Virtua Partners, a global real estate private equity investment firm, has launched its first-ever Opportunity Zone Fund. This fund is the first vehicle designed to invest in the newly created Opportunity Zones — one of the lesser-known provisions of the Tax Cuts and Jobs Act of 2017. Virtua Opportunity Zone Fund I aims to raise $200 million and is designed to utilize the tax-savings opportunities created by the tax-reform law.
Pursuant to the Tax Reform Act, governors of each state have designated Opportunity Zones, which are specific geographic areas eligible for tax-advantaged, long-term investment. Investors in qualified Opportunity Zone Funds receive a basket of tax benefits, including deferral of current capital gains, a tax reduction of up to 15 percent on current gains, and no capital gains taxes on appreciation if the investment is held for 10 years.
“For investors, this is a unique opportunity to capture a generous break on capital-gains taxes, while investing in real estate that stands to benefit from a broader government mandate for growth,” explains Derek Uldricks, president of Virtua Capital Management. “At the same time, investors can also make an impact by supporting the improvement of local communities and economies with their Opportunity Zone–directed investments.”
Under the Tax Reform Act, investors can defer and reduce capital-gains taxes when they reinvest profits into Virtua Opportunity Zone Fund I within 180 days following the sale of a prior investment. Unlike 1031 Exchange transactions, an investor does not have to invest the entire previous investment. Investors can use capital-gains proceeds from any asset class — not just real estate — to capture the benefits of the Opportunity Zone Fund provisions.
“Investors should consider tax efficiency when making investment decisions. Virtua Opportunity Zone Fund I is designed to improve after-tax returns for long-term investors,” says Uldricks. “We believe that investing in Virtua Opportunity Zone Fund I can be a key wealth building strategy for tax savvy investors.”
Virtua Opportunity Zone Fund I will primarily invest in residential rental property development (multifamily and single-family rental), hospitality and office. The geographical focus will be high-growth Sunbelt markets, such as Atlanta, Austin, Dallas, Orlando, Phoenix and San Antonio.
