Numbers Count With Opportunity Zone Deals

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WASHINGTON, DC—Investing in Opportunity Zones is not just about tax benefits and socially-responsible developments. Investors have to make sure the projects pencil. Data analysis, in other words, is just as crucial. So says Craig Bernstein, a principal at OPZ Bernstein, which recently launched the OPZ Bernstein Opportunity Zone Fund.

“We have a fiduciary responsibility to spend the time conducting the quantitative analysis while evaluating the 8,700 Opportunity Zones,” explains Bernstein.

Bernstein targets areas that have already experienced some gentrification and revitalization plus areas that can sustain growth during the life of the investment.

“One has to really look at the analysis including job growth, employment levels and whether the area can also support new construction,” says Bernstein. “We are not taking a shotgun approach on any of our deals including Opportunity Zone deals.”

Bernstein says he has several sources for numbers and especially relies on proprietary sources while evaluating OZ opportunities.

“The Opportunity Zone program is not a magic pill,” says Bernstein. “It has the ability to make a good deal great but will not make a bad deal good.”

Bernstein believes the program is one of the most significant pieces of legislation to affect the real estate industry in the past 100 years. That said, the program is just one piece in a larger picture of creating long-term sustainable growth within specific communities.

“The program is very powerful,” acknowledges Bernstein. “Some of the benefits of the Opportunity Zone program includes job growth, rent growth and property appreciation. As a firm, we have done over 80 deals totaling over $1.5 billion of New Market Tax Credit deals, which are similar to the types of projects we are pursuing in Opportunity Zones.”

Opportunity Zones have the potential for a far wider reach. Bernstein points out that about 11% of the United States is in a zone and 31 million Americans and approximately 1.5 million businesses live within these areas. The breakdown between suburban, rural, and urban, is fairly close with 40% rural, 38% urban and 22% suburban. “The areas where we’re seeing the greatest amount of interest are in the most densely populated, metropolitan areas including Los Angeles, New York, Houston, and South Florida,” he says.

Charleston, Austin and Columbus are also areas of high interest—areas where Bernstein and his team expect to provide good risk adjusted returns to their investors.

“I’m a fiduciary, and at the end of the day, we are a wealth management company focused on capital preservation and providing a steady, recurring income stream, while hopefully providing tax-free capital appreciation. So, when we look at these markets we are looking at them wearing our investor hat and determining where we can get the best risk adjusted returns for our investors,” says Bernstein. “Our numbers and analysis are invaluable during this entire process.”