2021 Riaz Capital Ozone Fund III

Riaz Capital is a Bay Area-based real estate development and asset management company, focused on urban workforce housing. Operating in the Bay Area since 1977, Riaz Capital’s principals have built a unique investment thesis over decades, profitably developing housing for the Bay Area workforce across 160 different residential and multifamily projects. The firm achieved from 2010-2019 an average IRR on exited deals of 40%, and $130m of value creation portfolio-wide. This fund is the third development fund from Riaz Capital, and the next step in Riaz Capital’s go-forward strategy.

Fund Focus

Ozone Fund III will raise $100M to develop Riaz Capital’s next round of urban workforce housing properties. With targeted deployment in the greater San Francisco Bay Area and two sites already identified, this Fund will target a 3.2x equity multiple and 15% IRR over a ten-year investment period. With Opportunity Zone compliance for those investors who have capital gains, the total tax-adjusted returns jump to a 5.0x and 21% IRR. All distributions through the period of the hold will be free of federal taxes for opportunity zone investors.

The fund will develop multifamily housing in urban markets targeting a moderate-income professional customer. The fund will include 65% new construction in the firm’s Micro-Living design, 20% adaptive reuse conversions to multifamily, and 15% other multifamily repositioning. Altogether the fund will create 1,600 new residences, and will include two properties acquired just prior to Temporary Certificate of Occupancy (TCO), as well as already-identified development sites and several additional properties to be identified.

Opportunity Zone Benefits

Riaz Capital’s urban workforce housing fund has optimized for the federal opportunity zone program, generating nearly $900K in benefit on every $1M invested. Under the legislation, OZ investors can defer 100% of federal capital gains, benefit from 10 to 28 years of tax-advantaged cash flow distributions, and enjoy long-term tax-free capital appreciation through the elimination of both depreciation recapture & capital gains tax liability if the investment is held for 10 years or more. Investors should note that taxes are deferred until December 31, 2026.

Target Returns

The fund will target a 3.2x equity multiple and 15% IRR over a ten-year investment period. With Opportunity Zone compliance for those who invest qualified capital gains, the total tax-adjusted returns jump to a 5.0x and 21% IRR. All distributions through the period of the hold will be free of federal taxes for opportunity zone investors.

Fund Manager:	Riaz Capital
Asset Classes:	Real Estate
Fund Size:	$100M
Minimum Investment:	$250K
Portfolio Type:	Multi-Asset
Fund Status:	Closed to new investors
Investment Locations:	California
Property Types:	Multi-Family Housing, Workforce Housing