Toby Moskovits launches $100M Opportunity Zone fund

Fund will focus on Brooklyn and Queens

Nov.November 13, 2018 03:30 PM

Toby Moskovits and 875 4th Avenue in Brooklyn with New York’s opportunity zone map (Credit: Google Maps and PolicyMap)

Toby Moskovits’s Heritage Equity Partners is the latest developer to seek opportunities in Opportunity Zones, launching a $100 million fund that will target properties in Brooklyn and Queens, The Real Deal has learned.

Moskovits joins real estate players like Anthony Scaramucci’s Skybridge Capital, RXR Realty, Normandy Real Estate Partners and Somerset Partners, all of which have announced plans to launch OZ funds in the last several weeks.

Though many of the details remain unknown, the OZ program is designed to stimulate growth in low-income neighborhoods, and offers tax deferrals and benefits to investors who park their money in assets located within designated areas. The breaks and benefits increase the longer investments are kept in the zones. Owners who keep onto a property in an OZ for at least five years receive a 10 percent tax break, while those who hold it for seven years receive 15 percent off their tax bill. An investor can also avoid paying capital gains taxes if they keep their money invested for 10 years, which makes for an attractive investment in neighborhoods where property values can explode over that period. To enjoy the benefits of the full seven-year tax break, Moskovits and other developers will have to find properties by Dec. 31, 2019.

Moskovits’s fund will focus on both commercial and residential development in Brooklyn and Queens. Out of 514 census tracts in New York state designated as Opportunity Zones by the program, 306 of them are concentrated in the five boroughs of New York, with 125 in Brooklyn and 62 in Queens.

In July, Moskovits’s Heritage Equity announced plans for a 150-unit residential building at 875 4th Avenue in Greenwood, which is located in one of the designated zones.

Moskovits confirmed the launch of the fund and its area of focus, but did not elaborate on other properties she might be targeting for the fund.

Among the more recent guidelines from the Treasury Department is the definition of a 70-30 rule, which specifies that a business will qualify for the program if 70 percent of the property is located within a designated zone. Developers can also be granted an additional 30 months to hold working capital for residential and retail development projects.

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