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All Of The Stocks Are Tumbling — Except Real Estate

While the U.S. markets are in fear of a recession, investors seem to know one place they want to park their money: real estate stocks.

Of the 28 real estate stocks tracked by The Real Deal — a sample of real estate investment trusts, mortgage companies, brokerages and other real estate services firms — 15 saw an uptick. That’s despite the S&P 500, Dow 30 and Nasdaq showing slight losses as of 1:45 p.m. Thursday, August 15.

The Dow plunged 800 points on Wednesday, August 14, after the yield on the two-year Treasury note pushed higher than the yield on 10-year Treasuries on early Wednesday — a sign investors think it’s riskier to make shorter-term investments than longer-term ones. Markets have been on edge since last week, after President Donald Trump escalated the trade war.

Of the 15 real estate stocks that were up, Realogy saw the biggest gains. The brokerage conglomerate’s stocks were trading at $6.03, up 2.29 percent. But not all stocks were up. Mortgage loan company Ocwen Financial Corporation recording the largest drop of 4.5 percent, trading at $1.40 per share.

The Real Estate Select Sector SPDR Fund, an index that follows real estate investment trusts and real estate management and development companies, was trading at $38.19, up less than 1 percent from the market’s close Wednesday, August 14.

As for only REIT stocks, their returns were up 0.91 percent as of 1:25 p.m. Thursday, August 15, according to the FTSE Nareit All REITs Index. But compared to last week, REITs overall may be losing: Last week the index’s domestic returns were up 1.67 percent, but so far this week they’re down 1.72 percent.

While a yield curve inversion may not always signal a recession, investors will be watching what the Federal Reserve does. Real estate stocks ticked up earlier this month when Fed chief Jerome Powell said there may be a possible cut in interest rates.

Last week, signs of an escalating trade war between the U.S. and China caused real estate stocks to dip but then largely performed well compared to the overall market.

 

Source: The Real Deal

Revised Plans For Delray Industrial Project Adjacent To Dakota Homes Don’t Appease Residents

The county zoning commission unanimously approved revised plans for an industrial-commercial project that will abut the Dakota Homes development west of Delray Beach despite strong opposition from area residents who fear the project will decimate their property values and destroy their quality of life.

Resident after resident told the zoning board they never would have bought in the 387-unit GL Homes development, currently under construction, had they known that the land adjacent to them was zoned industrial. Some of the homeowners paid as much as $600,000 for their homes.

“We knew something was going to be built there but not an industrial park,” said Monica Belisle, whose home on Salty Bay Drive is about 250 feet from the project.

At issue is whether West Delray Collision can move its operations across the street to a 10-acre site on the south side of Atlantic Avenue about .2 miles east of State Road 7. The 164,000-square foot project also calls for a 35-foot tall self-storage facility, a car wash, two warehouse buildings and a tire repair facility.

The Board of County Commissioners will decide the fate of the project Thursday, Aug. 22.

The Zoning Commission forced West Delray Collision to revise its plans so that its operations were farther away from Dakota Homes after residents pleaded for help at a July meeting. The revisions include:

  • Increasing the setback from 100 feet to 170 feet.
  • Increasing the buffer to 50 feet.
  • Reducing the size of the self-storage facility by 12,000 square feet.
  • Adding a second canopy of trees.
  • Building a 50-foot wall on the east side of the property next to Our Lady Queen of Peace Church.
  • Moving the dumpster from West Delray Collision farther away from Dakota.

But the concessions did nothing to appease the residents.

 “It’s like dying by cyanide or electrocution,” he said. “We feel like we are being bulldozed,” said Boca Raton cardiologist Steven Pollack, who like Belisle also lives on Salty Bay Drive:

Pollack and others claim traffic congestion is a nightmare on Atlantic Avenue, which is only one lane in each direction. The state has plans to widen the heavily traveled highway but that project is not expected to start until sometime in 2022 and may take two or more years to complete.

It is a big mistake to put more traffic on Atlantic Avenue before it is widened, he said, noting that people may not get to nearby hospitals in time for treatment because of the traffic congestion.

“Moving the auto repair operation 70 feet away won’t make a difference,” said Matthew Belisle.

He was concerned with the 7 a.m. to 7 p.m. operations Monday to Saturday as well as noise issues.

“This is fundamentally unfair,” Belisle said. “It will financially ruin us.”

But Greg DiMaria, the owner of West Delray Collision, said he is trying to be as neighborly as he can be. As for noise, he said all of the auto-body repair work will be done inside a concrete building.

The vacant land, which is in the Ag Reserve, had been zoned agricultural-residential but in 2017, at around the time GL began selling homes at Dakota, the county approved a zoning change to light industrial.

Donald Bryan said his family has owned the land for more than 50 years. He said future land use maps have designated the parcel as industrial ever since 1980.

“This property has right to be developed based on property rights,” Bryan said. “What is fair is fair.”

The opposition to the project is intense. Zoning staff received 66 comments in opposition; only 1 comment in support. Petitions with more than 515 signatures opposing the project were presented to the zoning board from parishioners at the nearby church and an on-line petition from 231 Dakota Homes’ residents.

Four Seasons HOA President Art Goldzweig testified against the project in July. He told The Post on that he was disappointed with the zoning commissioners. He said he can’t understand how the board could ignore the outcry of the residents and the parishioners of Our Lady Queen of Peace.

“This is shameful behavior,” Goldzweig said. “They should all resign.”

He was also disappointed with Alliance of Delray Residential Associations for supporting the project as long the concessions were made. This is not a project that the association should be supporting, he noted.

 

Source: Palm Beach Post

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Report: South Florida Investors Are Still Wary Of Investing In Opportunity Zones

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Months after the Treasury and the Internal Revenue Service released the latest round of regulations for Opportunity Zones, South Florida investors and developers are still wary enough about the rules to prevent them from investing.

A report by Bilzin Sumberg and the Urban Land Institute found that only 28 percent of respondents surveyed said that they intend to invest Opportunity Zones and only 7 percent have already done so.

The reason: investors still do not understand basic questions about the program. Nearly one third of the respondents cited uncertainty as their top reason for not investing in Opportunity Zones. The report surveyed 72 developers, investors and other professionals in June who specialize in real estate and finance in Florida.

One of the biggest questions that participants still have is around refinancings. Although the most recent regulations clarified how developers in an Opportunity Zone can refinance a property and qualify for the tax benefits, the report shows that the rules around refinancings are not understood by some members of the real estate industry.

“A lot of people still hadn’t fully digested the second set of regulations,” said Josh Kaplan, a corporate and tax attorney at Bilzin Sumberg, a Miami-based law firm.

Another reason that investors are avoiding Opportunity Zones is due to the rapid price appreciation of land in designated zones in South Florida, according to Kaplan.

Kaplan said he’s seen reports that land prices in South Florida Opportunity Zones have increased by as much as 30 or 40 percent, making it much more difficult for deals to pencil out for investors.

The Opportunity Zones program allows developers and property owners to defer and possibly forgo paying some of their capital gains taxes, or taxes resulting from the sale of certain assets. To reap the full tax benefit, those who invest in the more than 8,700 Opportunity Zones around the nation must hold the asset for at least a decade.

In Miami-Dade County, Opportunity Zones span distressed areas such as Opa-locka, parts of Overtown, North Miami Beach and Carol City, along with areas where major development is already taking place, like parts of Aventura, Edgewater and the Design District.

From April through September 2018, property sales in those areas tallied $942 million, a 25 percent increase from the same period a year earlier. Several of the Opportunity Zone tracts encompass some of the wealthiest enclaves and megaprojects in Miami, such as Turnberry Associates’ Aventura Mall and the Magic City Innovation District, a planned $1 billion development in Little Haiti.

The report shows that multifamily, however, is the favorite asset class for Opportunity Zones investors. About 82 percent of respondents view mixed-use and multifamily as the asset class most ripe for redevelopment.

Kaplan said he also expects to see more Opportunity Zones deals to close by the end of the year, as investors look to take advantage of the biggest tax benefits, which expire at the end of 2019.

 

Source: The Real Deal

Where South Florida Cities Rank For Tech Talent

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South Florida cities rank among the top tech markets in North America, according to a recent CBRE study.

The commercial real estate services and investment firm used 13 metrics to create a score based on the competitive advantage of each market and their ability to attract and grow tech talent pools.

Miami and Fort Lauderdale are gaining tech jobs and are seeing increases in their millennial workforce, the report revealed.

While these markets pose vitality in the future, they are expensive to operate in for tech workers and employers. Among the top 10 most expensive office markets on the list, Miami was the only small tech market with an asking rate above $35 per square foot.

Click here for a SFBJ slideshow to find out where Miami and Fort Lauderdale rank nationally for tech talent.

Click here  for CBRE‘s full report.

 

Source: SFBJ

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Blackstone Is Already Selling Pieces Of The $18B GLP Industrial Portfolio

The ink isn’t dry on Blackstone Group’s $18 billion buy of a U.S. warehouse portfolio, and it’s already negotiating to sell part of it.

The company, which finished its transition into a corporation this month, is drumming up interest from potential buyers for pieces of the GLP Pte portfolio, Bloomberg reported. Prologis is in private discussions to buy one such portfolio, valued at $1 billion.

Blackstone’s $18.7 billion deal for the Singaporean company’s 179 million-square-foot warehouse portfolio is one of the largest industrial real estate deals ever.

Selling non-core or non-strategic pieces of a recently required purchase isn’t uncommon. Blackstone applied the same strategy in 2007 when it sold off parts of its $40 billion acquisition of Equity Office Properties Trust.

On the whole, the warehouse sector has seen little supply, high demand and high prices, with available industrial and logistics real estate rising slightly for the first time in 34 quarters, according to a CBRE report. Demand for warehouse and distribution reached an 18-year high in 2018.

Large owners are optimistic that there will continue to be institutional investment in industrial real estate. As Prologis negotiates for a piece of Blackstone’s new holdings, it’s also in advanced talks to buy another $4 billion portfolio from Black Creek Group which spans 37.6 million square feet.

Colony Capital is weighing the sale of its $5 billion industrial in holdings on the heels of selling another warehouse portfolio for $104.6 million.

 

Source: The Real Deal

Prolific Industrial Builder Bridge Development Plans New Facility In Davie

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Prolific industrial builder Bridge Development Partners LLC purchased 34 vacant acres for $36.9 million to build a three-building center in Davie.

Bridge Point 595 will be southwest of Interstate 595 and Florida’s Turnpike. The 677,314-square-foot industrial park is set to open in the third quarter 2020. Two buildings will measure 290,295 square feet each and the third will be 96,724 square feet.

Chicago-based Bridge Development bought the land from Forman Industrial Land LLC, an affiliate of the Forman family whose late patriarch Hamilton Forman was a prominent South Florida landowner who ventured into real estate projects.

Bridge Point 595 speaks to the healthy South Florida industrial market, which has some of the lowest vacancy rates among all asset classes. Population growth, e-commerce and the scarcity of large parcels are boosting the sector. That’s heightened interest from institutional investors, which have been scooping up properties and encouraged merchant builders who build to sell.

Bridge’s construction spree since 2012 added 2 million square feet in Miami-Dade and Broward counties. Bridge recently sold its 221,815-square-foot Bridge Point Riverbend west of Interstate 95 in Fort Lauderdale to institutional investor ASB Capital Management LLC for $38.2 million.

Its other projects include Bridge Point Commerce Center, a mammoth industrial project on 185 acres southwest of Florida’s Turnpike Extension and Northwest 47th Avenue in Miami Gardens. The 1.1 million-square-foot first phase will be finished by month’s end. Future phases will take the total size to 2.1 million square feet.

 

Source: DBR

Sizzling Residential Real Estate Market Has Builders Thinking Twice About Commercial Projects

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How hot is the residential real estate market in parts of western Palm Beach County?

Hot enough that builders are seeking zoning changes to permit them to abandon already approved commercial projects and convert them into high-density residential developments with limited commercial parts.

 “The shift shows that builders can get a greater return on their investment by going residential,” said Jesse Saginor, a Florida Atlantic University professor who monitors real estate trends in South Florida. “There is not much of a wait to find buyers, regardless of the price point, for new homes in Palm Beach County.”

The latest example involves the vacant northwest corner of Hypoluxo and Lyons roads in suburban Lake Worth. It may soon be the site of Windsor Place, a 393-unit development that calls for 157 townhomes, 236 rental units and 30,192 square feet of commercial space, including a grocery store and a drive-through restaurant.

In 2005, previous owners obtained approval for 115,078 square feet of commercial space that included a 41,000-square-foot anchor store along with 184 townhouses. The new proposal seeks to more than double the number of residential units and represents a significant decrease in the amount of commercial space. The parcel is one of the last remaining, sizeable, undeveloped tracts west of Lake Worth Beach.

The development company behind the project is Hatzlacha WP Holdings, founded by Charles M. Scardina, once a senior vice president of Ansca Homes. Scardina was involved in a lengthy legal battle with his former partners, which settled in late 2017. Shortly after that, he bought the 40-acre parcel for $15.2 million.

But Scardina now says in a report filed with the county that the initial plan will result in “an improper use of the site” as there is too much other commercial development in the area. The report noted the changes were necessary because the original project “too closely mirrored” the adjacent Town Commons shopping center on the east side of Lyons Road.

Earlier this year, another company owned by Scardina made similar arguments for his Terra Nova project at Hagen Ranch Road and Atlantic Avenue west of Delray Beach.

Scardina’s Principal Development Group proposed a change from a mostly commercial project to one with 275 rental units and a drive-through restaurant. A group of area homeowner associations banded together to create the Common Sense Development Coalition to fight the plan on the grounds that the residential density is too intense. Scardina is working with coalition members to see if he can address their concerns.

And recently, another commercially approved project at Jog Road and Boynton Beach Boulevard is undergoing a change as the new owners seek permission to build an assisted living facility, which will reduce land devoted to commercial uses by 4 acres.

 “There is little land left in Palm Beach County to build homes,” said residential builder Alex Akel. “It is possible that residential builders may even buy up existing shopping centers and convert them into project that would include housing.”

Much has been written about how the tax law changes have fueled a luxury-home boom in South Florida but Saginor said the impact has been felt across all price points. Saginor of FAU said there is just as much a demand for homes between $300,000 and $800,000 as there are for luxury homes.

Additionally, with the rise of online shopping, brick and mortar stores are in decline. Strip center stalwarts Toys R Us and Sports Authority are gone. Booksellers, video stores and record shops are nearly extinct. Macy’s, Sears, JCPenney and Office Depot are shrinking.

Meanwhile, it is not clear whether Scardina will face the kind of fierce opposition for Windsor Place that he faces at Terra Nova west of Delray Beach. Plans call for Windsor Place to abut the 1,100-plus unit development at Bellagaio, which is northwest of the proposed development. The project calls for apartments in seven three-story buildings with each building containing 32 or 34 units.

A 4-acre lake separates the two developments. Access will be from both Lyons and Hypoluxo roads. The grocery store will be at the intersection. According to the builder’s traffic study, the development will generate an additional 3,738 trips a day on the already heavily congested Hypoluxo-Lyons road intersection.

 “Bellagio and other area HOAs are in active discussions with the developer,” said Pam Rothman, president of the Bellagio Homeowners Association. She declined further comment.

Repeated efforts to obtain comment from Scardina and his consultants were unsuccessful. Scardina asked the county Planning Division on June 18 for more time to submit detailed plans as he seeks the support of Bellagio and other nearby developments — Valencia Shores, Savannah Estates and Villagio.

The zoning changes would result in:

  • A significant increase in housing density.
  • New zoning classifications for both residential and commercial parts of the development.
  • Elimination of 59 guest parking spaces for the rental units.

If approved, the builder expects Windsor Place to be completed in 2023.

 

Source: Palm Beach Post

These Are The Top Issues Impacting Real Estate In 2019

The Counselors of Real Estate, an international organization for commercial real estate professionals, ranked what its membership body recently voted on as the current and emerging issues it expects to have the most significant impact on real estate.

Topping the organization’s list in a detailed report just released was U.S. infrastructure, which it characterized as severely lacking, and lagging behind many other developed countries.

“Inadequate infrastructure creates a hard ceiling to economic development, and real estate values are tied to sustainable growth,” Julie Melander, the 2019 chair of The Counselors of Real Estate, said in a press release about the ranking.

The nation’s roads, bridges, tunnels, railways, airports, the power grid, water systems, and levees are all in need of improvement and have failed increasingly often, the organization said.

President Trump has pledged to address infrastructure woes, and the White House and Congressional leadership have discussed funding for infrastructure to the tune of as much as $2 trillion, but action commensurate with the scale of the problem has not materialized.

Housing in the U.S. was the second item on the list, and the organization put an emphasis on the impact of growing inequality and the rising tide of unaffordability in housing, particularly for the middle class.

“Housing affordability is threatening the stability of the middle class, which will hit other parts of the economy as well,” Melander said.

The recently-imposed limit on state and local income tax deductions, along with Baby Boomers having trouble selling their homes were additional housing-related challenges outlined by the organization. Challenges related to weather and climate were third on the list, while slow technological progress including outdated physical plant systems in many buildings, economic challenges and high levels of institutional and personal debt also made the list.

 

Source: Miami Agent Magazine

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‘It’s Like The Tulip Craze:’ South Florida Developers Expect Opportunity Zone Land Values To Wilt

Developers are finally putting shovels in the ground and deploying capital in Opportunity Zones in South Florida and across the country.

But with 124 qualified Opportunity Zones in South Florida, developers, brokers and investors at a recent Bisnow panel said they are largely focusing their attention on projects near Fort Lauderdale and Delray Beach’s urban core.

Jaime Sturgis of the Fort Lauderdale-based brokerage Native Realty said his company is involved in about 10 Opportunity Zone projects. Most of the projects are around 13th Street and Flagler Village in Fort Lauderdale, where interest in the area was already promising and density is high.

“There is a finite amount of land in Flagler Village,” Sturgis said during the Opportunity Zones event held at Sistrunk Market & Brewery in Fort Lauderdale. “That is another reason Opportunity Zone investors are flocking to the area.”

The Opportunity Zones program was part of President Trump’s tax plan, and was designed to encourage investment into low-income and distressed areas. Real estate developers quickly became enamored with the program, and large real estate investment funds such as EJF Capital and RXR Realty sought to raise substantial Opportunity Zone funds.

The benefit for developers and investors in an Opportunity Zone is the ability to defer and potentially forgo paying capital-gains taxes. Yet some owners of property in Opportunity Zones are listing them at prices that are much higher than investors want to pay, panelists said.

“Some folks think that the Opportunity Zone supercharges the value of your land,” said Dale Reed, an executive at Merrimac Ventures. “They are unrealistic on what their land deals are worth.”

Daniel Lebensohn, co-founder of Aventura-based BH3, is planning to build a $100 million mixed-use project in an Opportunity Zone on West Atlantic Avenue in Delray Beach. He said that high land prices across South Florida will come down in the future once property owners realize that smart investors won’t pay the prices property owners are demanding.

“It’s like the tulip craze” said Lebensohn, referring to tulip mania in the 17th century, when tulips reached ridiculously high prices and then fell sharply.

Panelists also agreed that Opportunity Zone incentives alone would not lead them to invest in a project. Most already had secured the land and had the projects penciled out before the legislation came out in 2017.

“Merrimac Ventures invested in two projects before the regulations were in released,” Reed said. “The two projects we did were because they were in the Community Redevelopment Agency area — that’s really the driving force with those projects initially.”

Nick Rojo with Affiliated Development, who is building SIX13, a 142-unit workforce apartment complex at 13 Northwest Third Avenue near Fort Lauderdale’s Flagler Village, pointed out that Affiliated’s project is getting $7 million in gap financing from the Fort Lauderdale Community Redevelopment Agency to complete the project.

“Still,  the program helps make deals more feasible, especially since rents have gone up in Flagler Village and other areas,” Sturgis said. “The Opportunity Zone is the icing on the cake, its makes the pot that much sweeter.”

 

Source: The Real Deal

Beckham Group Looks For More Soccer Space In Broward

A South Florida county has said no to soccer legend David Beckham.

Beckham’s fledgling soccer franchise Inter Miami CF is in the market for more space in addition to its plans to replace Lockhart Stadium in Fort Lauderdale for one of its teams and to build a stadium in Miami for a second team.

Broward commissioners rebuffed a last-minute attempt by the franchise to land a contract for the county’s Central Broward Regional Park in Lauderhill. The park has a cricket stadium that can double as a soccer venue and also has practice fields.

Club officials said their most pressing need is a site for its 150-member youth academy, which is supposed to start training in August and start playing games in September. The academy has six groupings, from under-12 to age 19. The franchise could also use extra room for its two professional teams until the Fort Lauderdale and Miami complexes are completed.

Beckham is bringing a Major League Soccer team to South Florida starting next year, along with a United Soccer League, League One team that will act as a farm club for the MLS team. The United team’s home will be at the new Lockhart Stadium, but the MLS team will also need to play there until the Miami stadium is built.

The organization offered to have 20 United games a year at the Lauderhill park in the first two years of a contract, while its MLS team is using the Lockhart site, then to hold eight United games and four MLS pre-season games at the park in future years, when the Miami stadium is done.

Except for Vice Mayor Dale Holness, Broward commissioners didn’t even want to consider the proposal. They chose instead to sign an agreement with the group recommended by county staff after a lengthy and open selection process: US Champions Soccer Academy (PSG Academy Florida), which is affiliated with FC Miami City, a United Soccer League, League Two team.

U.S. Champions will pay the county at least $1.085 million over the initial five-year contract, plus a portion of its concession revenues. It will also make $936,500 in improvements, including two lighted synthetic turf soccer fields, by 2025. The group’s sporting director is Wagneau Eloi, the former head coach of the Haitian national team and a professional player in France.

Vice Mayor Dale Holness said he wasn’t trying to have Inter Miami selected over US Champions, which runs its own academy. The US Champions academy is fee-based, while the Inter Miami academy does not charge, he said. It is run in conjunction with the MLS and academy members are selected through try-outs.

“I think that both entities could co-exist at the park,” Holness said.

They still might. The US Champions contract says the county has the right for two years “to schedule and book soccer games in the stadium and practice sessions on fields 3 and 4 that involve the USL team affiliated with the Inter Miami Major League Soccer team.” Inter Miami said it doesn’t expect any delays in constructing the Lockhart Stadium replacement.

“With Lockhart scheduled to be completed in early 2020, we are currently having open conversations with many parks to serve as an interim facility for our academy, which begins training this August,” said Paul McDonough, Inter Miami’s sports director.

The new Lockhart may be able to handle both the United and MLS team schedules until a Miami stadium is built, but McDonough said it would be better to have an alternate site for the United games.

McDonough also anticipates interest from more MLS clubs to come to South Florida for pre-season training, which starts in January, so he said additional space would come in handy.

The US Champions soccer contract comes as the county tries to get more use out of its Lauderhill stadium and fields. A separate group has a contract to schedule cricket games and tournaments there.

 

Source: SunSentinel

CenterPoint Properties Breaks Ground On Logistics Park

CenterPoint Properties has just broken ground on Port Everglades International Logistics Center, a two-building industrial and distribution facility totaling 296,207 square feet in Hollywood.

The company signed a ground lease with Port Everglades of Broward County in May 2019 and the project is slated for delivery in Spring 2020. RLC Architects headed up the project design and ANF Group will lead construction for CenterPoint’s first ground-up project in Florida. CBRE will handle property leasing, while Avison Young’s Senior Vice President Eric Swanson and Vice President Chip Faulkenberry will provide project management and development services.

Situated at 3413 and 3423 McIntosh Road, the development is close to Interstate 595 and Port Everglades Expressway, minutes away from the port and Intermodal Container Transfer Facility. The location is convenient for containers arriving at Port Everglades that require inspection services from U.S. Customs and U.S. Department of Agriculture.

The two buildings will sit on a 16.5-acre parcel. The building located at 3413 McIntosh Road will be a speculative industrial property with 151,200 square feet. The second development will total 145,007 square feet and is 100 percent preleased, with International Warehouse Services occupying 142,454 square feet. The other tenant will be the Foreign Trade Zone No. 25 at Port Everglades which will take up 2,553 square feet. John Dohm with Florida Transatlantic Holdings LLC advised the port authority on the relocation and facilitated the public-private partnership.

ASB Capital Management just recently purchased a 221,542-square-foot distribution facility located 6.2 miles northwest of the logistics center. The 2018-completed warehouse commanded $38.2 million.

 

Source: CPE

The New Regulations Have Kick-Started More OZ Investing In Fort Lauderdale

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When the Treasury Department released its most recent guidance on opportunity zones in April, investors were relieved: The rules left a lot of leeway for taking advantage of the program’s tax breaks.

In Fort Lauderdale, that’s been translating into deals this spring.

The rest of the year should be busy as well, because program rules require people who harvested gains from hedge funds and partnerships in 2018 to reinvest them in opportunity zones by the end of June. And to reap the maximum benefit from the program — a 15% reduction on taxes — money has to be invested in opportunity zone funds by the end of 2019.

“The new proposed rules have been a catalyst for deals in emerging neighborhoods all year,” said Native Realty CEO Jaime Sturgis. “Native Realty is working on developments and property assemblages in zones in Flagler Village and the 13th Street and Sistrunk corridors. The latest IRS guidance made some significant clarifications and helped the local market become more comfortable, and even more bullish, about the program.”

Sturgis will be a featured speaker at Bisnow‘s upcoming Opportunity Zones event in Fort Lauderdale June 20. Other speakers include BH3 co-founder Daniel Lebensohn, Merrimac Ventures Senior Vice President Dale Reed, Affiliated Development President Nick Rojo and Jorge Gomez-Moller, general counsel for Driftwood Acquisition & Development.

Miami-based Driftwood, a private firm specializing in hotel assets, this month launched its initial qualified opportunity zone fund, Driftwood QOF, with a target raise of $50M. The firm is already invested in two opportunity zone projects: a joint venture to develop a 218-room, dual-branded hotel called Home 2/Tru by Hilton in Fort Lauderdale, and the redevelopment of a 10-story office building into a hotel in Wilmington, Delaware.

“People are out there looking for deals,” Rojo said. But he is wary that “land sellers are unrealistic as to the actual benefit of the program.”

Rojo said Affiliated Development had a deal in the works for years to build a workforce housing apartment building in the Sistrunk neighborhood; it just so happened that it fell into an opportunity zone when the program was announced.

Affiliated closed in April without waiting for the latest round of regulations. Its 220K SF building is beginning construction and should open in late 2020.  Rojo said his deal was complicated because it involved Community Redevelopment Authority grant money, but that some of the things he learned as they hit speed bumps in the development process was that “most investors from sophisticated family offices aren’t going to invest money in a blind pool.” He said his investors each set up their own LLCs, which functioned as individual funds, and then collectively invested in the opportunity zone business.

In FATVillage, a few well-known Fort Lauderdale names announced this month that they consolidated 5.2 acres in downtown to capitalize on a parcel that is in an opportunity zone. Alan Hooper and Tim Petrillo, who are co-founders of Urban Street Development (behind FATVillage projects Avenue Lofts, Foundry and Mill Lofts) and partners in The Restaurant People (Yolo, Boatyard and more), announced they forged a strategic partnership with Doug McCraw and Lutz Hofbauer, who are credited with creating the FATVillage brand and its art walk.

Without disclosing many specifics, Hooper said in a statement that they have retained consultants and architects, and will “combine food with art and technology (FAT) and develop a neighborhood where people and businesses of all sizes can find a place to create and collaborate, to live and socialize.”

The Bisnow Opportunity Zones event will be held at Sistrunk Marketplace & Brewery, a long-awaited, 40K SF food hall/brewery/meeting space with a DJ academy, cooking classes, and art and music events.

 

Source: Bisnow