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Strategic Business Plan

ST’s business plan, or strategy, is to create and manage one or more commercial real estate investment partnerships that will acquire and develop commercial property in California, and which partnerships will be structured as “qualified opportunity funds” under the so-called, “QOZ 2.0”.


These partnerships (hereafter, “ST Funds” or "Funds") will be organized as limited liability companies, comprised of two classes of owners, or members:


  • Sponsor-Manager (ST),
  • Investors (TBD)


ST Funds will be designed and planned with the intent of providing Investors the following five key benefits:


  1. A passive, hands-off investment managed by an experienced California commercial real estate attorney;
  2.  A 5-year deferral of Federal1 capital gain recognition, up to the amount of investment made in the Fund;2
  3.  Strong investment fundamentals, highlighted by solid tenants providing a dependable rental income stream, enhanced by pass-through tax deductions for depreciation and mortgage loan interest expense;
  4.  Forgiveness3 of at least 10% -- 30% if the Fund invests in a “rural area” -- of the deferred Federal capital gain after the initial 5-year investment period; and
  5.  Forgiveness of 100% of Federal capital gain realized by the investment (i.e., appreciation) during the investment period of at least 10 years.4,5


ST’s intent is for its Funds to pile the capital gains tax benefits of QOZ 2.0 onto an already-strong commercial real estate investment to provide investors with an A+ result from an after-tax ROI perspective.6

1 See Q&A #1.

2 See Q&A #2.

3 See Q&A #3.

4 This appreciation forgiveness is capped at the 30-years mark.

5 See Q&A #4.

6 See Q&A #5.

ST Funds are designed to offer ...

ATTORNEY-MANAGED PASSIVE INVESTMENT ST COMMERCIAL CAPITAL
KEY INTENDED BENEFITS NUMBER 1
5 5-YEAR DEFERRAL OF CAPITAL GAIN ST COMMERCIAL CAPITAL
KEY INTENDED BENEFITS NUMBER 2
INCOME-PRODUCING CRE, STRONG FUNDAMENTALS ST COMMERCIAL CAPITAL
KEY INTENDED BENEFITS NUMBER 3
10% OR 30% DEFERRED-GAIN FORGIVEN ST COMMERCIAL CAPITAL
KEY INTENDED BENEFITS NUMBER 4
100% APPRECIATION-GAIN FORGIVEN AFTER 10+ YRS ST COMMERCIAL CAPITAL
KEY INTENDED BENEFITS NUMBER 5

An investment vehicle designed to offer these 5 key benefits ... 

ST's qualified opportunity funds (ST Funds, or just Funds) will be a passive, hands-off investment managed by experienced California commercial real estate attorney Scott Toussaint.  However, investors will a substantial degree of control by way of majority vote, as will be detailed in the Fund's operating agreement.  Further, the Fund will be structured to provide absolute transparency to enable any investor to "trust but verify" the Fund's operations -- and most of all, spending -- by ST.

The 1st of the three big tax benefits of QOZ 2.0, as qualified opportunity funds (QOF's), ST Funds will permit taxpayer-investors to defer Federal-level recognition of realized capital gains for a 5-year period.


[How the "Big Three" QOZ 2.0 tax breaks work is demonstrated in this infographic.]

The bells and whistles of QOZ investment will not obscure the purpose that at their core, ST Funds will be structured as strong, traditional commercial real estate investment vehicles offering investors the best features of CRE investing:


  • secure income streams founded on creditworthy tenants;
  • long-term net leases;
  • strategic locations in solid markets promising appreciation over time, paradoxically coupled with the powerful income tax benefit of depreciation deductions; and
  • ability to leverage with non-recourse debt that doubles as a generator of interest-expense tax-deductions.


A conservative approach, avoiding large financial commitments until underlying tenancies and other project fundamentals are secured, will be employed.  Another protective measure, back-fill plans will be in place in case original tenants unexpectedly fail.


Each investment will be presented in its totality to investors before any commitments are expected.

The 2nd of the three investor tax breaks offered by investing in a QOZ 2.0 qualified opportunity fund is IRS forgiveness of a portion of the capital gains that was previously realized by the investor but the recognition of which was deferred by virtue of investing at least a like amount of cash in a QOF, IF the taxpayers' investment remains in the QOF for at least five years.  If so, then either 10% or 30% -- the latter being the case only if the entire qualified opportunity zone into which the fund invests is considered "rural area" as defined in 26 U.S. Code §1400Z-2(b)(2)(C)(ii) -- is never required to be recognized (i.e., is forgiven).  The flip side of this is the requirement that the remainder of the gain originally deferred by investing in the fund must, either 90% or 70% of said amount, must at the same time be recognized (i.e., the capital gain tax will now be due).


[How the "Big Three" QOZ 2.0 tax breaks work is demonstrated in this infographic.]

Tax break No. 3 offered under the QOZ 2.0 program is that 100% of the appreciation realized by a taxpayer's investment in a QOF will be forgiven if the investment remains in the QOF for at least 10 years (with the caveat that if the investment is held 30 years, any further appreciation won't qualify for forgiveness).  In other words, as the value of the investment in the QOF increases over time, none of the investment gain will be taxed by the IRS, provided the investment remains in place for at least 10 years (with the same caveat about post-30 year gain as mentioned above).


[How the "Big Three" QOZ 2.0 tax breaks work is demonstrated in this infographic.]