Grubb Properties Closes Opportunity Zone Fund Ahead of REIT Consolidation

Grubb Properties, a commercial real estate firm and opportunity zone fund sponsor, has closed its 2021 Grubb Qualified Opportunity Fund LLC with $152 million raised. According to the company, the fund raised $63 million from investors in December alone.

This brings the total raised across the three funds in its qualified opportunity fund series to $370 million. Grubb plans to consolidate its 2019, 2020 and 2021 qualified opportunity funds into a private real estate investment trust, dubbed the Link Apartments Opportunity Zone REIT.

The REIT was approved by shareholders in late 2021 and is expected to launch in the first quarter of 2022.

The firm’s primary strategy is to provide essential housing through its Link Apartments brand, which are geared to those earning between 60 percent and 140 percent of area median income. There are currently 19 communities stabilized or under construction across the country, totaling 4,935 multifamily units, with 16 additional communities in the pipeline.

“Providing essential housing through Link Apartments directly addresses the serious housing shortage facing the country today,” said Clark Spencer, managing director of investments, and manager of the qualified opportunity fund series. “We believe Link Apartments achieves the goals of the opportunity zone legislation, improving communities without introducing excessive gentrification impacts, while providing a compelling investment opportunity.”

The REIT will launch with the 15 communities previously owned by the three qualified opportunity funds, including the recently announced Link Apartments developments in Los Angeles and Oakland, California and Queens and Hempstead, New York.

Grubb Properties, founded in 1963, is a real estate fund manager focused on the essential housing space through its Link Apartments brand.

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Grubb Properties to Launch Opportunity Zone REIT

Commercial real estate firm Grubb Properties announced the launch of its 2021 Grubb Qualified Opportunity Fund, a private real estate investment trust that plans to invest in multifamily properties in designated opportunity zones nationwide. According to the company, the fund seeks to raise $200 million.

The company’s prior two Regulation D funds, 2019 Grubb Qualified Opportunity Fund and 2020 Grubb Qualified Opportunity Fund, had a similar investment focus and raised a combined $200 million from accredited investors.

Grubb Properties indicated that its latest fund plans to focus on essential housing in high growth markets, primarily in areas with strong job centers including universities, health systems and/or governmental agencies.

Grubb Properties’ Link Apartments brand, which include properties developed and professionally managed by the firm, is the core focus of its latest opportunity zone fund. The properties are designed to appeal to young professionals earning from 60 percent to 140 percent of area median income. The buildings are National Green Building Standard certified, and many include electric vehicle charging stations and proximity to bikeways.

Grubb said that demand for essential housing has increased as renters seek apartments in urban, transit-oriented locations close to fixed major employers. Meanwhile, this demand has dramatically outstripped supply, which has dipped to historic lows over the past decade, while rents have risen faster than wages and inflation, the company added.

“Virtually no other new multifamily product is being developed in the essential housing segment in our target geographies,” said Clark Spencer, manager of the Grubb qualified opportunity funds. “Our investment strategy focuses on essential housing because we believe it to be one of the most resilient asset classes, given little new construction and growing demand…”

2021 Grubb Qualified Opportunity Fund plans to target a 10 percent allocation to a community development initiative. Returns on this portion are capped at a 10 percent internal rate of return with any excess donated to community partners in the areas the fund serves, the company said. No asset management fee is charged for funds deployed in community development initiative projects.

Founded in 1963, Grubb Properties is 100 percent employee- and board-owned, and develops, operates, and manages properties primarily within the Southeast U.S., including commercial, multifamily, and mixed-use projects. The firm has corporate offices in Charlotte, Cary, and Winston-Salem, North Carolina, and Atlanta, Georgia.

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