Starwood Capital Group is taking its Opportunity Zone fund to San Pedro.
The Miami Beach-based firm has teamed up with Holland Partner Group on a 375-unit apartment building that Holland is developing at 550 S. Palos Verdes Street in Downtown San Pedro.
Washington-based Holland Partner had purchased the 2.5-acre development site in mid-2017 for $24.5 million. The property is expected to be completed next year. Starwood announced the joint venture on Monday.
Called 550 Harborfront, the project is seven stories with 5,000 square feet of ground-floor commercial space.
Starwood launched its $500 million Opportunity Zone fund in January, even after CEO Barry Sternlicht derided the federal tax incentive program as “political giftsmanship.”
The Opportunity Zone program launched following the passage of the federal tax overhaul in late 2017. It is designed to allow long-term investors and developers who build in low-income neighborhoods to significantly reduce or in some cases eliminate their capital gains taxes.
For its fund, Starwood plans to focus on markets where its already active, including New York, Washington D.C., and the West Coast. Last week, the company announced it was investing in an Opportunity Zone-eligible multifamily project in New York City’s South Bronx. It has long been among the poorest areas in the country, but has seen a surge in investment in recent years.
Starwood has interest in a number of properties around L.A., but its most recent play in the area was a sale of three multifamily properties, part of a portfolio deal with Singapore’s CapitaLand.
Holland is also active in the Los Angeles area. The firm was in exclusive negotiations with the county to redevelop the San Pedro courthouse property until last spring, talks broke off. The firm completed two residential towers in Downtown L.A. last month.