North Coast Partners, a Detroit real estate investment company, Thursday announced the launch of the Detroit Opportunity Fund, which will invest in newly designated opportunity zones in the Detroit Area. The fund is beginning with a $500-million pipeline of new deals in the city.
“The new federal legislation that created opportunity zones and opportunity funds is bi-partisan supported, intelligent, and bold,” says Matt Temkin, a managing member of North Coast Partners. “The future of the country depends on legislation exactly like this. Given our history of investing in Detroit, we couldn’t imagine launching our first Opportunity Fund anywhere else.”
The fund is the first of several geographically-targeted opportunity funds that will be offered by North Coast Partners through North Coast Asset Management. Opportunity funds are new, tax-advantaged private investment vehicles created by the Investing in Opportunity Act, which was passed as part of the Tax Cuts and Jobs Act in 2017.
While some opportunity funds will likely be custom-made for large projects, others will likely function like a mutual fund that invests in businesses and real estate located in opportunity zones instead of in stock, selling shares to the public, according to opportunity-funds.com.
Individual investors and corporations can roll capital gains from asset sales of any type into the funds, deferring and eliminating federal and state taxes due on the rolled-in gains in the process. Gains produced by the fund investment are tax-free. Opportunity funds can invest in more than 8,700 opportunity zones that have been designated around the country over the last three months.
“This new legislation is coming at the end of the longest bull market in modern history,” says Temkin. “By some estimates, there are $6 trillion in unrealized capital gains sitting on the sidelines in America. The unique tax advantages of Opportunity Fund investment are something investors all over the United States should be examining. This is an entirely new asset class. Plus, the program is going to do great things for the country.”