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SAN JOSE, CA ‒ A private equity firm focused on Opportunity Zone investments has engaged a local company to provide OZ funds administration.

OZ fund manager and sponsor Opp Zone Capital, which focuses on real estate and business ventures, retained specialty financial administrator NES Financial.

NES Financial will handle the administrative and compliance requirements of the OZ funds, using technology to streamline the execution of the regulatory requirements and administrative services.

A purpose-built service like what NES offers is vital for the success of specialty fund managers like the ones focused on OZs, said Reid Thomas, NES executive vice president, in prepared remarks.

"Traditional fund administration solutions fall short of meeting the needs of OZ fund managers," he said. The 2017 federal Tax Cuts and Jobs Act created the OZ legislation to breathe life into distressed areas by encouraging investors to put their capital gains into real estate or business in a designated OZ in exchange for tax breaks.

The magnitude of capital gains tax breaks depends on how long investments are kept in the OZ. There is a 10% cut for a five-year retention and a 15% cut for a seven-year retention. A 10-year investment means capital gains from the OZ investment itself won't be taxed.

Opp Zone Capital focuses on communities across the southeastern and western US with primary target states of Florida and Texas. Its client funds include a South US real estate fund primarily in Florida and Texas that has a $40 million target raise amount, a Central Florida fund that has a $120 million target amount, and a downtown revitalization fund for Clearwater, FL, with a $150 million target raise amount.

The Central Florida fund also is to benefit from the federal Historic Tax Credit.

Opp Zone Capital, based in Clearwater, was founded by principals Jeanine Warhurst Blake and Edmon Rakipi.

The retention of NES ‒ an industry leader first to offer dedicated OZ fund administration ‒ will give Opp Zone Capital's clients transparency and compliance services that also maximize social impact, Blake said.

NES also will give Opp Zone Capital clients access to the latest data on how their investments are doing, added Rakipi.

"Through NES Financial's portal, investors in our client funds get real-time access to fund status and capital account financial data, along with an objective measuring score about the social impact our fund is making, based on the iRR platform—all of which is very important to them and us," he said.

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Lidia Dinkova

Lidia Dinkova covers South Florida real estate for the Daily Business Review. Contact her at [email protected] or 305-347-6665. On Twitter @LidiaDinkova.