Summary

  • The preferred equity investment will fund the development of a new 179-unit non-restricted senior/active adult apartment community in Asheville, NC.
  • This investment is structured as preferred equity with a fixed return of 15%1.
  • We anticipate opening a new limited investment window for the Opportunistic Credit Fund soon. Investors interested in being included in the window should contact our Investor Relations team at investments@fundrise.com.

New preferred equity investment

The Fund recently closed on a preferred equity investment with Flournoy Development Group to finance the construction of a new 179-unit non-restricted senior/active adult multifamily community, Busbee Mountain, in Asheville, NC.

Busbee Mountain will feature an upscale club room with a fireplace and TVs, a well-appointed bistro dining area, coffee bar, a state-of-the-art fitness center/yoga studio and a craft/activity studio. Community features include a resort-style swimming pool with a poolside hot tub, dog park, pet spa, outdoor fire pit and grill area, outdoor putting green, turf area, on-site lifestyle coordinator, bicycle storage, and a communal gardening area. Unit amenities include designer quartz countertops, stainless steel appliances in a gourmet kitchen, wood grain flooring, flat top stoves, deep kitchen sinks, built-in microwaves, washers and dryers, walk-in closets, as well as 10’ ceilings and balconies in select units.

The sponsor already received construction permits and approved site plans before closing. Construction is anticipated to be completed in 2025.

Asheville is a thriving metropolitan area that benefits from low vacancy rates and unique cultural attractions. The area is expected to see both its population growth and household income growth continue to outpace national trends over the coming years. The property itself is expected to benefit from a lack of comparable competition with Busbee Mountain being the only class-A active adult community in the market, which has regularly ranked as one of the top cities to retire in and continues to experience growth in the over 75 age demographic.

The investment was funded partially at closing and the remainder will be with additional draws expected once the sponsor meets its full equity requirement. The gross rate of return is equal to 15.00%1 with an aggregate LTC once fully drawn of approximately 80% (this means that the last dollar of the investment is equal to roughly 80% of the total cost of the project). Said another way there will be over $13M of equity junior to the Fundrise position or roughly 20% of the total project cost. Fundrise’s initial per unit basis ($289k/unit) is 6.5% less than comparable properties sold between 2021 and 2023.

The sponsor, Flournoy Development Group, is an experienced multifamily development firm based out of Columbus, GA. Since being founded in 1971, Flournoy has completed more than 230 projects and developed over 43,000 units, across luxury multifamily and senior housing developments. Flournoy guarantors will sign both standard carveout and completion guarantees as well as springing guarantees and provide a pledge of partnership interest.

Funding the gap continues on

As we’ve discussed at length, we believe the current macroeconomic environment continues to create a window of opportunity for what are historically attractive investments with uncommonly strong risk-adjusted returns specifically in the credit and lending markets.

With interest rates continuing to remain elevated, we expect to continue to see strong investment opportunities arise in the preferred equity and bridge/gap financing space.

Interested in investing? Contact our team

We plan to open the Opportunistic Credit Fund for investment to a limited number of investors in the coming weeks.

If you are interested in participating in this upcoming window, please reach out to the Investor Relations team at investments@fundrise.com.

As a reminder, you will have to be designated as an accredited investor to reserve your spot. You can check your status or complete the verification process via Account Settings. For additional information, please visit the Opportunistic Credit Fund offering page.