Orion Pro Fund 2026: What 100% Bonus Depreciation Restoration Really Means for Net-Lease Investors

TL;DR: Orion Real Estate Group and Secure Properties have launched Orion Pro Fund 2026, LP, a private real estate fund targeting up to $200 million in equity to acquire single-tenant net-lease properties (specifically car washes, gas stations, and quick-service automotive facilities) with components eligible for 100% bonus depreciation restored under the One Big Beautiful Bill Act (P.L. 119-21, enacted July 4, 2025). With leverage, the sponsors expect to support more than $500 million in total acquisitions. Source: CityBiz, August 4, 2026.

The Deal: Orion Pro Fund 2026 Structure and Strategy

Orion Real Estate Group and Secure Properties are not first-time operators looking for a tax angle to dress up a mediocre deal. Since 2018, the two firms have collectively closed more than $3 billion in net-lease transactions across the United States and Canada, including sale-leasebacks, portfolio acquisitions, and direct purchases. They have acquired more than $1 billion in assets through comparable vintage funds. That is the context you need before you evaluate Orion Pro Fund 2026, LP.

The fund targets up to $200 million in equity from accredited investors, deploying it into a specific slice of the net-lease market: automotive services and convenience retail. Think car washes, gas stations, and quick-service oil-change facilities. The sponsors say they have already acquired more than 100 car wash properties and 70 qualifying convenience store assets over the past three years, giving them a proprietary sourcing network and specialized underwriting expertise in asset classes most generalist buyers cannot price correctly.

With leverage, the fund expects to support more than $500 million in total acquisitions. That implies a loan-to-value ratio somewhere in the 60% range, which is standard for stabilized net-lease assets, but worth noting because debt amplifies both upside and downside. The fund has identified an initial portfolio of qualifying properties and expects a pipeline of additional closings throughout the year.

The fund will also draw on advisory services from SURMOUNT, which the press release describes as having advised on more than $6 billion of bonus depreciation-eligible automotive service assets and representing more than 70% of total car wash transaction volume in 2025 by both deal count and value.

Net-lease (sometimes called NNN or triple-net) is a commercial property structure in which the tenant pays property taxes, building insurance, and maintenance costs directly, so the landlord collects a net rent check with few operating surprises. NNN leases typically run 10 to 20 years with creditworthy national-brand tenants, which is why institutional and private investors alike treat them as a yield-plus-stability allocation. The tax angle, which we will unpack below, is the specific reason to do it right now.

What 100% Bonus Depreciation Actually Means

Bonus depreciation, technically the "additional first-year depreciation deduction" under IRC Section 168(k), lets a property owner deduct a large percentage of an eligible asset's cost in the first year it is placed in service, rather than spreading that cost over 5, 15, or 39 years under the standard Modified Accelerated Cost Recovery System (MACRS) schedule.

The Tax Cuts and Jobs Act of 2017 (TCJA) set the rate at 100% through the end of 2022, then scheduled a step-down: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, zero in 2027. If you acquired a qualifying asset in 2024, you could only write off 60% in year one; the rest depreciated on the standard schedule.

The One Big Beautiful Bill Act (P.L. 119-21), enacted July 4, 2025, ended that phase-down and permanently restored the 100% rate for qualifying property acquired after January 19, 2025. The IRS confirmed the operative details in Notice 2026-11: the existing TCJA regulatory framework under Sec. 1.168(k)-2 remains in effect, with January 19, 2025 as the new cutoff. Binding contracts signed on or before that date follow the old phase-down; contracts signed January 20, 2025 or later qualify for the full 100%.

Here is the wrinkle that makes this relevant specifically to net-lease real estate. The land underneath a commercial building is not depreciable at all, and the building structure itself (Section 1250 real property) must still be depreciated over 39 years on the standard schedule. The 100% bonus depreciation applies to personal property components identified through a cost segregation study, which is a detailed engineering analysis that reclassifies portions of a commercial building's cost into shorter-lived asset categories: 5-year property (specialty equipment, certain finishes), 7-year property (fixtures), and 15-year property (qualified improvement property, site improvements such as paving and landscaping).

Car washes and gas stations are strong cost segregation candidates because a large share of their value sits in equipment, canopies, underground storage tanks, carwash tunnels, and specialized systems. Those components reclassify from the 39-year bucket into 5-, 7-, and 15-year categories, all eligible for 100% first-year bonus under the OBBBA. On a typical car wash or convenience store, 30% to 50% of total acquisition cost may allocate to bonus-eligible components, meaning a $5 million property could generate $1.5 to $2.5 million in year-one K-1 deductions.

The practical result: an investor who puts $500,000 into a net-lease fund structured this way might receive a first-year paper loss of $150,000 to $250,000. That loss exists only on paper (no cash left the account) but can offset other passive income, or in some cases ordinary income if you qualify as a real estate professional under IRC Section 469(c)(7). That is the tax benefit the sponsors are marketing.

Jeff's Analysis: Recapture Risk, What Happens at the Exit, and Why This Benefit Is Often Oversold

I want to be direct with you: 100% bonus depreciation is a tax deferral, not a tax elimination. The IRS will collect a meaningful portion of those deductions when the fund sells. The question is not whether recapture happens; it is whether you modeled it correctly before you invested.

At exit, the IRS "recaptures" the depreciation you already deducted. Recapture rules split by asset type:

• Section 1245 property (personal property including the equipment, fixtures, and systems identified in a cost seg study): recaptured depreciation is taxed at ordinary income rates, up to 37% for the highest federal bracket. If you deducted $200,000 of 5-year property components at 100% bonus and the fund sells that property at cost three years later, the full $200,000 is ordinary income at exit. There is no preferential rate here.
• Section 1250 property (the building structure depreciated straight-line over 39 years): recaptured depreciation on real property is taxed at a maximum federal rate of 25%, which is better than ordinary rates but still worse than the 20% long-term capital gains rate on the remaining appreciation.

Add the 3.8% net investment income tax (NIIT) if your modified adjusted gross income exceeds $200,000 ($250,000 married filing jointly) and you reach an effective 40.8% recapture rate on Section 1245 components. That is the tax you pay back at sale.

Sponsors sometimes bury this in the PPM. Before you sign, ask for a modeled after-tax IRR that includes depreciation recapture at exit. A fund targeting a 12% gross IRR can drop to 8% or 9% after recapture depending on your tax bracket and the exit timing. That is not a bad return, but you need the right number to compare against alternatives.

Two mechanisms can defer or eliminate recapture. A 1031 exchange (IRC Section 1031) rolls sale proceeds into a replacement property, carrying the recapture liability forward rather than triggering it at sale. Many net-lease funds use 1031 exchanges during the hold period but must eventually distribute proceeds to investors, and recapture hits at that point. Basis step-up under IRC Section 1014 eliminates recapture entirely if you hold until death and your estate passes the assets to heirs, which is an estate-planning tool rather than a retirement income strategy.

One more point worth stressing: the tax benefit depends on your personal situation. Bonus depreciation flows through to your Schedule K-1 as passive losses. Under IRC Section 469, passive losses offset passive income only, not W-2 salary or active business income, unless you qualify as a real estate professional. If you carry $250,000 in passive income from other investments, these losses are immediately useful. If you are a salaried executive with no passive income, the losses suspend until exit, where they reduce your taxable gain. That is still a benefit, but the timing differs substantially from what the marketing materials imply.

How Accredited Investors Should Evaluate a Net-Lease Fund Like This

Here is the checklist I use when evaluating any private net-lease fund. Apply it to Orion Pro Fund 2026 or any comparable offering.

Tenant credit quality. Net-lease income is only as reliable as the tenant paying the rent. Car washes and convenience stores operated by regional chains carry meaningfully different credit risk than a McDonald's or Dollar General on a corporate absolute-net lease. Ask the sponsor for credit ratings or EBITDA coverage ratios on the top 10 tenants by rent. A tenant paying $300,000 per year in rent against $400,000 in EBITDA is one bad quarter away from a default.

Lease term and rollover schedule. Bonus depreciation front-loads the tax benefit in years one through three. The fund's economics then depend on those properties staying occupied through the full hold period, typically 5 to 7 years. Ask for a weighted average lease term (WALT) across the portfolio and a year-by-year expiration schedule. A WALT below 8 years on a 7-year fund signals meaningful rollover risk before exit.

Cap rate and acquisition pricing. Cap rate (capitalization rate) is net operating income divided by purchase price, the fundamental valuation metric for income-producing commercial real estate. Car wash and convenience store net-lease assets have been trading in the 5.5% to 7.5% cap rate range depending on credit, lease term, and location. A fund acquiring at 5.5% cap with 60% leverage at 6.5% interest rates has negative leverage, meaning the cost of debt exceeds the property yield. Ask the sponsor for the projected portfolio cap rate and the assumed financing cost. Negative leverage is not necessarily a dealbreaker for a depreciation-driven fund, but you need to know it is happening and why.

Sponsor track record, verified. Orion and Secure Properties cite $3 billion in transactions and $1 billion in comparable vintage fund acquisitions. Ask for audited fund-level returns from prior comparable funds, including distributions paid, capital returned, and realized IRRs net of fees. Transaction volume counts every dollar of property purchased including debt and says nothing about what investors actually received.

Fee structure. Private real estate funds typically charge an acquisition fee (1% to 2% of purchase price), an annual asset management fee (1% to 1.5% of equity), and a promoted interest (typically 20% of profits above an 8% preferred return hurdle). Fees are a material drag on net returns and are paid regardless of performance up to the promote threshold. Model the after-fee, after-recapture IRR before you commit.

State tax conformity. Only about 15 states fully conform to federal Section 168(k). California, New York, and Illinois require add-backs or impose their own depreciation schedules, which can partially offset the federal benefit. Ask the sponsor for the target geographic distribution and each state's conformity status.

Frequently Asked Questions

Q: Is the One Big Beautiful Bill Act's 100% bonus depreciation restoration real, and is it permanent?

A: Yes. The One Big Beautiful Bill Act (P.L. 119-21) was enacted July 4, 2025 and permanently restored 100% bonus depreciation under IRC Section 168(k) for qualifying property acquired after January 19, 2025. The IRS confirmed the operative framework in Notice 2026-11. "Permanent" in tax law means Congress did not set a sunset date. It does not mean Congress cannot change the law in the future, but there is no scheduled expiration the way the TCJA phase-down had.

Q: Why do car washes and gas stations qualify for more bonus depreciation than a typical office building?

A: A standard office building is mostly structural (walls, roof, foundation, HVAC) — all Section 1250 real property depreciated over 39 years. Section 168(k) bonus applies to personal property with recovery periods of 20 years or less. Car washes and gas stations are equipment-heavy: tunnel conveyors, vacuum systems, underground storage tanks, canopy lighting, point-of-sale systems, and fuel dispensing infrastructure all reclassify into 5-, 7-, and 15-year property buckets through a cost segregation study, all of which qualifies for 100% first-year bonus. The more equipment-intensive the property, the larger the eligible depreciation pool.

Q: Can I use the fund's bonus depreciation losses to offset my W-2 salary?

A: Generally no, unless you qualify as a real estate professional under IRC Section 469(c)(7), which requires you to spend more than 750 hours per year in real estate activities and more than half your total working time in those activities. For most accredited investors with salaried income, the K-1 losses are passive losses that offset passive income only. If you have no passive income this year, the losses suspend and carry forward to offset future passive income or reduce your taxable gain when the fund sells. This is still a meaningful benefit, but the timing is different from an immediate income offset. Confirm your situation with your CPA before committing.

Q: What happens to my depreciation deductions if the fund does a 1031 exchange instead of selling outright?

A: A 1031 exchange defers recapture by rolling the adjusted basis (original cost minus depreciation taken) into the replacement property. Your accumulated deductions remain as a reduced basis in the new asset, and the recapture clock resets rather than clears. If the fund sells the replacement without another 1031, recapture is owed on a potentially larger accumulated pool. Serial 1031s can extend the deferral for years, but they require available replacement properties at acceptable pricing and work poorly in a rising-rate or compressed-cap-rate environment.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.