GTIS Partners Opportunity Zone REIT to Close at Year End
GTIS Partners, a real asset investment and development firm, has reported that its GTIS Qualified Opportunity Fund will have its final close on December 31, 2021.
GTIS Partners, a real asset investment and development firm, has reported that its GTIS Qualified Opportunity Fund will close on December 31, 2021.
GTIS Qualified Opportunity Fund has raised $450 million in capital from family offices, registered investment advisors, and directly from high-net-worth individuals. The fund, which launched in early 2019 and sought to raise $500 million from accredited investors, is structured as a Regulation D 506(c) real estate investment trust and has a $100,000 investment minimum.
GTIS has invested in 14 projects located in qualified opportunity zones, including the seven projects in their opportunity zone fund, committing more than $400 million of equity capital to date. The projects comprise more than 5,300 residential units and 1.6 million square feet of commercial office and industrial distribution space and are predominantly located in Sunbelt markets such as Phoenix, Las Vegas and Charlotte.
“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.
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 potentially significant tax incentives.
“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,” said Peter Ciganik, senior managing director of strategy, research and investor relations at GTIS Partners.
“Additionally, 2021 is the last year that investors are also eligible for a 10 percent 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 percent to 5 percent of incremental [internal rate of return] on top of the underlying investment return,” he added.
The fund is available through the iCapital alternative investments platform. Previously, GTIS raised capital primarily from pension plans and endowments.
GTIS Partners manages more than $4 billion in gross assets with a focus on residential and industrial logistics investments.
