NORF Companies, a New Orleans-based real estate investment firm specializing in developments offering tax relief to investors, has launched its fifth fund.
The NORF 5 Opportunity Zone fund is the company’s third since the Tax Cuts and Jobs Act of 2017, which created incentives to invest in state-designated areas deemed underdeveloped and in need of economic growth. NORF has two other funds that were created before the legislation.
Opportunity Zone funds are for investors who have or have not made long or short term capital gains, including the sale of stocks, bonds, real estate, businesses, cryptocurrency or other real estate, and who wish to defer and potentially eliminate some or all of their accrued taxes.
NORF’s latest fund will target investments in non-major markets where there is less competition with larger players and where local governments are more likely to support developments and streamline the permitting process, according to a release from NORF. NORF press.
Projects that have been identified include a high-rise building in downtown New Orleans that sits in the middle of Tulane University’s campus in the Medical District. In 2021, NORF began demolition on the site at 380 S. Liberty St. which it acquired in 2019 through two of its previous investment funds. The structure, located across from City Hall and once used as a mechanical building for the Warwick Hotel, has stood vacant since Hurricane Katrina. Preliminary plans called for the development of a 12-story, 58,000 square foot vertical building. The property is part of NORF’s flagship project, 1315Gravier, which includes the redevelopment of the former Warwick Hotel into housing for Tulane students and faculty.
A mixed-use development in St. Bernard Parish is also under discussion, according to NORF, and the company is considering a third project in Alabama.
NORF funds have varied in size; the company is looking to raise between $20 million and $25 million. Funds are smaller in the real estate investment sector, allowing the company to invest in niche markets with less competition, said Paul Tiranno, executive director of investor relations at NORF.
Investors have been a mix of entrepreneurs and other business people, he said. About half are in Louisiana and the other half are out of state.
Most of the projects have been historic redevelopments and renovations. NORF started with duplexes and triplexes and moved on to larger projects; most are multi-family developments with 25-100 units and some commercial or retail space. The company has added commercial and industrial projects, and says it sees more opportunities for new construction due to “greater availability of land at good prices”.
“There has also been a steady increase in the number of high-quality distressed/opportunistic acquisitions available at attractive valuations which they believe will create even greater opportunities for (Qualified Opportunity Zone) projects with an economic cycle to down,” the statement said.
NORF’s Opportunity Zone Fund’s first project was completed in late 2021: a 3-story building at 3100 Banks St. in Mid-City with 21 apartments and 5,000 square feet of retail space. NORF also redeveloped a building that was part of the old Gallier Court in downtown New Orleans into a mix of short-term rentals and retail space.
This year, NORF expanded into Tyler, Texas with its NORF 4 Opportunity Zone fund, which closed last December and raised more than $20 million from 40 investors. The company has acquired three historic buildings and announced plans to renovate them into mixed-use, multi-family rental and office space. NORF is also renovating the former Carlton Hotel in Tyler into apartments and commercial space. The company says it is “bullish” in the market, where the University of Texas at Tyler is expected to complete construction of its medical school next year.
NORF plans to continue to expand beyond New Orleans and is primarily focused on areas of Louisiana, Texas, Florida and Georgia. The area is attractive due to its growing population and employment, multi-family rental demographics, friendly local governments, and lack of developers experienced in navigating the types of tax and incentive projects that NORF has, according to the communicated.
“Given the focus of our portfolio on the New Orleans market, we have expanded to other Southeast regions with stronger than average economic growth in an effort to improve diversification,” Tiranno said.