Riaz Capital unveils USD100m development fund
Riaz Capital, a Bay Area-based real estate development and management company, has unveiled its latest opportunity zone-compliant development fund that will expand its visionary strategy for delivering cycle-resistant investor returns on housing for the Bay Area’s underserved urban workforce.
The Ozone III fund, which is seeking to raise USD100 million in new capital by the end of the year, follows two previous successful capital campaigns that supported the firm’s current workforce housing portfolio. The firm’s current 1,500-unit portfolio proved the workforce segment’s cycle-resiliency by maintaining 95 per cent occupancy and 94-per cent rent collections even through the peak months of the pandemic.
Calling it “the right thing to do for both investors and residents,” Riaz Capital founder and principal Riaz Taplin notes that the strategy’s success under the worst economic conditions in recent memory underscores its stability as a long-term investment.
“Riaz Capital asked investors to put their confidence in a strategy that delivered housing to Bay Area teachers, nurses and first responders, while protecting their investments from economic turbulence. When Covid-19 caused an economic downturn on the scale of the Great Depression, our properties and segment of renters remained stable even in the most extreme economic times,” Taplin says. “Our current investors were rewarded for their confidence and now we’re ready to expand our portfolio.”
Riaz Capital’s micro-studio strategy, which is also the core of this latest fund, achieves a high yield using efficient construction, short timelines, and serving a large and stable customer base of underserved urban professionals.
The strategy develops housing that is affordable for Bay Area renters earning between USD50,000-USD120,000. The Bay Area has an estimated 408,000-unit shortage of housing that is affordable for this group.
For this group, Ozone Fund III is expected to create up to 1,600 workforce housing residences. For investors, the fund will target an internal rate of return of 15 percent with 3.2x equity multiple over 10 years.
The strategy’s most notable proof point is The Linden, a 30-residence multifamily project at 1805 Linden Street in Oakland, which achieved stabilised occupancy within a month of opening last October. The project’s success at the height of the pandemic underscores the ability of the entire Riaz portfolio – which currently comprises 1,500 units under management and 1,700 more in development in Oakland– to protect investors even during the most volatile economic crises.
“The Bay Area provides the perfect mix of demographics, income and overwhelming demand for this product type. At the current rate of construction, the demand won’t be met until the year 2500. As a result, our properties will have a massive pool of prospective renters for decades and will continue to offer consistent returns regardless of the state of the economy,” Taplin adds.
By proving successful in the most extreme economic conditions, Riaz Capital has attracted heightened interest from investors seeking stable, long-term returns. Each Ozone-funded project delivers smart, flexible urban housing solutions that combine stylish and efficient design elements to make housing affordable and desirable for this group. At an average of USD250,000 all-in cost per residence, the firm’s designs come in below half the cost of other new construction in the Bay Area. When combined with the company’s zero-displacement approach to housing development, the new housing has proved itself as a socially conscious and scalable means to affordably house Bay Area essential professionals.
Riaz Capital is committed to protecting the culture and history of local neighbourhoods in the Bay Area. The company is headquartered in a 100-year-old former industrial site that it acquired and began redeveloping in 2016. The project was later designated part of an opportunity zone and is now known as Artthaus Studios, which is home to nearly 100 small businesses and start-ups.
The community-conscious company works closely with local leaders and residents to ensure every project has a positive impact on all stakeholders while delivering superior returns to investors. The firm measures and reports its impact across key metrics in transportation access, affordability, and environmental footprint. Founder and CEO Riaz Taplin is also involved in bigger-picture planning to tackle the housing crisis, as an Oakland board member of the Bay Area urban planning think tank SPUR.