New York based developer Youngwoo & Associates and Equitymultiple, a commercial real estate investment startup, have partnered to create an opportunity zone fund targeting projects across the United States that fall under new tax-advantaged investment provisions created by the 2017 tax reform bill.
Created by the 2017 tax reform law, the new legislation allows for tax-free reinvestment of capital gains into development projects, provided that the gain is placed into a qualified opportunity fund. The funds may only be invested in neighborhoods designated by federal and local lawmakers as “opportunity zones” based on a combination of U.S. Census Bureau income data and state and local input.
Youngwoo noted that its fund will offer individual investors the opportunity to participate directly through its partnership with Equitymultiple, which provides investors with online access to private real estate transactions.
“Finding underappreciated value in local markets has always been our focus, and opportunity zones are now providing a more tax efficient vehicle to attract investors into the areas where we’re already developing,” said Bryan Woo, executive vice president at Youngwoo & Associates. “We have seen firsthand that a well-conceptualized mixed-use development can serve as a new town square for both locals and visitors to live, work and play.”
In addition to deferring tax on invested capital gains, investors can reduce their tax owed over time and pay no additional capital gains on their opportunity zone fund investment if it’s held for more than 10 years.
Based in New York City since 1979, Young Woo & Associates LLC has developed projects totaling more than 8 million square feet and include the Sky Garage and Pier 57 in Manhattan. Most recently, the firm re-developed the historic Bronx Post Office into a retail, office and dining destination, which is set to open later this year. The company is also starting construction on a hotel and office development project in the Washington Heights neighborhood in Upper Manhattan.
Equitymultiple provides individual investors with online access to private real estate transactions across property types and risk profiles. To date, individual investors have invested more than $700 million in commercial real estate transactions through its online investing platform. The company is backed by entrepreneur and investor Ken Pasternak and received its seed funding from Mission Capital, a real estate capital markets firm that has helped close $70-plus billion in transactions.