EquityMultiple’s Growing Portfolio of Opportunity Zone Investments

September 8, 2019

EquityMultiple’s First Few Years Offering Opportunity Zone Investments

In March of 2019 year we were thrilled to announce our first Opportunity Zone investment opportunity in Goodyear, Arizona – part of the Phoenix MSA. EquityMultiple was one of the first investing platforms to offer Qualified Opportunity Zone investment opportunities to accredited individuals following a due diligence period regarding IRS guidance and tax implications. 

EquityMultiple’s investors participated in financing the ground-up development of a combined 325,000 SF of industrial space between two buildings. The business plan for this 10 year Opportunity Zone investment includes construction of the Property, lease-up, optimization of the tax benefits associated with the Qualified Opportunity Zone Fund (“QOF”) guidelines and an eventual sale of the Property. EquityMultiple’s network ultimately contributed over $2.4M. The investment is located within a Foreign Trade Zone (FTZ) magnet site, which is an area designated to facilitate international commerce by reducing operational costs and facilitating customs clearance, and has the potential to generate substantial job growth, along with attractive post-tax yield for investors.

For a full breakdown of the potential tax incentives afforded by the new Opportunity Zone program, please refer to our Resource Page on Opportunity Zones & Opportunity Funds.

EquityMultiple’s second Opportunity Zone investment—a National Manufactured Housing Fund—opened in late June of 2019. Again, this offering was structured to qualify for the substantial tax incentives afforded under the law, with an anticipated hold period of more than 10 years. This investment offered built-in geographic diversification as well as exposure to a new niche asset class: Manufactured Housing Communities (MHCs)

While the “mobile home” concept has been stigmatized in the past, modern Manufactured Housing Communities can offer quality, affordable housing to families – particularly in Opportunity Zones that have suffered from affordable housing shortfalls. Due to high barriers of entry and a pronounced demand/supply imbalance, the asset class is drawing increased interest from institutional investors.

Rolling Over Capital Gains into Qualified Opportunity Zone Investments

EquityMultiple investors began expressing interest in the Opportunity Zone concept in early 2018, but we held off on offering this new type of tax-advantaged real estate investment until mid-2019, after the U.S. Treasury provided requisite clarity in its highly-anticipated second set of proposed regulations. Our Investor Relations Team is available to help investors understand requirements as they manufacture gains through not just traditional public stock sales, but also a wide array of capital events. For example, individuals we have worked with have sold private stock in Biotech companies, single-family homes, a billiard manufacturing company, a roll-up of dermatology clinics. The list goes on.

Given the time constraints for capital rollover written into the program, investors are often bound by a “shot clock” after a capital event. Our team is able to work quickly to place capital into QOZ investment if we have exposure to deals in our pipeline that fit a given investor’s needs, so do not hesitate to reach out to our Investor Relations Team if you would like to schedule some time to coordinate.

The Future of the Opportunity Zone Program 

EquityMultiple has offered and successfully closed on a number of Opportunity Zone investments in the past several years. The program has been largely out of the headlines for the past several quarters, especially as the pandemic put longer-dated development projects on hold. However, with a new administration focused on revitalization of urban submarkets and spurring investment in affordable housing, we could see a resurgence of QOZ deal volume. 

It is possible that the list of ratified, qualifying census tracts will be revisited and expanded in the coming years and that new tax incentives may be combined with QOZ incentives to potentially create newly viable opportunities in select submarkets. 

We still believe that Opportunity Zone investing represents a groundbreaking opportunity for tax-advantaged real estate investing, and we are excited to continue to scale our QOZ offerings across markets and property types. As the economy recovers from the COVID crisis, we may see distressed asset opportunities emerge in census tracts that were already eligible and being revitalized prior to the crisis. 

Further Reading

For a full breakdown of the potential tax incentives afforded by the new Opportunity Zone program, please refer to our Resource Page on Opportunity Zones & Opportunity Funds.

Recap of Opportunity Zone & Opportunity Fund Materials

Video: What Are Opportunity Zones & Opportunity Funds? 

Press Center: News EquityMultiple Opportunity Zone Offerings, and More

Update: Opportunity Zones in 2021

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