Opportunity Zone Funds Due Diligence: Practical Tips and Strategies Explored
Opportunity Zone Funds (OZFs) continue to thrive since its implementation. With considerable tax incentives, more businesses are starting to realize its potentials. However, given the complex and changing regulatory landscape of tax laws, investing in the OZF may create a myriad of risk issues and challenges. Thus, it is essential for businesses, investors, and advisors to be in the know of the emerging trends and tax issues concerning the OZF. They must carefully review investment agreements and take proactive due diligence steps to ensure compliance and avoid legal liabilities.
Join a panel of key thought leaders and practitioners assembled by The Knowledge Group as they present an in-depth discussion of the recent trends and legal developments in the OZF. Speakers will dig deeper as they analyze the critical issues and compliance hurdles as well as the practical tips and strategies to avoid pitfalls in this rapidly changing legal climate.
This LIVE Webcast will discuss the following:
- Opportunity Zone Funds (OZFs): Recent Trends and Statistics
- Red Flags
- Risk Mitigation Strategies
- Best Due Diligence Practices
- 2020 Outlook
- Define key terms related to Qualified Opportunity Funds (QOF)
- Indicate practical considerations for investing in a Qualified Opportunity Zone business
- Determine the various QOF issues and their corresponding resolutions
- Identify the types of inclusion events and the amount includible in them
- Recognize regulatory and investing trends surrounding the Opportunity Zone Program
Darryl Steinhause, Partner
- What is a Qualified Opportunity Fund (“QOF”) (90% asset test)
- What is Qualified Opportunity Zone Property
- Qualified Opportunity Zone Stock
- Qualified Opportunity Zone Partnership Interest
- Qualified Opportunity Zone Business Property
- What is a “Qualified Opportunity Zone Business (50% gross income test, intellectual property considerations, 5% or less investment in certain financial products)
- What is Active Conduct of Trade or Business (NNN leases, 50% income safe harbors)
- Single Asset Structure (benefits if selling sub-partnership interest or if investors sell QOF)
- Multiple Asset Fund (matching money with a development deal, REITS)
- QOF Structure with Developer
- Contrast with QOF Structure with Sponsor/Developer
- Securities Issues (when a QOF is an issuance of a security, investment company issues, investment advisor issues, general solicitation)
Stephen Wilson, Of Counsel
- Building on the above, clarifying definitions of “Op Zone property” and “substantiality”
- What do you disclose to investors
- Private placements/supplemental disclosure
- Broker/dealer load issue
- Sale/reinvestment issues, property that is recommended not to be held for 10 years
- Zone straddle situations
Douglas W. Schwartz, Partner
- Allocation issues: construction/raw land
- Two year rule: distribution, facts & circumstances, making distributions within two years with operating businesses
- 1231 gain issues: 31st day to invest vs. January, sponsors have investors wait until next year because of 1231 assets
- 12/31/2019; lose 7 year basis adjustment
- Get money in and defer acquisition to next year, governed by at-risk rules, do we get basis
- What’s the rate of tax in 2026, rate at time or rate applicable from when taxpayer sold assets?
Sara Jane Holland, Partner
Lewis Brisbois Bisgaard & Smith LLP
- Inclusion Events (in addition to mandatory December 31, 2026 Inclusion Event):
- Reduction of interest in QOF
- Partnership distributions
- Claim of worthlessness
- Termination/Liquidation of QOF
- Transfers (by gift, by reason of taxpayer’s death)
- Amount includible in Inclusion Event
- Partnership mixed-fund investments
- Debt financed distributions
Matthew J. Schiller, Partner
Greenbaum, Rowe, Smith & Davis LLP
- Leasing strategies in Opportunity Zones
- Related party leases
- Attracting tenants to opportunity zone properties
- Current status of Opportunity Zone regulations
- White House Opportunity and Revitalization Council update
- Pending congressional legislation concerning the Opportunity Zone Program
- 2020 Opportunity Zone investing trends
Who Should Attend:
- Tax Lawyers
- Tax Advisers and Consultants
- Tax Practitioners
- Business Executives
- Fund Managers
- Investment Advisers
- Real Estate Companies
Darryl Steinhause is a partner in DLA Piper's Real Estate Capital Markets group.
Mr. Steinhause is an integral component of the real estate capital markets practice at DLA Piper. He is familiar with industry best practices and is well versed in the structuring and formation of a wide variety of real estate private equity funds, including those adopting a private REIT structure and the newly created Opportunity Zone Funds. A significant aspect of this representation involves the formation and structuring of sponsor ownership vehicles in a tax-efficient manner in order to maximize after-tax incentive payments to sponsors, their owners, and their employees.
With more than 35 years of experience in highly technical securities and tax transactions, Mr. Steinhause has structured securities offerings for a wide variety of significant clients across the country, acting as lead counsel on over 10 billion dollars of fund, debt, real estate investment trust (REIT), Delaware statutory trust (DST), Opportunity Zone Funds and other offerings. He has represented both sponsors and institutional investors in a variety of deal structures, including publicly registered transactions, private placements and institutional funds.
Darryl Steinhause is a partner in DLA Piper's Real Estate Capital Markets group. Mr. Steinhause is an integral component of …
Douglas Schwartz specializes in tax matters (international, federal, state, and local) as they affect real estate acquisitions, sales, development, leases, and other transactions; business formations, transactions, and operations; individual and compensation planning; charities, public pension systems, and other tax-exempt entities; and investments in different asset classes and investment vehicles. He has a comprehensive understanding of the complex local, state, and federal laws and regulations that affect personal and business taxes for a wide variety of industries, including entertainment, internet, manufacturing, real estate, sports, nonprofit, and public agencies, and including advice on sales and use tax; Proposition 13; documentary transfer; and local business license taxes in addition to income and franchise taxes.
He is AV Preeminent® Peer Review Rated by Martindale-Hubbell.
Douglas Schwartz specializes in tax matters (international, federal, state, and local) as they affect real estate acquisitions, sales, development, leases, …
Sara Holland is a partner in the Newark and New York offices of Lewis Brisbois and a member of the Corporate and Tax Practices and national M&A deals team, which leads both buyer and seller side acquisitions across industries, including medical providers, restaurants and hotels, manufacturing, and sports and entertainment. Ms. Holland serves as both tax and corporate counsel to her clients on M&A deals. She also focuses on business succession planning, tax deferred exchanges, tax-free reorganizations, and maximizing the tax benefits of tax credits and estate planning. Ms. Holland counsels her clients on 1031 exchanges, Qualified Opportunity Zones, SALT, energy credits, exempt organization law, and asset protection following major liquidity events. She earned her LLM in taxation in 2015.
Sara Holland is a partner in the Newark and New York offices of Lewis Brisbois and a member of the …
Steve Wilson has 45 years of continuous experience in transactional real estate law and related business issues. He also has substantial experience in corporate and general business law. He has held the esteemed Martindale-Hubbell "AV" (“preeminent”) peer designation for many years.
In the superheated West Coast real estate environment, he augments his technical knowledge by providing the business judgment and perspective that a seasoned institutional real estate executive would provide. Much of his current professional focus is on complex, value-added urban mixed-use projects and joint ventures, with recent focus on project planning in Qualified Opportunity Zones. A related longtime focus is assisting nonprofit or charitable organizations (including religious organizations) seeking to monetize their land holdings in a way which incorporates a charitable or public benefit. Steve’s clients routinely comment that he is "their other partner".
Other significant capabilities include real estate tax issues, entity formation/asset management for portfolio owners, restructuring and securitization of holdings, entitlement work, purchases and sales, commercial leasing and title matters. Many clients are offshore investors who benefit greatly from his guidance. Steve has been an expert witness in two recent, significant jury trials involving real estate issues.
Steve has traveled widely on business in Asia, and for 10 years led post-Perestroika humanitarian orphanage support work in the Ryazan region of CIS. His humanitarian endeavors have also included Africa and South America. In 2013, he lectured Chambers of Commerce throughout Indonesia on trade with the US. In 2017, he was a member of the San Francisco Mayor’s economic and trade delegation to Vietnam.
Steve Wilson has 45 years of continuous experience in transactional real estate law and related business issues. He also has …
Matthew J. Schiller is a partner at Greenbaum, Rowe, Smith & Davis LLP. Mr. Schiller represents clients in a wide range of transactional and litigation matters throughout New Jersey, New York, Connecticut and elsewhere. His transactional experience includes the acquisition, disposition, leasing and management of office, retail, and industrial properties. With a recent practice focus on Opportunity Zone developments and leasing matters, Mr. Schiller assists clients with the creation of Qualified Opportunity Funds (QOFs) and Qualified Opportunity Zone Businesses (QOZBs) under the Opportunity Zone Program. He is a frequent lecturer and author on topics related to commercial real estate, including Opportunity Zones.
Matthew J. Schiller is a partner at Greenbaum, Rowe, Smith & Davis LLP. Mr. Schiller represents clients in a wide …
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Method of Presentation:
General knowledge of tax laws
NY Category of CLE Credit:
Areas of Professional Practice
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About DLA Piper
The Real Estate Capital Markets group of DLA Piper builds creative solutions for your business needs. Our interdisciplinary approach ensures the involvement of skilled practitioners to address the complexities of real estate securities. Our group’s experience acting as lead counsel on fund, REIT, DST, TIC and debt offerings, gives our clients an edge in capital markets transactions.
About Nossaman LLP
Nossaman is an innovative mid-sized law firm working on cutting-edge issues across eight U.S. offices. Our expertise is focused in distinct areas of law and policy, as well as in specific industries. With a strong foundation in California, we have built nationally recognized practices in infrastructure, litigation, healthcare, environment and real estate, public policy, and corporate law.
The Firm has been an industry leader in California for seven decades. We know the land, the law, the courts, and the lawmakers. We also know the issues, from local bank failures and congested highways, to environmental conservation issues and scarce water supply. Nossaman is helping to solve many of the complex challenges public agencies and companies doing business in California face today.
Additionally, we offer strong capabilities in Washington, DC, resulting from a strategic merger that expanded the Firm's depth in several core areas including public policy, environmental permitting and litigation, and infrastructure. Nossaman attorneys in the capital monitor regulatory and legislative developments that affect clients' economic and legal interests and present clients' views on these issues to Members of Congress and Administration officials so that they are considered when decisions are made. We also specialize in administrative law proceedings before the agencies and the courts.
About Lewis Brisbois Bisgaard & Smith LLP
With more than 1,400 attorneys in 50 offices across the country, Lewis Brisbois dedicates itself to 40 practice areas for clients of all size, in every major industry. Our national bench of attorneys includes strong litigators and skilled transactional attorneys who have the expertise to guide our clients through an entire spectrum of legal matters. Our nationwide corporate and tax practices regularly counsel clients in real estate, private equity, venture capital, mergers, acquisitions, and a full array of corporate finance and capital markets deals.
Founded over 100 years ago, Withers is a leading international law firm for global businesses, their equity and debt stakeholders, and the executives who manage them. The firm is one of the largest tax law firms in the world and consists of over 160 partners supported by more than 1,000 people across 18 strategically located international offices.
Our Real Estate practice represents investors, developers, landowners, banks, institutions and non-profit organizations who are buying, selling, developing and investing in real estate in Europe, Asia (including Australia, China and Singapore), the Americas (including the Caribbean) and worldwide. We have experience working with a variety of investment vehicles, from open-ended investment companies to limited partnerships, unit trusts and REITs and deal with many major offshore fund jurisdictions. With experience in various aspects of real estate development--from obtaining land use approvals to negotiating design and construction agreements--we advise both landowners and developers in relation to real estate development.
We have completed commercial, residential and non-profit deals for some of the most prominent individuals and institutions in the world. Whether we’re advising a tenth-generation landowner in England, financing an international school in its expansion in Asia, helping a fund acquire a resort in Australia or structuring an investment in a mixed-use development in San Francisco, our team are discreet, cost-conscious and forward thinking, spotting potential pitfalls before anyone else.
About Greenbaum, Rowe, Smith & Davis LLP
Greenbaum, Rowe, Smith & Davis LLP is a multi-practice law firm serving local, regional and national clients. As one of New Jersey’s leading law firms, the firm brings diverse and comprehensive expertise to the representation of both businesses and individuals. For over 100 years, the firm has earned the trust and loyalty of clients by providing sophisticated, creative and cost-effective representation through collaborative teamwork, proactive legal strategies, attention to detail and relationship-oriented service.