Menu
Contact

Investment Dollars are Landing in Silicon Valley

by Erik Hayden, on Aug 11, 2021 11:47:20 AM

Silicon_Valley


Recent headlines suggest investors are flocking to the Bay Area thanks to San Jose’s booming economy.

The tech-rich Bay Area is known for its economic resilience and ability to bounce back from tough times. In fact, according to recent headlines, investors looking to manage hefty capital gains and invest money in a community poised to improve the quality of life, invested their quarantine dollars in what they consider a region full of potential growth for Silicon Valley.

Just look at a few of the recent headlines: 

New office space is under development throughout the Bay Area to keep up with demand. The San Jose Business Journal reported on July 8 that a South Korean real estate investor paid $283 million to purchase a large Mountain View office building leased entirely to Google. At $1,275 per square foot, it breaks the record set by LinkedIn that was reported just six days earlier.

Screen Shot 2021-08-11 at 11.39.47 AM

And citing a new repost from PitchBook Data and the National Venture Capital Association, the Silicon Valley Business Journal also reported that in the first half of this year, “Bay Area startups collectively raised $54.5 billion, according to the report. At that pace, they'll break the record total for a full-year — $66.4 billion, set in 2018 — in the middle of the current quarter… it means that 36% of all venture dollars nationwide are going to San Francisco or Silicon Valley startups.”

Furthermore, the article noted: “Some in Texas and Florida have made a lot of noise about Bay Area tech companies and startups moving to their states. But San Francisco and those same three Silicon Valley cities (Palo Alto, Mountain View and Menlo Park) each attracted more funding in the first half of this year than all of Texas, which has garnered about $4.2 billion. All of those Bay Area cities, plus San Jose and San Mateo, each took in more than Florida's $1.5 billion in the first half.”

So what does all this mean? 

It means the Bay Area is still doing what it’s done for decades: Providing an environment ripe for investment and innovation. And as the latest numbers show, we haven’t lost a step.

Just a friendly reminder that the potential 10% reduction of capital gains taxes disappears on Jan. 1, 2022. Contact us today to get started.

 

 

 

 

Important Disclosures

The contents of this communication: (i) do not constitute an offer of securities or a solicitation of an offer to buy securities, (ii) offers can be made only by the confidential Private Placement Memorandum (the “PPM”) which is available upon request, (iii) do not and cannot replace the PPM and is qualified in its entirety by the PPM, and (iv) may not be relied upon in making an investment decision related to any investment offering by an issuer, or any affiliate, or partner thereof ("Issuer").

All potential investors must read the PPM and no person may invest without acknowledging receipt and complete review of the PPM.

With respect to any performance levels outlined herein, these do not constitute a promise of performance, nor is there any assurance that the investment objectives of any program will be attained. All investments carry the risk of loss of some or all of the principal invested. Assumptions are more fully outlined in the Offering Documents/ PPM for the respective offering. Consult the PPM for investment conditions, risk factors, minimum requirements, fees and expenses and other pertinent information with respect to any investment.

These investment opportunities have not been registered under the Securities Act of 1933 and are being offered pursuant to an exemption therefrom and from applicable state securities laws. All offerings are intended only for accredited investors unless otherwise specified.

Past performance are no guarantee of future results. All information is subject to change. You should always consult a tax professional prior to investing. Investment offerings and investment decisions may only be made on the basis of a confidential private placement memorandum issued by Issuer, or one of its partner/issuers. Issuer does not warrant the accuracy or completeness of the information contained herein. Thank you for your cooperation.

Real Estate Risk Disclosure:

- There is no guarantee that any strategy will be successful or achieve investment objectives including, among other things, profits, distributions, tax benefits, exit strategy, etc.;
- Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
- Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
- Potential for foreclosure – All financed real estate investments have potential for foreclosure;
- Illiquidity – These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.
- Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
- Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits
- Stated tax benefits – Any stated tax benefits are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing. 

Opportunity Zone Disclosures

- Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings.
- Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments.
- Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations.
- Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available.
- Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund.
- Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments.
- Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities.
- It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.

Topics:Opportunity ZonesSan JoseSilicon Valleyoffice