Cresset Partners and Diversified Real Estate Capital have raised $465m (€417m) for their first US opportunity zone property fund and plan to raise up to $750m for a follow-on vehicle.

The Cresset-Diversified Qualified Opportunity Zone Fund I, which was launched in December 2018, is invested in seven US development projects.

The fund’s portfolio includes investments in multi-family, office, and ground-floor retail.

Fund I received capital commitments from a diverse set of investors including single-family offices, real estate investors, entrepreneurs, corporate executives and legal professionals.

Cresset and Diversified said they expect to target many of the same groups as it looks to raise capital for Fund II.

Fund II seeks to invest in seven to nine projects. Projects currently under consideration for the fund include mixed-use, multi-family, retail, and office investments in the Southwest, Texas, Mid-Atlantic, Northeast, and West Coast.

Qualified opportunity zones were created in 2017 to spur economic development and job creation in distressed communities throughout the country and US possessions by providing tax benefits to investors who invest eligible capital into these communities.

Avy Stein, Cresset founder and co-chairman, said: “When the opportunity zone program was first announced, we knew it represented a unique opportunity for investors to utilise their capital gains in a tax-efficient manner while also having an impact on communities across the country in need of economic development.

“I’m thrilled to see more and more investors and developers recognising the impact of the program and look forward to seeing what the coming years bring as we continue developing our Fund I projects and begin raising and investing with Fund II.”

Larry Levy, Diversified Real Estate Capital founder, said: Partnering with Cresset to develop the Cresset-Diversified QOZ Fund has been a terrific experience.

“Our highly experienced group of real estate investors has led the pack in identifying top qualified opportunity zones to invest in, and we’re ecstatic to have the opportunity to work with some of the country’s best developers to make those projects happen.”