Sound West Group, a leading property developer and asset manager in Seattle, has launched Sound West Realty Capital, an investment firm primarily focused on the sponsorship of project-specific qualified opportunity zone funds, in partnership with securities and real estate investment industry veteran Greg Genovese.
Genovese, a 30-year veteran of the real estate securities industry, leads Sound West Realty Capital as principal and president. He has played pivotal roles in the creation and growth of some the country’s largest real estate capital groups.
Sound West Realty Capital’s opportunity zone investment strategy is the result of a comprehensive internal study initiated in March 2018 following the passage of the Tax Cuts and Jobs Act of 2017, which allows for the creation of opportunity zones in each of the 50 states. The Sound West study determined there are notable investor advantages and program structures available to best facilitate successful opportunity zone investments. The study also estimates the demand for this type of investment program will be significant.
“The timing is right for us to take this next step, as we’ve continued to grow our development and asset management business. We have built a reputation over many years of delivering above-average returns for our investors, while also providing socially responsible, investor-centric programs, and the launch of Sound West Realty Capital is a natural extension for our expertise,” says Wes Larson, Sound West CEO. “Our entry into the real estate securities capital markets is one we are well-suited and prepared for with Greg at the helm. I’ve worked with Greg for more than 20 years in the securities industry, and he is a phenomenal leader. His proven abilities to create and grow realty capital companies that are best in class make this venture a great match.”
Sound West Realty Capital’s first program, Sound West OZ Fund I, a multi-asset class project in the Greater Seattle area, is set to be available for investment in September 2018.
“All of the elements have come together to present an opportunity to build a company and investment platform that allows investors the opportunity to do well by doing good,” says Genovese. “The fact that we’re going to focus on socially responsible investments means a great deal to me and our entire team.”
A qualified opportunity zone fund is a new investment vehicle created as part of the Tax Cuts and Jobs Act of 2017; it allows people to invest their gains from prior investments into designated state opportunity zones. These investments provide significant tax benefits to investors and stimulate economic development and job creation. The tax benefits include a temporary deferral of taxes arising from gains invested in an opportunity zone, an increase in basis that reduces the amount of taxes ultimately owed in respect of the deferred gains, and a potentially permanent exclusion from taxable income of gains arising from the new investment in the qualified opportunity zone fund. The first set of opportunity zones, covering parts of 18 states, were designated on April 9. A portion of the Greater Seattle area has been designated an opportunity zone.
“I particularly like that Sound West is focused on project-specific programs supported by tax opinions. The tax advantages are outstanding, of course, and opportunity zone funds can be a real game changer, but I’ve always cautioned investors to not invest exclusively because of the tax advantages,” says Jonathon Morris, a professor in Georgetown University’s Master of Professional Studies in Real Estate program and a Sound West Realty Capital board member. “Rather, invest because of your belief in the project, the demographic drivers, the management and the exit strategies. History tells us that deals are successful because they are good deals and managed properly, period.”
