In this webinar, Greg Genovese presents a multifamily OZ deal in Spokane available through the Investors Choice OZ Fund.

Interested In Learning More About This Opportunity?

You can visit the Official OpportunityDb Partner Page for the Investor’s Choice OZ Fund to:

• View beautiful high-resolution images.
• Learn key details about the fund and related projects.
• Request more information from the fund sponsor.

Webinar Highlights

• The unique model that allows investors in this fund to allocate across multiple projects.
• Economic tailwinds in Spokane, Washington.
• Overview of the Peyton Lofts project.
• Projected return and timeline for the Peyton Lofts deal.
• Live Q&A with OZ Pitch Day attendees.

Industry Spotlight: USG

USG Realty Capital provides investors with a unique, mission-driven and socially responsible investing platform through opportunity zone funds, as well as a family of alternative real estate investment programs, including a 1031 exchange Delaware statutory trust platform.

Learn More About USG

• Visit USGRE.com

Webinar Transcript

Jimmy: Greg is going to be presenting the USG Realty Capital Investors Choice OZ Fund. Greg, do you say OZ, or do you say “Oz?” What do you like to say?

Greg: You know, I say “Oz,” just because I’ve been saying that for so long, but I can go either way.

Jimmy: You’re the Wizard of Oz. I think I’ve bestowed that moniker on a handful of individuals over the year, but you’re the current Wizard of Oz, with us right now.

Greg: There we are.

Jimmy: Love the QR code there. Greg, USG Realty Capital, the OZ experts. Go ahead and dive in when you’re ready. Ten minutes. Go.

Greg: In 10 minutes, I’ll try to get it all done, plus try to get you on time, if I can. Anyways, nice to see everybody again. A lot of you know me. A lot of our own investors are on this call. Wanna present, as most people know, we’re the fund that has multiple projects within one fund structure which you’re allowed to pick and choose what you want, and the amounts that you want, with one fund, and actually, one K-1 delivered to our investors by March 1st every year. I’m gonna run through, very, very quickly, our fund structure, and then I’m gonna highlight our latest deal that we just launched in Spokane, Washington, which is an income tax-free state. A lot of people are moving there. And as Jimmy mentioned about the QR code, we put a QR code on all of our presentations, so that, at any time you need to duck out, or you wanna go right to our website, wanna talk to us further, or get an expanded presentation, please go to the QR code, fill out the submission form there, and we’ll contact you right away, and we’ll engage with you. So, you’ll see that QR code at the bottom right-hand corner of all of our presentations.

Real quick, on our track record, these are the projects that we’ve successfully built, as far as our track record, just for Opportunity Zones. You’ll see Marina Square, which was a $140 million project in Bremerton, Washington. Actually won Opportunity Zone Fund of the Year. We do stay somewhat west of the Mississippi, but we really are a national company, looking for middle-market infill projects, with barriers to entry, to maximize the value of the project. So, we do look nationally, but we do find that most of our investments are on the western side of the United States. So, with Market Flats in Olympia, Washington, fully subscribed and leasing. Marina Square, back to the left, fully subscribed and leasing. KindCare is our assisted care facility, in Bristol, Connecticut, fully subscribed and leasing. Same with Market Flats in Olympia. We do have a very small amount left in our Milwaukee project. It’s a Top-40 Opportunity Zone area, and in the highest income tract in the city of Milwaukee. We have a tiny bit left there. And then we’re launching today our newest project, Peyton Lofts, in Spokane. And then, coming soon is Avery Apartments in Fargo.

And so, if you look at our track record, and we’d be happy to send this presentation to anybody that wants it, right now, almost $300 million in assets under management, and our tenth asset with our fourth fund. As I mentioned, we do get a lot of accolades. Real Estate Forum and Globe St. named us the top fund in the country for our first project, and that really launched our company to grow pretty dramatically over the last few years. And I currently sit on one of the very few Opportunity Zone round tables that speaks directly to the President’s Council. First, it was Trump’s council. Now it’s the Biden’s council, through the New York Times. The fund structure, in general, is one fund, multiple projects, nationally around the country, smaller equity raises, of $5 million, $8 million, $10 million, maybe $15 million, but you’re looking at the $20 million to $30 million projects, and we look specifically at demographics. Demographics are big for us. We do, you know, always have to build these programs that, you know, if and when we have a recession, that we can weather those storms, so we always want a good corporate structure, and good educational structure around it, so that we can weather those storms, if they should come up, and still drive demand for the projects.

And then lastly, our investors get to choose whatever project they want. So, as you can see from this map, we are nationally, or we are national, and we do have projects all over the country, including as far east as Bristol, Connecticut, and we are looking at a new deal right now in Boston. Our current fund, or current projects that are available for investment, are here. A little bit in Elevation in Milwaukee. Avery, in Fargo, is coming soon, and I’m gonna highlight today our Peyton Lofts project in Spokane, Washington. You’ll see that our other projects are anywhere from 10% to 12% preferred returns, and they’re projected to do much, much better than that, but that is the preferred return. And then, Peyton Lofts, with a 10% preferred return. Everything that we do is risk-mitigated, meaning we go through a long risk-mitigation qualification, so that the developers and the contractor really take on the onus of any cost overruns, and they also take on, any of the lending that we have to go through, they have to put their personal guarantees. So, everything that we have out for our investors, the loans are all in place. They’re ready to go. All the guaranteed max pricing on the construction are all in place.

And so, investors can take our platform and do things like this. Investor A can invest across the board here. Investor B can invest 25% of their $400,000 like this. Investor C, with $100,000, could invest something like this if they want. Investor D, like this, and then, we contractually obligate each one of our developer partners to deliver the tax returns and K-1 for the project to us no later than February 15th of each year. And that means we can get our K-1s out to our investors, on one K-1, no later than March 1st. The current offering size is $50 million, with a minimum of $50,000 per investment. Our preferred returns are 10% to 12%, and our waterfall is very unique, in the sense of, we have it structured where our investors need to get all of their investment capital back, plus the preferred return of whatever it is, 10% to 12%, and then, at that point, we’ll do a split with the investors, 80/20, but we do not do a catch-up. It’s just the next bucket up. So, very, very advantageous for our investors.

For the rest of the time, I’m gonna talk, and again, I encourage you to go to our website, encourage you to call us. I encourage you to fill out a submission form, so that we can talk, and go a little bit further, but I wanna present to you Peyton Lofts, in Spokane, Washington. This is our 10% preferred return. We have it penciled to do around 16.4%, which is, roughly, the investors would get back, on the same question you gave Chris, on a $100,000 investment, if we were to do the 16%, it’s about $264,000 back to the investor over that time period. This is a development opportunity, tax-advantaged Opportunity Zone, and it is in a tax-free state. And that’s important because more and more people are in fact moving to tax-free states, and you’ll see that Spokane is growing by leaps and bounds right now.

Peyton Lofts, it’s a historic building, so we have a lot of tax credits, including historic tax credits in this deal. Ninety-six apartment units. It’s actually under construction now, and we’ve done the full demolition that’s needed, so there’s no surprises in this deal. There’s also 10 tenants on full 10-year leases on the bottom floor, and that’s fully leased and operating right now, so it’s starting, cash flow…cash flow will not stop in this deal, even through the build. Our developer is the largest developer in the city of Spokane, named 4Degrees. This is right downtown Spokane. It’s adjacent to the multi-transit terminal, and it’s in the most popular area for business and dining. And we’re raising roughly about $12 million, $11.9 million in total equity. We have the loan already in place with the Bank of Idaho, for $22.3 million. Total project cost here is about $34.2 million, and a 10% preferred return.

For those that may not know where Spokane is, it’s in northwestern Washington. And if we drill in a little bit, you’ll see, we really like areas that are infill, where there’s a lot of barriers to entry, so it limits the amount of building that can go into these areas. And this is the only Opportunity Zone project that’s on the books right now in the city of Spokane, so there’s really not much competition. And you’ll see that we’re only 25 minutes… well, you’ll not see this, but we’re only about 25 minutes away from Coeur d’Alene, which is a very popular vacation spot, and right next to Gonzaga University and Eastern Washington University, also home of the medical school for University of Washington and Gonzaga as well, and only a block away from the biggest shopping area, called Riverfront Park, and right next door to the historic Marriott Davenport Hotel. We drill in a little bit, you’ll see at the top left-hand side there, it says M Apartments. M Apartments is the, really, the only Opportunity Zone build that’s been done in Spokane that is of this quality. It’s fully-leased, and rent rates continue to go up. That’s a good thing. So, there’s a lot of absorption and desire and need for these particular units.

There is another Opportunity Zone project in the area, called RID, top right-hand side, and this is more, not homeless, but it’s really for migrant housing. It really doesn’t apply to what we do, or our demand. This is gonna be a mix, studios, with one-bedrooms, and a lot of one-bedrooms with dens, and some two-bedrooms, fully equipped with a fitness room, a theater, workstation, conference rooms, and its own cafe. We’re also putting in a, which is becoming really popular, an indoor rock-climbing wall, and bike storage in basement, and dog washing, etc. So, washer and dryer in each one of the units. We’re already seeing people knocking on our door, wanting to get this pre-leased right now, and we expect to have this built by probably the middle of, probably about, I would say the middle to Q3 of next year.

So, just a little schematic. As you can see, all the amenities are right in the middle, and you’ll see the apartments, the two-bedrooms on the left and the one-bedrooms on the right, and the studios in the middle. Just a snapshot of our rendering of one of our studios. This is the one-bedroom with the den, just to give you an idea. And then, if you look at the area demographics, you’ll see that Spokane has been growing well above two, three times the national average in population growth, currently well over $500,000 and…$500,000. Excuse me. Five-hundred-thousand people in the area, and they continue to drive more and more people, because a lot of world headquarters and regional headquarters are located right in Spokane. Amazon’s one of the biggest, Sky One Aerospace, Gonzaga University. Pepsi has their main distribution center for the northwest in Spokane. Providence Healthcare. Of course, everybody knows Kaiser Aluminum. Caterpillar. And it’s also buffeted by a lot of new tech companies that have been there for the past 10 years, and growing, and then also, adjacent to the U.S. Air Force base, which is also a demographic driver for this particular property.

And then, we like to have a, like I said, a good corporate structure, but also a good educational structure around all of our projects, so that we can always drive demand, even if we were to hit any type of recessionary pressure. Gonzaga University, the University of Washington’s med school is in Spokane. The Gonzaga law school is in Spokane. Eastern Washington University. Washington State’s medical school is also in Spokane. And University of Idaho and Washington State University are just a few miles away from Spokane. It’s also right next to, like I said, multi-transit hubs. Spokane Airport is growing. They have a lot of building going on there to add more terminals, because of the demand for people that wanna work and live in Spokane. Amtrak is just a block or two away from…and the Sounder system, train system, is there in Spokane, that can get people just about anywhere they go. And we do have people that will commute to Seattle. And then, the bus station is literally right around the corner.

Some of the activities that you’ll see in Spokane, again, Mobius Discovery Center is literally a block away. Riverfront Park is just a couple blocks away. It’s also the home of the new MSL teams, soccer teams, for the area, so they have their own MSL soccer team, that will be having their first season next year. And also, the women’s professional team as well. Entertainment is all around us. Wooden City, River Park Square, the Bing Crosby Theater. The gondolas over the river are right there, about a block away from this location. And then, very, very close to Coeur d’Alene, Priest Lake, and all the great activities that people like to focus on in this particular part of the country.

We’re all about risk mitigation, as I’ve told the group many times. When it comes to Opportunity Zones, it’s about risk-mitigating the deal. As I always like to say, at some point, investors are gonna say, “Where’s my money?” And so, we have to be good asset managers to keep the cost down, and to make sure that we’re putting the onus on the developers to make sure that they build it on time and at the rate that we’ve contracted with them. This also comes with 10-year parking lease. We have 120 spaces available for the 96 units. And this project, another risk-mitigating factor is that it’s cash-flowing from day one. All the floors of this project in this building have all been cleared and demolished, and we’re now doing the build, so there are no surprises in this historic building. And as I mentioned before, all the tenants are on new 10-year leases during construction. Also, weather. Some people talk about the weather. Because it’s an indoor build, the weather in Spokane during the winter time will not shut us down in any way, shape, or form, I guess unless it’s bad enough where they keep everybody home. But it’s an indoor build, and will not affect our timeline on building.

Jimmy: Hey, Greg, we are going a little over here, but we can share the rest of the deck with anybody on our website. If you could wrap it up in a minute, that’d be great.

Greg: This will be my last slide.

Jimmy: Thanks, Greg.

Greg: So, bottom line, everybody, why we like this project. It’s an infill development, so there’s limited capacities to entry. A low loan amount was needed with the Bank of Idaho. That’s in place. This is a quicker build. That means we get a quicker finance. It’s scheduled right now for about a 45% of your investment coming out in 2026, tax-free, back to our investors, and we’ve locked in the construction budget. Any cost overruns will go directly to our investors. And, strong demand in this area with multifamily housing. The population is growing way above the national average, with strong characteristics for the growing workforce and corporate headquarters. Over 77,000 students are here. This is fully-permitted, and the local economic development alliance and the local government is on board, and rent growth continues to be well above the national average here. And last point is, if you go up to where it’s in yellow, Cap Ex, the reason we like infill is it limits the amount of potential capital expenditure we may have to put into the project to maximize its value. That’s why we like to be in infill areas around the country, that really have limited amount of growth, and why we stay away from what I like to call equity rush areas, areas around the country that have a lot of area to build. We like to be in areas that have the demographics, but limited amount of building available to them.

So, that’s the last slide, and if anybody would like to come visit us or talk to me personally, please call us. Use the QR code. I’m happy to send you the PDF for this, and I’ll do that, Jimmy, and send it to you to send out, and I do appreciate everybody’s time, and 10 minutes is just not enough time, but I tried to do my best, and wanna thank everybody for being here. Thank you so much.

Jimmy: No, thank you, Greg. And thank you for all of the support that you’ve shown to OpportunityDb and myself over the years. You were one of my very first Opportunity Zone Podcast guests, way back, I think it was the end of 2018, or early 2019. Anyways. Always appreciate hearing from you, Greg. Please do visit usgre.com to learn more. Greg, thank you so much today. Appreciate it.

Greg: Thank you. God bless you guys. Thank you very much. Appreciate.