Four Things to Look for in an Opportunity Zone Fund
April 7, 2022 | Erik Hayden | Urban Catalyst
Opportunity Zones (OZs) were established by the 2017 Tax Cuts and Jobs Act to provide an incentive for investing in economically distressed communities. There are now about 8,700 zones around the country and hundreds of OZ funds competing to attract money from investors. So how do you tell one from another? Here are four things to look for:
• Location. Where does the fund invest? At Urban Catalyst we’re building in downtown San Jose, California, recently named the #1 city in the U.S. for attracting innovation-oriented industries by the real estate services firm JLL.
• Strategy. How does the fund invest? Is it diversified or focused on a single property type? We think diversification is good. In our Fund I we’re building office, retail, and multifamily, among other projects.
• Management. Who’s running the fund? Are they investors or real estate developers? Our team has years of experience in acquiring properties and doing ground-up development in San Jose and the San Francisco Bay area as well as working with financial institutions.
• Fundraising. Has the fund been successful in raising money? Out of 613 tracked Qualified OZ funds ranked by the consulting firm Novogradac, just 36 have raised $150 million or more. Urban Catalyst ranked #25, in the top 5% of all managers.
When you invest in real estate through a qualified OZ fund there are other benefits as well. For example, there is the potential to defer capital gains taxes on the sale of a business, company stock, or other real estate until the investment is sold or exchanged, or December 31, 2026, whichever comes first. If you then hold your investment in a qualified OZ fund for at least 10 years, you may be able to permanently exclude from taxes any gains resulting from that investment.
To find out more about investing with us in a Qualified Opportunity Zone fund, contact us today.
About Urban Catalyst
Urban Catalyst Opportunity Fund LLC (“Urban Catalyst”) is a real estate development Fund focused on properties located in the downtown San Jose Opportunity Zone, in the heart of Silicon Valley.
