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Saxum Debuts $100 Million Opportunity Zone Investment Fund

Firm's Fund is One of the First in the U.S. Northeast to Focus on Federal Opportunity Zones
July 31, 2018
Saxum Real Estate is launching a $100 million fund to invest in properties specifically located within federal Opportunity Zones, one of the first such pools of money to be unveiled in New Jersey and the Northeast.

Saxum, a private real estate investment and development firm based in Parsippany, NJ, plans to use its new fund to focus on middle-market projects located in high-growth commercial real estate submarkets in the Garden State, as well as throughout the Northeast and Mid-Atlantic regions, according to Anthony Rinaldi, the firm's managing principal.

Saxum will be looking to develop projects ranging from $10 million to $50 million, with most of the ventures likely to fall in the $15 million to $30 million range, he noted.

"We will invest in all asset classes within the specific Opportunity Zones that we are pursuing, much of which will be heavy value-add and opportunistic investments," Rinaldi said.

The federal Tax Cuts and Jobs Act of 2017 established the Opportunity Zone program, legislation that U.S. Sen. Cory Booker helped draft, as a way to spark private-sector investment in low-income urban and rural communities. The lure is a tax break on capital gains.

"Most notably, the program allows investors to unlock capital gains from any qualified asset and to redeploy proceeds which are tax-deferred into assets located in Opportunity Zones," Saxum Real Estate said in announcing the fund.

Earlier this month, New Jersey Gov. Phil Murphy and Booker, one on New Jersey’s representatives in Washington, addressed a group of potential investors about the Garden State’s 169 Opportunity Zones, located in 75 municipalities.

At that gathering, Booker said that Newark, NJ-based Prudential Financial Inc. was ready to launch an Opportunity Zone fund.

Prudential spokesman Brendan Duffy declined to comment “on specific fundraising,” but said that the company was looking at the new federal program.

“Prudential is actively evaluating Opportunity Zone investments both within its corporate impact investments group and its third-party real estate investment manager, PGIM Real Estate,” he said in an email.

Virtua Partners, a private-equity real estate investment firm based in Phoenix, was one of the first companies nationally to say back in June that it was creating an Opportunity Zone fund, looking to raise $200 million.

"This is a historic opportunity that seldom presents itself," Rinaldi said in a statement. "It is a unique chance for investors to receive significant tax savings while investing in real estate located in communities that Saxum has identified as exhibiting strong growth potential. It is also a chance for our investors to further diversify out of traditional investments such as stocks and bonds and into real estate, while also earning the additional return boost due to the tax savings of the [Opportunity Zones] program."

In addition to its new Opportunity Zone Fund, the company formed its flagship Saxum Adamas Fund I LP in 2017.

Linda Moss, Northern New Jersey Market Reporter  CoStar Group   
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