Continued momentum through second quarter caps off historic first half of the year

The first half of 2026 was marked by a steady drumbeat of significant milestones.

Though the most notable was the historic public listing of the Fundrise Innovation Fund (NYSE:VCX), the past six months also included the launch of RealAI along with sustained positive momentum across the majority of the Fundrise portfolio amidst an increasingly volatile global macroeconomic environment, including the re-emergence of inflationary pressures.

Despite these headwinds, the average net return for investors in the Flagship Fund, our largest real estate-focused fund, was approximately 6.18%¹, the strongest six-month performance since late 2021.

Meanwhile, the average net return for investors in the Income Fund was 4.90%² which also continued to deliver a steady distribution rate of nearly 8%³ annualized.

Of course, the driving force behind the majority of these returns (along with arguably the returns of every asset class) was AI and those sectors most directly impacted by it.

Perhaps then, the most interesting work was not the returns themselves but instead the ongoing repositioning of nearly the entire Fundrise platform to increasingly capture a greater and greater share of what we believe is the single largest technological breakthrough since the advent of electricity and potentially the greatest period of new wealth generation since the industrial revolution.

The IPO window opens

In June, SpaceX completed the single largest initial public offering in history, kicking off what many believe will be the largest ever period of IPOs more broadly.

The most anticipated, of course, being Anthropic and OpenAI, both of which announced last month that they have filed confidentially to go public later this year.

Behind them is a long line of large, late-stage private tech companies, some of which are valued in the tens or even hundreds of billions of dollars all eagerly awaiting their turn to debut.

If successful, this wave of IPOs will result in a windfall of returns to the venture capital community and those investors who were fortunate enough to have had the opportunity to invest in these companies while they were still private.

And it’s conceivable that much of this returned capital will be recycled into new technology startups and the next vintage of venture funds, providing further fuel to the ever expanding AI boom.

Additionally, the entry of many of these companies into the public markets will likely spill over into other parts of the economy as a result of more and more demand and investment into the foundational AI infrastructure and compute that ultimately is the life blood of these businesses.

Long term, of course, the hope (and belief amongst many) is that eventually this will all translate into an unprecedented exponential unlocking of productivity and efficiency gains for businesses and consumers alike.

Real estate pivots

While the first half of 2026 saw increasing tailwinds for AI, it brought on renewed challenges for much of the real estate industry.

The war in Iran led to a sharp increase in energy prices which has now slowly trickled its way through the system into other goods and services, reviving concerns of the inflation boogeyman.

This in turn led to higher borrowing costs, one of the most acute drivers of near term real estate pricing. As most of our investors are keenly aware, higher interest rates almost always translate directly to lower real estate prices (in the near term).

Meanwhile, outside of the AI super-cycle, much of the “main street” economy has continued to suffer from a slow but persistent softening. Incomes are stagnating. Borrowing levels are increasing. Defaults on credit cards and auto loans are rising. Population growth and hiring have slowed, and overall consumer sentiment is weak.

While no single factor is alarming, together with sustained higher borrowing costs they are putting pressure on real estate values and asset owners.

Today, we are seeing two major dynamics in the real estate markets.

First, some investors and owners that leaned in too heavily to the secularly high pricing of 2021 and 2022 are starting to show signs of distress, after years of kicking the can. This is showing up as defaults on large portfolios of office and multifamily assets, as well as private lending portfolios.

The second is that a smaller number of owners (like Fundrise) who were fortunate enough to have taken a more conservative approach have been able to mostly weather this period of stagnation and are now beginning to pivot into a new wave of real estate growth being driven by AI.

As we discussed at length in our recent strategy update, the seemingly insatiable demand of AI is driving a property boom in the infrastructure and data center industry, unleashing an explosion of new development akin to previous decades where technology change resulted in the emergence of new real estate asset types (the sharp uptick in industrial warehouse demand due to ecommerce is one such example).

This contrast in postures is leading to a stark divergence in outcomes with many of the asset-type exclusive operators being bound to the fate of rates, while those who are more nimble have been able to pivot into this swelling new demand.

As mentioned previously, our primary focus then continues to be systematically pivoting and realigning the portfolio across real estate, credit, and venture to increase our investors’ exposure to this once in a generation build-out.

The mission never ends

As we noted last quarter, there exists certain periods in history that somehow feel more significant, more momentous than normal.

Times when both the economy and the Fundrise platform make huge leaps forward.

So far, 2026 has been one of those times.

We started Fundrise with a simple idea that individual investors deserved access to the same quality investments as institutions and the ultra-wealthy.

And while we’ve never wavered from that mission, the past couple years have somehow made it feel even more important and pressing than it did a decade ago.

As a new generation of trillion dollar companies emerge in the private markets, and AI remakes the future of the country’s workforce and maybe even society as a whole, ensuring that individuals have the opportunity to be a part of investing in and owning that future has gone from merely important to in our opinion) existential.

Of course, with great potential comes greater risk (usually) and we, like many, are seeing increasing signs of extreme optimism in certain sectors of the market. As has been true since day one, we will aim to capture these opportunities with a healthy level of skepticism and a bend towards a value based approach, and potentially (where appropriate) opt to bank some of these larger gains by choosing to take some chips off the table.

As always, we appreciate the continued support and trust of each of our investors.

Onward.