In December 2015, we invested in the development of a two-unit luxury condo building in Long Island City, Queens, just across the East River from midtown Manhattan. Today, we’re pleased to announce that the investment has paid back, earning an internal rate of return of approximately 11.3%. This is our second successful investment in the neighborhood to date, accompanying a similar project with the same sponsor that paid back in May.
Once the building was complete, the project’s sponsor was able to obtain new financing at a lower rate and paid us back.
The finished two-bedroom, two-bathroom, 2,662 square foot condos are now on the market, asking $2.55 million each, or about $957 per square foot.
While this would be astronomical almost anywhere else, it’s about 24% below the median list price per square foot in the 11101 ZIP code, according to a May 2018 Zillow report.
Featuring high ceilings, oversized windows, and generous outdoor living space, these new homes are some of the nicest we’ve seen in this area. The property is just a few blocks from the subway and its one-stop ride to Manhattan. Vernon Boulevard, with its abundant restaurants, bars, and shops, is even closer — just half a block away.
What this means for you
This project is another great example of our broader strategy to finance new construction in major cities. Since we structured the investment as debt, the project’s sponsor had to pay back the principal of our investment plus interest before they could earn anything for themselves. This gave us a healthy margin of safety, while still producing a great return.
All signs point to us being late in the economic cycle. By focusing on debt and debt-like investments, we are working to fortify your Fundrise portfolio for times of turbulence. We believe this strategy will generate consistent returns in the near term, and set us up to aggressively pursue future opportunities that may arise as a result of that same turbulence.
