GTIS Partners (“GTIS”), a real assets investment firm that manages in excess of $4 billion in gross assets with a focus on residential and industrial logistics investments, announced today that its GTIS Qualified Opportunity Zone fund will have its final close on 2021. With $450 million in capital raised so far from family offices, RIAs, and directly from HNW individuals, the fund is expected to be among the largest opportunity zone funds raised to date. Unique in the Opportunity Zone space, the fund is structured as a private REIT and a 506(c) offering available to Accredited Investors with a $100,000 minimum commitment.
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The Opportunity Zone program was created as part of the 2017 Tax Cuts and Jobs Act, and is designed to spur investment and economic development in underserved communities by offering, through qualified opportunity zone funds, tax incentives. Tax incentives include capital gains deferral and eventual tax forgiveness if an investment is held for a minimum of 10 years as of December 31, 2026. 10% of capital gains are excluded for investments held at least five years.
“As year-end approaches, QOZ investments can provide meaningful tax savings, in addition to offering diversification from the highly valued stock market and supporting critical economic development in underserved communities,” said Peter Ciganik, Senior Managing Director of Strategy, Research and Investor Relations at GTIS Partners. “By transferring eligible investments into a qualified opportunity zone vehicle, capital gains on appreciated assets ranging from stocks, bonds and options, to real estate, business sales, cryptocurrency or art, can be deferred for five years. Additionally, 2021 is the last year that investors are also eligible for a 10% capital gains reduction when the deferred tax comes due in 2026. But most importantly, the real estate acquired with the deferred gain will become completely free of capital gains tax and depreciation recapture after a minimum hold period of 10 years. This powerful tax incentive can add 3.5% to 5% of incremental IRR on top of the underlying investment return.”
GTIS has invested in 14 projects located in Qualified Opportunity Zones, including the 7 projects in the Qualified Opportunity Zone Fund, committing over $400 million of equity capital to date. The projects comprise over 5,300 residential units and 1.6 million square feet of commercial office and industrial distribution space and are predominantly located in fast growing Sunbelt markets such as Phoenix, Las Vegas and Charlotte. GTIS recently sold RÊVE Boulder, a mixed use project of three multifamily and one office building developed with the Southern Land Company. RÊVE represented GTIS’ first completed project located in an Opportunity Zone.
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“Against the backdrop of the pandemic, we were able to acquire properties over the past two years at attractive valuations and, given that the projects are now well advanced in construction with locked-in construction contracts, we have great protection on controlling costs in a quickly rising inflationary environment,” noted Partner Josh Pristaw.
Following the spirit of the Opportunity Zone program, GTIS has a comprehensive ESG policy with a series of principles guiding its investments and operations. These principles include a dedication to community engagement, extensive public amenities such as parks, trails, and playgrounds, inclusive residential development, investments in local schools, and renewable energy sources.
The fund is available through the iCapital alternative investments platform. “iCapital has been a great partner for us in this fund raise, opening access to a large number of RIAs and the private wealth channel. Previously GTIS has raised capital primarily from pension plans and endowments, and iCapital has helped us diversify our client base,” noted Tom Shapiro, Founder and President of GTIS.
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