Shopoff Launches OZ Fund to Build Luxury Hotel in Las Vegas

Shopoff Realty Investments has launched its first qualified opportunity zone fund. Called the Shopoff DLV QOZ, the fund will have a maximum equity raise of $200 million, and it will provide equity for construction of the Dream Las Vegas hotel, a $545 million project.

Shopoff says there are no other opportunity zone projects on the Las Vegas strip for high-end hotels, making this deal an anomaly. There are few development sites on the strip that could accommodate a project like this. In addition, hotel construction, particularly in the luxury market, has been rare since the start of the pandemic as these properties are experiencing the biggest declines in occupancy and RevPAR across geographic markets.

Shopoff is not breaking ground on the hotel until late 2021 with completion scheduled in 2023. The hotel will have 450 rooms along with dining and nightlife venues, including 42,000 square feet of gaming. Already, Shopoff has secured Stateside Kitchen. Shopoff will hold the hotel for 10 years to take full advantage of the tax benefits.

Shopoff has partnered with Contour as the developer on the project, and McCarthy Building Cos. as the contractor. In addition, DLR Group is designing the project. SVP of design and construction Bill Smith is leading the project for Shopoff.

A New Administration

While opportunity zone projects have continued to progress through the pandemic due to substantial tax benefits, some are worried that the model could change depending on the results of the election. However, Reid Thomas of JTC Group recently argued that the opportunity zone model would continue to provide benefits, no matter who wins the election. “I would argue that OZs stand to benefit no matter what as both candidates have made proposals that could be good for the initiative—especially if the candidates’ plans are designed and executed in the right ways,” he said.

President Trump created the program, and is clearly a supporter. Democratic candidate Joe Biden has shown support for the project, but found three areas for improvement, including incentivizing OZ funds to partner with community organizations; having the Treasury Department review OZ regulations to ensure the tax incentives provide distinct economic, social, and environmental benefits; and creating a detailed public disclosure and reporting system for developers, according to Thomas.