South Florida hotel investment firm launches $50M Opportunity Zone fund

Driftwood has closed two deals in the fund, including a dual-branded Hilton in Fort Lauderdale

May.May 08, 2019 12:30 PM
  Home 2/Tru by Hilton, Driftwood Acquisitions and Development and Carlos Rodriguez Jr.

Home 2/Tru by Hilton, Driftwood Acquisitions and Development and Carlos Rodriguez Jr.

Add one more South Florida company looking to get into the most talked-about program in real estate.

Coral Gables-based Driftwood Acquisitions and Development is launching an Opportunity Zone fund with the goal of raising at least $50 million to invest in hotel assets throughout the country.

The company has already closed two deals in its fund: a 218-key dual-branded hotel Home 2/Tru by Hilton in Fort Lauderdale and 10-story office building in Wilmington, Delaware, that it plans to reconvert into a 136-room IHG-branded urban hotel.

Carlos Rodriguez Jr., chief operating officer of Driftwood, said the company is looking at three other Opportunity Zone projects and expects to close on them this year. He said the hotel deals include rehab projects and ground-up construction. The company is also being approached by developers to build a hotel component within larger multi-asset Opportunity Zone projects, according to Rodriguez.

He said the fund is open to existing investors of the company as well as new investors.

Since launching in 2015, Driftwood Acquisitions and Development has amassed a portfolio of 18 operating hotels. The company allows accredited investors to co-invest in hotel assets. It has also worked on a number of EB-5 projects.

Real estate developers and investors have become enamored with the federal Opportunity Zones program that was pushed forward as part of President Trump’s 2017 tax plan. The program allows developers or investors the ability to defer or potentially forgo paying capital gains taxes in exchange for investing in one of the more than 8,700 Opportunity Zone sites throughout the U.S.

In South Florida, developers are already setting up funds and putting shovels in the ground to invest in Opportunity Zone sites. Related Group said it could use the program for its Marina Village apartment project in West Palm Beach. Turnberry Associates and LeFrak are trying to figure out how to use Opportunity Zones for the development group’s $4 billion Solé Mia project in North Miami.

The Treasury and the IRS recently released more guidance on the program’s rules, which experts say will trigger more developers to begin building projects on the Opportunity Zone sites.

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