Qualified Opportunity Zone (QOZ) investing is one of the most potent combinations of tax incentives, capital deployment opportunities, and community impact that has ever been made available to investors. The program’s primary goal is to encourage investors to reinvest their capital gains in low-income areas by providing significant tax benefits.
Charlotte developer Clay Grubb has been exploring ways to balance unprecedented demand for affordable housing with an investment vehicle that guarantees solid returns.
Growth With Link Apartments®
Since 2019, Grubb Properties has raised about $350 million from about 800 individual investors to develop apartments in tax-advantaged Opportunity Zones. Late last year, shareholders of three Grubb Properties funds agreed to consolidate into the Link Apartments® Opportunity Zone real estate investment trust.
In the past few years, Grubb Properties has received around $350 million from over 800 private investors to create residences in tax-favored Opportunity Zones. More recently, Grubb Properties fund shareholders have agreed to merge and form a Link Apartments® Opportunity Zone real estate investment trust. Grubb Properties is the only group in North Carolina to raise this much money for Opportunity Zone multifamily investments.
Apartments under the Link Apartments® brand have been financed by Grubb Properties funds in regions ranging from Washington, D.C., to Los Angeles and northern California. There are approximately 4,935 units in the 19 Link Apartments® communities, with 16 more in development or under construction. The Charlotte, Triad, and Triangle metro areas all have Link neighborhoods.
Investing In Essential Housing
Grubb Properties specializes in developing “essential housing,” often described as units affordable to those earning from 60% to 140% of an area’s median income. Link Apartments® are mainly in urban areas and are popular with people under age 40. Many are early career nurses, teachers, municipal workers, and other professionals.
The company keeps rents lower than other apartment developers by focusing on design and cost benefits. For example, Link Apartments® offer only six floor plans designed for maximum efficiency. Using the same plans saves on architectural designs and allows construction to proceed more smoothly.
The first Link Apartments® opened in Richmond, Virginia, in 2012, although most of the venture’s growth has occurred in the last few years. Opportunity Zone funds have encouraged investors seeking tax benefits and exposure to the booming real estate market to get involved. Approximately half of Grubb Properties’ investors come from registered investment advisers in the United States, with the remainder coming through alternate marketing channels.
The enacted legislation requires that Opportunity Zone properties be held for at least ten years to achieve the maximum tax benefit. Grubb Properties already has plans to hold these apartments for a lengthy period because they believe the demand for affordable housing is a long-term trend.