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CIM Group To Launch $5B Opportunity Fund

Los Angeles-based CIM Group plans to launch a $5B opportunity fund to take advantage of the benefits of the federal opportunity zone program.

Some of CIM Group's first qualified communities were in Southern California, including parts of Hollywood that are now in opportunity zones.

Called the CIM Opportunity Zone Fund L.P. in documents filed with the Securities and Exchange Commission earlier this month, the fund will create a way for the company to expand its focus on opportunity zones and take advantage of the tax breaks offered through the program.

"CIM has been investing in Opportunity Zones as a prudent investment strategy long before these areas were considered Opportunity Zones," the company said in a release. "The [Tax Cuts and Jobs Act] offers the potential to qualify for added tax benefits from new Opportunity Zone investments in areas in which CIM has already targeted and has been actively developing, repositioning, and operating properties."

The opportunity zone program was created as part of the 2017 Tax Cuts and Jobs Act to bring investment to underserved areas. Under the program, investors in an opportunity fund can defer or even eliminate capital gains taxes if that fund is used to support and substantially improve businesses in qualified opportunity zones and if the investment meets certain criteria, such as the length of time the assets are held. Such incentives have led to a surge of interest in opportunity zone investment, though the federal government has yet to finalize guidelines for how the program will work in practice.

CIM Group has led more than $60B of projects in the Americas since 1994 for itself as well as partners and co-investors. 

The company uses a process to determine "qualified communities" that are in densely populated, transitional or thriving areas that are most likely to benefit from investment. U.S. cities where CIM has identified a large number of qualified communities include Los Angeles, San Francisco, Oakland, Austin, Chicago, D.C., New York and Boston.

Out of more than 100 qualified urban communities, 65 are in the recently designated opportunity zones, and the company said it has owned, developed, repositioned and operated more than 50 investments in areas now designated as opportunity zones. CIM Group controls $3B in assets in opportunity zones.

"CIM’s long-standing community-based approach directly aligns with the underlying goals of driving real estate improvements and bringing new businesses to Opportunity Zones," the release said.