Former AvalonBay Execs Launch First Public Opportunity Zone REIT

Even as the wait for final regulations drags on, opportunity zones continue to lure all kinds of investors and inspire a range of investment plans.

Belpointe, a real estate developer and investment company based in Greenwich, Connecticut, has launched Belpointe REIT, the first-ever REIT focused exclusively on opportunity zone investment, the company announced in a press release.

Connecticut private equity investor Brandon Lacoff founded Belpointe and installed a leadership team that includes former AvalonBay Communities executives Lori Wortz as executive vice president of development and Paxton Kinol as chief investment officer. Like AvalonBay, Belpointe focuses on multifamily development, as will the REIT.

Belpointe REIT is open to any investors with at least $10K in capital, whether or not they are accredited. It claims to have more flexibility and lower management fees than a private equity opportunity fund; investors are allowed to exit on a quarterly basis with no exit penalties, for example. By filing with the Securities and Exchange Commission as a public non-traded REIT, Belpointe is also promising a higher level of transparency than a private fund.

Belpointe REIT is targeting $3B in equity, and anticipates listing on Nasdaq or the New York Stock Exchange within eight years, according to the announcement. That would provide investors with an opportunity to achieve liquidity years before private equity would. Belpointe also claims to have significantly more freedom for its investment portfolio due to its status as a REIT, despite the fact that such restrictions are not official yet.

"The Opportunity Zone REIT will invest in multiple real estate investment assets across the country, where partnership private equity funds are limited in the number of real estate investments they can make due to opportunity zone requirements," Belpointe REIT's website reads. "Therefore, private equity fund investors are exposed to a higher level of real estate portfolio risk compared to the Opportunity Zone REIT’s shareholders [who] have less risk due to their larger diversified real estate investment portfolio."

Belpointe REIT plans to invest in development in one of two ways, according to its website: a Franchise Platform or a Programmatic Platform.

An investment through the Franchise Platform would entail finding a senior development executive in a specific market and "provide them with the necessary capital and back office support to be successful running their own company," while a Programmatic Platform investment would involve signing a deal with a local development company wherein the REIT would have exclusive first right to view and invest in any planned opportunity zone developments.

While the real estate industry expects the final opportunity zone regulations to define the parameters by which a qualified opportunity fund can reinvest its capital across properties, that mechanism is one of the many open questions about the law at this point. Belpointe REIT is joining the ranks of investors seemingly operating on faith that their behavior will be permitted when the regulations are finalized.