Equity raised by qualified opportunity funds (QOFs) that are tracked by national accounting and consulting firm Novogradac surpassed $15 billion at the end of 2020.
The firm’s Novogradac Opportunity Zones Investment Report: Data Through Dec. 31, 2020 reports $15.16 billion in equity raised by QOFs for which Novogradac has information.
Novogradac is tracking 969 QOFs, of which 659 have reported the dollar amount of equity raised by the end of last year. Novogradac began tracking opportunity zones (OZ) investment in May 2019 and the number of QOFs tracked and reported equity raised has increased steadily.
"The continuing growth of investment in 2020 in opportunity funds amidst the COVID-19 pandemic is particularly good news as businesses and residents in opportunity zones struggle to recover from the pandemic induced economic recession," said Michael J. Novogradac, CPA and managing partner of Novogradac. "The OZ incentive is proving to be an effective tool in driving capital to distressed areas."
Novogradac's report shows an average of $23 million raised by QOFs that have reported the dollar amount of equity raised. Funds with at least a partial focus on residential investment have raised $11.91 billion and those with at least a partial focus on commercial investment have raised $9.37 billion (due to the number of QOFs with multiple areas of focus, the sum of all areas of focus surpasses $15.16 billion).
In a blog posting accompanying the release of the report, Michael Novogradac says the total investment in QOFs is “undoubtedly more than $15.16 billion, due to the fact that the rolling collection of information comes from QOFs voluntarily providing information to Novogradac or from other public sources such as Securities and Exchange Commission filings and press releases.
“While the Novogradac list includes single- and multi-asset funds, it does not include proprietary or private funds that are owned and managed by their principal investors,” he adds.
"Despite unprecedented economic challenges, people continue to invest in opportunity zones," said John Sciarretti, CPA, Novogradac partner and head of the Opportunity Zones Working Group. "As time passes and investors become more comfortable and familiar with investing in opportunity funds, we expect the amount of investment to continue to grow."
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism.
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