Origin Closes First Opportunity Zone Fund at $265M

The Rosie, an apartment community in Pilsen, Chicago. Image courtesy of Origin Investments

Origin Investments has closed its first qualified opportunity zone fund, raising $265 million from more than 800 investors. An Origin representative told Multi-Housing News that the fund opened to investors in late 2018 and saw commitments from new and existing investors. David Scherer and Michael Episcope, Origin co-CEOs, also invested $9 million of their own capital into the fund.

The $265 million will be used to fund up to 10 properties expected to be worth more than $1 billion. According to Origin, the fund’s strategy will be to acquire sites within qualified opportunity zones that will be used to develop or significantly expand multifamily projects across the U.S.

In particular, the fund will target 14 fast-growing metro areas in the U.S., including Las Vegas; Salt Lake City; Phoenix; Denver; San Antonio; Dallas and Austin, Texas; Nashville; Atlanta; Tampa, Orlando and Jacksonville, Fla.; Charlotte and Raleigh, N.C.

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The fund has already committed approximately $100 million of equity for five developments with a combined construction value of $375 million. The five projects so far are a second-phase expansion that will add 105 units to an 80-unit community in Phoenix; a 300-unit residential project with joint venture partner Marquette Properties in Houston; a 202-unit community being built in partnership with CEDARst in Chicago; a 330-unit transit-oriented development in Charlotte, N.C.; and a 321-unit community in Colorado Springs, Colo., through a joint venture with Greystar.

NoDa Greenway Apartments in the NoDa submarket of Charlotte, N.C. Image courtesy of Origin Investments

Dave Welk, managing director of acquisitions at Origin, said in prepared remarks that all the investments were partnerships with regional developers with a strong presence in the local market or with some of the largest multifamily firms in the U.S. The remainder of the capital raised will be deployed into four or five additional projects, which would create a portfolio of nine or 10 properties that Origin would own and manage. According to Origin, the remaining projects will be announced in the next six to nine months.

Opportunity Zone Funds Rising

There is a continued demand for investment funds that focus on qualified opportunity zones, Episcope said in prepared remarks. Based on this trend, and combined with the success of its first fund, Origin is planning to launch its second qualified opportunity zone fund later this year.

Other companies have also started opportunity zone funds to take advantage of the tax incentives for developing in those areas. In February, EJF Capital closed its first opportunity zone fund, raising a total of $280 million that has gone towards eight residential projects so far.