February 19, 2019

Since the Opportunity Zone program was enacted though the Tax Cuts and Jobs Act of 2017, more than $65 billion in properties have emerged with CMBS backing, according to research by Trepp. Currently, there are 8,700 opportunity zones across the U.S., which were created to encourage investment and thus improve the economic conditions of low-income areas.

Trepp research from January 2019 shows 5,842 properties in opportunity zones are underlying collateral on CMBS loans. The states with the greatest number of CMBS properties in opportunity zones include:

California – 887 properties
New York – 506 properties
Florida – 403 properties
Texas – 372 properties
Illinois – 294 properties

Looking at property sectors, Trepp research analyst Dylan Wall writes, “the multifamily CMBS space will receive the greatest benefits from the new tax law, since the number of apartments in eligible opportunity zones far exceeds all other property types.”

Eligible opportunity zone properties by property type includes:
Multifamily – 2,803 properties
Retail – 749 properties
Lodging – 484 properties
Office – 416 properties
Industrial – 307 properties

Total monetary exposure of CMBS loans with underlying collateral in opportunity zones by state closely mirrors the total number of properties. The five states with the greatest CMBS exposure include:

California – $8.3 billion
New York – $6.2 billion
Florida – $6.05 billion
Maryland – $4.15 billion
Virginia – $3.80 billion

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