January 4, 2019
The Dec. 3 update of Qualified Opportunity Zone funds, compiled by the National Council of State Housing Agencies (NCSHA), lists 53 funds that are now or soon will be operating, and that is surely not an exhaustive list.
While all of these funds seek to build or invest in commercial real estate and/or affordable housing, there is great diversity in fund size, type of projects sought and locations of the new development or rehabilitation. The funds are valued from just under $1 million all the way up to $3 billion, and are targeted as hyper-locally as specific boroughs in New York City.
The $3-billion fund is also one of the few that has established itself as a REIT – The Skybridge-EJF Opportunity Zone REIT, managed by Anthony Scaramucci’s Skybridge Capital II and announced in November.
“This will be a game-changing product for SkyBridge,” Scaramucci, the former Trump administration communications director, told Business Insider. “This will likely be bigger and more important to the firm than our current fund of funds.”
Unlike many of the Opportunity Zone funds, the Skybridge REIT is looking at multiple CRE sectors – including hospitality, mixed-use, multifamily and industrial – nationwide and seeks to partner with local developers.
At the other end of the spectrum is the single-project-oriented Tech Transfer Fund I, valued at $976,690. This fund is designed to boost Grey Ops, LLC in Lusby, MD, which is creating defense technology for the military and first responders.
Of the 53 funds listed by the NCSHA, 12 are ready to invest $500 million or more, and another 13 have $200 million to $499 million available. A few are willing to do any type of CRE project, though most of them list multifamily development and/or affordable housing as their preferred sectors. Very few list office or retail projects specifically, though several have mixed-use development among their specialties. One fund, the King Tide Capital Opportunity Zone Fund, is focusing on hospitality projects in Honolulu, Austin and San Antonio.
The Miami Opportunity Fund is the second-largest, with capital of $750 million, and is one of 13 that targets one specific city, metro area or state for Opportunity Zone development. The Miami fund is one of three Florida metro-specific funds established by SikariLuxe. The firm also has a $400-million fund dedicated to Orlando, and a $50 million fund for hospitality development in Tampa.
Fifty-one of the 53 funds target a number of developments. But the $50-million Sound West Opportunity Zone Fund I in the Seattle suburb of Bremerton, WA, is designed solely to build Marina Square, a retail, restaurant, office and multifamily development on the Bremerton waterfront.
A couple of funds are earmarked for developments in only a few selected primary and/or secondary markets. For example, the $650-million Opportunity Development Group Fund is looking at projects in New York, Miami, Los Angeles, Denver and Chicago. The Origin QOZ Fund wants to invest in Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, Minneapolis, Nashville, Phoenix and Raleigh.
And then there are the two most unique funds, both of which aim to boost agribusiness in the east. The $60-million Local Grown Salads i95 Opportunity Zone Fund hopes to develop greenhouses to grow produce along the Boston-Washington corridor. The $24.8-million North Country Opportunity Zone Fund specifically targets a 20-acre greenhouse in New Hampshire that will grow tomatoes and greens.
Opportunity Zone funds come in various shapes and sizes. Investors must decide which ones suit them best.
Tags: Opportunity Zones