DEAL TIME! The Integris DLV Opportunity Zone Fund - Viva Las Vegas!
Learn about Integris's DLV Opportunity Zone Fund investment opportunity
Deal Name: DLV Opportunity Zone Fund
Asset Class: Hospitality
Investment type: Ground up, QOZ
Offering Size: $500MM total deal size - $25MM equity
Minimum Investment: $100,000
Adam Gower: Gentlemen. Super good to see you. Thank you so much for being on the podcast. I am dying to hear all about the DLV Opportunity Zone Fund. What on earth is that? Before we get into it, please introduce yourself. Tell me your name, rank and serial number over there at Integris.
Daniel Oschin: I'm Daniel Oschin. I'm the Chief Strategy Officer of Integris Real Estate Investments. We're an Irvine, California based company with a national footprint. A 30-year track record of more than a 1,000 full- cycled assets and my job within the company is to help run the day-to-day business, drive strategy and help communicate information in the marketplace.
Adam Gower: Ben.
Ben Matheson: My name is Ben Matheson, I'm the Director of the private client group for Integris and really I ended up being the face of the company at the investor level. I have the most opportunity to interact with prospective investors and our existing investors. Just happy to be here. It's nice to put a, you know, a face to the name, even if the face, you know, probably should stay on podcasts instead of video. But it is nice to have that level of familiarity. So, you know, a lot of your audience, you know, at some point, hopefully, we'll be speaking to. So, it's nice that they know who I am, a little bit, before we talk.
Adam Gower: A face only a mother could love, kind of thing, right? All right. So I want to turn our conversation around, just a little bit. Before we actually talk about the deal itself, let's talk about the benefits of investing. One of the things that nobody likes to do is to pay more tax than they need to. And this is a deal in a QOZ - a qualified opportunity zone. So this applies to a very broad swath of accredited investors. But there are certain qualifications, right, to get you in. Tell us a little bit, or tell me a little bit, what is a QOZ and who should be interested in what they are?
Daniel Oschin: So a qualified opportunity zone is something that was created federally and worked/reworked within each state to outline areas that had certain economic disadvantages in an attempt to drive development or businesses into those areas. And it's interesting because a lot of people think of a qualified opportunity zones as real estate, but really, that wasn't the only intent. It's a byproduct of what there is. But, you can have a QOZ that's a business and many other things. It's used - you can have an investment in a qualified opportunity zone, across a spectrum of things. In the case of what we're talking today about, is real estate but fundamentally all QOZs have the same benefits. You can take gains from today - and when I say gains, I mean both short or long-term capital gains from almost any source. You could have sold - anything that creates a gain on your tax return. Real estate business, almost anything on earth, short-term, long-term stocks, whatever it is, and you can invest the gain in a qualified opportunity zone investment. Can be subject to the variety of benefits and requirements thereof. So, one of the things that a lot of people don't realize, right off the bat is, is the timing of that investment. And that is, you have the 6-month window from when you booked your gain, to invest in a qualified opportunity zone. I know we're doing this podcast or presentation at a moment in time, but, let's say you sold some stock in November. You can invest in it today and take advantage of the benefits I'm about to mention.
Daniel Oschin: You can go back 6 months. And in fact, if you're invested in an entity, a business that provides, say K-1s, or other types of reporting like that - in many cases, you can go all the way back to the beginning of 2021, with many of those. So, it gives you the ability to, over a range of time, take your gain and invest it in a QOZ. And what do you get for that? You get a couple of things. One is, you do not have to pay tax on that gain until the 2026 tax year. Typically, people are going to pay their taxes in 2027. So, they're going to have a reprieve from taxes. So again, let's say you sold a stock in November of 2021, normally you'd be paying your taxes this April. You can defer those taxes all the way to 2026. That's the first thing. You push off those taxes. And then, and much more importantly, there's a variety of ways that you eliminate or keep from having tax on the money you make with your investments. So, if you invest in a QOZ, not only are you not paying tax on what you put in it, but what you make is generally tax free. So, any gains you make, if you hold it and you stick within the requirements of the QOZ, which is a 10-year holding period plus, and a variety of other things, whatever money you make on the gain side, tax free.
Adam Gower: Isn't that incredible?
Daniel Oschin: It is.
Adam Gower: Really incredible.
Daniel Oschin: So..
Adam Gower: Yeah, no capital gains tax if you hold for 10 years. That's just mind- blowing.
Daniel Oschin: And then, something most people don't realize is, depreciation - which normally, in a real estate deal, you can depreciate each year. And then, at the end when you sell it, you recapture that depreciation and have to pay tax on it. In a QOZ, you don't. The depreciation is not recaptureable and, in the type of deal that we're talking about today, substantial depreciation, which is likely to cover all the cash flow, means that your cash flow would not be taxable at that time, assuming it's all covered by depreciation and not be recapturable at the end. So if you're getting cash flow that's not taxable and gains that are not taxable, pretty much, you're making all your money, tax free, or at least potentially tax free if you understand all the rules. That is an incredibly powerful tool. All predicated on one thing. The deal has to be a good deal and has to actually make money, because if you have no tax on a deal that doesn't make you profits and you hold it.
Adam Gower: What's the?
Daniel Oschin: Right? So it's got to be a good real estate deal for it to be a really good tax opportunity.
Adam Gower: All right. So I'm dying to know more about this deal now. Let's talk - a high level overview. What have you got? And then I'm just - you have to - afterwards, I want to know who the dream team is. I know you've got some incredible partners, incredible investors in this deal. First of all, give me the high level overview. What have you got for investors today?
Daniel Oschin: We have something that doesn't exist anywhere else that I know of. We have a hotel, resort and casino on Las Vegas Boulevard, on the Las Vegas Strip in Las Vegas, with one of the best brands of hotels in the world. So, just stopping right there. Of all the QOZs that are out there, of all the real estate..
Adam Gower: I was just going to say. How did - a QOZ on the Las Vegas Strip. That's extraordinary.
Daniel Oschin: So, as I mentioned, the reason - the way QOZs got started is, they're looking for areas where they're looking for economic revitalization. It happens that the south end of the strip, as you come down to the south end of it, which is around the airport area, there's a huge area around and south of the airport that is all needs economic revitalization. It happens, at the very edge of the QOZ, happens to be, right where our asset is, right on the Las Vegas Strip. Now, I can tell you, this real estate deal is a - we would not have done it if it wasn't intrinsically a good real estate deal. But I can also tell you, the fact that it's in a QOZ makes it just that much more interesting. And I don't know if this would have been done without it. I think it's achieving the goal of what QOZs were intended to do, which is drive economic revitalization. And to be clear, you can't make a bad deal good. So, a lot of QOZ areas, don't get, nobody invests in them. I don't care if it's in QOZ or not. You can't take a bad piece of real estate and make it good. Or somethings not worth it and build something. You have to be able to make money. This fits right in that category, and it happens to be really good real estate and it happens to be in a QOZ and it just happens to be right on the edge of that.
Adam Gower: All right. Come on, get me excited. What is the deal? I'm looking at pictures here. What are we talking about?
Daniel Oschin: There's one right behind me.
Adam Gower: Yes.
Daniel Oschin: Why not? Right? So, this is a 5-acre site on Las Vegas Boulevard. Catty- corner to Mandalay Bay and adjacent to private aviation at McCarran Airport. It's a 20-storey, luxury resort hotel and it is going to be managed and operated, currently contracted to do so with the Dream Hotel Group. Dream - if you don't know who they are, it's a worldwide group. They have - they are really focused on a bespoke, really customized, high-end experience that fits a certain kind of clientele. They have a couple of hotels in Las Vegas, or in New York, Miami, Nashville. They've got a number of them around the world that they're opening. They are a long-term real estate hospitality company but they have expertise in driving this very specialized kind of client and generating a lot of entertainment, food and beverage revenue. And, they've been looking for a decade or so in Las Vegas for a headquarters for their flagship, and they finally found it with this because we're in a unique location. We're less than a mile from Allegiant Stadium, which if you don't really know what's happening in Las Vegas, with the inclusion of Allegiant, which will have hundreds of events a year. They are literally millions of people being driven to Las Vegas to go see, not just the Raiders, but all the events that will be there and we are going to be the closest new hotel within walking distance. So we have all these locational things. We're near Allegiant Stadium. We're not far from Golden Knights Stadium. We're right near where they're talking about putting Major League Baseball, just a few blocks away. We're the closest hotel, new hotel, to driving in from Los Angeles, which can save you a lot of time.
Daniel Oschin: We're adjacent to private aviation and where JetSuiteX is, at the airport, so people who are flying in on JetSuiteX - if you don't know who they are, they're kind of a private Southwest Airlines kind of thing. It's a really great way to get to Las Vegas and many other areas within the United States. All are right where we are. We're catty-corner to the 5th largest convention center in the world, at Mandalay Bay. We're across the street from a golf course. We're in this incredible location where all the revitalization is happening in Las Vegas and we have this incredible brand. And I'm going to give you one more thing. Uniquely to this deal, if you invest in our deal, we have this thing called the dream - the DLV Founders Club. DLV Dream Las Vegas. And, as an owner, as an investor, you are treated just like the owner you are when you come. You can be picked up at the airport. You can be - front of the line access. You can have special privileges to get into things you wouldn't otherwise get. Room upgrades and all kinds of things. A laundry list of benefits that come with this, depending on what level of investor you are. So they'll start at $250,000 or more. But as an investor in the Dream Las Vegas project, you are really treated as an owner, so you can enjoy your ownership. You can go to Las Vegas, stay in your hotel, be treated like the owner you are, and have all those advantages.
Adam Gower: That is very cool. All right. How many rooms are there? Like, give me, like a - how many rooms?
Daniel Oschin: So it's 525 rooms, which in Las Vegas is considered boutique or tiny.
Adam Gower: It is tiny.
Daniel Oschin: If it was anywhere else, it would be a gigantic hotel.
Adam Gower: I remember staying at the - the G, what was it? What was it - 5,005 rooms. I want to say general something. I forget. It was so many years ago. One of the huge hotels, anyway, so but...
Daniel Oschin: Resort World just opened and Circa just opened - gigantic, mammoth properties are in Vegas and Vegas is going in a different direction right now. It's splitting into - from what was, which was kind of the Mirages and the Excaliburs and all the "themed hotels" into two, kind of, experiences. One of them is these gigantic resort universes, like resort world, which if that's your thing, that's great. It's a beautiful property - properties. Or, and it's also going in the direction which we're leading, which is this, what they call "boutique" the smaller, call it, 500-room hotels, which are much more customized experiences. Where you don't have this massive - like wave of humans. You're not in this cattle car of people. You have everything customized to you in a much more interesting environment. For those who are looking to spend more money and have a - elegant is the wrong word, but a more luxury-oriented focus without it being stuffy because it's also not the Encore or the Wynn, which are great hotels too, but kind for an older crowd. This fits a different crowd with a different economic zone.
Adam Gower: Forgive me for asking a dumb question, but presumably it being on the strip, it will have a casino in it as well.
Daniel Oschin: It will. So there will be a casino. Under the QOZ rules, you can't have what's called a "sin" business. So, a sin business, it's a variety of things, including casinos. So, the way that this was structured - and Baker Tilly is our our accounting firm that helped to structure this. Seyfarth Shaw is our law firm that helped us structure this. It's not something we invented. It's just how the rules work. We created - we bifurcated the ownership into what's called a condominium structure. We still own both condominiums, but the hotel operations is one, and then the other condominium will be a lease to a third party casino operator. So we're just receiving lease income, like you would for renting out a, you know, a restaurant or a retail store. We receive a lease income and because we don't own or operate the casino, it falls within allowance for the rules. So this, while it is going to have a casino, technically, the ownership of it does not own or manage the casino, allowing us to fit within the QOZ rules and also alleviating us from having to be in the casino business, which is a whole other universe of businesses. But, a well known operator will operate the the casino. We'll receive a base rent and some revenue sharing. And actually, it's really a creative. So yes, it will have a casino, but it is not operated by Dream or by Integris.
Adam Gower: Ok, but the bottom line is that money coming from that lease and any ups on revenues will accrue to your investors.
Daniel Oschin: That's correct. They get all the benefits without the risk or the exposure.
Adam Gower: What is the scale of the project in financial terms? Daniel, please.
Daniel Oschin: It's a little north of a $500 million project. There's about $175 million of equity, and the rest will be debt. Now, honestly, the project started out a little higher and little by little, we've been reworking the project and dropping down costs, and we expect them actually to come down a little further. I know that that is probably mind-blowing in the world of real estate, that the price is going down..
Adam Gower: Today. Yeah.
Daniel Oschin: We're a long-term firm. We started out extraordinarily conservatively in our underwriting and we have found ways to be more efficient and as a result, the prices come down. But it's around a $500 million project, about 525 rooms. It will have a variety of - like you would with any resort within Las Vegas. You'll have a variety of experiences, restaurants, bars, you'll have day pools. You're going to have the - all the different components that you would expect to have in a Las Vegas hotel, including the casino within those walls. In addition to the fact that you have, with the Dream group, some very specialized entertainment style venues within the hotel that can drive a lot of revenue.
Adam Gower: Right, so - $500 million dollar project. This is a ground-up development, just to be clear. Tell me the timeline from investment. When are you going to break ground? Is it entitled? When are you going to break ground? When do you expect to complete and when do you expect to stabilize?
Daniel Oschin: Great questions. Long answers. So let's start at the beginning. So the project is fully entitled. We do have all of our approvals. We also have FAA approval. As I mentioned, we're near the airport.
Adam Gower: Right.
Daniel Oschin: Height is an issue, right? We're 20 stories high. You know, a lot of people worry we're, you know, they'll say, oh gee, you know, what about airport noise or what have you? I mean, obviously, it's an enclosed circumstance, and even the pools are set up to reduce noise significantly. But we're not actually in the flight path, which is why you can have a 20-storey building in this location. So it is entitled. We're looking to break ground in - probably the end of Q2. Right in the middle of summer. Could be May, June, July. We don't have a date yet because a lot of things have to be done to finalize all the the plans and getting all the building permits and all the things that need to be done. But we expect to break ground fairly shortly. We would expect to be completed a few years down the road in 2024, and we're hoping to open in Q3 of 2024. Could be Q4. We're not going to open early or rush. A month or two is not going to make the difference in our overall revenue. Opening too early can. You don't want to open up too early.
Daniel Oschin: It typically takes a couple of years to build. We have McCarthy - is our our general contractor, and they're actually overseeing the entire build and design part of the contract. It's important to know who McCarthy is. They're not only a worldwide firm. They're one of the largest and most reputable construction firms in the world. But they built Allegiant Stadium, right up the street. Essentially on time and on budget. They built Circa, just up on the strip. They have a lot of experience in Las Vegas. They know what they're doing. We have DLR as our design firm, working underneath McCarthy. They're also world renowned for design and construction. We got Dream working with us every day and we have this guy, Bill Smith, who if you have never heard of him - he is renowned in Las Vegas. He's one of the most well-known hotel designers in the world. He designed CityCenter for Kirk Kerkorian, which was a $9 billion, 18 million square foot project with the Aria and Crystals and all that. He built that thing in 5 years, essentially on time and on budget. Just a massive project - the largest privately funded project in U.S. history. And he works for Integris and our affiliated companies. Focused solely on this project. We have these incredible people moving this project forward in a really interesting way.
Adam Gower: Right. You've got me very, very excited. As an investor, what are the numbers? What's in it for me apart from, you know, royal treatment when I arrive at the hotel? Of course, everybody likes that. But how much am I going to make? What's the value of this thing? What's the projected value upon completion? How am I going to make money?
Daniel Oschin: All right. Well, let's talk about two different things. One is - and I'm just going to be really honest. There are a million firms out there selling their products, many of them doing it online. And it's really, really easy to put big numbers on things and say, well, you know, the bigger the number, the better the deal. I remember back in the tenant common days of the early 2000s - there was this firm who put out a list. They would put down every project that was out there and he would list by return, and the highest return was at the top. Nothing to do with whether or not it was going to get there. Just what that person said and people would inevitably pick the highest return. We're not in the business of highest returns. We are in the business of conservative underwriting. So this is what I would tell you. A couple of things. One, if people are telling you what their percentage returns are in a marketing piece or online, they are violating regulatory rules. We are specifically not allowed to say in a marketing piece, we're going to make you "X percent". 10 years from now, I can tell you assuredly, nobody knows what they're going to make in 10 years.
Daniel Oschin: In our offering documents are very detailed underwriting that provides a range of outcomes, all of which are very substantial. We think our base case gives you a substantial cash flow, starting once the project is stabilized, probably in the beginning of '25. That there'll be substantial cash flow covered by depreciation along the way. Which I mentioned, is not recaptureable. That there'll be a refinancing return substantial capital to investors in 2026 so they have sufficient funds to pay their taxes at that time and hopefully be mostly or fully out of the investment at that point. So, even though it's a 10-year deal, they may not really have all their money at risk for 10 years. In fact, we're expecting it to be a much smaller timeline than that. Then get consistent cash flow over time and then we're going to sell it at the end. Again, I would refer you to the offering documents so that you can see those things. We are very cognizant of compliance and regulations where a lot of firms don't even know what those things are. When you work with a firm like ours, that's large enough, that has enough time and experience. We work with our regulators directly.
Daniel Oschin: We have an open dialog with them and we're careful not to disclose more than we should.
Adam Gower: That's good.
Daniel Oschin: What I would tell you - I think you're going to find our returns are attractive while being conservative and I would look at our long-term 30-year thousand full cycle asset track record to know that we have the knowledge and capability to show you that you're likely to achieve the returns that we're projecting. That we're not just throwing out some pie in the sky number and I think that's incredibly important. What I will also tell you, is that ours and every other deal out there is going to have a high level of possible fluctuations and outcomes based on a 10- year holding period, which is so long, nobody on earth knows what 10 years is going to bring. We believe that there is substantial revenue to be generated from the operations of the hotel and the lease on the casino. We've been very conservative in how we've underwritten those, and we believe that we can exceed those goals substantially assuming that the market is in our favor and if it's not, still have a high probability of achieving our goals even in a dynamic market.
Adam Gower: All right so. Go ahead, Ben. Go ahead.
Ben Matheson: Yeah, that brings up a good point. It's probably, you know, maybe not a bad time to let people know where they can find those documents and they can actually go through it for themselves. Easiest way - visit the website. It's integrisinvestments.com or if your fingers are a little tired - integrisinv.com. Real easy to jump over to the offerings page. There's a button there. It just says request offering documents or request more information, and we can have the offering documents in your hands. And again, I mean, going along with what, you know, Daniel mentioned, it's, you know, we take the regulatory aspect very seriously along those lines. You know, the amount of information we provide for people to do their diligence. You know, for less experienced investors might seem a little daunting, might seem like a lot. But, for more experienced investors, they'll understand our commitment to transparency and providing every bit of information that they should need. And if there's something they need beyond that, you know, we're, you know, an enterprise size level company, but we still have that smaller company feel that, you know, for the right people with the right questions - if those questions need to get directed to C-suite executives in the top of the food chain. I mean, those things can still happen, but, it all starts with accessing the offering documents at integrisinvestments.com.
Adam Gower: I will also - presuming it's okay with you guys, I'll also include a link on the show notes page to this podcast as well.
Daniel Oschin: Absolutely. It's all available in there. I would just reiterate - if you're looking at companies that don't know how the regulations work enough to know what to say and not say on a marketing presentation like this or publicly, and aren't referring to their offering documents, it's usually an indication of a company that doesn't have enough scope to know the difference. We are careful about everything we do, not just regulations, but every aspect of what we do.
Adam Gower: So there are some questions, I'm sure you can answer and that you have already partially answered. Minimum investment and then you've got some levels, don't you, for hotel, as an owner. So that was the one thing you talked about - $250,000. What is the minimum and are there any other splits, along the way, that investors should know about?
Daniel Oschin: So the minimum is $100,000. We typically see investments over $250,000. The founders club starts at $250,000 because those are very expensive benefits and don't make any sense, cost-wise, below that amount. But that's the only place where the amount matters. Other than that, you can invest $100,000 or more, whatever you want. There are no other break points or issues anybody has to be....
Adam Gower: Here's an interesting question. We talked about Opportunity Zone. We talked about people wanting to benefit from deferred payments of capital gain, but that does not mean that you can only invest capital gains in this project. You can bring new money into the deal as well, right?
Daniel Oschin: Yeah, you know, it's interesting. Most people don't know that either. The fact that it's a qualified opportunity zone investment. If you invest qualified gains, short or long-term, you get the benefits of the QOZ. But, you don't have to invest that way. You can invest cash or other money into - like, from a qualified plan into this. You don't get those QOZ benefits. You don't get the elimination of tax on your gains or things like that, but you still own, and many people invested with us with cash, great real estate. You want to own Las Vegas real estate? You want to have a chance to make a really good return, have depreciation along the way, cash flow, the refinancing, all the things that come with that? It's a good real estate deal, regardless. I would say, if you invest cash, it has to be invested completely separate from the QOZ capital gains investment, if you make both. You can't co-mingle them. They're separate issues, from a tax perspective. But yeah, absolutely. You can invest cash and we have both individuals and institutions looking at doing that.
Adam Gower: Co-invest. Talk to me about the co-invest. You've got institutional partners. You mentioned a few other people who are invested in this project. That's an important component. Tell me a bit about that.
Daniel Oschin: So as a company, we have an institutional pedigree. Many of our assets, that we buy, have an institutional partner. Those are institutions who vetted us as a company and they vetted the asset and our structure internally is all there to support that institutional-level of both underwriting, accounting and things like that. In the case of the Dream Las Vegas project, the $173 million that we're looking to raise, we've raised about $40 million of that so far, by the way. So, we're moving along in that process pretty quickly. That includes $4 million from the general partners as well as other money. But the balance of the money is going to come from, some level of institutional investment or qualified opportunity fund. Those are funds that raise capital from people and then invest in a diversified range of qualified opportunity zones. That money, we're expecting - we're in negotiations now with a number of people, both in the U.S. and internationally, looking to bring in both equity and or debt into the project on a variety of levels. And when that happens, the fund will likely close up. So, we continue to raise money from individual investors, and we'll do so until the institutional money comes in and picks up the balance of it. And it may be worth $40 million now, maybe it's $50 million and $123 million dollars. It could be $60 million from regular investors. It also could be, you know, in 3 weeks, we find the right institutional investor. But, we have a lot of institutional interest. And, if you look at our current history, the vast majority, more than 90% of the assets we've done in the last number of years, have all had institutional partners across the spectrum of things that we do. Some on a very, very large level like this.
Adam Gower: Individual investors. Is there any early exit possible, during that 10 years? Or this is a commitment for 10 years?
Daniel Oschin: It's a commitment for 10 years and this is important. It's 10 years from when the investor invests. It has nothing to do with the fund itself. So really, this fund will last 10 years from when the last investor comes in, or longer. There's no requirement that you sell after 10 years either. I think you have 25 years or something to run a QOZ. So, our intent is to sell after the 10th year, at some point. But, we may also come up with a structure where people who want to stay in can stay in and those who want to exit can exit. If somebody exits before the 10 years, they're going to lose all of their QOZ benefits. And the only way that they can sell, would be if they sold to a third party in a secondary market transaction, which would have nothing to do with us. They're not precluded from doing so, but then they lose their QOZ benefits.
Adam Gower: That's interesting.
Daniel Oschin: And that's not an Integris Dream Las Vegas thing. It's a QOZ rule thing. Within QOZ.
Adam Gower: So there are 2 liquidity events projected. One is in 2026, when you refinance. And, the idea is to recapitalize the deal and take investors - or return investor's principal and then they stay in the deal. And then the last one is, when you sell the project, at the end of 10 years - at the end of the 10-year cycle, right?
Daniel Oschin: That's correct. So, once we have cash flow started, as we move into 2026 and we have some - we have stability and a little bit of track record, we'll go back to the market. There actually is going to probably be a refinancing right after construction, take out the construction loan. And I'm going to caveat on this in a minute because it's always possibilities. But, the current intent is, in 2026 to do a large refinancing, return substantial capital at that time to investors, combined with their cash flow, should give them a very large portion, if not all of their capital back at that point, and then continue with cash flow and like you mentioned at the end of the ten years, have a capital event when we sell. The caveat I mentioned is this: we are negotiating with certain institutional investors right now who may bring in the debt component and allow us to do a construction financing that converts to permanent financing at some point and then brings out capital. So structurally, things may change a little bit, but the concept is still the same. By 2026, our intent is to have substantial capital back to investors.
Adam Gower: Last two questions. Who is your investor avatar for this fund? Who is the ideal investor? Paint me a picture of who this - who should really be perking up and paying attention?
Daniel Oschin: Ben, why don't you answer that question because that's your area.
Ben Matheson: Yeah, it's - you would think right at face value - QOZ fund, that that would narrow it down to a fairly small audience. But surprisingly, as you work through the nuances of that, it's a much broader audience than what people would expect. We heard a lot pre-election, there's a lot of talk of something that can make a huge change to the real estate business, and that was the 1031 Exchange, coming into question. And sure, that was maybe a bit of saber rattling and pre-election strategery, if you will. But it brings up a good point is, a potential 1031 investor is at least a candidate for someone who should look at a qualified opportunity zone. You know, there's some differences, and it's not something where you can wholesale say, yeah, anyone that's doing a 1031 should consider a QOZ but it certainly warrants investigating because the level of familiarity with 1031's is quite large. The level of familiarity with QOZs is actually still quite small, which is, astounding.
Adam Gower: It is astounding, yeah.
Ben Matheson: But there's nuances to each one of those. There's slight differences to each one of those. I think a good percentage of people that are doing 1031s, may look at the pros and cons of a QOZ and might see some some benefits for them, where maybe one direction is better than the other. So, I would say that's one potential audience.
Ben Matheson: You know, obviously it's anybody with any type of gain. But, you know, let's unpack that a little bit too. You know, what's a gain and who could have a gain? Well, we just had a lot of volatility in the crypto markets and the stock market. So, if there's volatility, people are buying, people are selling and hopefully a good portion of those people made money. And if they did well, that's a capital gain. And regardless, if it's a long-term capital gain or a short-term capital gain. Those are opportunities. If they don't want to write that big tax bill, for those gains, there's an opportunity there to potentially defer those gains through, a QOZ. Going through the layers - if you've sold a business, if you've sold investment property, if you work for a company - or one of the founding members of a company or you had a startup and it just went public, and now all of a sudden you've had this big stock sale or stock options. The more you look at this, you find out there's so many scenarios where people could potentially have a big capital gains bill. And I think, here we are in the start of 2022 and this is actually quite timely because, over the next 30, 45, maybe 60 days is when people are going to start getting a lot of those phone calls from their CPA saying, Hey, you know...
Adam Gower: You got to write a check.
Ben Matheson: This is what happened. Prepare your checkbook or find your checkbook. Dust it off, or they're going to ask them: how big a check are you prepared to write? The next level of that is, not only are a lot of individual investors, not 100% up to speed on QOZs, if they've heard of heard of them at all. A lot of CPAs just haven't had enough time to ramp up and have the knowledge base on this. So, in many cases, it may have to be the actual individual investor proposing to their accountant. Hey, is this something a QOZ could help with? So you'll have to initiate that conversation, potentially. But yeah, the more you look at it and you think, Oh, it's this finite group or this small sliver of the population, just the more you look at it, I mean, you could spend hours just uncovering individuals where this could potentially be tremendously beneficial. Again, based on their individual situation. But it's not something you can just discount and say, Hey, QOZ is not for me. You may not even know yet. Maybe that call from your accountant isn't going to come till next week. So, start your due diligence process now. Maybe you're getting ahead of the curve a little bit.
Adam Gower: I guess I've got, like I did last time, one final question before my final question. You have triggered this thought. Do gambling gains count? If I win the lottery or I hit Black 13 or whatever it is? Does that count as a capital gain? Or is that - that doesn't count? Or is that beyond your scope of knowledge? Thinking Vegas primarily.
Daniel Oschin: We're not accountants, and so I wouldn't definitively say, but I don't believe so. I don't think that counts as a capital gain. But I believe you have to make an investment to generate a gain.
Adam Gower: I see.
Daniel Oschin: But, this is where...
Adam Gower: It's my retirement plan. The lottery is my retirement plan. I don't know why.
Daniel Oschin: It's really a smart one. Good for you. What I would say is, this is a golden opportunity. Whether or not you like our project or not, if you have any kind of gains in your universe, sit with your account, figure out what your gains look like. Know that you can go back 6 months on your individual gains, maybe even further, if they're into deal level gains and consider not just what's happened in the past, but what's going to happen through the next few months of the year and say, you know, is this a time to harvest my gains? Do I use the gains I've already made? What do I have that I can defer tax for till 2026? Not owe my taxes until '27 and everything I make is going to be essentially tax free on those investments. How can I take advantage of that now? Whether it's the Integris Dream Las Vegas project, or any other QOZ. It is a remarkable thing where there is bipartisan support from government and to a large extent and an opportunity that I've never seen in my life and I don't know that I'll see again.
Adam Gower: I have one last question for you. This is for my post-production team. Whoever's doing this edit, I want this particularly segmenting out. It's my last question for you. The old days. You had to tune into a radio show at exactly the right time, to listen to it. And if you came in late, you would only hear the very, very last part of the show. So, with that in mind, if somebody was to tune in now, even though we're going to break this out, put it somewhere separately, and they only heard what you are about to tell me about your project Integris, The Dream project, the DLV Opportunity Zone Fund. What would you want them to hear?
Daniel Oschin: I'd want them to hear that QOZs, in general, are a remarkable opportunity that are worth investigating. And then, within the world of qualified opportunity zone investments, we have, what I believe to be, the best and the most unique of what's available. A 20 storey, 500 room resort casino, on Las Vegas Boulevard in Las Vegas, within a mile of Allegiant Stadium, down the street from where the new baseball stadium may be, catty corner to the 5th largest convention center in the world. Access to private aviation. A remarkable location, an incredible property. A unique investment opportunity with a company where, in our case, a 30-year track record of more than a 1,000 full cycle investments has brought in, what we call a "dream team" literally, of the best contractors, designers and construction management people in the world to build what is going to be a worldwide recognized premier property that people are going to look back on, years from now and say, I wish I had invested in that. I've never seen anything like it available, and I'm probably not going to see something like that again. It's an opportunity not to be missed.
Adam Gower: Daniel Oschin, Ben Matheson. Thank you, of Integris Real Estate Investments talking about the Integris DLV Opportunity Fund deal in Las Vegas. Thank you so very much for joining me today.
Daniel Oschin: Thank you very much.
More information about the Integris DLV Opportunity Zone Fund
Integris Real Estate Investments offers accredited investors the opportunity to directly invest in the transformation of underutilized, undervalued real estate into better-managed, attractive and valuable assets that have the potential for appreciation and profitability.
For nearly three decades, Integris Real Estate Investments’ executive team, through its affiliation with Shopoff Realty Investments and other related firms, has focused on opportunistic, value-add projects. Headquartered in Orange County, California, Integris uses a multi-disciplined approach that enables the firm to uncover opportunities that others miss. The firm primarily focuses on proactively generating appreciation through the repositioning of commercial, income-producing properties and the entitlement of land assets.
The Integris DLV Opportunity Zone Fund seeks up to $25 million in investor capital for up to 14.5% ownership in the development and ownership of the Dream Las Vegas hotel and casino, located on a 5.25 acre site on the Las Vegas Strip.
Located in a Qualified Opportunity Zone (“QOZ”), the project will provide potentially advantageous tax benefits to investors. The Fund offers prospective investors an opportunity to defer and reduce capital gains for federal income tax purposes pursuant to an investment in a QOZ.
The partnership is expected to hold the project for 10 years to realize the full benefits of the QOZ, however, an early liquidation could result in a loss of QOZ benefits and/or additional tax consequences. The potential tax benefits related to this Fund are the federal income tax aspects, and state, local or other tax implications may vary.
About the Presenters
Proven, successful Southeast Wholesaler with deep trust based relationships in the IBD and Hybrid BD space. Abundant experience and entrepreneurial spirit that has helped propel new sponsors in the space to class leaders in remarkably short time periods. Consistent top producer responsible for inordinately high percentage of capital raise time and time again.
Daniel Oschin is Chief Strategy Officer of Integris Real Estate Investments. He is focused on cultivating the company’s platform of distinctive public and private programs, enhancing its brand and market presence, and broadening the visibility and impact of its added value, institutional co-investment model.