Maxus Opportunity Fund

What is an Opportunity Zone

Opportunity Zones are census tracts of low-income areas designated by state governors (or, in the case of Washington, D.C., the mayor) and certified by the U.S. Department of the Treasury. These areas are being targeted for economic development through the newly created Opportunity Zone program.

What do Opportunity Funds do?

Opportunity Funds promote investment and development in targeted communities across the U.S. by offering investors federal tax advantages that are only available through the new Opportunity Zone program.

What tax advantages are available to investors in an Opportunity Fund?

Opportunity Fund investors can defer and reduce their capital gains tax burden, in addition to enjoying tax-free appreciation, should certain conditions be met. In fact, investors in Opportunity Funds may defer and reduce realized capital gains on the principal invested, and even possibly eliminate capital gains tax burden on returns earned from the sale of appreciated qualified investments in Opportunity Zones. While certain tax incentives are available to Opportunity Fund investors immediately, in general, the most powerful tax incentives are available to long-term investors.

What is Maxus Opportunity Fund I, LLC?

Maxus Opportunity Fund I, LLC is a Missouri limited liability company formed as a specialized real estate investment fund to invest in real estate within qualified “opportunity zones” created pursuant to the 2017 Tax Cuts and Jobs Act, with a primary focus on acquisitions of controlling interests in multifamily commercial real estate projects which are under development and construction.

What are the assets within Maxus Opportunity Fund I?

We intend to focus on high-quality multifamily real estate with long-term growth potential, while taking advantage of the tremendous tax benefits afforded by the Opportunity Fund designation. Maxus Opportunity Fund I, LLC’s assets include indirect investments in Metropolitan Apartments, in Birmingham, Alabama, and Town Park Apartments, in Kingsport, Tennessee.

Metropolitan Apartments (“Metropolitan”), in Birmingham, Alabama, is in the final stages of construction and is currently expected to be completed in mid-2019. Metropolitan is a 262-unit apartment community, with 237,631 square feet of rentable area. We are in the lease up stage of the property now. Metropolitan is expected to stabilize in 2019 and projected cash flow is expected to commence in 2020.

Town Park Apartments (“Town Park”) is a 263-unit multi-family complex located in Kingsport, Tennessee. Town Park is expected to be substantially complete by April of 2019 and is planned to include 249,554 square feet of rentable space. The 7.3-acre property site is part of the downtown Kingsport “Opportunity Zone” redevelopment district, an area that the City of Kingsport is heavily invested in seeing develop. The city pushed mightily for this project granting the property a 20-year tax full abatement. Town Park will be the premier residential product in the Kingsport market. The property is expected to stablize in 2019 and projected cash flow is expected to commence in 2020.

Why Metropolitan?

Metropolitan is considered a “AAA” class complex in a “B+/A-” location that is up and coming in an area very near the University of Alabama at Birmingham campus. We are excited to own this “AAA” asset in the high growth market of Birmingham, Alabama, at a price that we believe provides a good rate of return over the next 10 years.

Why Town Park?

The 7.3-acre property site is part of the downtown Kingsport “Opportunity Zone” redevelopment district, an area that the City of Kingsport is heavily invested in seeing develop. The city pushed mightily for this project granting the property a 20-year tax full abatement. Town Park will be the premier residential product in the Kingsport market.

Is the Manager personally investing in Fund?

Yes. The Manager will be making a cash investment. In addition, it is anticipated affiliates of the Manager will guarantee some or all of the debt placed upon the projects in the fund. The investors, themselves, will not incur any additional liability for the fund’s debts.

What are you seeking?

We are seeking primarily investors with capital gains from sales or exchanges of any property to an unrelated party within 180 days prior to investment in the fund, or any other gains future legislation or regulation allows for Opportunity Zone investing.

What is the minimum and maximum investment?

The Confidential Private Placement Memorandum describes the private offering of a maximum of $50,000,000 of our interests. We are accepting investments in increments of $50,000 and the minimum aggregate offer is $25,000,000.

How does the economy impact this strategy?

Real estate investments have been increasingly volatile and real estate valuations have experienced severe past downward corrections, and there can be no assurance such volatility will not continue or that such downward corrections will not recur.

What will the Manager do to protect the investment?

We will closely evaluate each acquisition for the potential to upgrade the property and increase rents. We will closely manage the property and the maintenance of the property to prevent problems with the real property itself and to maintain or increase rent. In addition, our understanding of the particular markets will allow us to maximize the opportunity to increase rent and cash flow at the time of renewals and maximize selling prices at the time of disposition.

Why should investors rely on our strategy for income protection and investment returns?

We thoroughly analyze our investments to more accurately predict the cash flow stream during the period of the investment and the likely challenges that will result from our difficult economic times. By carefully selecting target properties and purchasing them at favorable prices, we believe that we have a higher probability of achieving our investment goals.

Does the fund have relationships with any affiliates of the Manager?

The fund will have business relationships with affiliates who may have conflicts of interest with regard to the fund. These affiliates will receive fees and other compensation from the fund for services rendered. The relationships with such affiliates and the fees payable to them are fully documented in the Offering Materials. Investors will be provided with these materials in which full disclosure is made.

Who do I contact if I have questions or want to invest?

We see appealing investment opportunities as they relate to Opportunity Funds. Please contact Matt Baty should you have any interest in MOF I, LLC or would like further information regarding Opportunity Zones. Matt can be reached at mbaty@maxusprop.com or by telephone, 913-286-2214.