USG Realty Capital, OZI Group Launch Multi-Asset Opportunity Zone Fund

USG Realty Capital and OZI Group have partnered to launch an investor-directed multi-asset opportunity zone fund. The platform is the first of its kind. It has already identified projects for the fund, expecting to provide between $10 million to $15 million of equity for five to 10 projects in total in the multifamily, senior living, self-storage and manufactured housing asset sectors.

“We’ve been in the opportunity zone funding arena from the very start, in 2018,” Greg Genovese, CEO of the USG/OZI Opportunity Zone Investment Platform and the founder of USG Realty Capital, tells GlobeSt.com. “USG Realty Capital and OZI have been proponents of project-specific opportunity zone funds as we believe these give the investor the best ability to review a single project, the demographics, and complete better due diligence, instead of having to invest into a portfolio, without any choice of which projects they would like to invest in, having to accept all the projects in the portfolio.”

The fund is also unique in that it refocuses on investor needs and interests, rather than developer interests. “Before COVID-19 hit, the vast majority of qualified opportunity funds were developer-driven,” adds Genovese. “Developers oversaw the funds, developed the projects, and served as asset managers. This, in turn, led to conflicts of interest and decisions that weren’t necessarily in the investors’ best interests.” Developers are still active in the platform, but as project partners not fund directors.

As a result, this fund will give investors more flexibility in deciding where their investment capital is heading. “Investors wanted more control over where their monies were being directed, and our platform met this challenge,” says Genovese. “Moreover, we also solved how we could develop an investment vehicle in which the asset manager was clearly on the same side of the investor as the asset manager while still working with our development partners at the project level, thus eliminating potential conflicts of interest between the project developers and the investors.” The multi-asset platform allows investors that opportunity by building in flexibility to invest in one or several projects through the fund.

USG and OZI are also responding to new market demand born during the pandemic. “When COVID-19 hit, and the following economic downturn, we noticed that high net-worth individuals and investors liked the single-project investment dynamic, but with so much new uncertainty, also wanted more diversification in their portfolios, thus the impetus for us,” says Genovese. “The challenge was to develop an opportunity zone fund investment platform that can give the investor the single-project dynamics they demand, but also the portfolio diversification they were looking for with the economic uncertainty post COVID-19.”