My K-1 shows $0 depreciation on a medical building in year three and the sponsor says that's normal
I have four LP positions and three of them front-load depreciation the way I expected, cost seg done in year one, bonus depreciation flowing through, meaningful paper loss against my passive income. The fourth is a 2021 vintage MOB fund, 68,000 sf across two buildings in suburban Nashville, and the K-1 I just got for 2023 shows essentially no depreciation. The prior two years were the same. Sponsor told me the properties are "held for investment under a long-term basis schedule" and that the depreciation profile normalizes over time. I have been investing passively long enough to know that answer is not an answer. I paid a CPA to look at it and she said the cost segregation study either was never done or was done and produced almost nothing, which can happen if the buildings are older and the prior owner already burned through the accelerated components. These are 1998 and 2003 vintage. I want to know if anyone else in a MOB fund has seen a K-1 with flat or near-zero depreciation in years two and three and whether the sponsor actually owed me disclosure on this before I wired money. The PPM said "depreciation benefits available to investors" and I took that to mean something real. My CPA says that language is almost worthless as a promise. I cannot find anything in the subscription documents that gave me a specific number or method.
