The Cresset-Diversified QOZ Fund partners with best in class developers to build institutional quality core real estate assets in high growth primary markets across the United States. Our investments are structured conservatively with low loan-to-cost leverage.
|The Preston||Houston, TX||Hines|
|North Wynkoop||Denver, CO||Hines|
|Eleven West||Portland, OR||DDG & Gerding Edlen|
|T3 Finery||Nashville, TN||Hines|
|Ripley II||Silver Spring, MD||Washington Property Co.|
|River Crossing||Omaha, NE||Hines|
Cresset Partners, led by Eric Becker and Avy Stein, and Diversified Real Estate Capital, led by Larry Levy, have partnered to create the Cresset-Diversified QOZ Fund. The Fund is managed by an experienced team of investors along with legal, tax and accounting experts.
The Tax Cuts and Jobs Act of 2017 created QOZs to provide potentially significant tax benefits to investors who re-invest capital gains into long-term investments into communities designated for economic development. This solution is useful for investors who have substantial capital gains and a desire to realize them in a tax-efficient manner.
Cresset Partners, led by Eric Becker and Avy Stein, and Diversified Real Estate Capital, led by Larry Levy, have partnered to create the Cresset-Diversified QOZ Fund. The Fund is managed by an experienced team of investors along with legal, tax and accounting experts. The Fund held its first close in December 2018, and will hold a final close no later than December 31, 2019.
The Fund closed on its investment in Houston in April 2019 and started construction shortly thereafter, making the Preston one of the largest QOZ investments in the U.S. to start construction. The Preston is being developed in partnership with Hines. In June 2019, the Fund closed on the purchase of land for its second project, North Wynkoop, in the RiNo Neighborhood in Denver. North Wynkoop is also being developed in partnership with Hines.
The fund has four other investments under contract in the northwest (Eleven West), midwest (River Crossing & T3 Finery), and northeast (Ripley II).
After-tax gains on a QOZ Investment can be more than double those of a similar investment without the QOZ benefits. The table below illustrates an investor’s potential after-tax returns in a QOZ investment compared to the investment of capital gains in a traditional investment both appreciating at 10%.
|Traditional Investment||QOZ Investment|
|Invested Capital Gain||$1,000,000||$1,000,000|
|Less: Capital Gain Tax Investment (23.8%)||($238,000)||0|
|Year 10 Value (assumes 10% annual investment appreciation)||$1,976,432||$2,593,742|
|Less: Year 10 Capital Gains Tax (23.8%)||($289,035)||0|
|Year 10 After-Tax Value||$1,687,397||$2,593,742|
|Less: Cap Gains Taxes on Invested Gains Due on 12.31.26*||0||($202,300)|
|Total Year 10 After-Tax Value||$1,687,397||$2,391,442|
|Total Year 10 After-Tax Net Gain**||$687,397||$1,391,442|
By investing in an opportunity zone, investors are able to defer taxes on capital gains, reduce taxes by holding the investment, and eliminate taxes if held for 10 years, as illustrated below.
Harvested gains are invested into the fund.
The original capital gain is reduced by 10%.
The original capital gain is reduced by an additional 5%, for a total reduction of 15%.
Original capital gains tax is due unless the asset has been sold.3
When the investment is sold, tax is eliminated on QOZ capital gain.