A pioneering Opportunity Zone is already having an impact in Augusta
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Less than a year after Maine designated 32 areas as Opportunity Zones, GenX Capital Partners of Miami has closed on financing for the redevelopment of 333 Water St. in downtown Augusta.
Redevelopment of the former Odd Fellows Hall, by Dirigo Capital Partners and Capital Area Properties, may be one of the first projects in the country to take advantage of the Opportunity Zone tax program, Mainebiz has reported.
The Opportunity Zone program uses tax breaks to encourage real estate investment in distressed areas. Former Gov. Paul LePage designated 32 Opportunity Zones in May 2018, choosing from 128 eligible tracts. The program was created under the federal Tax Cuts and Jobs Act of 2017 to provide incentives for economic development.
The development partnership secured a bridge loan from GenX Capital, GenX Managing Director Mark McClure said in a press release. The 31,500-square-foot building was acquired in 2018 for $195,000 by Dirigo Capital Advisors and Capital Area Properties. It will be redeveloped for housing and ground-floor retail.
Kevin Mattson, president of Dirigo Capital, said McClure and GenX Capital “were instrumental in allowing us to acquire this asset quickly, as the minute it became available we knew there would be a lot of bidders, and thus they were able to tap one of their investors in Boston who was able to evaluate and finance the acquisition literally in under two weeks.”
The GenX loan provided “the breathing room to move forward with construction and bring this special project to fruition,” Mattson said.
There’s demand for market-rate housing in the Augusta zone, as well as a need for other sustainable development, Mattson said.
The plan is for ground-floor retail and as many as 30 market-rate apartments in the 31,000-square-foot building.
GenX Capital’s main focus the past two years has been underwriting debt and equity financing for projects, typically with a capitalization of $25 million or more.
“While we typically look to underwrite deals of $10 million and up, we launched our direct lending platform a couple of months ago for smaller deals just like this, which now allows us the ability to tap into the ‘fix and flip’ value-add acquisition segment with our own funding,” McClure said.
“We were excited to be the first firm ever to close an Opportunity Zone deal under this platform. Our director of origination for the state of Maine, Michael McNaboe, was instrumental in helping put this all together and Grand Coast Capital and Matt Divito out of Boston were absolutely amazing in the speed in which they were able to close on the initial acquisition. We are now moving toward construction,” he added.
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