Finding Uncommon Value in Untapped OZ Markets, with Four Points Funding

Stephanie Copeland

What are some of the economic advantages of rural multi-asset multifamily and outdoor-focused hospitality Opportunity Zone fund investing?

Chris Montgomery and Stephanie Copeland are partners at Four Points Funding, who earlier this year was awarded the Forbes OZ 20 Grand Prize for Top Rural Opportunity Zone Fund Catalyst.

Click the play button below to listen to the condensed audio recording of the webinar.

Or, for the full video recording, click here.

Episode Highlights

  • The economic advantages of multifamily investing through an Opportunity Zone fund.
  • Why investing in small markets may generate outsized returns, compared to larger funds.
  • Advantages of investing in a multi-asset fund with a defined portfolio.
  • How new norms around remote work are accelerating the increased demand for housing in rural markets.
  • Why outdoor-focused hospitality is poised to thrive, while traditional hospitality is lagging.

Featured on This Episode

Video Recording

Sponsor a Future Webinar

Would you like to sponsor a future webinar like this one, so you can promote your Opportunity Zone fund or deal to the OpportunityDb network? Email [email protected] to request more information.

Industry Spotlight: Four Points Funding

Four Points Funding

Founded in 2013, Four Points Funding invests in real estate across Colorado’s emerging communities, in particular the state’s Western Slope. They are developing a series of multi-asset Opportunity Zone funds focused on rural multifamily and outdoor-focused hospitality located primarily in Grand Junction, Durango, Avon, Estes Park, Buena Vista, and Glenwood Springs.

Learn more about Four Points Funding

About the Opportunity Zones Podcast

Hosted by founder Jimmy Atkinson, the Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in opportunity zones.

Webinar Transcript

Jimmy: Welcome to the Opportunity Zones Podcast. I’m your host, Jimmy Atkinson. Today’s episode is a condensed audio recording of a live Opportunity Zone fund pitch webinar sponsored by Four Points Funding, originally recorded on July 14th. For the complete version of this webinar in video format and to learn more about how you can present your Opportunity Zone fund or deal to the OpportunityDb network in a future webinar just like this one, head over to Enjoy.

Hi, I’m Jimmy Atkinson from the Opportunity Zones Database, and also host of the “Opportunity Zones Podcast” at Welcome to today’s webinar, “Finding Uncommon Value in Untapped Markets.” Today’s webinar is sponsored by Four Points Funding.

Earlier this year, Four Points was awarded the Forbes OZ 20 Grand Prize as the best rural Opportunity Zone funds, so I’m very pleased to have two of their partners with us today.

Some of the things that we’ll be talking about today include the economic advantages of multifamily investing through an Opportunity Zone fund, why investing in small markets should generate outsized returns versus larger funds, advantages of investing in a multi-asset fund with a defined portfolio, and how new norms around remote work, especially with the COVID-19 pandemic, are accelerating the increased demand for housing in rural markets. And we’ll also touch upon why outdoor-focused hospitality is poised to thrive while traditional hospitality lags.

Chris Montgomery will be one of our speakers today. He’s the founding partner at Four Points Funding, which is a Forbes OZ 20 Grand Prize award-winning Opportunity Zone fund investing at scale in Colorado’s emerging communities.

And Stephanie Copeland is our other presenter today. Stephanie is also partner at Four Points Funding, and previously she was appointed by former Colorado Governor John Hickenlooper as the executive director of the Colorado Office of Economic Development and International Trade. She was instrumental in the nomination of the State of Colorado’s Opportunity Zones.

I’m very pleased to have both of them with us here today. So Chris, if you wouldn’t mind, you can begin screen sharing, and please take it away.

Chris: Thanks, Jimmy. It’s nice to be with you again and be with your listeners. I’m especially pleased to be joined by my partner Stephanie today. We’re excited to talk Opportunity Zones and to tell everybody about what we’re doing in Colorado. Happy to be here. So, thank you for putting this together.

Just a quick introduction of who we are. First, Jimmy mentioned some of the things that we’re going to talk about. So, Four Points Funding, we form the Opportunity Zone. Stephanie, in particular, had a chance to collaborate on the implementation of this Opportunity Zone, so it’s a pretty unique chance if you’re an investor or just an interested person on Opportunity Zones to ask questions to somebody who had a chance to be instrumental in setting the zones. I’ve got a long background in real estate, particularly in western Colorado, which is where our fund is based.

We have a strong team, and I think the team is something we’ll… We won’t go through everybody’s bio today, but we’ll talk about quite a bit the importance of having a strong team as you put together a fund and, in particular, having strong ties to the communities that we’re in. We’re a role-based fund. And the ability to have boots on the ground to be in these communities working to solve the problems in the communities is really the best way to have an impact and to have strong return for your investors.

We’re also advised by a real strong team of investors, we’re gonna talk about both the line of credit and the advice that we get from the team that we’ve put around as seasoned investors in Colorado.

And as we talk today, I’m gonna talk a little bit about us. We’re gonna talk about the fund, the fund structure, spend a little bit of time on the educational topics Jimmy talked about. And then I’m gonna turn this over to Stephanie, who’s gonna talk really in-depth about the portfolio of our specific projects and our specific funds. So, we want to be really transparent and really detailed about what we talk with you guys about today. We appreciate everyone being here.

Jimmy: Chris, before we move on, I did want to interrupt with our first poll question today. So I’m gonna launch that now and everybody can click on their answer really quickly here.

What is your experience level with multifamily investing, multifamily residential investing? Very experienced, somewhat experienced, or no experience? We’ll get a good pulse of the room here.

And the results are getting shared now. So, we’ve got about only 20% of the audience considers themselves very experienced with multifamily investing. So, a lot of people who are only somewhat experienced or no experience at all. So, Chris, that’ll help you tailor your presentation for our experience level with the attendees today.

Chris: Fantastic. Thanks, Jimmy. So, let me tell you what I’m not gonna talk about. I’m not gonna go into a lot of depth about Opportunity Zone tax benefits. I’m assuming that most of you are aware of the details of the tax benefits. If you’re not, Jimmy has had a series of podcasts with the national experts on it. Great place to learn more.

I’m gonna mention a couple of things that I think most of you will be familiar with the basic structure of Opportunity Zones, the deferral, the reduction, and the elimination of capital gains. Everything that we talk about today, when we talk numbers, we talk about the return on your investment, the internal rate of return. Any numbers that we use, we’re gonna be talking about those prior to the Opportunity Zone tax benefits.

So, we have a pro forma of a 12% IRR, for instance, that’s gonna be net of any fees we may have, but before all of the significant tax benefits. And we do that because everybody’s tax situation is a little bit different. But the two things I did want to point out, one is really the most important one for us is that to maximize these tax benefits requires a decade long hold. So, 10 years is a substantial period of time. Everything that we do in this presentation, and that we do with the fund is oriented around long-term assets and a long-term hold for those assets.

The other thing that I want to point out because we are a real estate fund, one of the things that gets overlooked many times when you see these benefits, there’s really a fourth benefit. And that’s if you hold your investment in this fund for 10 years, you get to avoid depreciation recapture. So, I promise not to get tax wonky on anyone today. That’s a really significant benefit of investing in a real estate fund is that you not only get to take depreciation along the way, you can avoid recapturing that depreciation at the end. And it’s an often overlooked benefit.

But primarily I wanted to mention that as we’re talking about benefits, every number that we use will be prior to the Opportunity Zone benefits. Those will be layered on as a significant bonus. Our basic premise is that the Opportunity Zone tax benefit is massive, it’s a significant benefit, but it doesn’t do any good if the underlying real estate investment or business investment that you’re making doesn’t make sense.

So, every investment that we’re talking about, every project that we’re doing, we believe it stands alone on its own and then benefits from the Opportunity Zone incentive. So, our value proposition, what makes Four Points Funding unique, we start with our investment thesis, and it’s really around inefficiencies and efficiencies. We’re in small markets. Those are smaller markets that are typically very difficult for larger funds to invest into…by their nature forced to invest in a really large scale. Our efficiencies are investing in what have been inefficient markets, but are really high-value markets. We’re gonna talk quite a bit about why the smaller markets make sense.

One piece of that is the exposure to under the radar multifamily housing projects. People are bringing us projects, we’ve been established in these communities. Housing and outdoor-focused hospitality are the focus of our current fund. This is our second Opportunity Zone fund. So, for today, we’re gonna be talking exclusively about multifamily housing, as well as the outdoor-focused hospitality. And in our case, a big piece of our value proposition is that we not only have a defined…we have a defined portfolio of projects, we’re able to do that in each of our funds because we go out, use bridge capital from a very friendly family office that wants to support Opportunity Zone growth and economic development in the markets that we’re in.

We then go secure the projects, have control over the projects. So, somebody invest with us, they’re investing into a defined portfolio of funds. We now have over $150 million pipeline of potential investments planned for future Opportunity Zone funds as well. So, though we’re talking today about fund two, which has three projects in it, we’re also working on our pipeline for fund three and for fund four. We’ll have a series of multi-asset Opportunity Zone funds.

I mentioned the partnership, and I think it’s worth bringing back up, there’s a group called Zoma Capital. What they’ve done is they’ve allowed us to use really a warehouse line, they’ve invested into our fund as a general partner interest. They’re a passive general partner, but they’ve provided capital to us. It really allows us to go out and secure projects. We can go out, use that money to buy the land, to move through pre-development, even to buy pre-existing assets.

So, as we take control of those, we’re not going out. We’re solving what we call… I believe when I talked to Jimmy, previously called it the chicken and egg problem. The idea of going out and buying land when you don’t have cash, very difficult, raising money when you don’t have projects, also very difficult. We seek to solve that by having the cash availability to take down these projects. And then, as we raise the Opportunity Zone money, we just replace that capital and we recycle it. The most important piece of that is it really eliminates project completion risk to investors. It also eliminates fundraising risk.

The idea of, “Hey, if we put money in with this fund, what if they don’t raise enough money, can they move their projects for…?” It’s always a question that investors should be asking. We’ve solved that by having access to $20 million of bridge capital that allows us to move our projects and our funds forward. Importantly, it makes things transparent. You have a rather than a blind pool fund, you’re able to invest into a transparent portfolio. So, what are we raising? What is the size of our fund? What are we doing? We are on our second fund, as I mentioned, it’s an $18 million equity fund.

We have three projects that have already been purchased and controlled. The total project cost in that is around $56 million. So, it’s around $22 million of equity. Some of that comes from some partners. Some of that comes from our first fund. We’re raising $18 million for this fund, forecasting a 12% net IRR, so that’s the long-term return, 2.5 to 3x multiple on your equity. Importantly, we, as partners, the partners in the fund, co-invest. We put a $1.2 million co-invest into this portfolio of projects. So I think it’s important that the alignment is there from the participation of the partners long-term, both their time and their equity.

We’re also exclusively focused on Colorado. We’re really fortunate to be where we are. We’re gonna place…it has really significant population growth. We’ve talked to some Opportunity Zone funds, some of our other fund managers in other parts of the country, where they have a population loss, very different prospect, hats off to them, it’s an incredibly hard thing to do when you have population loss. Where we are, and we are in Colorado, specifically outside of Denver and Boulder, we have a strong population growth.

The Western Slope, in particular, we do the entire state, but the Western Slope, where we’re based, we’re based in Steamboat Springs, up in the ski resort in Colorado, as well as based in Denver. But we were out here in the area that had strong population growth, really prior to COVID-19. We think that… It’s difficult to look for a silver lining in a global pandemic. But if you’re talking about investing, you do need to look for things that are de-risked, whether they’re truly counter-cyclical, or at least as low risk as possible.

We think that the areas that we’re in are actually seeing some strengths from a long-term perspective, by what we’re seeing coming out of the pandemic. We already had a strong inflow of residents. The ability for people to work remotely has really increased that. We’re seeing more and more people that, either part-time or full-time, are looking to be out of population-dense areas out into places where they can have a little bit more space. That’s where we were already investing.

The other thing that’s coming out of this is historically low interest rates. So, as we’re building our multifamily housing that Stephanie will tell you about in a moment, we’re able to at least benefit from the historically low. We’ve been saying historically low, I think, for the last eight years, but really it can’t get much lower. It’s been dropping as we go. So, we were able to take advantage of that as we are in Colorado.

Jimmy: Chris, can I interrupt you for a second? We’ve got a question from Doug, who just chatted me. He wants to know if you can specifically define what you mean by outdoor-focused hospitality. I know that’s a core theme and you’re fun. What does that mean exactly?

Chris: Yeah, absolutely. That’s a great question. I have two slides for now. I’m gonna talk about it a little bit more. But let me start by what it’s not. What it’s not is traditional hotels, right? You need to go on a vacation, you’re gonna hop on a plane, and you’re gonna fly to Italy and stay in a hotel or stay in a villa. Or you’re gonna just get in…you’re gonna get in the car and just drive to the Holiday Inn. There’s a great place for those.

But from an investment perspective, traditional hospitality has really been crushed by what’s going on with COVID-19, both from a equity raising and debt perspective, but primarily from… It’s just challenging for people to go, the cleaning requirements, the people being in a tight area, where you’re having breakfast together and the same check-in.

What we’ve done is we’ve invested in…several things that we’ve invested in, several things that we’re planning to invest in. One example is we’ve launched a RV park and a tiny home hotel. Really cool, cute, tiny homes out on 20 acres. When you go to check in and you go to… We’ve all been cooped up. I mean, we’re… Some of us, I think have been desperate to get away.

But the idea that you can’t get on that plane and fly to Italy right now, but you can get in your car and drive to a place in Western Colorado where you can check in electronically with your key code, walk into your own tiny home that has your own kitchen, your own bathroom. You might have a shared fire pit out there, but you can socially distance. Things that people already like to do.

The numbers on that, and I’ve got some statistics I’ll share in a minute, have really been booming. So, everything from RV park, a traditional RV park, tiny home hotel, which is something that we own. We’re building several RV parks, as well as really high-end glamping. One of the things we’ll talk about on one of our projects is the ability to show up and already have really nice tents that are there. So you’re camping, but you may not be camping with your backpack, hiking 20 miles, there’s a great place for that as well, but you may want to pull in and have some element of luxury to it.

So, I’m glad you asked the question. I’ll talk about statistics in a minute. That, for us, is an important piece of our portfolio.

At scale, we’re gonna be investing primarily in multifamily housing. So, generally, 80 to 90% of our portfolios will be around very traditional, attainable housing that we’ll talk about in a moment. Not truly affordable housing, the kind that requires a separate federal subsidy, but workforce housing.

If you’ve got a good solid job, you need a nice, clean, new place to live, there’s a shortage of that housing. What’s been built, especially in Colorado, has tended to be truly affordable housing or luxury housing. And that missing middle is where we’re focused. So, at scale, we’re mostly going to be investing in multifamily housing. But the outdoor rec, outdoor-focused hospitality, really important part of the multi-asset fund here.

If you see on the screen, we’ve got three projects in our current fund. At scale, there’s 100-unit multifamily housing, 96-unit multifamily. Those are $8 million, $10 million type of investments. The outdoor rec hospitality might be, in some projects, $1 million or $2 million, so they’re smaller, but they really generate strong impact for the community, as well as good job growth. Importantly, as an investment perspective, they have a higher rate of return. So, they’re a little bit more seasonal, but a much higher rate of return.

So, thanks for the question, and jump in anytime there, Jimmy.

So, when we sat down to have this conversation about starting our fund, well, more than a year ago, at the time, many people were coming out with single asset funds, there’s certainly a place for that. We’ve made the decision to structure ours as a multi-asset fund.

The final guidance that came out in December really made it clear that you could go forward with a multi-asset fund. And, importantly, you could do that, sell off the individual assets, but still achieve the full forgiveness of capital gains, as well as that avoidance of depreciation recapture. So I was a little bit uncertain before that, but we’re now well past that. We believe it’s the best approach for multiple reasons.

The starting point is really this idea of a portfolio. Rather than investing in just one project, you get a slice of each of the three projects that we have in this fund. But, importantly, it takes away the blind pool aspect that you see in many traditional funds.

So for many traditional funds, “Hey, we’re raising money, please invest with us, especially you’re on the schedule, you give us the money, we’re gonna then go figure out what to do with it.” We’re pleased not have to do that. With the line of credit and just with the structure that we’ve put together, we’re able to provide that transparency of a portfolio, provide some diversification and some scale.

You’re not back into that one project enabled by the line of credit. I think the risk-adjusted piece of it is important as well. If we were baseball players, we’re not trying to hit home runs with the risk of striking out. We’re trying to really preserve the capital gains. You’re only investing capital gains into a fund. It’s really incumbent on that fund manager to really preserve capital. So rule number one is preservation of capital.

And rule number two is preservation of capital and then preservation of tax benefits. We’re really focused on that. So, these are what we believe to be very risk-adjusted portfolio investments. Stephanie, in particular, has done a lot of work around stress testing these investments.

On the downside, what happens if there is a higher vacancy? What do we do in those cases? We’re very focused on appropriate leverage. We do leverage each of our investments. But across the fund, we’re gonna have low leverage, strong debt service coverage ratio on what we believe to be a very low-risk set of assets.

I mentioned multifamily. That’s a key for us. So, multifamily in smaller markets is something that has not been invested in as much recently. I looked at some statistics that come from the Institute for Building and Technology. Between 2008 and 2017, there were fewer than 1.25 million new housing units being built every year. Before that, there were more than that being built every year other than 1982. There was a huge boom of building. Since 2004, there’s been a real lack, and that’s nationwide. That’s really been exacerbated in the smaller markets.

As I mentioned, it’s been hard for large funds to invest into these smaller markets. We’re really looking to solve that. There’s such a dearth of good quality housing in many communities. We’ve got these 50, 60, 100-year-old houses. It’s hard for those communities to attract the jobs that go with it. As jobs have been moving more towards rural areas, the housing has not really been able to keep pace.

So, we’re focused on putting the multifamily in the smaller markets. The pandemic is accelerating that net migration in, and we’ll show you some specific pictures and details on that multifamily.

We believe it’s one of the most recession-resistant and counter-cyclical investments you can make. Things like traditional hospitality, office space, retail have really been crushed by COVID. But even pre-COVID, they have a much higher degree of volatility. Many of the areas that we’re in have 2% and 3% vacancy rates. And we’ve modeled much higher rates than that to still have attractive investment opportunities.

Outdoor-focused hospitality that we just had the question that Jimmy gave us. A picture up on the right is actually one of the assets that we own. Picture on the bottom right, it’s just a pretty aspirational one. But it gives you an idea of the type of things we’re talking about. We’ve set around the campfire in the picture on the upper right and done a team meeting out there, there’s been a wedding out there, you can rent them individually, you can go out in small groups.

Type of things that I mentioned before, where you want to get out and be away and still socially distance appropriately. Some of the statistics up here, I won’t read each of them to you, but they make sense. When you just think about it from a common sense perspective, road trips are the safest form of travel, really being the biggest one. I looked for a really pretty chart, but we ended up with a set of statistics where… There’s a massive movement towards this that took place. It was really a huge increase after 9/11 for understandable reasons. It’s been continuing to grow since then. And the quality of what’s available, too.

When I think… Sometimes when you think RV, you think about the Winnebago, that blue going on a vacation back in the ’70s. Those are still cool and some of those are cool and cute, but there’s a huge option of outdoor-focused hospitality. From a revenue perspective, we’re targeting much higher returns. Our IRRs on these tend to be in the 16%, 17%, 18%, even 20% IRR. It’s very difficult to get that over 10 years in an investment. We’re seeing that in our outdoor-focused hospitality.

Again, it’s going to be generally around 10%. It’s 10% of this portfolio will generally be 10% of each of our portfolios. I’m not gonna read our bios to you. This deck will be available to anyone later, so it’s got our bios in there. We do have a strong team, though, both in real estate and operations, also in business development. We’ve been running something called the West Slope Angels, that our partner Sean, who’s on here, is in charge of.

We’ve been doing startup investing across these same regions. We’re not doing that in our Opportunity Zone fund. I always want to highlight the fact that this fund is really about real estate in place-based businesses. We’ve got a strong team around both real estate and operations. And we think investing into that startups in that same community, really, it’s an additive investment for everything that we do.

As we build multifamily housing and someone else builds bike trails and someone else puts in the brewery, we’re trying to really add…we’re really trying to be additive in all the investments that we do.

Jimmy mentioned previously the Forbes award that we were given. It was a huge honor, we want to celebrate that with the team. We’re thankful to get that. But, importantly, one of the reasons we were excited to be selected is that it’s a wrap that we were selected for having…being a catalyst around impact in these communities, but we are not an impact fund.

Our belief is that the best way to have an impact in these areas is to invest at scale and to keep that capital flowing in ways that bring additive investment to these communities. So I think it’s important to mention that the impact is… We’re true believers in the impact of what we’re trying to do and what we are accomplishing in these communities, but we’re doing that through raising capital and investing it at scale into these communities.

I mentioned the word community, it’s really hard to talk about what we do without mentioning community and without mentioning opportunity. The community-centered piece of this is important for us. We’re coming in… The deals are coming to us. We’re not coming from the outside saying, “Hey, we know what’s best for you. This is what we should build.” We’re coming in and saying, “Hey, what is it that your community needs? How can we come and work with you?”

It’s important for a variety of reasons. I think the reputation is a big piece of it, the exposures piece of it, but it also ultimately really de-risks these projects. When we’re working with communities, we’re listening to what they want. Having the community support speeds up everything from the planning process to just the long-term success of these projects. So that’s the overview from where I’m gonna talk about.

I’m gonna hand it over to Jimmy for a quick poll and then transition to Stephanie, who’s gonna talk in detail about the portfolio, the specifics of what we invest in, as well as the terms of the funds. So, Jimmy, with that, I’ll turn it back over to you.

Jimmy: Yeah. Thanks, Chris. I appreciate that. And before we turn it over to Stephanie, we will launch our second poll question of the day here. We want to know, and I’ve been asking this at a few of the other webinars that I’ve done, as well. I’m always curious about this. Which of the following best describes your primary motivation as an Opportunity Zone investor? Why do you invest in Opportunity Zone fund? Is it for the social impact? Is it for the ROI? Is it for the tax incentives?

I think those are the only three options, but I included an other option in there for you as well. And if you do answer other, I’m curious what your other reason is, so feel free to use the chat and let me know. So, I’ll just keep this one open for a few more seconds. And it looks like we got a plurality who are interested in the ROI, but a fair amount of people also are interested in social impact.

And, Chris, you spoke about that a little bit earlier, just a minute ago about how you’re not an impact fund. But, essentially, you are catalyzing some additive investments and creating social impact in that way. So, Stephanie, I’ll turn it over to you to go through the portfolio details with us now.

Stephanie: Great, thanks. I do want to touch a little bit on the impact because there have been so many questions around this. So, they’re impact in the ways that the Opportunity Zone incentive was really truly meant to benefit the residents of the community where capital was focused. And in an inner city urban neighborhood, you think about underrepresented populations, people looking for social, mobile, economic, where the broader market, the broader community is actually doing well.

There are pockets of isolation where the community is not doing very well, and that’s bifurcated. In the markets we’re targeting, the real practicality of investing is what is driving the risk to these communities, thereby, there’s not such a big divide necessarily in the participation of those in the community. It’s the viability of the communities themselves.

And because of the large size of capitalists sitting on the sideline right now, looking to invest, sometimes getting capital into these communities, because it’s so inefficient from an institutional investor standpoint, is the first problem to solve. And over time, you then start to get more nuanced and solve down to the micro-level in the community, different cohorts of residents.

So, what we’re trying to solve as a first step is really getting efficient sources of capital to these communities to develop basic infrastructure elements they need to support the potential for their population growth, housing thematically in the western part of the U.S., frankly, all over the U.S.

But in the western part of the U.S. where population growth is, frankly, the highest has been one of the biggest determinants of the ability for people to move into these areas. Affordable, not necessarily low income, which is highly subsidized, and would…this capital source, Opportunity Zone capital source, would not necessarily be the most appropriate source. We’re going into low income, subsidized properties, but affordable workforce housing, which kind of spans the 80% to 120% income earners.

So, what we’ve done is we are putting together, again, these portfolios that Chris talked about, and they will be anchored by one to two multifamily housing projects in communities that we believe have…where this would be the most catalytic. And then, we are talking in smaller investments that have also dramatic byproduct, upside impact, and I’ll talk a little bit about those. So the first one in Grand Junction, which is one of the economic centers that is outside the urban corridor in Colorado.

Grand Junction was traditionally an oil and gas community. It had suffered traditionally from boom and bust cycles but, over the past five to six years, has really turned the corner in diversification, but has struggled with attracting investment into the community, because, again, its size is somewhat under the radar and there’s not a tremendous amount of evidence to say you could go in and invest in this community like you could for housing, like you could in the Bronx, or in different parts of bigger metropolitan areas.

And what we did is we acquired alongside a public investment of the new…part of the riverfront that’s being developed in Grand Junction toward the city, we acquired adjacent land and worked with the city to formulate a workforce housing facility that will be on that site, and directly adjacent to that, which also creates some diversification for the parcel. We are putting in an outdoor rec-focused campsite, and think of that as kind of tiny home-RV combination.

So this is one project, one investment that has two sources of income and revenue, but are serving both to bring capital into the market, create economic activity in the market, and create sorely needed additional housing infrastructure at affordable pricing for the market, again, in that workforce range.

This is a $24 million project. We’ll be levering it between 63% and 65%, and pretty conservative leverage. And we’re forecasting north of 11% IRR. It’s actually a current plan. Our costs continue to come in lower than we expected, is currently forecasted to be above 12% net of our fees, but not including the Opportunity Zone benefits. So this particular qualified Opportunity Zone investment sits within our fund.

The second project that we’re working on, we’re doing almost exactly the same thing on the exact same timeline, in Glenwood Springs, which is a community that sits at the head of the Roaring Fork Valley, at the Taylor Roaring Fork Valley, actually, that serves Aspen, which is this community, this area which houses a tremendous amount of the workforce that serves down into the valley, the community. And this is a transit-oriented development sitting on top of the Roaring Fork Transport Authority’s main hub. It’s 100 units of multifamily housing, 1 and 2 bedrooms.

We are also putting in a community park that will be a dog park, serving the residents around the development, and it is essentially targeted at those workers that are serving Carbondale, Basalt, the majority of the Roaring Fork Valley, where housing prices have been out of reach and rental prices have been out of reach, as well as a lack of what I would consider solid and nice categoric rental housing availability. This project is also similar return profile to our Grand Junction project and anchors part of the fund.

And then, Chris, the third slide really kind of talks to the outdoor-focused hospitality. As Chris said, we’re thinking about is non-single building hospitality. This is a layered amount of hospitality where people can come and camp, but they don’t necessarily have to bring their own tent or cook outside or do things. They can have their choice on how they want to experience the outside and they’ll either be in a high-end tent, a cabin, or they can bring their own gear. This is 120-acre site.

And the impact around this, we purchased this site with the support of a very seasoned operator near Telluride, in a town called Naturita, which was an extraction town that was completely decimated when the mine closed. We are repurposing this location to create outdoor-focused destination for the area. It’s ideally between Moab and Telluride. And we expect this to bring both a sense of purpose and destination back to the community, a way to monetize the land that was otherwise sitting vacant, and it has a number of art installations, which are creating a sense of artisanship in the community that’s attracting a lot of different tourists coming in.

We have the New York Arts Academy coming in to hold a seminar at the site in the next two months. We have different interests from different artists and communities from around the country. And we believe what this will do is create a new sense of place for a community that was otherwise decimated through the mine closure, which, again, exists. There’s quite a bit of that going on in Colorado, in many parts of the country.

So moving on to our next slide, as Chris mentioned, what we’ve done is we take our bridge capital, we create a portfolio, we diverse the portfolio, we get it through development process, and we start fundraising behind that. We close that fund, we take that bridge capital, we recycle it, and we do it again. So, we’re creating this cycle of portfolios that we’re investing around the rural parts of Colorado using the Opportunity Zone incentive to do this.

And we’re working with other funders across the state to make sure that our investments are then levered and coordinated with other people that are trying to invest in these markets for different needs. So we are very focused on making sure there’s a lot of transparency in what we’re doing and there’s a tremendous amount of coordination with both philanthropic impact as well as public investors in the space. We think that’s the only way to create real scale.

We also have… Our portfolios, again, are identified so you can see exactly what the fund is exposed to. There’s no blindness to this. But it is diversified because we’re taking the fund and spreading it across multiple investments that we’ve secured. And we’ll continue to do this over the next three or so years.

Next slide. The summary of terms, again, we’re raising $18 million for this fund. We’ve talked about what we believe the return profile should look like based upon our underwriting. We have an eight pref on our returns, so we return 8% back to our investors before we retain any of the profit, and after that, it’s an 80/20 split between investors and us. We have a minimum commitment of $100,000.

Our fees are right above 1% for the term of the investment. They are more weighted upfront because that’s when the majority of our work is done, and that’s where we hire a staff to ensure that these are managed and executed correctly. We have no transaction fees or related party fees. We are trying to make sure that we are aligned as much as possible with any investors coming into our fund. And we are also investing directly, as Chris mentioned, in each fund.

And so, I believe that brings us to the end of the presentation, other than the disclaimer that Chris just flew through, but I think we talked about that in the beginning. So, happy to answer both Q&A. Both of us, if Q&A does come up and any other real-time Q&A.

Jimmy: Yeah. Fantastic. Yeah. Go ahead.

Chris: Let me add one thing, just one thing to that, too. We’re gonna… Happy to answer as many questions as you have during the Q&A. If you have additional questions, you’re more than welcome to reach out to either of us. I’ve placed my information on the screen.

As Jimmy mentioned, he’s gonna send you the deck and the video. This is our talking deck, we don’t want to make you go through a larger deck, but we have a more in-depth investor deck, as well as full demos for all these projects. We’re more than happy to share that with anybody, as well as your questions. If you’re not an investor and you just have questions about Opportunity Zones, still reach out, we want to be here as a resource.

If you are a potential investor, obviously reach out as well. Through the website, you’re able to make a request, provide your information, we’ll get back to you right away.

One thing I did want to add that we hadn’t really talked on is just the return structure of what we’re building. I know there were several questions that we’ll get to. One is that what we’re doing from just a construction process on these projects, we’re building these projects right now.

So, we’ll actually be breaking ground, call it January. We’re not gonna be generally returning cash for the first couple of years. We’re using the first two years to build the assets. Year three, as we stabilize the assets, we’ll be returning cash to our investors. We essentially return all of the cash that’s generated every year back out to our investors minus, of course, the part we need for working capital.

But we return that cash back out to our investors every year. After year 10, as we sell off the assets, that’s when we return the capital and start paying back the profit, but these are income-generating assets along the way. So I did want to mention that from just a return profile perspective.

Jimmy: Fantastic. Well, thank you. Well done. Great fund you have here, an award-winning fund, as I mentioned at the top. Please do head on over to if you want to receive more information and the full slide deck.

Thank you to all of the attendees, and especially thank you to the presenters today, Stephanie Copeland and Chris Montgomery. Really appreciate your insights into Opportunity Zone investing.