Driftwood Acquisitions & Development Launches First Opportunity Zone Fund With Seeded Deals

May 07, 2019 No Comments by

Driftwood Acquisitions and Development (DAD) – a privately held investment firm specializing in the acquisition, development and investment syndication of quality hotel assets – has launched its initial qualified opportunity zone fund (Driftwood QOF) with a target raise of $50 million.

The firm has already secured two opportunity zone investments for Driftwood QOF: a joint venture for the development of the 218-key dual branded hotel Home 2/Tru by Hilton in Ft. Lauderdale, and the redevelopment of a 10-story office building in Wilmington, Delaware, into a 136-room IHG-branded urban hotel.

 

“There’s a tremendous amount of excitement about opportunity zones and the potential tax benefits,” said Carlos Rodriguez Sr., Chief Executive Officer of DAD.  “Driftwood Acquisitions & Development has specific experience that gives us a distinct competitive advantage in this space.  We’re a vertically integrated real estate firm with experience raising capital, structuring deals and developing properties, which creates economies of scale, giving us the ability to execute quickly and increase returns for our investors.”

Those advantages, he continued, also include DAD’s record with the EB-5 investor program – another specialized federal program with substantial reporting requirements.

In addition to investing in the Ft. Lauderdale and Wilmington deals, the Driftwood QOF intends to leverage its acquisition pipeline to source high-yield development and redevelopment projects in opportunity zones across the U.S.

“As an experienced developer and a sponsor – we maintain a 10 percent equity stake in all of our investments – we’re not going to invest in a property simply because it’s in an opportunity zone,” said Rodriguez. “The deal has to make sense regardless of the potential tax benefits. At the end of the day, opportunity zone investments require a 10-year hold period in order to maximize the tax benefits, so deals need to be underwritten responsibly.”

Since launching in 2015, DAD has built a portfolio that includes 18 operating hotels yielding an average cash-on-cash return of 10% with targeted IRRs of 14% to 18%.  DAD and its affiliates are also currently developing three new-build hotel developments across the U.S.

 

 

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