In less than one week, we’ll be speaking with Chris Milner, Head of CRE Investment Management at Cantor Fitzgerald, during our next Opportunity Zones webinar on August 14. This past March, Cantor Fitzgerald and Silverstein Properties entered into a joint venture focused on acquiring and developing real estate projects located in Opportunity Zones.
Investments may include retail, office, industrial, hospitality and multifamily developments located in Opportunity Zones in major metropolitan markets throughout the U.S.
This is the first Opportunity Zone initiative for Cantor Fitzgerald, and we asked Chris a few questions about the OZ program and why it’s important to Cantor Fitzgerald.
- How does the OZ program align with Cantor’s vision and values?
Cantor remains at the forefront of the global financial arena through a focus on customer service and financial innovation. We remain committed to those values by consistently fueling the growth of new ideas and new markets to deliver opportunity to all who place their trust in us. Qualified Opportunity Funds (“QOFs”) seek to promote real estate development, job creation and overall economic growth in lower income communities through the use of substantial potential tax incentives to investors. Cantor and Silverstein’s shared history of rebuilding and commitment to communities is a central theme of our opportunity zones strategy.
- Why did Cantor decide to enter into a joint venture focusing on Opportunity Zones?
Building on the last point, Cantor and Silverstein came together to apply the extensive real estate expertise of their combined organizations to Opportunity Zone Investments. The firms have long tenures under steady and consistent leadership as well as a historical legacy through the events of September 11, 2001 and the World Trade Center.
Demand for investment capital has steadily increased in qualified opportunity zones even before the program was enacted. Over the past five years, nearly $234 billion has been invested in areas which are now designated as qualified opportunity zones. Many of these areas were already growing and attractive places to invest. The Congressional Joint Committee on Taxation estimates that investors in QOFs will receive in the aggregate approximately $1.6 billion in tax benefits per year from 2018 through 2027. Increasingly, investors seek a trusted source that can deliver a robust pipeline of opportunities.
The relationships Cantor, Silverstein and their affiliates have cultivated with leading regional and national developers, owners, brokers and other commercial real estate market participants will generate a pipeline of attractive qualified opportunity zone investments.
- What is the single most difficult part of putting of navigating the OZ program?
On October 19, 2018, the IRS released its first set of guidance on opportunity zone programs and on April 17, 2019, Treasury released a second set of program guidelines. The new regulations clarified many issues for investors, including how a qualified operating business is defined as well as safe harbors for meeting certain statutory requirements designed to protect investors.
One of the most difficult challenges is defining and understanding the new opportunity zone legislation as well as the compliance implications for QOFs under federal and state securities laws. The Securities and Exchange Commission and the North American Securities Administrators Association (NASAA) recently issued a summary that explains the application of the federal and state securities laws to opportunity zone investments.
In order to be successful, sponsors will need a robust legal, compliance and accounting infrastructure that has the resources to manage compliance with qualified opportunity zone rules, regulations and reporting requirements – partners like NES Financial can help towards that end.
To find out more of what Chris has to say about Opportunity Zones, attend our webinar and register today.