A Mission Driven OZ Development, With Monte Dei

In this webinar, Tess Young presents an OZ project in Globe, Arizona that includes ground up construction, redevelopment, and a substantial charitable component.

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  • Request more information from the fund sponsor.

Webinar Highlights

  • Overview of the unique, mission-driven focus of this OZ project.
  • History and current state of Globe, Arizona.
  • Opportunity to serve retired religious.
  • Summary of financials, timeline, and projected returns for this project.
  • Plans to acquire and rehabilitate buildings in Globe, and future uses of cash.
  • Milestones achieved to date.
  • Live Q&A with OZ Pitch Day attendees.

Industry Spotlight: Monte Dei

Monte Dei Globe is a rural Opportunity Zone development project that will be a luxury, sustainable retirement mountain top village where a portion of the profits are tithed to build co-located free housing for retired religious clergy.

Learn More About Monte Dei

Webinar Transcript

Jimmy: Up next is Monte Dei Globe.

Tess: Thank you, everyone, for your time. My name is Tess Young with, Monte Dei Globe. I’m the CEO. And right beside me is Brian England. He is the chief operating officer, and he’s helping me greatly with managing the slides. For those of you who were at the spring 2024 Opportunity Zone Pitch Day, you heard about Monte Dei Globe. And back then, we were just giving you pretty much an overview of our project, that promotes impact over income. And in essence, the unique aspect of Monte Dei Globe’s Opportunity Zone investment is that there’s a mission-driven component to it.

So, today, what I’d like to do is really share with you the how. And in our next slide, you’ll see that we’re very excited to share with you how we are implementing that mission-driven Opportunity Zone strategy, that emphasizes impact over income. Many of you, throughout the day, have listened to many impressive Opportunity Zone pitches. And for us, we’re gonna be a little bit different. And the reason is is that what we try to do here is threefold, as you’ll see on the screen. We’re trying to, in essence, balance the needs of future residents, while preserving the natural beauty, and emphasizing sustainability and preserving the environment, but at the same time, finding a way to generate profits. Because with those profits, that allows us to allocate a portion to give back, and to be able to serve underserved communities.

What exactly is impact? And in our next slide, we’ll share with you, of course, with the base of what we’re trying to do is we’re trying to fill a huge need of residential housing in Globe. Our team and I have rigorously studied Globe’s housing needs, and the impact that not having housing does, not only for the people, their quality of life, but also the employers as well. So, with our project to build ground-up construction, as well as rehabilitate and renovate historic downtown Globe, which is also inside an Opportunity Zone, we found that we actually help employers be able to retain and recruit talented employees, and talent that’s needed, such as providing housing for school teachers and first responders, as well as for the hospital, to be able to retain good staff and workers as well.

But more importantly, what we’ve found is that, with our ground-up development, we have been able to play a role in breaking the cycle of poverty, and I believe that’s part of what was the intent and the spirit of the Opportunity Zone, in being able to provide jobs, full-time W-2 employee jobs. For every, based on a formula, for every $3 million of concrete purchased, that translates to 25 jobs. But more importantly, with our development, and being able to fill that need, we’re able to also create profitability, that gives us opportunity to support underserved communities. Once such would be veteran-owned small businesses and contractors, as well as something that’s near and dear to our hearts, which is really to be able to provide free housing for retired priests and religious, who, after serving years, and living a life of taking a vow of poverty, find that at the end of their twilight years, their congregations aren’t able to help them, and they’re indigent, and they need help.

So, with that, what we’ve done is that we’re gonna, in essence, in the next few minutes, share with you some of the financial metrics that we’re showing you how we’re able to implement this impact over income strategy, so that with our mixed-use asset class, we’re able to resonate these values with investors that want to create value with their values, to be able to prioritize long-term gains, and significant asset growth over passive income. So, in order for us to achieve this goal, our end goal is to raise $100 million. And just like how to eat an elephant, you do it one bite at a time, our initial raise is $10 million. With that $10 million, we anticipate being able to use $5 million to acquire and capitalize the 58 acres of land that we will be using to develop the type of housing that we will need, single-family residential, 120, about 600 multifamily multi-story condominiums, retail commercial spaces, hotel, and event space as well. And the other $5 million, we plan to use that to renovate existing buildings in historic downtown Globe. We already have an existing building, and we plan to acquire up to five, and be able to rehabilitate that, and stabilize the rents within a time period of 12 to 15 months.

And further down in our presentation, we’ll also talk about the additional raises that we’ll need in the second and third phases. And that would be for the ground-up development for Marigold Village. But for now, we’re gonna go to the next slide, and we’ll talk about our QOF structure. Similar to what you’ve heard today, our QOF is really designed for accredited investors only. The minimum investment is $100,000. And we’ve also created our Opportunity Zone business, a QOZB, that, in essence, will be holding all the different assets. From there, we, as mentioned, we will be using that to capitalize our investment, and we also ask the general partners, with our limited partners, we also have a distribution structure, where, at the end of the 10-year holding period, we will return the invested capital, but also, once we are able to double or triple your capital, then that is the time that we are able to share in the profitability. Next slide please.

As mentioned, our focus, of impact over income, is to grow the portfolio of assets, to be able to retain and reinvest all our revenue throughout the different development of Marigold Village, and also the downtown historic Globe. So, the kind of investor that we seek to find are those that do prioritize patient capital, that believe in strategy of being able to grow the assets, and similar to what Jimmy said in his keynote speech this morning, to be able to utilize the Super Roth feature of the Opportunity Zone program, and at the end of the tenth year holding period, be able to exit tax-free the asset appreciation, because the QOF will, in essence, be valuing the investments at fair market value. One note, that we will plan to provide distributions, so that there would be no out-of-pocket expenses for retained and reinvested revenue.

So, what exactly will a $100 million equity raise look like? What you’re seeing here is a 3D architectural renderings of Marigold Village. The image that you see on the left, that you see, will be the multifamily multi-story condominiums. We’re very blessed to have a pro-growth planning and zoning and city council, that sees the huge need, and this opportunity that they have. And back in December, they gave us, through unanimous vote, the ability to increase the building height from three stories to seven. What you see here are six buildings of commercial retail, at the ground floor. We’ve allocated 65,000 square feet for supermarket, restaurants, and retail space. And to the left, you will see the sacred space, where we have a private chapel, and a building where housing will be for retired priests and religious, for free. To the right on the screen, as you will see, the other types of residential housing that we’ll provide. We’ll provide single-family residential homes, 120 of them, a combination of product types, of single-family residential, casitas, or patio homes, as well as two-story, possibly three-story townhomes, and also an amenity, the fitness center, and a clubhouse, that will be open for residents, and open to the city of Globe as well.

What’s unique about this location of this land is that this development backs the Round Mountain Park, and there’s actually a trail that connects our development with Box Canyon Trail. So, again, we have the ability to create a community that is minutes from downtown historic Globe, but also create all the amenities that you would find in an urban setting. So, why do we believe that this is the right time? Well, because a lot of the home buyers really haven’t been able to find inventory, and a lot of the people who want to buy homes tend to commute from the valley, and they work in Globe. So, we feel that the time is right. We feel that with a pro-growth government, and with Opportunity Zone investments providing lucrative opportunities and tax-advantaged benefits for investors, we feel that this is the right time to be able to present to you our idea of this Opportunity Zone investment as well.

So, in addition to the housing, one of the key features that we have is a premier 300-key hotel and event space. Globe is the county seat of Gila County, and unfortunately, it doesn’t have a place that can house events. And this is something that the city has been anxiously needing for the longest time, and we’re just grateful to be able to be given this opportunity to present this hotel event space, with underground parking, to have solar, as well as EV charging stations throughout.

So, with our development, we actually have achieved these milestones, and we’re on track to continue to receive more support from the city, as well as meet our groundbreaking deadline of December 24th. The next slide, please. In addition to what we will use the $5 million for, the other $5 million will be for renovating historic downtown Globe. As mentioned, we have one building already, and here, we’re happy to present our architect’s rendering of what we plan to do. We plan to utilize 60% of the space for commercial retail, and 40% for residential as well. And what’s unique about that is that historic downtown Globe is inside the Opportunity Zone census tract, and this plan coincides and aligns greatly with the city of Globe’s, desire to rehabilitate and renovate historic downtown Globe as well. So, based on this, in our next slide, we did some financial modelings, and what we found was that with five acquisitions of historic buildings, as well as the acquisition of the land, we were looking at an internal rate of return of over 10%. Actually, we’re looking at an IRR, next slide please, of over 10.2%, with a return on invested equity at over 2%, at 2.8%.

So, what we’re looking at, then, is for the next two equity raises, just looking forward, we anticipate needing an additional $35 million, and this will be for the actual construction of the 120 single-family homes, as well as implementing the hotel and event space. What’s unique about this is that we really anticipate being able to raise enough, $35 million is enough, because there has been an incredible interest from the EB-5 investors, who, since Congress reformed the program in April of 2022, there’s been a push for rural development. And so, with ground-up development, and the creation of jobs, this allows us to take advantage of a source of debt, that’s, their risk factor is really how much jobs it’ll create, but also, because this is in a rural area, we’re looking at being able to access USDA rural financing for bridge and capital loans as well.

And finally, in the third raise, of $55 million, this is when we would need to utilize a lot of the profits that we’ve earned from selling our single-family residential homes, and being able to utilize equity, and debt, debt of about 50%, for the third and most intensive, and probably most dense aspect of our development, and this would be the condominiums and the hillside development. And with that, what we did with our financial modeling is that we were able to, in the next slide, wanted to show you, just from our site plan, just on the southwestern portion, C and D, on your screen, is the hotel and event space, and the buildings that are in red, that looks like those are six buildings that are multifamily. And that, in essence, is where we plan to deploy the equity raise of phase two and phase three. And based on our financial modeling, what we found, next slide please, is that we would generate, after a 10-year period, an internal rate of return of over 10%, with a multiple of over 2-plus on invested capital. So, similar to what we found with our initial raise of $10 million, we’re looking at similar metrics for the more intensive use of capital for the multifamily, and hotel and event space as well.

Lastly, how we were able to do this is our management team. Our management team has the experience and the know-how to be able to manage and recruit the kind of talent that has the kind of alignment that we need, to focus on impact over income. We’re very fortunate to have as our builder Matthew Grim, from Jones and Jones Construction. Their wheelhouse is primarily in hotel, hospitality, and multifamily multi-story, not just in Arizona, but internationally as well. And we have been very fortunate, having an advisory board who are OZ experts, but especially someone who specializes in sustainability, and because of her contact, Jan Green, she was able to network with us to builders who would be able to utilize many of the innovation and building technologies that only will help us to build homes that are not only energy efficient, but also make it affordable to be able to maintain, and sustainable as well. Also on our crew, we have, of course, Brian, and his expertise in residential real estate, and Cathy. And she will be our point when it comes to transactions. And for me, I have a background in commercial development as well, and also as an entrepreneur, being able to find these unique opportunities where we can utilize profitability, and create impact for underserved communities.

And speaking of impact, I had mentioned this earlier. In our next slide, I just wanted to share with you briefly why being able to provide housing for retired clergy is so important. What we’re finding is that there are a lot of retiring priests, and unfortunately, they’re, for every three retiring priests, there’s only one new aspirant. And these numbers are not sustainable throughout the U.S., and I think they’re seeing this throughout the world as well. And what they’re finding is that, as they age, they’re not able to find their congregations being able to support them. Only 6% of congregations are able to take care of their needs in their twilight years. So, what we’ve done, as part of our philosophy in giving back, is that throughout all our Monte Dei Globe properties, that retired priests and underserved communities will be able to have free housing, and we’re able to utilize this unique feature of Opportunity Zones to be able to make this possible. And so, with that, we’re just so grateful, because we are also planning to utilize partnership with our 501(c)(3), to be able to do activities outside our QOF.

Anyway, that wraps up my presentation. I really appreciate your time, and I hope that this message resonates with you. We hope that you will take the next step, reach out to us. We’d love to hear from you. We have our contact information on the screen. And lastly, like with any investment, there are risks involved. And here, you’ll see our legal disclosure. I hope that you will take your time to read it. At the end of our presentation, we’ll give Jimmy a copy of our slide, and you’ll be able to read it as well. And so, finally, we’re gonna post our contact information, and we’d love to hear from you. And again, thank you, again, Jimmy for your time, and congratulations on another successful Opportunity Zone Pitch Day.

Jimmy: Well, thank you, Tess, and thank you, Brian. Great presentation. Very impactful project there. We’ve run out of time for questions. If you have any questions for Tess or Brian, please do contact them using the information on your screen. I’ve also posted their contact information in the Zoom as well, but for now, we have to move on to the next presenter, but thank you both so much. Really appreciate it.