Multifamily Investor Expo - Feb 15th
In this webinar, Jamie Nahon discusses the Eagle OZ Fund, which is developing multifamily housing in one of Chicago’s most historic neighborhoods.
- An overview of Eagle OZ, a real estate company investing in new construction of apartment buildings in Chicago’s historic Bronzeville neighborhood.
- The major developments now underway on the south side of Chicago, including the Bronzeville Lakefront site, the Obama Presidential Center, and a new Tiger Woods golf course.
- The historical significance of the Bronzeville neighborhood, and the potential for it to be designated as a National Heritage area.
- Why catalytic growth is coming to Bronzeville, with $10 billion of economic development and 55,000 new jobs all breaking ground this year.
- How Chicago housing prices compare to other major metro areas, and the opportunity that this creates for investors.
- The success of Eagle’s Fund I to date in the Bronzeville neighborhood.
- Q&A with webinar attendees.
Featured On This Webinar
- Jamie Nahon on LinkedIn
- Eagle OZ
- Bronzeville Lakefront Development
- Obama Presidential Center
- South Shore & Jackson Park Golf Course Restoration
- Pitch Deck [PDF Download]
Industry Spotlight: Eagle OZ
Eagle OZ is a group of seasoned local real estate professionals who are already active with creating and managing hundreds of affordable housing units in neighborhoods south of Chicago’s downtown core. They are brought together by the shared vision to use the Qualified Opportunity Zone for an investment that is great for both investors and the subject communities at large.
Learn More About Eagle OZ
Jimmy: Jamie Nahon from Eagle OZ Fund. Developing in Chicago’s historic Bronzeville community on the south side. Jamie, there you are. How are you doing today, sir?
Jamie: I’m good. How are you?
Jimmy: Excellent. Excellent. Thanks for joining us today. Well, if you’re ready, I’ll turn it over to you. The stage is yours for the next 10 minutes. Fire away.
Jamie: Sure. Opportunity Zones are said to be the greatest tax incentive of all time, but you can still make a bad investment in an Opportunity Zone, saving on taxes while losing money. Welcome to historic Bronzeville, just south of Chicago’s downtown. Bronzeville is an unusually good investment opportunity. Powerful forces of revitalization are all coming together with billions of public and private dollars, setting the stage for catalytic economic growth and appreciation.
Eagle OZ is building 264 multi-family rentals in Bronzeville. Phase one construction is already underway. We are projecting a 20% IRR from ground-up construction in Chicago, a low-risk investment with a nice upside profile and I have 10 minutes to tell you why. The shaded green blocks are Eagle OZ Opportunity Zone tracts and are the closest Opportunity Zones to downtown Chicago. We are local Chicago developers already in the business of delivering affordable housing in Chicago. We are investing our own cash to Eagle OZ.
I am Jamie Nahon, a chartered financial analyst with 20 plus years experience managing real estate investment funds and I’m proud to be at the head of the Eagle OZ. My partner, Scott Allbright, has been a general contractor and operator in Chicago for 30 plus years. His construction company, Green Day Construction, is building Eagle OZ multi-families. Our head office has 15 local employees is located just south of Bronzeville. Here’s a picture of the home team.
I am excited to announce that Eagle OZ won the award for America’s most impactful project at the Opportunity Zone Expo in Denver earlier this month. It’s one thing to be recognized with an award, but serious investors, such as yourselves, know accolades alone don’t make great investments. I’ve made the claim that Bronzeville is an unusually good investment opportunity, now I will explain specific reasons why I think this is the case.
Firstly, you don’t see many big developers in Bronzeville because there are no large tracts of land here ripe for residential development. Unfortunately, this limits new housing inventory in a market where there is strong demand and need for new housing. We overcome this obstacle, achieve scale, and create a compelling Opportunity Zone project by assembling many smaller infill parcels into a single fund. Eagle OZ faces lower overall competition with fewer developers in Bronzeville. The economics are on our side.
Secondly, notice that Opportunity Zones only appear on scattered blocks here as Bronzeville is well on its way to revitalization, following in the footsteps of the transformed Hyde Park, home to President Obama to the immediate Southeast. Note that Bronzeville held its ground during COVID with stable rent, home price and occupancy, demonstrating resilience.
These green dots are Eagle OZ Fund One addresses, all walking distance to the metro and a 10-minute ride into downtown. Catalytic growth is coming to Bronzeville with $10 billion of economic development and 55,000 new jobs, all breaking ground this year. Chicago is the nation’s third largest metro, an international hub for culture and finance, but residential property values lag 50% behind the two larger contenders, New York and LA. Conditions are perfect for housing appreciation.
Here are the big catalysts, which I will zoom into on the coming slide. The Bronzeville Lakefront site, the Obama Presidential Center, Tiger Woods’ new PGA Golf Course, the University of Chicago. This is the stage for Eagles OZ’s program. Most exciting is the $3.8 billion redevelopment of the Michael Reese Hospital site known as Bronzeville Lakefront, 7.8 million square feet of new mixed use space plus an additional 5.5 million future development planned on the adjacent marshaling yards. This economic engine will create 48,000 new jobs and spin the entire neighborhood into further revitalization. Groundbreaking scheduled this year with a forecasted $8.2 billion economic impact.
Next, the Obama Presidential Center just south of Bronzeville and Hyde Park with a $700 million ticket. Breaking ground this year, the Obama Center is expected to create $3 billion of economic development, 7,500 new jobs, attracting 700,000 annual visitors. Tiger Woods announced he will open a new PGA golf course in Jackson Park with $160 million economic impact. And don’t forget, the world-class University of Chicago is right here with 35,000 staff and enrollment with a $10 billion endowment and ranked sixth best university in the country and eighth in the world. And we are a stone’s throw from a [inaudible 00:05:48] place in downtown Chicago, the nation’s third largest city.
Eagle OZ offers you a venue to participate in this wave of catalytic financial and social upside with the added bonus of Opportunity Zone tax incentives, an unusually good investment opportunity indeed. In 10 plus years, we expect to have two exit options, either a sale to investors or to home buyers with appealing units built to new condo standards, all three-bed two-bath units with enclosed parking. Our 20% IRR projection assumes a 495,000 sale price for door to home buyers based on 3.5% annual home price appreciation from the current market at $350,000, a modest assumption given the catalytic growth coming to Bronzeville.
Let’s talk about impact. We have been operating in these markets for many years, and part of our business, the plan has always been to improve quality of life for our tenants. We are targeting a 20% affordability ratio, delivering 283,000 square feet of new stable living space for 1300 people. Eagle OZ is creating at least 150 new construction jobs and 10 new permanent jobs, drawing at least 25% from the local labor pool and at least 10% of our construction work is sub-contracted to minority-owned businesses.
Eagle OZ follows green standards with energy-efficient, all-brick buildings and industry-best in the materials across the board. See the long list here from triple pane windows to LED lighting. We are practically improving housing quality according to IRIS+ impact standards, with features that improve living comfort and safety in Bronzeville while reducing tenant and landlord maintenance costs.
On a quick tangent and of great interest, Bronzeville is before the Congress to be named a national heritage area because of its historical significance as a hub of black culture, leaving an outsized footprint on America. The likes of Nat King Cole, Gwendolyn Brooks, Louis Armstrong, and many others found their fame here. Bronzeville is home to the Wabash YMCA where Black History Month started, and the Pilgrim Baptist Church, known to be the birthplace of gospel music.
If approved by Congress as a national heritage area, National Parks Service will be engaged to maintain Bronzeville, telling this nationally important story with 10 million pumped into preserving its remaining buildings and traditions. We are honored to do our part to revitalize this important corner of American history.
Back to business. Our Fund One construction is already underway with 66 units. Fund Two will build an additional 198 units for a total of 264 units between both funds. Here’s the operating proforma for Eagle OZ rentals. We forecast a 6% operating cash yield based on an average year-one rent of $2,300 versus the current market of 2,500, allowing room to hit our 20% target affordability ratio. Our 2% asset management fee will be deferred until the 6% preferred cash distribution is paid up-to-date.
The exit proforma projects a 17% IRR before OZ incentives, and 20% IRR after OZ incentives based on what we believe to be conservative exit assumptions with the $10 billion of catalytic growth happening in Bronzeville. There was a 9% IRR hurdle. So, the manage shall only participate in profits after the investors receiving minimum profit of 9% per annum in present value terms. Our Fund One equity raise of 6.5 million is almost fully subscribed with a minimum investment of $60,000, and just a few spots left. Our Fund Two equity raise is $20 million with a minimum investment of $100,000.
We are a boutique Opportunity Zone fund focused on this one small submarket of Chicago, soon to be a national heritage area. We did not go out looking for an Opportunity Zone project. The Opportunity Zone came to our backyard and we jumped on the opportunity to use this unprecedented tax incentive to drive much needed investment dollars into our home market.
In summary, we are projecting a 20% IRR with stable interim cashflow, all supported by $10 billion of catalytic growth, with 55,000 new jobs here in historic Bronzeville, with the added benefits of Opportunity Zone incentives. It’s not often that this many positive factors come together, which is why I think Bronzeville truly is an unusually good investment opportunity.
We are a local team in the heart of the nation’s third largest city, and we welcome you to join us in Chicago for a tour of Bronzeville and Eagle OZ sites. I encourage you to go to our website, eagleoz.com, to download our investment summary and to contact us at the phone number and email here for the subscription documents and our offer documents. Thank you, Jimmy. Happy to answer any of your questions now.
Jimmy: Fantastic. Thank you, Jamie. I like your fund. Like a few of the other funds, it’s focused very specifically on one area of one city. We’ve had a few funds like that today. What do you like the most about Chicago? What gets you the most fired up about the location you’re in, if you could summarize it in just a few words?
Jamie: I mean, there’s so much potential in Chicago. It has so much character and it’s so rich with potential that hasn’t been unleashed yet. And I think that’s really what excites me most.
Jimmy: Tremendous. Well, I’m gonna cut you lose there. I’ve gotta get onto our next presenter. But thank you very much for joining us today, and we’ll be in touch soon, Jamie. Thank you very much. And for those of you out there who would like to learn more, please do visit eagleoz.com and email [email protected] Jamie, thank you so much. Appreciate your time today.
Jamie: Okay. It’s a pleasure, Jimmy. Thank you.
Jimmy: Thank you.