The 11.4% stripped of tax treatment is the number that matters most in this thread, and your framing is exactly right: the OZ wrapper is not a return generator, it is a return amplifier on a deal that already works.
The assumption doing the most work in your outcome is the promote structure. A 1.5% AM fee plus a 20% carry above an 8% pref is fairly standard, but that structure means your 11.4% figure already absorbed the waterfall correctly. A lot of investors in passive OZ funds lose track of how the promote erosion interacts with the tax math, and they report blended figures that overstate underlying asset performance. You did not do that, which makes your number credible and comparable.
The risk you did not mention is fund-level leverage on top of your equity contribution. If the sponsor used debt at the fund or project level, your 11.4% reflects a levered asset return, and the underlying property return before debt service would be softer. That distinction matters when you evaluate the next fund, because comparable leverage assumptions have to be present for the comparison to hold.
On the program mechanics side: the One Big Beautiful Bill Act made the OZ incentive permanent and introduced a rolling five-year deferral for investments made after 2026. That changes the long-hold calculus going forward, since the prior expiration cliff discouraged exactly the kind of patient capital you deployed. The current zone designations sunset at the end of 2026, with new designations effective January 1, 2027, so any fund you are evaluating now is operating in a near-term transition. Your tax professional should confirm how the new deferral structure applies to your specific gain timing given the post-2026 rules, since those specifics require a licensed tax advisor.
What was the loan-to-cost on the Pittsburgh project, and did the sponsor report the unlevered IRR separately in the final distribution package?
