Key Highlights of the Opportunity Zone Program:
Introduced as part of the Tax Cut and Jobs Act of 2017, Opportunity Zones encourage long‐term private sector investment in ‘distressed communities’ nationwide. Under the regulation investors have the ability to contribute capital gains into investments on a tax‐deferred and tax‐reduced basis. Any gains on the new investments will be completely untaxed, should they be held for at least 10 years.
Investors that contribute capital gains (for any asset type) into Qualified Opportunity Funds are eligible for:
- A tax deferral on those contributed gains through 12/31/2026,
- A discount of 15% on the tax deferred amount, if held for 7 years (10% if held for 5 years),
- A complete tax abatement on any appreciation of the investment, if held for at least 10 years.
Somera’s Unique Positioning:
- Somera’s entrepreneurial investment strategy and philosophy is uniquely aligned with the goals of the Opportunity Zone Program.
- Between Somera’s inception and today, Somera acquired $850M of value-add assets across many secondary and tertiary markets, large portions of which were within Opportunity Zones.
- Markets like Kansas City, Cleveland, and Memphis are inefficient and not institutionalized and have lagged behind in growth due to a lack of low cost capital.
- Somera has been very successful in revitalizing “forgotten” urban cores of America through significant asset repositioning and capitalizing on market value dislocations.
Somera’s Opportunity Zone Transactions
- Somera has closed 3 separate Opportunity Zone Funds (single asset deals) and is under contract on another 3. All 6 of these transactions represent assets that Somera intends to acquire, with or without the Opportunity Zone incentives.
- Somera believes it will continue to lead the Opportunity Zone space with more than $1 billion of real estate in our pipeline that would be qualified opportunity zone investments.
- Somera will maintain its approach of identifying value-add opportunities in secondary and tertiary markets, and if deals qualify, Somera will look to structure the investments through Opportunity Zone Funds.
For More Information Please Contact Somera’s Opportunity Zone Team: