Qualified Opportunity Zones

The Qualified Opportunity Zone Program, established by Congress in the 2017 Tax Cuts and Jobs Act, works as a powerful tool to incentivize private sector long-term investments in areas targeted for redevelopment nationwide through Qualified Opportunity Funds, in exchange for a suite of tax benefits, including the ability to pay as little as $0 in capital gains on investment returns.

This Federal Program designed to incentivizing impact investing serves as a powerful program for investors with substantial capital gains seeking to realize them in a tax-efficient manner.

Screen Shot 2018-11-30 at 1.02.49 PM

The Solution to Opportunity Zone Investing

Fund Overview:

The Halpern Real Estate Ventures Opportunity Zone Program offers investors the ability to invest alongside a seasoned investment platform, primarily focused on value creation and opportunistic equity investments in Qualified Opportunity Zones.

The Program is managed by an experienced team of Real Estate and Private Equity professionals, and supported by tax, accounting, and legal experts that have differentiated themselves as thought leaders and policy changemakers in the Opportunity Zone and tax credit space.

Investment Strategy:

The Halpern Real Estate Ventures Opportunity Zone Program targets investments that benefit from a generational shift towards emerging urban lifestyle zones, amplified by business demand and capital flow that will be freed by the QOZ federal and state tax incentives designed to encourage investment.

The HREV investment approach focuses on ground up and adaptive reuse projects and seeks to establish long-term partnerships with locally entrenched operating partners, providing strategic capital, expertise, and relationships in order to execute on institutional quality projects.

HREV targets markets and property sectors in Opportunity Zones located in urban lifestyle cores in the Northeast, and other high growth markets that are poised to benefit from key long-term demographic and economic shifts, which, when coupled with our multi-cycle investment and risk management knowledge, along with micro-market knowledge and execution capabilities of local operators as partners, leads to compelling investment opportunities.

The 12-year fund horizon is designed in order to capture the full tax benefits of the Opportunity Zone Program, qualify investors for a full step-up in basis at disposition, and facilitate an orderly exit.

A Powerful Boost to Returns:

As an investor, benefits are at least threefold: deferring federal taxes on any recent capital gains until December 31, 2026, reducing that tax payment by up to 15%, and paying as little as zero taxes on potential profits on gains invested into an Opportunity Fund if the investment is held for 10 years. This provision in the $1.5 trillion tax cut is projected to save investors $1.6 billion in capital gains taxes over the next 10 years.

After-tax gains on an Opportunity Zone eligible investment are substantially increased in relation to a similar investment made without the Opportunity Zone tax benefits:

*The tax calculation uses New York City, the highest tax rate nationally for this example. The rate is comprised of Long Term Capital Gains tax of 20%, top marginal state and city tax rate of 12.7%, and 3.8% surcharge on capital gains, rounded to the nearest 10th.

Note: Chart does not capture cash flow, tax benefits from deprecation and expensing during the hold period.

Qualified Opportunity Zones:

Within the 50 states and D.C., Opportunity Zones are home to 31.3 million people

Over three-quarters of certified tracts lie within metropolitan areas. An interactive map, depicting Qualified Opportunity Zones throughout the country is depicted below:

Investment Drivers:

We have found that our investment thesis coupled with our distinct capabilities as an operator and investment manager actualizes advantages through a distinct set of core real estate fundamentals: 

Accessibility: Provides tax deferral and abatement to both real estate and non-real estate investors alike, qualifying trillions of dollars in capital gains for potential investment in localized areas.

Appreciation: Funds with first mover advantage will recognize appreciation resulting from the estimated tens of billions of dollars of capital to be deployed by investors seeking to eliminate or significantly reduce capital gains.

Value Creation: Participation is limited to development platforms that can execute on ground up development and heavy repositioning, generating and opportunistic returns through stabilization.

Driving Additional Demand: Real Estate and businesses that form within or relocate to Opportunity Zones will realize significant tax savings upon the exit or sale of the company and will likely select space in Opportunity Zones over other locations.

Barriers to Entry: The program creates scarcity as zones are tightly defined and is only available to platforms with both complex execution capability and solid compliance experience.

For additional information or to review the Halpern Real Estate Ventures Opportunity Zone Program investor presentation and current offering, please email [email protected]