The Next Phase of Opportunity Zones (OZ 2.0)
Qualified Opportunity Zones were created by the 2017 tax Cuts and Jobs Act to spur economic development and job creation in underinvested communities by providing tax benefits to investors who invest eligible capital into these selected census tracts.
In 2025 the One Big Beautiful Bill made the program permanent, with new benefits and updated zone designations set to begin in January 2027.
Brightshore has raised over $875M and ranks among the top 10 OZ managers nationally by capital raised and pursues a diversified investment strategy focused on residential, industrial, and student housing projects in growing sunbelt markets and selected coastal gateways.
Please register to learn more about OZ 2.0 and our future offering.
Opportunity Zones By The Numbers
- kCensus tracts designated as QOZs under OZ 1.0
- kCensus tracts eligible as QOZs under OZ 2.0
- $B+Capital raised since program inception in 2018
- %Urban
- $KMedian income
- %Income growth
Many types of capital gains are eligible for Opportunity Zone program, including stocks, bonds, commodities, partnership K-1s, business sale, real estate, personal residence, cryptocurrency and art sales
- Stocks, Options
- Bonds
- Commodities
- Partnership K-1s
- Business Sale
- Real Estate
- Cryptocurrencies
- Art
What Are The Tax Benefits?
Defer
Investors may defer the payment of capital gains by rolling realized gains into a Qualified Opportunity Zone Fund ("QOF"). Under the current Opportunity Zone program, eligible gains invested in a QOZ Fund may be deferred until December 31, 2026.
Capital gains generally need to be invested in the QOF within 180 days of the sale or transaction that generated the capital gain. Beginning January 1, 2027, OZ 2.0 introduces a new rolling five-year deferral period for eligible gains invested in QOF, replacing the current fixed deferral deadline and creating a renewed planning window for investors.
Reduce
At the 5-year anniversary investors receive a 10% basis step-up on their original taxable gain (i.e. a gain of $100 is reduced to a gain of $90 when the deferred tax comes due).
- There are additional incentives for rural OZ investments: 30% step-up and lower substantial improvement threshold.
- Step-up doesn’t have an expiration, unlike in OZ 1.0.
Eliminate
Investment in the QOFs becomes completely free of capital gains and depreciation recapture after 10 years, as the basis is increased to match current Fair Market Value.
Among other qualifications, assets in the QOZ Fund must be:
- Put to new use (typically new development) or
- Substantially improved by investing at least as much as the original purchase price
QOF must invest at least 90% of its assets in a QOZ.
Defer
Investors may defer the payment of capital gains by rolling realized gains into a Qualified Opportunity Zone Fund ("QOF"). Under the current Opportunity Zone program, eligible gains invested in a QOZ Fund may be deferred until December 31, 2026.
Capital gains generally need to be invested in the QOF within 180 days of the sale or transaction that generated the capital gain. Beginning January 1, 2027, OZ 2.0 introduces a new rolling five-year deferral period for eligible gains invested in QOF, replacing the current fixed deferral deadline and creating a renewed planning window for investors.
Reduce
At the 5-year anniversary investors receive a 10% basis step-up on their original taxable gain (i.e. a gain of $100 is reduced to a gain of $90 when the deferred tax comes due).
- There are additional incentives for rural OZ investments: 30% step-up and lower substantial improvement threshold.
- Step-up doesn’t have an expiration, unlike in OZ 1.0.
Eliminate
Investment in the QOFs becomes completely free of capital gains and depreciation recapture after 10 years, as the basis is increased to match current Fair Market Value.
Among other qualifications, assets in the QOZ Fund must be:
- Put to new use (typically new development) or
- Substantially improved by investing at least as much as the original purchase price
QOF must invest at least 90% of its assets in a QOZ.
Where QOZ's are located?
Opportunity Zone Program is Well Aligned with Brightshore Strategy and Experience
Opportunity Zone Program is Well Aligned with Brightshore Strategy and Experience
Opportunity Zones
Brightshore Capital
Opportunity Zone Program is Well Aligned with Brightshore Strategy and Experience
1. Brightshore ranks among the top 10 OZ managers nationally by capital raised
OZ Program is a direct continuation of Brightshore investment strategy and focus on areas undergoing transformation
2. In-house development capabilities with vertically integrated platform
OZ program requires development or redevelopment and Brightshore team has been focused on ground-up development since it's inception in 2005 with a vertically integrated development platform spanning site selection, acquisition, development, construction oversight, leasing, and asset management
3. Long-Term Ownership
OZ Program requires to hold the investment for a minimum of 10 years and Brightshore has an established fund management platform investing on behalf of the world's largest pension plans, and wealth managers with extensive reporting, institutional terms and governance
1. Brightshore ranks among the top 10 OZ managers nationally by capital raised
OZ Program is a direct continuation of Brightshore investment strategy and focus on areas undergoing transformation
2. In-house development capabilities with vertically integrated platform
OZ program requires development or redevelopment and Brightshore team has been focused on ground-up development since it's inception in 2005 with a vertically integrated development platform spanning site selection, acquisition, development, construction oversight, leasing, and asset management
3. Long-Term Ownership
OZ Program requires to hold the investment for a minimum of 10 years and Brightshore has an established fund management platform investing on behalf of the world's largest pension plans, and wealth managers with extensive reporting, institutional terms and governance
What Is The Brightshore Opportunity Zones Strategy?
Recovering Coastal Gateways
NYC, San Francisco lead all U.S. markets in rent growth for residential, as vacancies have recovered to pre-COVID levels and future supply is constrained
Southeast & Texas Industrial
Industrial in the Sun Belt is driven by reshoring, data center build-out and energy boom
Major Southern Sports Colleges
Trend toward enrollment growth at major SEC and state schools (even as admissions decline for liberal arts institutions) creating a need for student housing
Build-to-Rent Housing
The ‘American Dream’ of living in a home endures, but affordability concerns create a need for rental homes
Lingering Distress: Pre TXO Deals & Recaps
An existing large capital gap still needs to be plugged from distressed/repriced debt following an interest-rate spike – opportunities to provide rescue capital, acquire projects pre-TCO
Case Studies
Tavalo at Cadence, Single-Family Build-to-Rent (Phoenix, AZ)
- In-house development of a 197-unit bungalow style community. Brightshore was an early institutional investor in BTR in Phoenix’s Southeast Valley, capitalizing its demographic growth before it became a mainstream institutional strategy
- Construction was completed in August 2023 and the property reached leasing stabilization in December 2023
- Construction using Hercuwall, an innovative and environmentally friendly prefabricated exterior wall system that enables a faster and cleaner construction
Brightshore QOZ Fund Investments
Assets
$M
Equity Committed$B
Total Project Cost
Longview (Multifamily)
197 units
Atlantic Square - Miami, FL
Stateline 85
Time-lapse
Warehouse construction