Pinnacle Partners and Trilogy Investment Company are launching a Build-to-Rent (BTR) Opportunity Zone Fund, aiming to target three regions in the Sunbelt.
The goal is to build 462 townhomes, with the fund size reported at $60 million. They are set to be constructed in three BTR foster communities in Huntsville, Alabama (172), Augusta, Georgia (245), and Decatur, Georgia (45).
The two companies said in a statement that the areas are “underserved” and the fund intends to offer investors ”substantial tax incentives.”
“This tax-advantaged real estate fund is targeting strong risk-adjusted returns, fueled by long-term positive trends in these markets with an exciting in-demand asset class,” said Jeff Feinstein, managing partner of Pinnacle Partners.
“In fact, the Fund’s launch is timely for investors looking for more tax-efficient strategies as they complete their year-end tax planning. We believe this is a great opportunity for investors who can manage the risk and liquidity.”
Also, this isn’t the first time TIC and Pinnacle have teamed up on housing.
Previously, the two closed the Pinnacle Partners OZ Fund VIII, which involved the development of two BTR projects in Charlotte, North Carolina, and Avondale, Arizona. They were for townhouses and single-family homes, respectively.
“This growing relationship with Trilogy has allowed us to be their co-GP investment partner for their upcoming pipeline of BTR projects,” Feinstein said.
In the current state of the market, the two firms see BTR as an opportunity to capitalize on the housing shortage. These types of multifamily properties typically offer lower vacancies, higher monthly rental rates, longer leases, more space and amenities, as well as better renter profiles, according to details from the latest fund.
For the most part in the past year, the multifamily asset class has faced challenges of high supply. However, a recent market analysis by Cushman & Wakefield finds that the pace of construction is falling, while demand is increasing. For example, construction in Austin has plunged from nearly 19 percent of its inventory last year to 11 percent in 2024. Nashville’s went from 15 percent to nine percent.
Pinnacle’s portfolio includes roughly 2,400 multifamily units.