How to Invest in Opportunity Zones, an OZ Pitch Day Panel

Dana Woodbury

What should an investor consider before investing in a Qualified Opportunity Fund? Several Opportunity Zone experts provided their insights on a live panel recorded on March 9, 2021 during OZ Pitch Day, titled “How to Invest in Opportunity Zones.”

Today’s podcast episode is the audio version of that panel. Moderated by OpportunityDb founder Jimmy Atkinson, the panel featured Greg Genovese of USG Realty Capital, Dave Kunz of Hall Venture Partners, Clark Spencer of Grubb Properties, Will Walker of Hall Labs, and Dana Woodbury of Buttonwood Due Diligence.

Click the play button below to listen to the audio recording of the panel.

Or, for the video recording, click here.

Episode Highlights

  • Considerations for LP investors before investing in Qualified Opportunity Funds.
    • Are the fund’s OZ deals accretive to the local community?
    • Does the fund expect safe recession-resistant development returns?
    • Who is the management team? Do they have a good track record and domain expertise?
    • Does the fund return any capital to provide liquidity for deferred tax liabilities due in 2027?
    • Has the fund attracted anchor investors or strategic partners in the deal(s)?
    • Does the fund have the ability to handle changes in the regulatory environment or market conditions?
    • Does the investment strategy of the fund have the ability to withstand vicissitudes of the market over the next 10+ years?
    • Does the management team have inroads with the local community where they are investing?
    • What does the investment management team have to lose? What are the fund’s fees?
  • How the experience level of the LP investor should play into the decision making process.
  • A crash course in Opportunity Zone basics.
  • How to due diligence a Qualified Opportunity Fund.

Featured on This Episode

Video Recording

Industry Spotlight: OZ Pitch Day

OZ Pitch Day 2020

The OZ Pitch Day 2021 Spring Session was an online event geared toward matching investors who have capital gains with Qualified Opportunity Funds that are seeking capital. The live event took place on March 9, 2021 and featured pitches from 12 Qualified Opportunity Funds, a keynote fireside chat with Steve Glickman, two educational sessions, and an interactive happy hour mixer. OpportunityDb will host more Pitch Day events like this one in 2021.

Learn more about OZ Pitch Day:

About the Opportunity Zones Podcast

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

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Show Transcript

Jimmy: Welcome to the Opportunity Zones Podcast. I’m your host, Jimmy Atkinson. Earlier this year, I hosted the OZ Pitch Day 2021 Spring Session, a one-day online Opportunity Zone investor matchmaking event. What follows is the audio version of a panel from that event titled, “How to Invest in Opportunity Zones.”

To view the panel in video format and to learn more about the panelists, check out the show notes page for today’s episode at OpportunityDb.com/podcast

And to register for the upcoming OZ Pitch Day 2021 Summer Session, head to OZPitchDay.com.

Jimmy: Okay. We’ve got a good-looking group here. So, welcome everybody. This is our panel, educational panel on “How to Invest in Opportunity Zones.” And I want the investors in attendance today to be able to take away some practical investing advice from the perspective of the panelists. All of the panelists here have worked with different opportunity zone investors and opportunity zone fund issuers. We’re very pleased to have them all join us today. Let me just introduce them one by one here. We’ll go around the room.

So Greg Genovese, wave. You are the CEO at USG Realty Capital and managing partner of the Investors Choice OZ Fund by USG OZ. You’ll be pitching your fund a little bit later today.

Dave Kunz is also joining us. He’s the managing director and general partner of Hall Venture Partners.

We also have with us today, Clark Spencer, senior vice president of investors and fund manager for Grubb Properties. And you’ll be pitching your fund a little bit later today with your colleague Todd as well.

We have Will Walker, a good friend of mine, a close friend of mine. He’s a business development consultant and private equity veteran.

And last but not least, Dana Woodbury, president at Buttonwood Investment Services, a third-party due diligence provider, and he’s worked with a lot of different opportunity zone funds over the last couple of years as well.

So, to get us started, I’m just going to throw a simple question out there, and as you give your answer, you can also give yourself a little bit more of an introduction. Tell everybody a little bit more about yourself, but let’s get the ball rolling with this simple question. What should an investor consider before writing a check to a qualified opportunity fund?

And Greg, I’ll turn to you first. We’ll go alphabetically.

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Greg: Okay. Wonderful. Thanks. You can hear me, right?

Jimmy: I can. Yes.

Greg: Okay, great. Anyways, hi, everybody. There’s a couple of people on the panel that I’ve known for many years, and a special hello to Dana Woodbury, who I won’t say how long I’ve known him. And hello to Will. Nice to see you.

Will: Thank you.

Greg: And thanks again, Jimmy for having not only myself, but putting on a wonderful conference. This will be our second time presenting. And you do a wonderful job and so, I think I speak for everybody in thanking you for that. Real quick, I am the founder and CEO of a company called USG Realty Capital. We actually launched a company called Sound West Realty Capital back in 2018 and our focus is really on the single project arena. And so, we did that. Very successfully raised $40 million in a short amount of time. And we are very happy to say that we were named by GlobeSt the top opportunity zone fund in the country.

And so, we’ve taken that whole dynamic and moved it over to USG and partnered with a wonderful group out of Olympia, Washington called OZI. And we were just about to launch, in fact, yesterday the press releases went out on our new platform and we’re about to launch our new fund, which is going to be a little bit different than everything else in the sense of it’s the first investor-directed opportunity zone fund.

So, it gives everybody, the investors, the chance to either invest in as much diversification or concentration as they want. To answer your question, there are really a number of ways to invest in programs. And Jimmy, do me a favor, restate the question because I got lost in my intro and I wanna make sure…

Jimmy: Sure. You’re our guinea pig. You’re first today, so I’ll throw you a mulligan here. What should an investor consider before investing in Qualified Opportunity Funds?

Greg: Yeah. It was what to consider. I’m sorry. I was going into how to invest. As far as consideration, what Steve Glickman was saying, in my opinion, is paramount to making an investment. Whenever there’s a tax advantage program, and a gentleman like Dana on this call, who’s been in the 1031 exchange industry, and we’ve been in the securitized world doing exchange deals for many, many years, when there’s a tax advantage program, it’s really important to understand that just about everybody and their uncle would get…is going to get involved to raise capital.

And so, I always say who you’re investing with is tantamount to what you’re investing in and what your returns are going to be. So, you really want to look for those programs with long track records, assets under management, and then you have these risk mitigators in there from the asset manager and the developer co-managing and coexisting, but doing it in such a way that it’s accretive to the investor.

So, you’ll hear in our pitch later, but I’m very big on oversight and accountability, bifurcation of duties. And I think it’s really important. The other side of it is I’m really big on honoring the spirit and intent of the program itself. And so, what Steve was saying as far as public-private partnership, to me that’s a big thing and that’s a big thing for our company in having projects that are doing public-private partnership with the local community, and also truly creating a positive social impact with social impact reporting. But tying it all together with returns that would be attractive for investors.

So, it’s not just about being in an opportunity zone fund and building something, it’s really about being an opportunity zone, doing something that’s accretive to the community, but where the real secret sauce comes in is doing it in such a way to build as safe development, at least on our side, development returns as possible because at the end of the day, the risk mitigation, in my opinion, is the big thing. Who owns the projects at the beginning, you want to make sure owns it at the end of 10 years.

So, you have to look at how many recessions will we have between now and 10 years from now. And so, these projects and these funds need to be built in such a way to protect that capital during that time period. So, I could go on, but I hope that’s enough for you.

Jimmy: No, that’s enough for now. Let’s keep it rolling. Dave, I’m going to turn to you now. And thanks for joining me again, Dave. Dave was on a similar panel that I did with last year’s OZ Pitch Day. Dave, you’re a general partner of Hall Venture Partners, and you’re involved with the Hall Labs Opportunity Fund 1. Tell us a little bit about what you think an investor should consider before writing a check to a QOF.

Dave: For sure. First of all, Jimmy, thanks for having us. You know, we’re happy to be here and happy to contribute. And we’re gonna be talking a little bit more about Hall here at the end of the day as well. So, for anyone who wants to find out a little bit more about operating businesses and how to kind of invest in those, we’ll be talking at 4:30. And, you know, I want to officially welcome Will Walker too, a partner here at Hall. He’s decided to join us.

So, we’re excited to have him and running business development here at Hall Venture Partners. So, Will, thanks for jumping on today and joining us here too.

But, you know, I think, Jimmy, the biggest thing for me and you know, I’ll echo, you know, some of the things I said before, but, you know, to me it’s people first. And, you know, I think Greg said the exact same thing. So, know who you’re investing with. And I mean that in a couple of different ways.

One, it’s understanding domain expertise. So, you know, have these people had a history of executing in that particular space and sector, and do they have wins on the board that they can reference and show you where they’ve got direct experience in delivering returns to investors?

And then the second piece would be do they understand their asset class? So, you know, all too often, you know, I hear many people that you have to think about it in a couple of ways. One is the initial investment, two is the exit, and three is what are you going to do with it in 10 years?

So, ask your managers to walk you through what investing in that asset looks like. If you have an early exit, what that means, how they plan to deploy the capital, and ultimately, what their plan to exit that asset at the end of that 10-year-period, I think, is critical in understanding who you’re investing with. And lastly, it’s the entire team. Does the team have experience and history of working together? And that’s the trifecta.

You know, if you can find a management team that’s worked together before, previous funds history, I think that’s important as well. And I’ll throw one more thing in there as I kind of think about whether it’s real estate or whether it’s operating businesses, you just wanna…you know, you want to trust your gut a little bit too. And I think it’s important for all of us to just be comfortable with writing that check. And if you’re not, you know, pull back. You haven’t asked enough questions. So, I’ll leave it at that, Jimmy. I’ve got more to add, but I know you’ve got…

Jimmy: I’m sure you do. That’s great, Dave. I appreciate that insight there. The exit strategy, in particular, is really interesting. That gets glossed over sometimes, but at the end of the day, this is a capital gains tax incentive, so you need to make sure that fund has a viable exit strategy so you actually achieve a capital gain, right?

So, Clark, let me turn to you next. We’re going alphabetical order by last name. Clark you’re, as I mentioned before, you’re senior vice president of investments and fund manager for Grubb Properties. You’re going to be doing a presentation and I believe your fund is actually immediately following this panel in fact. So, Clark, I’ll pose the same question to you. What do you think an investor should consider before writing a check to a QOF or any other insights you may have?

Clark: Absolutely. Thanks, Jimmy. Thanks for hosting. And thanks to all the other panelists for joining this conversation. You know, I think that both Greg and Dave made a lot of good points and I don’t need to rehash those. You know, we at Grubb Properties are very proud of our track record and, you know, that’s something that we like to emphasize, but I’ll take it in a sort of a different way. Investor experience, and I’ll put that in two ways.

So, one, how experienced of an investor are you? Is this sort of your first diversification into real estate or have you been a real estate investor for a long time? I think when you’re talking to an opportunity zone fund manager, your prior experience in real estate can be very instructive both in how they may have their funds set up, and what type of ongoing responsibilities that may create for you if this is, you know, sort of your entry into the real estate market, which I think that opportunity zones are a good way to enter into real estate diversification.

But then also what sort of your ongoing experience in the fund is going to be like. What you can expect from a distribution standpoint, what you can expect from, like I said, an ongoing tax preparation requirements standpoint. And then I think one crucial question that comes around there is deferred taxes. When you make an opportunity zone investment with capital gains, and remember, you only get benefits if you do have capital gains I think is something that’s sometimes lost on people, even that back…that 10-year back in benefit is only available if you go in with capital gains.

But you owe your deferred taxes at the end of 2026, and you may not have liquidity in your investment. Most opportunity zone funds that I’ve encountered, including the ones that we run…essentially have a plan for that, whether it’s through, you know, large return of capital distributions, refinance distributions, things like that around that 2026 date to get capital back in investors’ hands to pay those deferred taxes.

But that’s a really important question because if you don’t know whether, you know…if you don’t ask that question, you don’t know what that plan is, then you can’t prepare properly to pay those deferred taxes, which can be, you know, obviously a fairly large obligation, you know, to Uncle Sam, you know, five, six years from now. So, you know, that’s sort of one tip I’d throw out there, certainly a lot of others, but a lot of those that, you know, David and Greg already covered.

Jimmy: No, that’s very helpful. Thank you, Clark.

I got a couple more panelists I want to hear from. Will Walker, let’s turn to you next. Dave announced that you are officially coming on to Hall Labs. I wasn’t sure if we were able to announce that today or not, but congratulations. And let’s hear from you, Dave…or I’m sorry, Will. You’ve been a private equity veteran for…I won’t say how long.

Will: Yeah. Well, that’s good. That’s kind of you, Jimmy, but thanks for having me on and thanks for all that you do. And, you know, OZ Pros has been a great affiliation for me and my group of investors and operators and affiliations. So, you know, I have the highest degree of appreciation for what you and your team does and, you know, I look forward to many more. Yeah, I’ve spent over 20 years. We’ll just let it go with that since I’m getting up there.

But I’m certainly excited to work with the prototype, what I consider the A1 prototype of operating companies and proven process and exit, since we touched on that a little bit, and since they’ve had 4 exits over $100 million in operating their OZ companies on their 130-acre campus. That’s really a privilege to be able to work with a prototype, a proven prototype like Hall. And we’ll cover more of that at 4:30 on the happy hour with Dave and that type of thing.

But I just wanted to say some of the things that I look for, number one is how much money does the operator…whether it’s a single issue product or it’s both, how much money do the founders or the operators or the GPs have in and how is that structured, you know, on top of the exit? I was going to get to that too. So, that’s that’s number one.

But also how are they positioned to get a strategic partner, either they have an anchor investor, Steve Glickman covered some of this of what I look for. It’s really the ability to attract and keep or already have an anchor investor, potential strategic partner capital-wise, and otherwise in the deal.

And also last thing I’ll cover because I know we’re running a little bit behind here is the ability to pivot. You know, do they have the ability, the experience, the resources to be able to pivot or handle a contingency, whether it be a regulation change, a regulatory change, or some sort of a market condition as we’re probably like to hit some headwinds in the next 10 years here, no matter who’s in charge and who’s running the ships on the regulatory side?

So, you know, have they weathered the storm before? Are they prepared? Are they experienced? Anyway, all of that is good on top, of course returns, but anyway, I’ll send it back to you, but that’s kinda my two cents. I’ll give some more on that later, some ideas and hope that helped.

Jimmy: Awesome. Thank you, Will. Well, Dana, let’s turn to you now. Unlike everybody else on our panel, you are not a fund manager or actively involved, employed by one particular fund. You are president at Buttonwood Investment Services, which is a third-party due diligence provider. So, you perform due diligence services on a lot of private equity funds and including opportunity zone funds. I’d like to get your insight. What do you look at when you’re performing due diligence on a fund and what should investors consider?

Dana: Sure. Okay. Well, thank you, Jimmy. And thank you for the opportunity to participate. And I think that each of the other panelists have made some excellent points. And my special thanks to Greg Genovese, who I have only known for about 20 years now, but I appreciate all of the comments.

I think one thing that I’d like to…well, a couple of things that I’d like to add, and actually, in terms of saying that we provide due diligence reports, that our reports are for RIAs, broker-dealers, family offices, many individual investors, larger investors will look at our reports also, but they’re driven by the SEC, by FINRA, and just, in general, investors who want to make sure that their investment pans out. And specifically, what you’re looking at is an investment that ideally you want it to last at least 10 years for the simple reason that that’s where you get the full tax benefits, that’s where you get the real punch at the back end.

And so, any sponsor that is not financially strong enough that we look at to be able to withstand the vicissitudes of the market over the next 10 years, that’s a huge risk for us. But the other thing is in looking at the assumptions that go into that, and what underwriting has gone into the assumptions, who have they used? Is this something that, for instance, the sponsor just comes up with on their own?

And in this particular market that we’re working with, it’s kind of ironic that we have where many sponsors are coming in and wanting to sell properties because they think it’s an uptick because the market could go down in the future, and yet they’re giving assumptions that are going to last for the next 10 or 12 years. And so, that’s something that we look at very carefully, and we’ll do a lot of sensitivity analysis in determining what happens if those assumptions don’t pan out, and what could occur to the investment.

One of the key things about qualified opportunity zone funds is that you don’t want to go into it just for the tax benefits. That’s the worst reason that you can go into it. You really want to go into it because fundamentally the real estate is good, the stock is good, the partnership is good, the plan is good, the overall business plan, and it works within the rules.

So, to see someone, a sponsor that is experienced, and that also has inroads in the particular community, and where they can work with the community and say, “You know something? We have worked with this community and we know that we can get them to cooperate with us. We have a development project. We have several development projects that we already have planned,” those are all things that are key.

And then the final thing that I just throw in is financial statements, and looking at the actual, if it’s audited or if it’s something that’s compiled or reviewed, those are all things that are very iffy, especially if you need to prove from a tech standpoint your ability to be able to come forth and to state your capital gains accurately.

Jimmy: Excellent. Well, thank you, Dana, and thank you to all the panelists for your opening insights here. A couple of things I wanted to say right now. This panel is set to end in six minutes, but we got started a little bit late. So, I think we’re going to stretch this until about 10 minutes after the top of the hour. We’re getting a lot of great questions in. I’m going to get to those questions in a minute, but I’ve actually been surprised by how many questions we’re getting and maybe it shouldn’t come as a surprise. And I apologize that it did.

We’re getting some questions about how does this program work? What are the basics of opportunity zones? So, I wasn’t planning on doing this, but I do have a presentation now that I just like to run through just in a couple of minutes. I’m going to do a crash course on opportunity zones for everybody, and then we’ll turn back to the panel. So, for those of you who are new to opportunity zones or are wondering how does this work, I’ll give you a very quick rundown right now.

It’s a place-based tax incentive passed as part of the Tax Cuts and Jobs Act of 2017. And the way it works is the investments are qualified when they invest in particular locations around the country that have been designated as opportunity zones and roughly 35 million people live in these zones throughout the country. Here’s where they all are. These are again at the census tract level. You can see that some of the zones are larger than others. In the more densely populated areas of the country in the east, the zones are smaller. And in the more sparsely populated zones in the Great Plains and the west, they’re much larger.

The reason for that is each census tract has approximately 4,000 people living in it. So, they kind of grow and shrink over time whenever the census does a…whenever the Center Bureau performs a census. But let’s quickly now go through the different tax benefits and then we’ll turn back to the panel for the last few minutes.

There’s three tax benefits that you can achieve, and this applies to capital gains. So, step one is you have to realize the capital gain, maybe you’ve sold stock, or real estate, or a private business, or art, or some other sort of collectible, it doesn’t really matter what it is as long as a capital gain has been realized. Your first benefit, if you roll over that gain into a qualified opportunity fund within 180 days, and an asterisk there, the IRS extended many of those 180-day deadlines until March 31 of this year, and you can read more about that on my website at opportunitydb.com, but the first benefit is a deferral period. You get to defer recognition of the gain until the end of 2026.

The second benefit is you get to reduce the amount of gain recognized by up to 10% if you achieve a 5-year hold before the end of 2026. So, note that this benefit actually expires at the end of this year. It’s no longer possible to achieve a 5-year hold after this year before the end of 2026.

And the final benefit and this is the big one is the elimination of liability on capital gains within the opportunity zone investments. So, you take your gain from the sale of a stock and you put it into an opportunity zone fund, and that opportunity zone fund, the value of that fund grows and you have a capital gain. If you hold the fund or the assets in the fund for at least 10 years, when you exit, you pay no capital gains tax on that.

So, I just wanted to go through that really quickly because I know we did have some questions on how the program works. And if you do have any other questions, please do feel free to submit them and I’ll try to get to them as efficiently as I can.

But turning back to the panel now, again, we’re going to go until probably about 10 minutes after the top of the hour. I’ve got a great question in here from Jeffery, so I’m going to just pose his question to everybody here. So, just chime in. He would love to hear the panel answer the question of why are you invested in the further ins and implementation of the opportunity zone program? What is your idea of the end game? What do you hope for within opportunity zones? I guess we’ll go back in order again. We’ll start with Greg again.

Greg: Sure. I think he asked another…I’m seeing him pop up. There are some really good questions popping up and he asked a couple of it. On that one, end game, first and foremost, and I don’t want to speak for the panel, but you know, I’ve been in the real estate securities industry now for 32 years. So, you know, this is what I do. And opportunity zones didn’t exist before, you know, 2018 hit. So, there’s obviously an expertise and I assume that’s same with everybody on the panel, and it really is one of those things where we’ve been given an opportunity ourselves.

You know, Ben Franklin used to say, you know, “Do well by doing good,” and here’s this opportunity now, you know, for us to take something, employ our expertise, also be able to take a step up. You know, the whole world is moving more towards ESG, social impact, positive social impact. The return profiles are becoming more and more aligned with just about every type of investment. And so, it’s natural that those two things start to come together.

And I think this is really a good opportunity for people like us who are either developers, asset managers, securities people, or even due diligence people like Dana to really move into that arena with the extra added benefit of not only the tax benefits, but also being able to honor the spirit and intent of something that’s truly…every now and then something truly bipartisan comes down the pike. And this is one of them.

So, I think the impetus was in, “Hey, there’s opportunity zones, let’s jump into the business.” At least from our perspective it’s, this is what we’ve always done. Here’s this opportunity to really put our expertise at work and really do some good for the community.

Jimmy: Good. And Dave, turning to you now.

Dave: Greg, great points. I’d like to, you know, to kind of follow through on what you said there, where, you know, I too have been in the public and private, you know, sector business and been building businesses for the last 20 years. So, not my first rodeo either. And I think the idea is especially with what was great about Hall, we were building this anyway. So, you know, the program and the fund that we put together, we were three months into building that fund before the incentive structure around opportunity zones came out.

And for us, it was another vehicle for us to add to kind of our quiver of ways for people to take advantage of an incentive structure. And, you know, we look at it as a vehicle to invest, but I would never put your money into an opportunity zone investments, as Greg said too, that, their whole intent was based around figuring out how to put a plan together for OZ. You have to have kind of that experience in place first and it needs to just be the cherry on top or the tailwind for you to be able to take advantage of.

And then from a community aspect, I think Cory Booker called them the domestic emerging markets. We’ve all heard of investments going into emerging markets. Well, you know what? We’ve got plenty of them here locally within the U.S. that need investment in order to continue to grow. So, that’s my point, Jimmy.

Jimmy: Great insight, Dave. Thank you. Clark, I’ll turn to you now.

Clark: Yeah, absolutely. I’d really like to echo both Dave and Greg, and I think it’s about developing the communities that opportunity zones are in, that’s fundamentally the purpose. Obviously, you know, return to investors and all that is you know, the responsibility of people who are going and making these investments. But you know, at Grubb, our product, Link Apartments, that’s our main strategy. You can see that over my shoulder here, and I’ll talk about it a whole lot more in the next half hour.

But you know, going into opportunity zones, 4 of our prior 10 Link Apartments projects were in opportunity zones before they were designated. Link Apartments is a product that targets people making between 60% and 140% of area median income. So, you know, for us, we thought that’s exactly what these opportunities zones need, what these areas need.

And so, it was really a natural fit for us. And so, you know, being able to provide both, you know, investor return, but also, you know, positive growth and sustainable growth in communities I think is really the marriage that this program is trying to build. And you know, it was just important for us to be a part of that. And you know, it’s something that we’ve been really proud of over the past couple of years in utilizing the program.

Jimmy: Fantastic. Thanks, Clark. Will, I’ll turn to you. What are your thoughts?

Will: Yeah, I just want to pick up on what Clark and Dave and Greg have said, you know, a little bit too, it’s community, community, community, and then I’ll punctuate that with jobs, jobs, jobs. So, you know, one of the things that I’ve kind of set my career and working with lots of different investors, retail, and institutional whatever, whether it be funds and other things is finding the community, what I started with, the anchor investor.

So, whether it’s Texas A&M or BYU with Hall and all of these different portals of support and talent, and also where the money is, you know, where the growth, whether it be in tech or even in real estate, you know, a lot of these areas are just thriving. And really to do your due diligence, whether you’re an investor or an operator and learn from this or to, you know, to connect these resources is super, super powerful.

And I call them incubator accelerators, like Hall, you know, that’s the prototype. And EIG even trumpets about for operating companies, but there’s others. And, you know, I kind of like to connect and work with the resources and see that, whether I’m dealing with an operator or I’m looking for a specific investment for myself, or, you know, consulting with an investor. So, that’s my two cents there, Jimmy.

Jimmy: Fantastic. Thanks, Will. And Dana, we’ll leave you with the final word here. We do have to wrap up because we’ve got some more pitches coming up. I actually want to pose a different question to you, Dana. I’m going to put you on the spot here real quick although you can answer the first one too if you want to, but I’ve got a question coming in here. If someone invests in the formation phase of a QOF, what documentation or due diligence is required or what does a firm like yours do exactly, Dana?

Dana: Gosh. Okay. Well, let me answer that and then I’ll try to briefly touch on the other one in terms of adding what the others have already stated, which I should say that I agree with all of those comments as well. We have typically about two to three pages of documents that we request from each individual sponsor or manager that proposes an opportunity zone to us.

And that starts with the private placement memorandum to partnership agreement, any legal opinions that are stated, financials, and then other documents that go out for the actual investment, and things that are stated in terms of how the actual development is going to occur, or what has already taken place in terms of if there are multiple properties that are being involved.

And so, it’s really…it’s very extensive. It differs a little bit for each sponsor, although there are many similarities, but we want to make sure that all of the points are covered just to make sure that whatever investment is there is going to be around for the long-term. Something else that I want to state that’s really important and it’s been alluded to by some of the other panelists is that when a sponsor or a manager invests in this, what have they got to lose, what are their fees, and are they reasonable?

And we have a number of tables that look at average fees across a number of different QOZs that we’ve looked at, and to be able to state if it’s high or low in various areas. And finally, the other point is I do think, just the initial question, this is a bipartisan issue, and we have seen in our country over the last several decades, a real bifurcation in terms of the top 1% versus the next 99% or the top 10% versus the next 90%.

And this is a real opportunity to bring people from all economic cycles, particularly those that had been underprivileged or understated to be able to lift them up. And that is something that we really see as a real benefit for our firm and why we enjoy doing due diligence on QOZ so much. It’s a real investment benefit to the public.

Jimmy: Excellent.

Dana: Ongoing due diligence as well.

Jimmy: Absolutely. That’s all right. Well, thank you, Dana, and thank you to all of my panelists today.

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