IPAForum 2019 | Qualified Opportunity Zone Funds – Institute for Portfolio Alternatives

FEB 12-13, 2019

CONFERENCE RECAP

DALLAS

Bringing the QOZ Community Together

Thank you to everyone who attended IPAForum: Qualified Opportunity Zone Funds in Dallas! The ideas and information that was discussed was developed in close consultation with leading broker-dealers and RIAs and designed to strengthen their knowledge and assessment of this highly sought-after investment opportunity. The inaugural event brought together over 150 professionals from the QOZ community, representing dozens of broker-dealers/RIAs, asset management firms and PDI industry partners. The IPAForum would not have been possible without our event partner, AI Insight, and the support of our generous sponsors. We truly value your membership and dedication to these topics.

VIEW AGENDA

Opportunity Zone Resources

Novogradac Opportunity Zones Handbook

IPAForum Attendees Receive a 15% Discount (Coupon Code: IPA2019)

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IPA Qualified Opportunity Zone Resource Library

(IPA member password required)

Advocacy Action

IPA Submits Comments to Treasury Department on Proposed Regulations for QOZs

Continue Your Training & Earn 1 CE Credit

Toward the CFP® and other designations when you complete the “Introduction to Opportunity Zones” CE course on AI Insight.

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Regulatory Insight for

Qualified Opportunity Zones and Funds

IPAForum kicked off with a regulatory insights panel. Some key themes emerged, including the fact that the vast majority of the first QOZ funds are focusing on real estate assets and development projects within the opportunity zones. But, technology start-ups, biotechnology and solar companies and infrastructure funds are beginning to emerge. To date, FINRA has reviewed over a dozen new QOZ private placement programs and public offerings and indicated that they are closely following the regulatory process at the Treasury Department. From the states’ (NASAA) perspective, issuers should still comply with anti-fraud laws regardless of whether or not they are filing their programs. Richard LaFalce said that among his clients there is a real urgency to move forward in establishing their funds, but he is counseling continued caution to ensure they clearly understand the unique issues of QOZs.

The panel also acknowledged the bipartisan nature of the legislation and expressed hope that this program will succeed both in revitalizing underserved communities and providing new investment opportunities. The next tranche of regulatory guidance is expected to be released in the weeks ahead and should provide more clarity on structuring and managing a QOZ fund.

(from left to right) Moderated by Anya Coverman, SVP, Government Affairs and General Counsel, IPA; featuring Faith Anderson, Chief of Registration and Regulatory Affairs, Washington Department of Financial Institutions, Securities Division; Richard LaFalce, Partner, Morgan, Lewis & Bockius LLP and Thomas Selman, EVP, Regulatory Policy and Legal Compliance Officer, FINRA.

Establishing a QOZ – Impacts and Considerations

A panel of legal and tax experts explained the rules and qualifications for structuring QOZ funds, noting that this is one of the most impactful investment opportunities in a generation. Many of the earliest entrants into the market have been single-asset deals, but larger funds are emerging quickly. And while the larger funds are more complex to structure, they can offer a portfolio premium and more asset diversity within the funds.

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(from left to right) Moderated by Dan Cullen, Partner, Baker & McKenzie LLP; Panel: Addison Braendel, Partner, Baker & McKenzie LLP; Steven Meier, Partner, Seyfarth Shaw LLP; Darryl Steinhause, Partner, DLA Piper LLP (US).

Understanding the QOZ Fund Investment Thesis for Real Estate

Day two focused on the wide range of potential investment structures QOZs provide. Asset managers and fund sponsors discussed the importance of investing in great real estate, regardless of whether it’s a portfolio of properties or a single-asset development project. And regardless of the rolling nature of the Treasury Department’s regulatory process, real estate fundamentals don’t change and there’s enough guidance to establish their funds. In fact, some investment managers already own assets that ended up being located within the new opportunity zones.

Due diligence experts stressed the importance of suitability, e.g., whether products are geared towards a qualified purchaser or an accredited investor and discussed the importance of establishing an effective financial review process for QOZ funds. Risk factors need to be appropriately disclosed, and broker-dealers need to clearly understand the investment thesis of the asset manager or development partner. At the end of the day, they have to invest in real estate that performs for investors.