Opportunity Zones - Considered an opportunistic/value add strategy?

Hi Everyone, 

I'm just starting to learn more about investing in opportunity zones as a fund that I will be interning for next year in the east coast will be deploying a lot of capital towards. 

Given these are often times "distressed" areas to make JV investments for LPs doing development or redevelopment deals, is this considered an opportunistic/value add strategy?

In my opinion, a good portion of opportunity zones are not in truly "distressed" beater neighborhoods. I've noticed they are typically in up and coming areas near major metros which makes them great opportunities to invest in early on. For example Scottsdale or Austin etc. 

Comments (5)

  • Intern in PE - Other
1y

How do you make money in this? Tax credits mostly?

  • Analyst 1 in IB - Cov
1y

Redever makes a great point, these strategies take a lot of capital and consideration for the risk. Finding the right deal to receive the tax benefits along with a high return make this a challenging and fun role. 

1y
Ozymandia, what's your opinion? Comment below:

Honestly, the whole thing was a scam for politicians to hand out money to given supporters.  The decision making behind what areas were designated OZ and which weren't would make a Tammany politician blush.

In any case, people are now pricing in the benefits of the OZ into their sales pricing, so you don't actually gain a ton of benefit.  I'm really only familiar with the tri-state market, but to my knowledge the entire program has been a pretty big dud.  Unless, I guess, you're a wealthy person trying to shield income, in which case perhaps it's been a success, but as far as an engine for jobs growth and helping to alleviate poverty-stricken areas, it's done almost nothing.

  • Analyst 3+ in RE - Comm
2mo

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