Avanath Capital Management and MacFarlane Partners, two of the largest African-American owned real estate companies in the United States, have jointly filed with the SEC to create a new REIT. It is reportedly the first REIT to focus on opportunity zones, although other properties are also involved.
The company will "invest in, develop, renovate and manage mostly affordable apartment buildings and workforce properties in opportunity zones in dynamic US metropolitan areas," the file says.
The new company, titled Aspire Real Estate Investors, will be managed and advised by Aspire REIT Manager, a new venture created by affiliates of the two parent companies.
"We believe we will be the first Opportunity Zone fund to be listed for trading on a national stock exchange," the file said. “These sectors have historically been fragmented and underserved by institutional capital. However, they make up much of the U.S. multi-family market (by unit) and offer solid long-term fundamentals to generate attractive returns for investors.
"In addition, we intend to select and qualify the first publicly traded Opportunity Zone Fund REIT listed on a national stock exchange that we expect to provide significant tax benefits for our investors under the Opportunity Zone tax." Legislation."
The partnership will acquire an initial portfolio of nine apartment buildings in six states for $ 260.4 million in cash. The total estimated cost of the project for the first properties, including the initial purchase price plus development and refurbishment costs, is approximately $ 582.4 million.
Five of the Opportunity Zone properties in the original portfolio – Arbors at Cary, Academy at Waterford Lakes, Woodside Senior, Oak Village, and Seaport Village – are existing commercial properties that Entitled will acquire from an Avanath-managed private investment fund for a total purchase price of approximately 176, $ 4 million.
Long term, investment in and outside of opportunity zones will "focus on assets in high-growth metropolitan areas."
In particular, Entitled committed itself in its submission to improve the properties it acquired and at the same time to build new ones in “dynamic markets with limited supply”.
The company explained why it likes the affordable housing segment. "We believe that the affordable housing sector and the labor force housing sector offer attractive risk-adjusted returns with superior supply and demand dynamics and greater fragmentation of existing property than the multi-family market price segment."