The Real Deal Miami

Somera Road is latest firm trying to raise $500M to invest in Opportunity Zones

It joins a growing number of investment firms hoping to cash in on the tax incentive development program
By Keith Larsen | October 31, 2018 12:45PM

Opportunity Zones map, Somera Road Ian Ross

Add Somera Road to the growing list of real estate investment groups seeking to raise millions of dollars to invest in distressed areas as part of a new federal program.

Somera Road is looking to raise $500 million to invest in those Opportunity Zones, and is in talks to buy several properties located within the program’s designated areas.

The New York-based firm joins RXR Realty,  Youngwoo & Associates and Normandy Real Estate among others that have created funds, all looking to cash in on the tax incentive program.

Opportunity Zones is part of President Trump’s tax plan, and is designed to encourage investment in low-income areas across the country. Developers and real estate investors get a big tax advantage for buying and hold real estate properties in the 8,700 designated zones.

Investors can qualify by building new projects or substantially rehabilitating existing properties in the zones.

Two weeks ago, the first set of regulations were released from the IRS and the U.S. Treasury Department, prompting renewed interest from developers and investors. Analysts and attorneys said the new rules could give investors enough clarity to start deploying capital into these areas. Though the program is months old, the lack of details had prevented many investors from jumping in.

Viceroy Equities just announced it is raising a $75 million fund — calling it B’KOZ — to invest only in Brooklyn projects.

Somera Road focuses on value-add, distressed and opportunistic transactions across all asset classes in the U.S. That includes properties in “urban cores” in cities such as Austin, Atlanta, Pittsburgh and Jacksonville, Florida. It has invested more than $750 million in real estate since 2014, when Ian Ross founded the firm.

Somera Road’s opportunity zones investments will focus on value-add office, retail, and industrial properties largely in secondary urban markets, said Fergus Campbell, managing director.

By the end of the year, the company expects to close on a creative office conversion deal in downtown Cleveland, an office repositioning in Louisville, Kentucky, and a value-add industrial deal in Upstate New York through qualified opportunity zone funds.

Somera Road has also hired the advisory services of Steve Glickman, the founder and CEO of Develop. He was former head of the Economic Innovation Group, one of the architects of the Opportunity Zones program.