March 22, 2019

Prepared by:

Qualified Opportunity Zones

NH-CIBOR Presentation

John H. Sokul Partner jsokul@hinckleyallen.com

Jeff B. Groshek Partner jgroshek@hinckleyallen.com

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Hinckley Allen Northeast Footprint

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Real Estate transactions in 47 states

Spotlight: Rock Row► Hinckley Allen serves as real estate counsel for the owner/developer of Rock Row,

the 1 million-square-foot, mixed-use project in Portland and Westbrook, Maine.

► The site will embrace the 26-acre quarry as a natural centerpiece and foundation, combining elements of destination retail, urban living, modern workplaces, vibrant hospitality, entertainment, dining, wellness and recreation into one immersive experience offering something for everyone.

► We are handling real estate, land use, development, leasing and other related issues for the Project.

4 Images: Wakefield Beasley & Associates; Rock Row

Rock RowPortland • Westbrook, ME

Spotlight: Tuscan Village► For the past four years, we have served as real

estate counsel for the owner/developer of the 170 acre, Tuscan Village Project in Salem, New Hampshire.

► This is a redevelopment of the former Rockingham Park Race Track and it is one of the largest, active redevelopment projects in New England.

► The project consists of a multi-phased mixed-use development that will include over 2,000,000 square feet of retail, residential, office, restaurant, entertainment, hotel and medical uses.

5Image: Tuscan Village Salem

Tuscan VillageSalem, NH

► Tuscan Village is expected to become the premier north of Boston destination.

► We have handled real estate, land use, development and other related issues for the Project.

Spotlight: Arsenal Yards► We provided strategic counsel to Boylston Properties

and The Wilder Companies, who recently secured the equity funding and construction loan necessary to begin construction of New England’s premier urban mixed-use redevelopment project. Arsenal Yards, located in Watertown, MA, is a cutting-edge redevelopment of an existing enclosed mall. Once completed, the property will boast 250,000 square feet of retail and restaurants, 200,000 square feet of office space, a 150-room hotel, and 425 apartments and condos.

► An interdisciplinary team of Hinckley Allen attorneys successfully guided this massive project, including:

– Structuring a condominium regime that allows distinct aspects of the project to be operated as a cohesive development;

– Negotiating and closing a joint venture with an equity partner who contributed $109M;

– Closing a $222M construction loan;– Negotiating and drafting key leases with national and

regional retailers;– Counseling the client on complicated tax issues; and– Negotiating and drafting construction contracts.

6Images: Arsenal Yards

Arsenal YardsWatertown, MA

Spotlight: Atlantic Sports Center

► We represent Global Property Developers Corporation in connection with redevelopment of the Atlantic Sports Center, located in Amesbury, MA. The facility is proposed as a 410,000 square-foot athletic facility, with six hockey rinks, a 300-seat conference room and restaurant, and a 130,000 square-foot office building.

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Opportunity Zones► A once in a generation investment opportunity

► Tax, Real Estate, Construction, Estate Planning and Wealth Advisory

8 Image: Google

Real Estate Talking Points

► Economic Development Activity– Ingredients in place for a possible surge of development

activity– Gold Rush mentality– Challenged Areas

► Deals are Ahead of the Capital– People are lining up deals now– High net worth investors are pounding on the doors of their

investment advisors asking how to get in– Institutional money is waiting for final regulations

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Real Estate Talking Points

► Commercial Brokers need to know:– Sales of developable site in OZ's are up 80% in the first 3 quarters

of 2018 compared with the same period last year.– Can tax benefit deals be done NOW? YES!– Real Estate Projects – Substantial rehabilitation; 30 months– Biggest benefits are for those who buy and hold for more than 10

years; NOT a buy and flip program– Development or redevelopment deals are front and center.– Once acquired, additional capital must be invested to improve or

develop within 30 months. Safe harbor 31 months.

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Real Estate Talking Points

► Commercial Brokers need to know:– Substantial improvement based on value of the structure; not the

land.– Investment must be made in a “Qualified Opportunity Fund”.– Investment must be made within 180 days of recognition of the

capital gain.– Gain does not need to be from sale of real estate.– Property must be purchased after 2017.– Investors can defer taxes on capital gains until 2026.– Tax recognition on original gain in 2026.

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Real Estate Talking Points

► TO DO:– Identify the sites. Easy.– Research the community needs or the identified community goals

and objectives.– Get sites under control.– Assemble a development team.– Align with owners wanting to sell.– Align with investors looking to invest.– Align with wealth managers.– Align with OZ communities.

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Real Estate Talking Points

► Who Wins? – Existing owners vs. new investors

► Asking Prices vs. Tax Benefits– Comps plus 20 percent? No way!

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Image: Volaris Group

Real Estate Talking Points

► Single Asset/Single Fund

► Multiple Asset/Single Fund

► REIT Structures

► Community Sponsored Funds

► Smaller non-urban towns with smaller parcels will be harder to attract institutional investors and money. More suitable for local of community developers.

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Real Estate Talking Points ► Municipal Campaigns

– Why choose us?

– Municipal toolkits

– Municipalities who are offering a “package” will be most successful in attracting investment money

– Layering of other development incentives

► Development Incentives– Public private cooperation and partnerships

– Tax increment financing

– Property tax deals

– Deals need to move quickly – do the upfront homework– Developers and OZ communities need to be in alignment;

see Amazon HQ2 in New York15

Real Estate Talking Points

► Types of Projects– Whatever the OZ community wants

Municipalities still hold the cards Zoning and other development regulations

– Workforce housing

– Last mile industrial

– Social “impact” investing

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Real Estate Talking Points

► Remember:– Bad deals are still bad

– Good deals can become great deals

– For the most part these are development deals – you need to be comfortable with that

– No cash flow right off the bat

– Longer term hold

– Construction costs can be deal killers

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Tax Talking Points

► Tax Benefits (i.e., Deferral & Exclusion)

► Whose Gain can be Deferred?

► What is Qualified Opportunity Zone Property?

► Real Estate as Qualified Opportunity Zone Property

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