Novogradac: QOF Fundraising Flat From Previous Quarter, Down From Previous Year

According to new data from Novogradac, equity raising by Qualified Opportunity Funds was largely flat from Q2 to Q3, but the QOFs that they track are still on pace to exceed $10 billion for the year.

As of September 30, 2022, Qualified Opportunity Funds participating in Novogradac’s voluntary survey of the industry reported a total of $32.69 billion in equity raised since program inception in 2018. That was an increase of $2.20 billion over the course of the quarter, a slight uptick in growth compared to the previous quarter (ending June 30, 2022), which experienced a $2.12 billion increase. But it represented a small decline in per-QOF fundraising, from 1.93 million in Q2 to $1.79 million in Q3.

Comparing 2022 Q3 figures with the same time period in the previous year, QOF fundraising pace has experienced a marked decline. The third quarter in 2021 showed 2.76 billion in fundraising from 909 QOFs — an average of $3.04 million in fundraising per QOF in the period. This equates to a year-over-year same-quarter slowdown of 20% in aggregate fundraising, and 41% per QOF.

There are numerous factors likely playing a role in the slowdown, compared to the same period in 2021. First and foremost may be the fact that there are fewer capital gains available to defer into QOFs. Equities markets have experienced a steep decline this year, with the broad S&P 500 index down 24.8% this year thru September 30, 2022.

Novogradac’s survey is not comprehensive. Because Novogradac is only able to survey a portion of the total QOF universe that self reports directly to Novogradac or reports to the SEC, the $32.69 billion reported is only a fraction of the total amount of equity raised by all Opportunity Zone funds. Novogradac estimates that the actual total is likely three to four times greater that what gets captured in the Novogradac reports, which would put the total amount of QOF equity raised for Opportunity Zones in the range of roughly $95 billion to $130 billion.

Novogradac QOF Survey Reporting History

Reporting Period End Date	Total Funds Raised (Billions)	Number Of QOFs Reporting Funds Raised	Funds Raised During Period (Billions)	Days In Reporting Period	Funds Raised Per QOF During Period (Millions)
6/28/2019	$0.79	28	$0.79	365	$28.21
9/20/2019	$2.50	57	$1.71	84	$30.00
10/24/2019	$3.17	112	$0.67	34	$5.98
12/9/2019	$4.46	184	$1.29	46	$7.01
1/8/2020	$6.72	292	$2.26	30	$7.74
4/29/2020	$10.09	406	$3.37	112	$8.30
9/1/2020	$12.05	580	$1.96	125	$3.38
12/31/2020	$15.16	659	$3.11	121	$4.72
4/12/2021	$16.34	708	$1.18	102	$1.67
6/30/2021	$17.52	853	$1.18	79	$1.38
9/30/2021	$20.28	909	$2.76	92	$3.04
12/31/2021	$24.40	978	$4.12	92	$4.21
3/31/2022	$28.37	1,035	$3.97	90	$3.84
6/30/2022	$30.49	1,097	$2.12	91	$1.93
9/30/2022	$32.26	1,231	$2.20	92	$1.79

More From Novogradac

Read more about this reporting update: QOFs Tracked by Novogradac Continue on Pace for $10 Billion Year.

Year-end results from Novogradac’s survey are expected to be released in February 2023.