SkyBridge Capital, a global alternative investment firm, and EJF Capital, a hedge fund and private equity fund manager, announced the launch of the SkyBridge-EJF Opportunity Zone REIT.
SOZ REIT has a mandate to invest in US Treasury-certified Opportunity Zones, which are low-income communities where recycled capital gains can receive favorable tax treatment.
The offering is structured as a private, non-exchange-traded REIT available to accredited investors at a minimum investment of $100,000 with 1099 tax reporting and quarterly distributions.
SOZ REIT is expected to be diversified by geography, property type, and developer, focusing on both new development and redevelopment real estate projects.
“We launched the SkyBridge-EJF Opportunity Zone REIT in response to demand from investors, who correctly see the OZ program as a chance to potentially generate attractive returns while having a positive societal impact,” said Anthony Scaramucci, founder and co-managing partner of SkyBridge Capital.
“We worked with EJF to structure the product in an investor-friendly way to democratize access to this historic incentive.”
Opportunity Zones were conceived during the Obama administration and passed into law with bipartisan support as part of the Tax Cuts and Jobs Act of 2017. The program allows investors to diversify their investments and reinvest in America’s future while taking advantage of three powerful tax incentive structures, including:
- US taxpaying individuals or corporations with any capital gain – from the sale of any asset (e.g., stocks, real estate, a business) – can defer taxation on an unlimited amount of realized gains until year-end 2026 if the gain is reinvested within 180 days in a Qualified Opportunity Fund.
- Capital gain liabilities associated with the sale proceeds are reduced by 15 percent if Opportunity Zone investments are held for at least seven years. Capital gains liabilities are reduced by 10% if held for longer than five years and less than seven years.
- Investors pay no capital gains tax on new gains generated by a Qualified Opportunity Fund if held for more than 10 years.
“Our team’s expertise in real estate and related investments, along with our relationships with regional and community banks, gives us an edge in sourcing and developing investment opportunities across multifamily, industrial, and hospitality,” said Neal Wilson, Co-Founder and COO of EJF Capital.
“We partnered with SkyBridge on opportunity zones because they understand the needs of mass affluent investors.”
To be eligible for the program, census tracts must have a 20 percent poverty rate or median family income of less than 80% of the surrounding area. Governors then chose 25 percent of eligible tracts in their state to be certified by the Treasury Department as Opportunity Zones.