An Atlanta-based joint venture is looking to raise tens of millions of dollars for the development of three build-to-rent projects in several tax-advantaged opportunity zones across Georgia and Alabama.
Pinnacle Partners and Trilogy Investment have collaborated to launch the Pinnacle/Trilogy BTR OZ Fund, which is seeking at least $60 million from accredited investors for a 10-year hold period. Projects targeted by the fund are “shovel ready,” according to the firms, and are expected to result in the opening of 462 townhouses in Augusta, Georgia; Decatur, Georgia; and Huntsville, Alabama.
The federal opportunity zone program, created as part of the Tax Cuts and Jobs Act of 2017, is meant to encourage development in areas designated as economically distressed by deferring or eliminating capital gains taxes for commercial real estate investors.
The fund “will channel significant investments into underserved areas, foster community development and seek to offer attractive returns to investors,” Jason Joseph, CEO and managing partner at Trilogy, said in a statement.
The fund's launch is timed to attract investors looking for tax-efficient strategies as they complete their end-of-year planning, according to executives from Pinnacle. It follows the joint venture’s closing of two build-to-rent projects financed through Pinnacle's OZ Fund VIII that included a townhouse development in Charlotte, North Carolina, and a single-family home development in Avondale, Arizona.
Projects from Pinnacle and Trilogy’s latest fund are expected to include 45 market-rate townhouses in Decatur, a suburb of Atlanta; 245 workforce housing units 15 minutes outside Augusta; and 172 market-rate townhouses in Huntsville.
Opportunity zone investment
Two of the markets — Atlanta and Huntsville — ranked on the accounting and consulting firm Novogradac’s list of the top cities targeted by opportunity zone funds. According to the firm, a total of $3.53 billion in equity was raised by opportunity zone funds in 2023; that's a 10.4% increase from 2022.
Of that total, funds targeting zones in Atlanta raised more than $635 million, or a 9.9% bump from the year prior. The total capital raised saw Atlanta ranked sixth among the top 50 cities in the United States and included 20 projects of all types of investments, including the creation of 4,071 housing units.
Huntsville accounted for 10 projects in 2023 totaling $114.6 million in total equity raised in 2023. The amount placed Huntsville at 47th among cities with the most equity raised over the year.
While total investment figures account for all property types, Novogradac noted more than 71% of all opportunity zone investments the firm identified since the program's start was aimed at multifamily housing. That total includes 972 separate multifamily developments funded across the country.
Funds that counted residential as one of several investment types have raised nearly $31 billion. Total equity for residential-only opportunity zone funds, which have reached $8.1 billion, is nearly four times larger than the second-largest single-property type fund that has raised just $2.2 billion.
Trilogy is focused on investing in the development and construction of build-to-rent projects. Pinnacle has a history of opportunity zone developments and has invested more than $20 million in 13 projects, including two office-to-residential developments, totaling roughly 2,400 units.