The most talked-about facet of opportunity zone investing so far has been the 15% discount on capital gains invested in the zones if held for seven years, but that only applies for investments made by the end of this year. Some movement is already happening, like Plymouth Group’s purchase of the former Budd Co. factory where Bisnow held its Philadelphia Opportunity Zones and Capital Markets event last week.
As private equity firms try to put together huge qualified opportunity funds to take advantage of the new laws, time is running out before they can deploy the bulk of that capital for maximum tax savings. If an investor makes an opportunity zone acquisition and invests the necessary capital in improving the property, then holds that property for at least 10 years, all capital gains from that investment are untaxed.
Although dealmaking is well underway, the vast majority of capital sources planning to invest with opportunity funds are still sniffing for such opportunities.
Across Philly, there are smaller companies already at work to revitalize struggling areas, and if Kensington-based Shift Capital is any indication, they are getting more attention than ever before from such deal hunters. The growing group of national investors raising hundreds of millions to invest in opportunity zones must feel like a prize catch for community stakeholders like Quiñones-Sanchez, but Adler cast doubt on whether such capital sources would be the ones to get in bed with.