With Opportunity Zone REITs already starting to be formed, savvy investors and asset managers have been taking a closer look at the potential benefits of structuring an Opportunity Zone Fund as a REIT.
Here are some of the reasons that a sponsor might consider structuring an Opportunity Zone product whether a public or private offering as a REIT, as opposed to a partnership, limited liability company or other pass-through entity. Let’s talk about some reasons to put these two together to form an Opportunity Zone Fund that also qualifies as a REIT.
First, a REIT structure provides a great deal of flexibility on exit. So are Opportunity Zone REITs a path to the retail market? The short answer, again, is yes Opportunity Zone REITs should be considered as a possible path to raising retail capital. The simplified reporting requirements and the expanded set of potential exit structures make REITs an attractive investment vehicle both for investors generally and for investors in Opportunity Zone Funds.
There may, of course, be reasons not to use a REIT in a given deal, and other structures may provide other advantages and it is possible that future tax regulations may provide additional benefits to Opportunity Zone Funds formed as partnerships or LLCs.
Nevertheless, the benefits of a REIT structure are significant, and may especially be so for certain investors. When a client asks whether an Opportunity Zone REIT is a path to the retail market, the answer is “Let’s definitely consider it.”