Saratoga Group Closes 1st OZ Fund; Nears Close on 2nd
"We are excited to announce our second QOZ fund, also specifically investing in MHCs located within Opportunity Zones. Our second QOF (Qualified Opportunity Fund) is a $15-million equity raise and is about 70% subscribed,” Hales says.
AUBURN, CA—The locally-based Saratoga Group reports it has closed on its first fund targeting mobile home investments in Qualified Opportunity Zones and is in the midst of fundraising for its second fund.
Saratoga Group CEO Same Hales says, “We were over-subscribed with a number of investors requesting investment after the closing. I believe we struck a chord with investors who have researched QOZ (Qualified Opportunity Zone) offerings and decided they aren’t comfortable with the risk to reward profile that is generally available in the marketplace.”
The company announced on May 28 that its first “Qualified Opportunity Fund” was fully subscribed and had invested in two communities, one in Bakersfield CA and the other in Marietta GA.
“We are excited to announce our second QOZ fund, also specifically investing in MHCs located within Opportunity Zones. Our second QOF (Qualified Opportunity Fund) is a $15-million equity raise and is about 70% subscribed,” Hales says. “We anticipate closing this fund to outside investment in September. We have six communities under contract in areas like Austin TX, Greenville NC, Daytona Beach FL and Bloomington IN.”
Saratoga Group is specifically investing in mobile home communities located in Opportunity Zones and currently has 14 communities under management with plans to purchase another 15 to 20 locations this year.
The company notes that its investment specifically helps fill the QOZ mandate to invest in lower-income census tracts and assist current residents instead of accelerating gentrification that ultimately leads to displacement of these families. The median income nationally for a mobile home family is $34,000 compared to nearly $60,000 for families not living in a mobile home community. A significant percentage of families in MHCs have incomes that place them below the poverty line.
It adds that QOZ investment requires “substantial improvement” into the real estate property. “For these neglected communities, that often means new water, sewer, electrical lines, renovated clubhouses, freshly paved streets, upgraded lighting and new parks for the children,” says Saratoga Group CFO Becky Smallwood. “It’s heartwarming to see these communities turn around.”