warranties and agreements of the Subscriber set forth in this Subscription Agreement.

2.8    The Subscriber acknowledges that the Shares may not be sold, transferred, assigned, exchanged, pledged, hypothecated or otherwise disposed of except pursuant to a registration of the Shares under the Securities Act and all applicable State Acts, or in transactions which are exempt from the registration provisions of the Securities Act and all applicable State Acts, and that the Subscriber has no right to require the Company or any other party to seek such registration of the Shares. The Subscriber further acknowledges that the Shares are subject to significant restrictions on transferability and ownership set forth in the Company’s Second Articles of Amendment and Restatement, dated as of March 1, 2021 and filed with the State of Maryland Department of Assessments and Taxation (as may be amended or restated, the “Articles”), and that the Subscriber has no present intent to attempt to sell, transfer or otherwise dispose of the Shares, except in compliance with applicable securities laws.

2.9    The Subscriber is (a) an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act and (b) a “qualified purchaser” within the
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meaning of Section 2(a)(51) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the rules thereunder. The Subscriber agrees to furnish additional information reasonably requested by the Company to assure compliance with applicable U.S. federal and state and non-U.S. securities laws, rules and regulations in connection with the purchase and sale of the Shares.

2.10    The Subscriber acknowledges that neither the Company nor any other person offered to sell Shares to it by means of, and the Subscriber is not investing in the Shares as a result of, any form of general solicitation or advertising, including but not limited to: (a) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media (including any Internet site whose information about the Company is not password protected) or broadcast over television or radio or (b) any seminar or meeting whose attendees were invited by any general solicitation or general advertising. The Subscriber further acknowledges that Subscriber did not become interested in an investment in the Shares via the registration statement with respect to the Company’s initial public offering of the Company’s common stock or from any marketing of the Company’s initial public offering.

2.11    Subscriber acknowledges that the Company will not issue physical certificates for the Shares and that the Shares will be recorded on the books and records of the Company and the Company’s transfer agent; provided, however, that the Company will provide the Subscriber with evidence of such recording that is reasonably acceptable to the Subscriber.

2.12    The Subscriber acknowledges and agrees that this subscription will become irrevocable at the time of its submission to the Company and that this subscription may not be withdrawn, in whole or in part, by the Subscriber.

2.13    The Subscriber acknowledges that the Company has not and does not intend to register as an investment company under the Investment Company Act.

2.14    ERISA.

(a)    The Subscriber is not and will not become, for so long as the Subscriber holds any Shares and absent a change in applicable law, a Benefit Plan Investor or a person that is subject to Similar Laws.

“Benefit Plan Investor” means any person that is (i) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Part 4 of Subtitle B of Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended from time to time (“ERISA”), (ii) a “plan” to which §4975 of the Internal Revenue Code of 1986, as amended (the “Code”), applies, or (iii) an entity whose assets include the assets of any such “employee benefit plan” or “plan” by reason of ERISA or the U.S. Department of Labor regulation codified at 29 C.F.R. §2510.3-101, as modified by Section 3(42) of ERISA (“Plan Asset Regulation”), or otherwise (including certain insurance company general accounts).

“Similar Law” means any federal, state, local, non-U.S. or other law or regulation that contains one or more provisions that are (i) substantially similar to any of the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Code §4975, and/or (ii) substantially similar to the provisions of the Plan Asset
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Regulation or otherwise provide that the assets of the Company could be deemed to include “plan assets” under such law or regulation.

(b)    If the Subscriber becomes aware that it has become a Benefit Plan Investor or a person subject to Similar Laws, the Subscriber will promptly notify the Company in writing of the occurrence of such an event.

2.15    Anti-Money Laundering Regulations.
    
(a)    The Subscriber acknowledges that: (1) the Company may be subject to certain provisions of the Bank Secrecy Act (31 U.S.C. §5311 et seq.) as amended (“Bank Secrecy Act”), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism of 2001 (the “PATRIOT Act”), including, but not limited to, Title III thereof (the International Money Laundering and Abatement and Anti-Terrorist Financing Act of 2001) (“Title III”), certain regulatory and legal requirements imposed or enforced by the Office of Foreign Assets Control of the U.S. Department of Treasury (“OFAC”) and other similar laws of the United States; and (2) to comply with applicable U.S. anti-money laundering legislation and regulations, all payments by the Subscriber to the Company and all distributions to the Subscriber from the Company will only be made in the Subscriber’s name and to and from a bank account of a bank based in or incorporated under the laws of the United States or a bank that (i) is not a “foreign shell bank” within the meaning of the Bank Secrecy Act, and the regulations promulgated thereunder by the U.S. Department of the Treasury, as such regulations may be amended from time; (ii) is not in a “non-cooperative jurisdiction” as defined by the Financial Action Task Force; and (iii) is not a financial institution, is not involved in transactions, and is not in a jurisdiction of primary money laundering concern, as defined in section 311 of the PATRIOT Act.

(b)    The Subscriber understands and acknowledges that Executive Orders and Regulations administered by OFAC prohibit, among other things, transactions with, and the provision of services to, certain non-U.S. countries, territories, entities, and individuals which are listed on the List of Specially Designated Nationals and Blocked Persons (the “SDN List”) maintained by OFAC, as such list may be amended from time to time, or in an Executive Order. In addition, certain programs administered by OFAC (the “OFAC Programs”) prohibit dealing with individuals or entities in certain countries regardless of whether such individuals or entities appear on the lists maintained by OFAC. The Subscriber represents and warrants that, to the best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person controlling or controlled by the Subscriber; (3) if the Subscriber is a privately held entity, any person having a beneficial interest in the Subscriber; or (4) any person for whom the Subscriber is acting as agent or nominee in connection with the purchase of the Shares is: (A) a person or entity named on the SDN List or any other blocked persons list as required by law, (B) a person who is the subject of one of the OFAC Programs, (C) a senior non-U.S. political figure, or any immediate family member or close associate of a senior non-U.S. political figure, (D) a non U.S. shell bank, or (E) a person or entity resident in, or organized or chartered under the laws of, a jurisdiction that has been designated by the U.S. Secretary of the Treasury under Section 311 or 312 of the PATRIOT Act as warranting special measures due to money laundering concerns or any person or entity resident in or whose subscription funds are transferred from or through an account in a jurisdiction that has been designated
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as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the U.S. is a member and with which designation the U.S. representative to the group or organization continues to concur. In addition, if the Subscriber is a “financial institution” as such term is defined in the Bank Secrecy Act, the PATRIOT Act, or the regulations promulgated thereunder, the Subscriber represents and warrants that the Subscriber has anti-money laundering programs and customer identification policies and procedures in place that meet the requirements of sections 352 and 326 of the PATRIOT Act.

(c)    The Subscriber acknowledges that, by law, the Company may be obligated to “freeze the account” of the Subscriber, by prohibiting additional investments from the Subscriber, withholding distributions to the Subscriber or segregating the assets in the account in compliance with governmental regulations, and the Company may also be required to report such action and to disclose the Subscriber’s identity to OFAC. The Subscriber further acknowledges that the Company may, by written notice to the Subscriber, take such actions as permitted by the Company’s organizational documents if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable to the Company or any of the Company’s service providers.

2.16    Disqualifying Events. The Subscriber hereby certifies that none of the disqualifying events or conditions (each, a “Rule 506(d) Event”) described in Rule 506(d) under Regulation D has occurred or is true as of the date hereof with respect to (a) the Subscriber or (b) any beneficial owner of the Subscriber which indirectly holds 20% or more of the total outstanding shares of the Company. The Subscriber shall promptly notify the Company, in writing, in the event that, after the date hereof, the foregoing sentence is no longer accurate.

2.17    Tax Information.

(a)    The Subscriber certifies that the Subscriber has completed and delivered to the Company the appropriate IRS tax form as part of the required Subscription Documents and that the information contained therein is correct.

(b)    The Subscriber agrees to provide the Company with any additional tax information or documentation that the Company reasonably requests in order to enable the Company or any affiliate of the Company to comply with or mitigate any of their respective tax reporting, tax withholding or tax compliance obligations.

3.    Representations and Warranties of the Company. The Company hereby represents and warrants to the Subscriber as set forth in this Section 3. The Company acknowledges that all representations and warranties made in this Section 3 shall be deemed made as of the date hereof and as of the date of each purchase of Shares by the Subscriber pursuant to this Subscription Agreement, unless otherwise indicated herein.

    3.1    The Company is a legal entity duly organized, validly existing and in good standing under the laws of the state of Maryland. The Company has all requisite power and authority to execute and deliver this Subscription Agreement and to perform all the obligations required to be performed by the Company hereunder, and such performance will not violate or
6
1 = 1 LEGAL02/40607079v15 LEGAL02/40607079v15

contravene any law, rule or regulation binding on or applicable to the Company. The person executing this Subscription Agreement on behalf of the Company is duly authorized to do so in the capacity in which such person is executing this Subscription Agreement. This Subscription Agreement and any other documents executed and delivered by the Company in connection herewith have been duly authorized, executed, and delivered by the Company, and are the legal, valid, and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws of general application related to or affecting creditors’ rights and by general equitable principles.

    3.2    For the Company’s taxable year that ended December 31, 2020, the Company was organized in conformity with the requirements for qualification and taxation as a real estate investment trust (“REIT”) under the Code and the Company’s ownership and operations satisfied the requirements for qualification and taxation as a REIT under the Code. The Company’s current and proposed method of operation will enable the Company to continue to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year ending December 31, 2021 and for future taxable years. The Company and its subsidiaries have paid all federal, state, local and foreign taxes and filed all tax returns required to be paid or filed through each Closing (taking into account any validly obtained extension of the time within which to file), except for such failures to pay or to file as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on or would materially and adversely affect the properties or assets of the Company or which might materially and adversely affect the consummation of this Subscription Agreement; and there is no tax deficiency that has been, or could reasonably be expected to be, asserted against the Company or any of its subsidiaries or any of their respective properties or assets, except for such tax deficiencies as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on or would materially and adversely affect the properties or assets of the Company or which might materially and adversely affect the consummation of this Subscription Agreement.

    3.3    Neither the Memorandum nor any amendments or supplements thereto, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that there are no material relationships between the Company and its affiliates other than as described in the Memorandum.

    3.4    Since the respective dates as of which information is given in the Memorandum, except as otherwise provided in the Memorandum (including any supplements thereto), (a) there has not occurred any material adverse change or any development that is reasonably likely to have a material adverse effect on the financial condition or in the earnings or business of the Company and its subsidiaries considered as one enterprise from that set forth in the Memorandum, and (b) there have been no transactions entered into by the Company or its subsidiaries which are material with respect to the Company and its subsidiaries considered as one enterprise other than those in the ordinary course of business.

    3.5    The Company represents and warrants that no person, other than as described in the Memorandum, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any registration statement filed by the Company for the sale of securities for its own account or for the account of any other person.
7
1 = 1 LEGAL02/40607079v15 LEGAL02/40607079v15


    3.6    The authorized stock of the Company as of the Initial Closing consists of 3,700,000,000 shares, consisting of (a) 3,600,000,000 shares of common stock, $0.01 par value per share, 600,000,000 of which are classified as Class D Common Stock (the “Class D Shares”), 600,000,000 of which are classified as Class E Common Stock (the “Class E Shares”), 600,000,000 of which are classified as Class I Common Stock (the “Class I Shares”), 600,000,000 of which are classified as Class N Shares, 600,000,000 of which are classified as Class S Common Stock (the “Class S Shares”) and 600,000,000 of which are classified as Class T Common Stock (the “Class T Shares”), and (b) 100,000,000 shares of preferred stock, $0.01 par value per share (the “Preferred Stock”). As of the date hereof, (i) 91 Class D Shares were issued and outstanding, (ii) 156,066 Class E Shares were issued and outstanding, (iii) 492 Class I Shares were issued and outstanding, (iv) 6,090,595 Class N Shares were issued and outstanding, (v) 91 Class S Shares were issued and outstanding, (vi) 91 Class T Shares were issued and outstanding, (vii) 125 shares of Preferred Stock (designated as “12.5% Series A Redeemable Cumulative Preferred Stock”) were issued and outstanding, (viii) no shares were held in treasury and (ix) no shares were issuable upon exercise in respect of any option, warrant or other convertible security, whether vested or unvested.

    3.7    Neither the offer and sale of the Shares nor the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Subscription Agreement will result in a violation or default of, or the imposition of any lien upon any property or assets of the Company or any of its subsidiaries pursuant to (a) any provision of applicable law, (b) the Articles or Bylaws of the Company, as the case may be, (c) the organizational documents, each as amended, of any subsidiary of the Company, (d) any agreement or other instrument binding upon the Company or any subsidiary of the Company or (e) any order any governmental entity, agency or court having jurisdiction over the Company or any subsidiary of the Company or any of their properties, except in the case of clauses (a), (c), (d) and (e) for any such violation, default or lien that would not, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Subscription Agreement.

    3.8    No consent, approval, authorization, order, registration, qualification or filing of or with any governmental entity by the Company is required in connection with the transactions contemplated herein, except such as may be required under the Securities Act or “Blue Sky” laws. No consent, approval, or authorization of any other person is required to be obtained by the Company in connection with the transactions contemplated herein, except for any such consent, approval or authorization (i) required pursuant to Section 4 hereof or (ii) that would not reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Subscription Agreement.

    3.9    The Shares to be issued pursuant to the terms of this Subscription Agreement will, when issued and delivered at each Closing and any time thereafter, be duly and validly authorized, issued and delivered and shall be fully paid and non-assessable, and such Shares will be free and clear of all taxes, liens (other than transfer restrictions imposed hereunder, under the Articles or by applicable law), preemptive rights, subscription and similar rights. Assuming the accuracy of the representations and warranties of the Subscriber set forth herein, it is not necessary in connection with the issuance and sale of such Shares to the Subscriber in the manner
8
1 = 1 LEGAL02/40607079v15 LEGAL02/40607079v15

contemplated by this Subscription Agreement to register such issuance and sale under the Securities Act.

    3.10    The Company is not and will not be, immediately after giving effect to the receipt of payment for the Shares and the application of proceeds thereof as contemplated in the Memorandum, an investment company under the Investment Company Act. The Company does not intend to register as an investment company under the Investment Company Act.

    3.11    The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with generally accepted accounting principles. The Company has designed and implemented, and will maintain, a system of internal controls over financial reporting, as defined in the Securities Exchange Act of 1934, as amended, sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

    3.12    There is no action, suit or proceeding before or by any court or governmental agency or body, now pending, or, to the knowledge of the Company, threatened against the Company or its subsidiaries, which would have a material adverse effect on or would materially and adversely affect the properties or assets of the Company or which might materially and adversely affect the consummation of this Subscription Agreement.

    3.13    The Company and each of its subsidiaries are, and since October 5, 2018, have been, in compliance with and not in default under or in violation of any law, except as where such non-compliance would not, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Subscription Agreement. Since the Company’s organization, neither the Company nor any of its subsidiaries have received any notice or other communication from any governmental entity regarding any actual or possible violation of, or failure to comply with, any law, except as would not, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Subscription Agreement.

    3.14    The Company is not a party to any contract with any person that would give rise to a valid claim against the Subscriber for a brokerage commission, finder’s fee or like payment in connection with the sale of the Shares.

    3.15    Neither the Company, nor any of its officers, directors, managers, members, employees, agents, stockholders, partners or affiliates has either directly or indirectly engaged in any general solicitation or published any advertisement in connection with the offer and sale of the Shares.

    3.16    Neither the Company nor, to the Company’s knowledge, any of its affiliates or any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security of the Company or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 4(a)(2) of the Securities Act for the exemption from the registration requirements imposed under Section 5 of the Securities Act for the transactions contemplated hereby or that would require such registration under the Securities
9
1 = 1 LEGAL02/40607079v15 LEGAL02/40607079v15

Act. The offer and sale of Class N Shares, including the Shares, will comply with the requirements of Rule 152(a) or one or more of the safe harbor provisions of Rule 152(b), such that such offer and sale will not be integrated with any offering registered under the Securities Act or other public offer and sale of securities by the Company, including the Company’s initial public offering of the Company’s common stock.

    3.17    The Company hereby certifies that no Rule 506(d) Event described in Rule 506(d) under Regulation D has occurred or is true as of each Closing with respect to (a) the Company or (b) any beneficial owner of the Company which indirectly holds 20% or more of the total outstanding shares of the Company. The Company shall promptly notify the Subscriber, in writing, in the event that, after the date hereof, the foregoing sentence is no longer accurate.

3.18    The Company represents and warrants that the Company is not (a) a person or entity named on the SDN List, the Executive Order 13599 List, the Foreign Sanctions Evaders List, or the Sectoral Sanctions Identification List, each of which is administered by OFAC (collectively “OFAC Lists”), (b) owned or controlled by, or acting on behalf of, a person, that is named on an OFAC List; (c) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States, (d) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (e) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. The Company represents that if it is a financial institution subject to the Bank Secrecy Act or PATRIOT Act, that the Company maintains policies and procedures reasonably designed to comply with applicable obligations under the Bank Secrecy Act or PATRIOT Act. The Company also represents that, to the extent required, it maintains policies and procedures reasonably designed to ensure compliance with OFAC-administered sanctions programs, including for the screening of its investors against the OFAC Lists. The Company further represents and warrants that, to the extent required, it maintains policies and procedures reasonably designed to ensure that the funds held by the Company were legally derived. The Company acknowledges that all payments by the Company to the Subscriber and all payments to the Company from the Subscriber will comply with applicable U.S. anti-money laundering legislation.

4.    Conditions to Subscriber’s Obligations. Notwithstanding anything in this Subscription Agreement to the contrary, the Subscriber’s obligation to perform under this Subscription Agreement shall be conditioned upon the delivery of each of the following prior to the initial Closing:

4.1    a legal opinion in the form attached hereto as Exhibit A, duly executed by Venable LLP, counsel to the Company;

4.2    a legal opinion in the form attached hereto as Exhibit B, duly executed by Alston & Bird LLP, counsel to the Company;

4.3    a certified copy of resolutions duly adopted by the Company’s board of directors (the “Board”) approving a waiver of the common stock ownership limits and restrictions set forth in the Articles with respect to the Shares to be acquired by the Subscriber pursuant to this Subscription Agreement, in form and substance reasonably acceptable to the Subscriber;

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4.4    an Amendment to Request to Waive Stock Ownership Limit letter in the form attached hereto as Exhibit C, duly executed by the Company and the Subscriber;

4.5    an Amendment to Letter Agreement in the form attached hereto as Exhibit D, duly executed by the Company, the Subscriber and the Adviser; and

4.6    such other certificates and documents as reasonably requested by the Subscriber.

5.    Repurchase Rights
    
5.1    Certain Defined Terms. As used herein, the following terms shall have the meanings set forth below:

    (a)    “Fundraising Periods” is defined as each of (i) the period beginning on May 14, 2021, the date that the Securities and Exchange Commission (the “SEC”) declared effective the registration statement with respect to the Company’s initial public offering of the Company’s common stock (SEC File No. 333-254931) and ending on May 31, 2022, (ii) the period beginning on June 1, 2022 and ending on May 31, 2023, and (iii) the period beginning on June 1, 2023 and ending on May 31, 2024. Each of the foregoing is individually referred to as a “Fundraising Period.”

    (b)    “Lock-Up Period” is defined as the period beginning on September 28, 2020 and ending upon the earlier of (i) May 14, 2024 (the third anniversary of the date that the SEC declared effective the registration statement with respect to the Company’s initial public offering of the Company’s common stock (SEC File No. 333-254931)), and (ii) the date that the Company’s aggregate NAV is at least $1.5 billion.

    (c)    “Prior Commitment Shares” means Class N Shares purchased by Subscriber in satisfaction of the Prior Commitment pursuant to the terms of the Prior Subscription Agreement.

    (d)    “GP+ Fund” means UBS Global Property Plus Fund.

5.2    Monthly Automatic Repurchases.

    (a)    Subject to the terms of this Section 5.2 and Section 5.4, during each Fundraising Period, the Company will repurchase Class N Shares held by Subscriber (inclusive of Prior Commitment Shares and Shares acquired pursuant hereto) on a monthly basis, no later than the fifth Business Day of each month (such date, the “Automatic Repurchase Date”). The Subscriber may elect to forego a monthly repurchase pursuant to this Section 5.2 by providing written notice thereof during the first five Business Days of the month prior to the month in which the applicable Automatic Repurchase Date occurs. The aggregate repurchase price paid by the Company on each Automatic Repurchase Date will be equal to the aggregate of:

(i)    between fifty percent (50%) and one hundred percent (100%) (in the Company’s discretion) of the net proceeds to the Company (i.e., gross proceeds net of all applicable upfront selling commissions and dealer manager fees) from the sale of shares of common stock of the Company (excluding any
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1 = 1 LEGAL02/40607079v15 LEGAL02/40607079v15

sales to the GP+ Fund) for the month in which the Automatic Repurchase Date occurs; and

(ii)    one hundred percent (100%) of the net proceeds (if any) to the Company (i.e., gross proceeds net of all applicable upfront selling commissions and dealer manager fees) from the sale of shares of common stock of the Company solely to the GP+ Fund in the month in which the Automatic Repurchase Date occurs.

Notwithstanding anything herein to the contrary, the amount of “net proceeds to the Company” for purposes of clauses Section 5.2(a)(i) and (ii) above shall be based upon the subscriptions for the Company’s common stock received and accepted as of a determination date five (5) Business Days prior to the first calendar day of the month in which the Automatic Repurchase Date occurs (the “Net Proceeds Determination Date”).

(b)    Notwithstanding anything herein to the contrary, any repurchases of Class N Shares by the Company during any Fundraising Period in excess of $70,000,000 (based upon aggregate repurchase price paid by the Company) will be in the sole discretion of the Company. Notwithstanding anything herein to the contrary, the Company shall not be required under any circumstances to repurchase more than $200 million (based upon aggregate repurchase price paid by the Company) in Class N Shares pursuant to this Section 5.2 over the course of the three Fundraising Periods.

(c)    The Class N Shares repurchased on each Automatic Repurchase Date will be repurchased at a cash price per Class N Share equal to the NAV per Class N Share as of the last day of the month immediately preceding the Net Proceeds Determination Date for such Automatic Repurchase Date (the “Automatic Repurchase Price”). For the avoidance of doubt, the Automatic Repurchase Price on an Automatic Repurchase Date may never be less than the applicable NAV per Class N Share for the month immediately preceding the Net Proceeds Determination Date for such Automatic Repurchase Date, and such NAV will not be subject to discretionary downward adjustment by the Company prior to the Automatic Repurchase Date. The Company may, in its discretion, elect not to repurchase fractional shares.

(d)    Following the conclusion of the third and final Fundraising Period, the Company will, if and to the extent necessary, continue to repurchase Class N Shares held by Subscriber (inclusive of Prior Commitment Shares and Shares acquired pursuant hereto) on a monthly basis in accordance with the terms of this Section 5.2 (excluding Section 5.2(b)) until such time as the Company has repurchased an aggregate of $200 million in Class N Shares (based upon aggregate repurchase price paid by the Company) pursuant to this Section 5.2.

    (e)    For purposes of repurchases pursuant to this Section 5.2, Class N Shares shall be repurchased on a “last in, first out” basis, such that no Prior Commitment Shares are repurchased unless and until all of the outstanding Shares acquired pursuant hereto have been repurchased.

(f)    Notwithstanding anything herein to the contrary, the Company shall limit the repurchase of Class N Shares pursuant to this Section 5.2 as necessary to ensure that
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at no time will the repurchase of Class N Shares pursuant to this Section 5.2 result in the aggregate NAV of the Class N Shares held by Subscriber to be less than fifty million dollars ($50,000,000) (based upon the aggregate NAV per Class N Share of the Class N Shares that Subscriber would hold following each Automatic Repurchase Date), unless otherwise agreed to by Subscriber.

5.3    Repurchases Upon Request.

(a)    Upon (i) the expiration of the Lock-Up Period and (ii) the Company having repurchased the maximum amount of $200 million in Class N Shares (based upon aggregate repurchase price paid by the Company) pursuant to Section 5.2, the Subscriber will have the right to request that the Company repurchase any outstanding Class N Shares held by Subscriber (inclusive of Prior Commitment Shares and Shares acquired pursuant hereto), subject to the terms of this Section 5.3 and Section 5.4.

(b)    Repurchases pursuant to this Section 5.3 will be made monthly upon written request of the Subscriber, in a form and substance reasonably acceptable to the Company, delivered to the Company no later than the second to last Business Day of the month in which the request is delivered (a “Repurchase Request”). The Company will make such repurchase on the last Business Day of that month (such date, a “Repurchase Date”), subject to Section 5.3(d). The Subscriber may revoke a Repurchase Request in writing at any time prior to the Repurchase Date.

(c)    Class N Shares will be repurchased at a cash price per share equal to the NAV per Class N Share as of the last day of the month immediately preceding the Repurchase Date (the “Repurchase Price”). For the avoidance of doubt, the Repurchase Price may never be less than the applicable NAV per Class N Share as of the last day of the month immediately preceding the Repurchase Date, and such NAV will not be subject to discretionary downward adjustment by the Company prior to the Repurchase Date. The Company may, in its discretion, elect not to repurchase fractional shares.

(d)    Notwithstanding anything herein to the contrary, the aggregate Repurchase Price of Class N Shares that the Company will be required to repurchase in any month pursuant to this Section 5.3 will be limited to no more than the lesser of (i) fifteen percent (15%) of the net proceeds to the Company from the sale of shares of common stock of the Company and securities convertible into shares of common stock of the Company (i.e., gross proceeds net of upfront selling commissions and dealer manager fees) to persons other than the Subscriber and its Affiliates (as defined in the Articles) in the month immediately preceding the month in which the Repurchase Request is timely submitted, and (ii) one and a half percent (1.5%) of the Company’s aggregate NAV as of the last day of the month immediately preceding the month in which the Repurchase Request is timely submitted. In the event that, due to the foregoing limitations, the Company determines to repurchase less than all of the Class N Shares submitted for repurchase during any month, any unsatisfied repurchase requests must be resubmitted after the start of the immediately following month. The Company will provide the Subscriber (A) the monthly NAV per share of each class of the Company’s common stock (promptly following the Company’s monthly determination of the NAV per share of each class of the Company’s common stock), (B) the gross proceeds from the sale of common stock of the Company or securities convertible into shares of the Company’s
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common stock on a monthly basis, and (C) any other related information reasonably requested by the Subscriber on a monthly basis; provided, however, that (1) the Company shall not be obligated to provide the Subscriber any such information to the extent such information has been included in a public filing made by the Company with the SEC or is otherwise publicly disclosed by the Company and (2) the Company may limit any such information provided to the Subscriber to the extent the Company deems reasonably necessary to comply with the requirements of Regulation Fair Disclosure (Reg FD) promulgated by the SEC.

5.4    Notwithstanding anything herein to the contrary, the Company shall not be required to repurchase any Class N Shares pursuant to this Section 5 if and to the extent necessary to (i) preserve the status of the Company as a REIT under the Code or (ii) ensure that no more than forty percent (40%) in value of the Company’s stock is at any time held directly or indirectly by “foreign persons” for purposes of Section 897(h)(4)(B) of the Code.

5.5    For the avoidance of doubt, no Class N Shares held by Subscriber (inclusive of Prior Commitment Shares and Shares acquired pursuant hereto) are (i) eligible for repurchase pursuant to any other share repurchase program adopted by the Board (any such share repurchase program, the “SRP”), or (ii) simultaneously eligible for repurchase pursuant to both the terms of this Section 5 and the SRP.

5.6     The parties hereto acknowledge and agree that the terms of this Section 5 amend, restate and supersede the terms of Section 5.7 of the Prior Subscription Agreement, and that in the event of any conflict between the terms of this Section 5 and the terms of Section 5.7 of the Prior Subscription Agreement, the terms of this Section 5 shall control. Other than as set forth in the preceding sentence, the terms of the Prior Subscription Agreement shall remain in full force and effect and shall not be amended, restated or superseded hereby.

5.7    The Subscriber will provide, upon the Company’s request, reasonable documentation verifying, among other things, the Subscriber’s identity and source of the funds used to purchase the Shares and the Subscriber acknowledges and agrees that the Company may decline to accept the Subscriber’s subscription if this information is not provided or on the basis of the information that is provided. The Subscriber further agrees to provide the Company at any time during which the Subscriber holds Shares with such necessary information as the Company reasonably determines to be necessary or appropriate to comply with the PATRIOT Act and the anti-money laundering and countering the financing of terrorism laws, rules and regulations of any applicable jurisdiction, or to respond to requests for information concerning the identity of the Subscriber from any governmental authority, self-regulatory organization, or financial institution in connection with its anti-money laundering and countering the financing of terrorism compliance procedures, or to update such information.

6.    Additional Agreements.

    6.1    The Company will utilize the net proceeds from the sale of the Shares in the manner specified in the section of the Memorandum entitled “Estimated Use of Proceeds.”

6.2    During any period that the Company is not subject to the public reporting requirements of the Securities Exchange Act of 1934, as amended, and the rules promulgated by the SEC thereunder, the Company will prepare, or cause to be prepared, and make available to the
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Subscriber, at the Company’s expense, (a) audited financial statements of the Company prepared in accordance with generally accepted accounting principles consistently applied (“GAAP”) as of and for each fiscal year within ninety (90) days after the end of each fiscal year or as soon as is reasonably practicable thereafter, and (b) unaudited financial statements of the Company prepared in accordance with GAAP as of and for each fiscal quarter (other than fourth quarters) within sixty (60) days after the end of each quarter or as soon as is reasonably practicable thereafter; provided, however, that the Company’s obligations pursuant to this Section shall terminate if, following the expiration of the Commitment Period, the Subscriber ceases to hold any outstanding Shares.

    6.3    

(a)    The Subscriber hereby agrees to indemnify and hold harmless the Company, the Adviser and each of their respective members, managers, partners, affiliates, officers, directors, agents and employees from and against any and all loss, damage, liability, or expense, including costs and reasonable and documented attorneys’ fees (“Losses”), to which any such person may become subject or which they may incur by reason of or in connection with any material breach by Subscriber of any representation, warranty, covenant or agreement set forth in this Subscription Agreement; provided, however, that the Subscriber will not provide any such indemnification if and to the extent that such Losses are the result of conduct by the Company that constitutes fraud, gross negligence, intentional misconduct or a material breach of this Subscription Agreement.

(b)    The Company hereby agrees to indemnify and hold harmless the Subscriber and each of its members, managers, partners, affiliates, officers, directors, agents and employees from and against any and all Losses to which any such person may become subject or which they may incur by reason of or in connection with any material breach by the Company of any representation, warranty, covenant or agreement set forth in this Subscription Agreement; provided, however, that the Company will not provide any such indemnification if and to the extent that such Losses are the result of conduct by the Subscriber that constitutes fraud, gross negligence, intentional misconduct or a material breach of this Subscription Agreement.

6.4    The Company will reimburse the Subscriber for reasonable legal fees and expenses incurred by the Subscriber in connection with the negotiation and preparation of this Subscription Agreement (including the documents and agreements to be prepared or delivered in connection herewith), including any amendments or supplements to the foregoing, and the delivery of the Shares pursuant hereto, up to a maximum aggregate amount of $50,000.

6.5    This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of Maryland without giving effect to the conflict of laws provisions therein.

6.6    Any notice, demands or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been given and received when delivered by (i) hand, (ii) courier or overnight carrier, (iii) registered or certified mail, or (iv) electronic mail, in each case addressed as set forth below.

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To the Company:

Invesco Real Estate Income Trust Inc.
1555 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Christopher B. Fischer
Email: chris.fischer@invesco.com

To the Subscriber:

The address of the Primary Contact previously designated by the Subscriber in writing.

    6.7    THE PARTIES HERETO IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT.

    6.8    This Subscription Agreement (including the agreements and other documents delivered hereunder) contains the entire agreement between the parties hereto with respect to the subject matter thereof. The provisions of this Subscription Agreement may not be modified or waived except in a writing signed by all parties hereto.

    6.9    This Subscription Agreement and the rights, powers and duties set forth herein shall, except as set forth herein, bind and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto. No party hereto may assign any of such party’s respective rights or interests in and under this Subscription Agreement without the prior written consent of the other party, and any attempted assignment without such consent shall be void and without effect.

    6.10    If any part of this Subscription Agreement is held by a court of competent jurisdiction to be unenforceable, illegal or invalid, the balance of this Subscription Agreement shall remain in effect and unaffected by such unenforceability, illegality or invalidity.

    6.11    All representations, warranties and covenants contained in this Subscription Agreement shall survive the acceptance of this subscription by the Company and the Closing.

    6.12    The headings of this Subscription Agreement are for convenience of reference only and shall not limit or otherwise effect the interpretation of any term or provision hereof.

    6.13    This Subscription Agreement may be executed in any number of counterparts, each of which when so executed and delivered (including via facsimile or other electronic transmission) shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

[Signatures on following page]
16
1 = 1 LEGAL02/40607079v15 LEGAL02/40607079v15

    IN WITNESS WHEREOF, the undersigned parties have executed this Subscription Agreement as of the day and year first above written.


MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY


By: /s/ Eric Partlan                    
Name: Eric Partlan
Title: Head of Portfolio Management




INVESCO REAL ESTATE INCOME TRUST INC.


By: /s/ Beth A. Zayicek                    
Name: Beth A. Zayicek
Title: Chief Operating Officer



Signature Page to Invesco Real Estate Income Trust Inc. Subscription Agreement


EXHIBIT A
Form of Legality Opinion
_______________, 2021


Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111

Re:    Invesco Real Estate Income Trust Inc.

Ladies and Gentlemen:
    We have served as Maryland counsel to Invesco Real Estate Income Trust Inc., a Maryland corporation (the “Company”), in connection with certain matters of Maryland law arising out of the sale and issuance of (a) _______________ shares (the “Initial Shares”) of Class N Common Stock, $0.01 par value per share, of the Company (the “Common Stock”) to be issued on the date hereof and (b) up to an additional $_______________ in shares of Common Stock (the “Subsequent Shares” and, together with the Initial Shares, the “Shares”) to be issued in one or more closings after the date hereof, in a private offering covered by the Private Placement Memorandum of the Company, dated January 16, 2020, as supplemented by Supplement No. 1, dated August 7, 2020, Supplement No. 2, dated October 30, 2020, Supplement No. 3, dated February 10, 2021, and Supplement No. 4, dated July 21, 2021, relating to the Shares (as amended from time to time, the “Memorandum”). The Shares will be issued pursuant to the Subscription Agreement, dated July 29, 2021, by and between the Company and Massachusetts Mutual Life Insurance Company (the “Agreement”). This firm did not participate in the negotiation or drafting of the Agreement.
    In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (herein collectively referred to as the “Documents”):
    1.    The Memorandum;
    2.    The charter of the Company (the “Charter”), certified by the State Department of Assessments and Taxation of Maryland (the “SDAT”);
    3.    The Bylaws of the Company (the “Bylaws”), certified as of the date hereof by an officer of the Company;
    4.    A certificate of the SDAT as to the good standing of the Company, dated as of a recent date;
    5.    Resolutions adopted by the Board of Directors of the Company (the “Board”) relating to, among other matters, (a) the sale and issuance of the Shares and (b) the authorization of the execution, delivery and performance by the Company of the Agreement (the “Resolutions”), certified as of the date hereof by an officer of the Company;




    6.    The Agreement;
    7.    A certificate executed by an officer of the Company, dated as of the date hereof; and
    8.    Such other documents and matters as we have deemed necessary or appropriate to express the opinion set forth below, subject to the assumptions, limitations and qualifications stated herein.
    In expressing the opinion set forth below, we have assumed the following:
    1.    Each individual executing any of the Documents, whether on behalf of such individual or another person, is legally competent to do so.
    2.    Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.
    3.    Each of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents to which such party is a signatory, and such party’s obligations set forth therein are legal, valid and binding and are enforceable in accordance with all stated terms.
    4.    All Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All Documents submitted to us as certified or photostatic copies conform to the original documents. All signatures on all Documents are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All representations, warranties, statements and information contained in the Documents are true and complete. There has been no oral or written modification of or amendment to any of the Documents, and there has been no waiver of any provision of any of the Documents, by action or omission of the parties or otherwise.
    5.    The Shares will not be issued or transferred in violation of any restriction or limitation on transfer and ownership of shares of stock of the Company contained in Article VI of the Charter.
    6.    Upon the issuance of any of the Subsequent Shares, the total number of shares of Common Stock issued and outstanding will not exceed the total number of shares of Common Stock that the Company is then authorized to issue under the Charter.
    Based upon the foregoing, and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that:
    1.    The Company is a corporation duly incorporated and existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT.
    2.    The issuance of the Shares has been duly authorized and, when and if issued and delivered against payment therefor in accordance with the Resolutions, the Agreement and the Memorandum, the Shares will be validly issued, fully paid and nonassessable. The issuance of the Shares




is not subject to preemptive or other similar rights arising under the Maryland General Corporation Law, the Charter or the Bylaws.
    3.    The Company has the corporate power to execute and deliver, and to perform its obligations under, the Agreement.
    4.    The execution and delivery by the Company of the Agreement, and the performance by the Company of its obligations thereunder, have been duly authorized by all necessary corporate action on the part of the Company.
    5.    The Agreement has been duly executed and delivered by the Company.
    6.    The Agreement constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited (a) by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other laws relating to or affecting the enforcement of creditors’ rights, generally, (b) by general equitable principles, whether applied in law or in equity, or (c) by the doctrine of commercial reasonableness.
    7.    The execution and delivery by the Company of the Agreement, the performance by the Company of its obligations thereunder and the sale and issuance of the Shares do not conflict with or violate (a) the Charter or the Bylaws or (b) any statute, rule or regulation of the State of Maryland applicable to the Company.
    8.    No consent, approval, authorization or order of, or registration or filing with, any governmental authority of the State of Maryland is required for the execution and delivery by the Company of the Agreement, the performance by the Company of its obligations thereunder or the sale and issuance of the Shares, except as may be required under the securities or blue sky laws of the State of Maryland (as to which no opinion is rendered) or such as have been obtained or made.
    9.    The statements in the Memorandum under the captions “Description of Capital Stock” and “Certain Provisions of Maryland Law and Our Charter and Bylaws,” insofar as such statements purport to describe certain provisions of Maryland law or the Charter or Bylaws, constitute an accurate description of such provisions of Maryland law or the Charter or Bylaws in all material respects.
    In addition to the qualifications set forth above, and without limiting the generality of such qualifications, the opinion contained herein is also subject to the following:
    a.    We express no opinion as to the availability of specific performance or injunctive relief in any proceeding to enforce, or declare valid and enforceable, any provision of the Agreement.
    b.    We express no opinion with respect to the legality, validity, binding effect or enforceability of, or the compliance with any applicable law of, any provision set forth in the Agreement (i) purporting to confer jurisdiction upon any court to hear or resolve any suit, action or proceeding seeking to enforce any provision of or based upon any matter arising out of or in connection with the Agreement, (ii) under which any party consents to service of process or (iii) purporting to be a waiver of the right to a jury trial.
    c.    Enforceability may be limited to the extent that remedies are sought with respect to a breach that a court concludes is not material or does not adversely affect the parties seeking enforcement and we express no opinion with respect thereto.




    d.    Enforceability may be limited by any unconscionable or inequitable conduct upon the part of any party, defenses arising from the failure of any party to act in accordance with the terms and conditions of the Agreement or defenses arising as a consequence of the passage of time or defenses arising as a result of any party’s failure to act reasonably or in good faith and we express no opinion with respect thereto.
    e.    We express no opinion with respect to the legality, validity, binding effect or enforceability of, or the compliance with any applicable law of, any provision set forth in the Agreement for (i) indemnification on the part of any person, (ii) contribution with respect to liability on the part of any person or (iii) the limitation of liability of any person, to the extent that such indemnification, contribution or liability limitation is contrary to public policy or law.
    f.    Enforceability of provisions relating to dividends and other distributions may be limited by laws affecting the right to authorize, declare, make or receive dividends or other distributions and we express no opinion with respect thereto.
    g.    We express no opinion with respect to the binding effect or enforceability of any provision of the Agreement which states that the provisions of the Agreement are severable.
    h.    We express no opinion with respect to the legality, validity, binding effect or enforceability of, or the compliance with any applicable law of, any provision of the Agreement which (a) would require the Company to take any particular action after the date hereof which by law could only be undertaken upon the approval of the Board (or any committee thereof) or the stockholders of the Company or (b) would require the Board (or any committee thereof) or the stockholders of the Company or any person or entity other than the Company to take, or to refrain from taking, any particular action after the date hereof.
    i.    We express no opinion with respect to the legality, validity, binding effect or enforceability of any provision of the Agreement which would require the Company to take any particular action after the date hereof which could only be undertaken upon the consent of a third party.
    j.    We express no opinion on the enforceability of any provision of the Agreement permitting modifications of the Agreement only if in writing.
    k.    We express no opinion as to (i) the interpretation of such terms as “reasonable,” “material,” “material adverse effect,” “good faith,” “best efforts,” “reasonable best efforts,” “commercially reasonable efforts,” “reasonable actions,” “prompt,” “customary terms and conditions,” “timely” or “endeavor,” or any similar terms or any variation thereof or (ii) any matter dependent on the interpretation of any such terms.
    l.    We express no opinion as to the enforceability of any provision of the Agreement the performance of which by the Company would be prohibited by federal law or the law of any state other than Maryland or the rules of a securities exchange.
    m.    We express no opinion as to the enforceability of any provision of the Agreement by or against any person not a party to the Agreement.
    n.    We express no opinion with respect to the legality, validity, binding effect or enforceability of any provision of the Agreement which purports to establish the governing law of the Agreement.




    The foregoing opinion is limited to the substantive laws of the State of Maryland and we do not express any opinion herein concerning federal law or the laws of any other state. We express no opinion as to compliance with any federal or state securities laws, including the securities laws of the State of Maryland, or as to federal or state laws regarding fraudulent transfers or the laws, codes or regulations of any municipality or other local jurisdiction. To the extent that any matter as to which our opinion is expressed herein would be governed by any jurisdiction other than the State of Maryland, we do not express any opinion on such matter. Our opinion expressed in paragraph 6(b) above is based upon our consideration of only those statutes, rules and regulations of the State of Maryland, if any, which, in our experience, are normally applicable to transactions of the type contemplated by the Agreement. Our opinion expressed in paragraph 7 above is based upon our consideration of only those consents, approvals, authorizations and orders of, and registrations and filings with, governmental authorities of the State of Maryland, if any, which, in our experience, are normally applicable to transactions of the type contemplated by the Agreement. The opinion expressed herein is subject to the effect of judicial decisions which may permit the introduction of parol evidence to modify the terms or the interpretation of agreements.
    The opinion expressed herein is limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof.
    This opinion is being furnished to you solely for your benefit. Accordingly, it may not be relied upon by, quoted in any manner to, or delivered to any other person or entity without, in each instance, our prior written consent.

                        Very truly yours,




EXHIBIT B
Form of Tax Opinion
[ ], 2021
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Re:    Real Estate Investment Trust Qualification of Invesco Real Estate Income Trust Inc.
Ladies and Gentlemen:
We are acting as tax counsel to Invesco Real Estate Income Trust Inc., a Maryland corporation (the “Company”), in connection with the purchase of up to $200,000,000 of the Company’s Class N shares of common stock (the “Shares”) by Massachusetts Mutual Life Insurance Company (“MassMutual”). This opinion letter is rendered pursuant to Section 4.2 of that certain Subscription Agreement dated July 29, 2021, by and among the Company and MassMutual (the “Subscription Agreement”).
You have requested our opinion as to the qualification of the Company as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”).
In preparing this opinion letter, we have reviewed the Company’s Articles of Amendment and Restatement (the “Articles”) and such other documents as we have considered relevant to our analysis. We have also obtained, and are relying upon, representations as to factual matters made by the Company through a certificate of an officer of the Company (the “Officer’s Certificate”). These representations generally relate to the operation of the Company as a REIT.
For purposes of this opinion letter, we have assumed (i) the genuineness of all signatures on documents we have examined, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to the original documents of all documents submitted to us as copies, (iv) the conformity, to the extent relevant to our opinion, of final documents to all documents submitted to us as drafts, (v) the authority and capacity of the individual or individuals who executed any such documents on behalf of any person, (vi) due execution and delivery of all such documents by all the parties thereto, (vii) the compliance of each party with all material provisions of such documents, and (viii) the accuracy and completeness of all records made available to us.
Further, we have assumed, with your consent, that (i) the factual representations set forth in the Officer’s Certificate are true, accurate and complete as of the date hereof, and that during the first taxable year of operations and during subsequent taxable years, the Company and its subsidiaries have operated and will continue to operate in a manner that have made or will make the representations contained in the Officer’s Certificate true for such years, (ii) the Company will not make any amendments to the Articles or amend or adopt any other organizational documents after the date of this opinion that would affect the Company’s qualification as a REIT for any taxable year, (iii) your representations and undertakings in your agreement with the Company waiving the Company’s ownership limits pursuant to Section 6.1.7 of the Company’s Article of Amendment and Restatement are and will remain true, and (iv) no action will be taken after the date hereof by the Company or any of its subsidiaries that would have the effect of altering the facts upon which the opinion set forth below is based.
LEGAL02/40955466v4

For purposes of our opinion, we have not made an independent investigation of the facts, representations, and covenants set forth in the Officer’s Certificate or in any other document. Consequently, we have assumed, and relied on the Company’s representations, that the information presented in the Officer’s Certificate and the other documents provided to us for our review accurately and completely describe all material facts relevant to our opinion. We have assumed that such representations are true without regard to any qualification as to knowledge or belief. Our opinion is conditioned on the continuing accuracy and completeness of such statements, representations and covenants. Any material change or inaccuracy in the facts referred to, set forth, or assumed herein or in the Officer’s Certificate may affect our conclusions set forth herein.
The opinion expressed herein is given as of the date hereof and is based upon the Code, the U.S. Treasury Regulations promulgated thereunder, current administrative positions of the U.S. Internal Revenue Service and existing judicial decisions, any of which could be changed at any time, possibly on a retroactive basis. Any such changes could adversely affect the opinion rendered herein. In addition, as noted above, our opinion is based solely on the documents that we have examined and the representations that have been made to us and cannot be relied upon if any of the facts contained in such documents or in such additional information is, or later becomes, inaccurate or if any of the representations made to us are, or later become, inaccurate. Our opinion is limited to the U.S. federal income tax matters specifically covered herein. We have not opined on any other tax consequences to the Company or any other person. Further, we express no opinion with respect to other federal laws or the laws of any other jurisdiction.
Based on the foregoing, and subject to the qualifications, assumptions and limitations stated herein, including the assumption that the elections and other procedural steps referred to in the Officer’s Certificate will be completed by the Company in a timely fashion, we are of the opinion that, commencing with the Company’s taxable year ended December 31, 2020, the Company has been organized, and has operated, in conformity with the requirements for qualification as a REIT under the Code, and the Company’s present and proposed method of operations will enable it to satisfy the requirements for qualification and taxation as a REIT under the Code for such taxable year and subsequent taxable years.
The Company’s status as a REIT for any taxable year is dependent upon, among other things, the Company meeting the requirements of Sections 856 through 860 of the Code throughout such year and for the year as a whole. We do not undertake to monitor whether the Company will, in fact, through actual annual operating results and other annual requirements, satisfy the various qualification tests on a continuing basis. Accordingly, because the Company’s satisfaction of such requirements will depend upon future events, including the final determination of financial and operational results, it is not possible to assure that the Company will satisfy the requirements to qualify as a REIT in any particular taxable year.
Our opinion is not binding upon either the Internal Revenue Service (the “IRS”) or any court. In this regard, an opinion of counsel with respect to an issue represents counsel’s best professional judgment with respect to the outcome on the merits with respect to such issue, if such issue were to be litigated, but an opinion is not binding on the IRS or the courts, and is not a guarantee that the IRS will not assert a contrary position with respect to such issue or that a court will not sustain such a position asserted by the IRS.
This opinion has been prepared solely for your use pursuant to Section 4.2 of the Subscription Agreement. No opinions other than that expressly contained herein may be inferred or implied. Also, we undertake no obligation to update this opinion letter, or to ascertain after the date hereof whether circumstances occurring after such date may affect the conclusions set forth herein.





Very truly yours,
____________________________________________
Alston & Bird LLP







EXHIBIT C

AMENDMENT TO
REQUEST TO WAIVE STOCK OWNERSHIP LIMIT

[_], 2021

Invesco Real Estate Income Trust Inc. 1555 Peachtree Street NE, Suite 1800 Atlanta, GA 30309

Ladies and Gentlemen:

Invesco Real Estate Income Trust Inc. (the “Company”) and Massachusetts Mutual Life Insurance Company (the “Investor”) previously entered into that certain letter agreement, dated August 12, 2020 (the “Original Waiver”). The Company and the Investor desire to amend the Original Waiver as set forth in this Amendment to Request to Waive Stock Ownership Limit (this “Amendment”). Unless otherwise stated herein, defined terms used herein shall have the meanings assigned to them in the Original Waiver.

1.    Amendment to Original Waiver.

(a)    The Original Waiver is hereby amended to provide that the term “Purchased Shares” is defined for all purposes as follows:

“Class N Common Shares with an aggregate purchase price of up to $400,000,000 (purchased by the Investor pursuant to terms of (i) the subscription agreement, dated August 12, 2020, between the Investor and the Company pursuant to which the Investor agreed to purchase Class N Common Shares with an aggregate purchase price of up to $200,000,000, and (ii) the subscription agreement, dated July 29, 2021, between the Investor and the Company pursuant to which the Investor agreed to purchase additional Class N Common Shares with an aggregate purchase price of up to $200,000,000) and any Common Shares into which any such Class N Common Shares are converted pursuant to any conversion or exchange rights held by the Investor and any Common Shares received by the Investor pursuant to the Investor’s participation in any Company distribution reinvestment plan or stock distribution, while owned by the Investor.”

(b)    Except as expressly set forth in this Section 1, the terms of the Original Waiver are not amended or modified hereby and shall remain in full force and effect as set forth in the Original Waiver.

2.    Miscellaneous.



LEGAL02/40713209v4

(a)Assignment; Benefit and Binding Effect. Neither this Amendment nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto without the prior written consent of the other party.

(b)Governing Law. Regardless of any conflict of law or choice of law principles that might otherwise apply, the parties agree that this Amendment shall be governed by and construed in all respects in accordance with the laws of the State of Maryland.

(c)Severability. Any term or provision of this Amendment which is invalid or unenforceable, shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable this Amendment or any of its remaining terms and provisions of this Amendment or affecting the validity or enforceability of any of the terms or provisions of this Amendment.

(d)Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. Signatures sent by facsimile transmission shall have the same force and effect as manually signed originals.

(e)Captions, Headings and Sections. The captions, headings and section references contained in this Amendment are for convenience of reference only and are not to be considered in interpreting the provisions hereof.

[Signatures on following page]


LEGAL02/40713209v4

If the foregoing correctly sets forth the agreement between the parties hereto, please indicate your acceptance in the space provided for that purpose below.
Very truly yours,
Massachusetts Mutual Life Insurance Company
By: ________________________________________________
Name: Andrew C. Dickey
Title: Head of Alternative and Private Equity
Accepted:
Invesco Real Estate Income Trust Inc.
By:    
Name: Beth A. Zayicek
Title: Chief Operating Officer






EXHIBIT D

AMENDMENT TO
LETTER AGREEMENT
                                    
[_], 2021

Invesco Advisers, Inc.
1555 Peachtree Street
NE Suite 1800
Atlanta GA 30309

Ladies and Gentlemen:

Invesco Real Estate Income Trust Inc. (the “Company”), Invesco Advisers, Inc. (“IAI”) and Massachusetts Mutual Life Insurance Company (the “Investor”) previously entered into that certain letter agreement, dated August 12, 2020 (the “Original Letter Agreement”). The Company, IAI and the Investor desire to amend the Original Letter Agreement as set forth in this Amendment to Letter Agreement (this “Amendment”).

1.Amendment to Original Letter Agreement.

(a)    The Original Letter Agreement is hereby amended to provide that the term “Waiver” means for all purposes that certain Request to Waive Stock Ownership Limit, dated August 12, 2020, between the Investor and the Company, as amended by that certain Amendment to Request to Waive Stock Ownership Limit, dated as of the date hereof, between the Investor and the Company.

(b)    Except as expressly set forth in this Section 1, the terms of the Original Letter Agreement are not amended or modified hereby and shall remain in full force and effect as set forth in the Original Letter Agreement.

2.This Amendment may only be amended by a written instrument signed by all of the parties hereto.

3.This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of Maryland, without giving effect to the conflict of laws provisions therein.

4.If any part of this Amendment is held by a court of competent jurisdiction to be unenforceable, illegal or invalid, the balance of this Amendment shall remain in effect and unaffected by such unenforceability, illegality or invalidity.

5.This Amendment may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument.

[Signatures on following page]

0 = 1 LEGAL02/40713129v4

    If the foregoing correctly sets forth the agreement between the parties hereto, please indicate your acceptance in the space provided for that purpose below.

Very truly yours,

Massachusetts Mutual Life Insurance Company


By:     
Name:
Title:


Accepted:

Invesco Advisers, Inc.


By: ____________________________________
Name:
Title:


Invesco Real Estate Income Trust Inc.


By: ____________________________________
Name: Beth A. Zayicek
Title: Chief Operating Officer





Exhibit 31.1
CERTIFICATION
PURSUANT TO 17 CFR 240.13a-14
PROMULGATED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, R. Scott Dennis, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Invesco Real Estate Income Trust Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)[Intentionally omitted];
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(1)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 15, 2021
/s/ R. Scott Dennis
R. Scott Dennis
Chairperson of the Board, President and Chief Executive Officer
(Principal Executive Officer)



Exhibit 31.2
CERTIFICATION
PURSUANT TO 17 CFR 240.13a-14
PROMULGATED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, R. Lee Phegley, Jr., certify that:
1.I have reviewed this quarterly report on Form 10-Q of Invesco Real Estate Income Trust Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)[Intentionally omitted];
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 15, 2021
/s/ R. Lee Phegley, Jr.
R. Lee Phegley, Jr.
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)



Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Invesco Real Estate Income Trust Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Scott Dennis, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ R. Scott Dennis
R. Scott Dennis
Chairperson of the Board, President and Chief Executive Officer
(Principal Executive Officer)
November 15, 2021
This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.


Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Invesco Real Estate Income Trust Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Lee Phegley, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ R. Lee Phegley, Jr.
R. Lee Phegley, Jr.
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
November 15, 2021
This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.