- Mike O"Mara
NEXUS OZ Fund Featured in New York Times
One of the newest OZ Funds to hit the market was recently featured in the New York Times. The Nexus 1 QOF (Nexus) presents a Qualified Opportunity Zone Fund that was created to operate a facility in Hazleton, PA that will produce over 3.6 million square feet annually of environmentally friendly building panels used by commercial builders across the world. The construction industry is faced with rising material prices, lack of skilled labor and supply chain issues across all its inputs. Nexus’ solution is a superior product that manufactured off site in a controlled environment that can be assembled in as little as six days.
The Nexus Hazleton facility will build panels using Nexiite, which is a proprietary material designed and patented by Nexus parent Nexii. Nexiite is a sustainable alternative to conventional concrete, comprised of sand, high-quality aggregate and a binder, with no ILFI Red List materials. Nexiite’s composition facilitates a rapid curing process, attaining higher compression strength faster than concrete. Nexiite has up to 36% less carbon emissions during production than Portland cement concrete. Further emissions reductions are due to the quantity of materials used and weight to transport. Assembled Nexii panels weigh 15-20% the weight of pre-cast concrete equivalent products.
Because Nexus panels are manufactured off-site, there is no building waste that needs to be transported to landfills. The Nexus solution decreases build time, reduces operating cost, is highly resistant to water, mold and mildew and is fire resistant.
Nexus clients include a who’s who of the retailing space. Included on this list is Starbucks, McDonalds, Chick-Fil-A, Chipotle and Chase Bank among others. The capital raised through the OZ program will be used to upgrade and expand the current facility, additional equipment, debt reduction and working capital to foster expansion.
The Fund has a strong management team led by John Wolfington and Dan Metzler who have combined over 40 years’ experience in the building industry.
This OZ project fits well with ESG goals and Community Development Investing. To start, it is located within a designated Opportunity Zone and will create 180 good paying jobs in an economically hard-hit community. Nexus will also significantly reduce carbon emissions from transportation. Their desire to be better for our plant is combined with a strong commitment to diversity.
Given the efficient process and strong demand for state-of-the-art ESG friendly building produces, the Nexus 1 OZ Fund is expected to produce an IRR of 55% with a MOIC of 18x. The significant increase in returns over other OZ projects is due to the strong demand, a business that is operating and already profitable, realistic valuation and strong margins for the product.