Jersey City/Teaneck, N.J. – Two New Jersey-based multi-family focused entities have announced the formation of PEEK Development (PEEK), a new investment, development and management joint venture focusing on traditional development as well as recently approved Opportunity Zone (OZ) projects throughout the state’s urban submarkets. Equis Realty Partners LLC, based in Jersey City, and The Fountain Group LLC of Teaneck are partnering to employ an opportunity fund strategy for PEEK, which has $85+ million in projects involving 300+ market-rate units already under contract.
Created as part of The Tax Cuts and Jobs Act of 2017, opportunity zones were established as an incentive to promote investment in economically distressed communities. Under the guidelines, governors were tasked with submitting designated census tracts for opportunity zone approval. In order to invest in OZ projects, a qualified opportunity fund (QOF) such as PEEK can then be established. Philip Evanski, managing member of Equis Realty Partners, and Emanuel Klein, co-founder The Fountain Group, are spearheading the PEEK initiative.
“Together with Equis Realty Partners’ operational and finance experience and our development expertise, PEEK is in a very unique position,” explained Klein. “We are addressing the housing-stock needs of local municipalities by transforming a distressed-building landscape into high-quality, income-producing properties to benefit the local economy and its resident base.”
Long considered the catalyst for economic development and urban revitalization, multi-family has been and continues to be at the core of municipal revival initiatives statewide. Examples include Jersey City, Newark and East Orange, where Klein and Evanski serve as vice president and president/founding board member, respectively, of the East Orange Property Owners Association – a three-year-old industry-unique commercial real estate membership organization committed to advancing the city’s renaissance.
According to Evanski, founder of Equis Realty Partners, the QOF is an extremely useful funding strategy for opportunity zone investment. As long as 90 percent of the funds are invested in OZs, investors will then receive beneficial tax treatment. Another benefit is that investors can defer the tax payment due on capital gains until December, 2026 if they invest the money in a QOF. By leaving the money in a fund for at least seven years, investors also receive a 15% discount on the deferred tax payment.
“If the money remains in the fund for at least 10 years, investors will not owe any capital gains tax on the appreciation of assets in the fund,” he added. “Partnering with The Fountain Group is a win-win because of their expertise when it comes to knowledge of New Jersey’s urban-core municipalities as well as their extremely impressive track record for getting projects completed and delivered to market.”
The Fountain Group, founded in 2015 by Klein, is a real estate investment, management and development firm focused on multi-family and mixed-use assets throughout North Jersey. The company, which has developed and managed over 700 units, continues to grow its portfolio by focusing on renovations to existing buildings as well as ground-up development. Projects in The Fountain Group pipeline are valued in excess of $70 million.
Founded in 2012 by Evanski, who has 25+ years’ experience in the commercial real estate debt and equity sector, Equis Realty Partners owns and manages a portfolio of multi-family apartments throughout the North Jersey Metro. As part of the firm’s acquisition strategy, Equis generally performs extensive value-add capital improvements in order to maximize property repositioning.