Opportunity Zone Funds Raising Money Successfully

Goals

To determine if there are any Opportunity Zone funds that are successfully raising money and if so, how they are successfully raising money, how much they are raising, and what the successful funds have in common for purposes of a business meeting presentation.

Early Findings

Preliminary research indicates that while there are numerous Opportunity Zone funds available, investors are hesitant to invest in them. Two funds that have raised money are the SoLa Impact Fund and SkyBridge's Opportunity Zone fund.

GENERAL INFORMATION

  • According to Barron's, at the end of 2018, only "8% of the 51 U.S.-based institutional investors in real estate" were invested in Opportunity Zone funds; however 51% said they were interested in doing so in 2019. An additional 12% are interested in investing in Opportunity Zone funds over a longer term.
  • According to Institutional Investor, "allocators have been slow to invest capital in" Opportunity Zone funds partially because they are a long-term investment that "takes more consideration before pulling the trigger."
  • Other concerns about the Opportunity Zone funds include lock up periods and high fees.
  • An anonymous investor said the general problem with the Opportunity Zone funds is that "are being started by entrepreneurial people trying to capitalize off of this new law instead of existing real estate investors who might have done the deals anyway."
  • Brett Messing, president of Skybridge Capital, says that Opportunity Zone funds are the buzzword of the moment, but even though everyone is talking about them, no one is investing in them.
  • InvestmentNews found that there is a "huge amount of interest" in Opportunity Zone funds and that investors must act by the end of 2019 to reap full benefits, but according to wealth advisers, "investors are hesitating before jumping into Opportunity Zone funds."
  • Some investors are waiting for more direction from the U.S. Treasury while others are concerned that the funds are too risky.
  • Jeffrey MacDonald, head of fixed-income strategies at Fiduciary Trust Co. International, stated that he has not yet put any clients into Opportunity Zone funds because there "there wasn't much time for extra due diligence."
  • Justina Lai, the director of impact investing and a shareholder of Wetherby Asset Management, agreed with MacDonald saying, "To date, most of the opportunities would not be appropriate investment strategies for our clients."
  • Nina Streeter, a director of asset management at Abbot Downing, has not seen much investment activity in the Opportunity Zone funds. She said, "it's quite clear to me that the amount of capital closed so far is small."
  • The single largest Opportunity Zone fund is "CIM Group's $5 billion fund, followed by hedge fund firm Skybridge Capital with $3 billion and property developer Decennial Group with $1 billion."
  • So far, investors are interested not in the impact part of the Opportunity Zone funds, but the tax incentives.

OPPORTUNITY ZONE FUNDS THAT HAVE RAISED MONEY

  • SoLa Impact Fund, which "invests in the distressed neighborhoods in South Los Angeles," has raised $100 million.
  • According to Martin Muoto, founder and CEO of SoLa Impact Fund, the Opportunity Zone fund "has attracted a new set of investors, like hedge funds."
  • As of April 2019, SkyBridge Capital had raised just $10 million toward its $3 billion Opportunity Zone fund.
  • Anthony Scaramucci, founder of SkyBridge Capital, indicated that he had hoped have raised $300 to $400 million by then, but he said he "may have overestimated the size of the market and the amount of capital these tax-paying investors are willing to invest."
  • Most funds have not publicly disclosed how much money they have raised toward their Opportunity Fund goals.
  • In addition to this public search, we scanned our proprietary research database of over 1 million sources and were unable to find any specific research reports that address your goals.

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