Opportunity Funds Investment Report: $15 Billion in Equity by End of 2020

Published by Michael J. Novogradac on Wednesday, February 3, 2021 - 12:00AM

Investment in opportunity zones (OZs) by qualified opportunity funds (QOFs) tracked by Novogradac has surpassed another milestone: $15 billion.

Three years after the passage of legislation creating the OZ incentive, investment continues to grow. The latest data–a reported equity raise of $15.16 billion by QOFs being tracked by Novogradac on Dec. 31, 2020–continues a steady trend since tracking began in May 2019.

Blog Chart: OZ Report QOFs Overview

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The data is reported in the new Novogradac Opportunity Zones Investment Report: Data Through Dec. 31, 2020. The report–first of a semiannual series of such reports–includes information on what types of investments are being made, where they are being made and more. There is a list of the top 20 states and top 40 cities for planned investment and information on how much of the overall investment is made by QOFs of different sizes.

The report also includes historical data, allowing readers to track, for instance, how steadily investment in residential properties or operating businesses has grown or how much investment has been made over time in QOFs that focus their investment on specific cities.

Here’s the big picture: Novogradac was tracking 927 QOFs on Dec. 31, 2020, 659 of which have reported the dollar amount of equity raised.

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.

The equity total at the end of 2020 is $3.11 billion more than at the last update, which was for data through Aug. 31, 2020. It continues a steady climb in tracked investment, even during the COVID-19 pandemic.

Among the QOFs that have reported the amount of equity raised, the average amount raised at the end of 2020 was $23.0 million, an uptick from the average of $20.8 million four months earlier.

The total amount of equity reported raised and the number of QOFs tracked have steadily increased in the 19 months for which Novogradac has been compiling the information. The investment level hit the landmarks of $5 billion of investment in January 2020 and $10 billion in April 2020.

Blog Chart: OZ Funds by Business Type

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The QOFs that report having raised equity continue to focus largely on residential and commercial investment. QOFs that report at least some focus on residential properties account for $11.91 billion in equity investment (78.5% of the total) while commercial-focused QOFs account for $9.37 billion (61.8% of the total). Due to the fact that many QOFs report a focus on multiple areas, the sum of the percentages of the investment foci is way more than 100%.

Hospitality, renewable energy and operating businesses make up the other areas of investment, in order of investment.

Novogradac Opportunity Zones Investment Report: Data Through Dec. 31, 2020 also includes a breakdown of how much investment was made in different subcategories of residential and commercial investment, as well as a list of QOFs found on Novogradac’s Opportunity Funds list.

During a difficult 2020 that included a worldwide pandemic and subsequent economic recession, investment in OZs continued to grow, going from $6.72 billion in January to $15.16 billion in December. Novogradac will continue to track the trends and will issue another report this summer  covering investment through June 30, 2021.

The information contained in this blog post is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy securities. Novogradac does not provide investment advice and the information in this report is not to be construed as a recommendation to engage in any specific transaction. Readers are urged to consult with their own professional advisors if they are considering investing in a QOF.

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