We are pleased to highlight a Fundrise Income Real Estate Fund holding — a preferred equity investment in Saltese Creek, a 192-unit ground-up multifamily development in Spokane Valley, WA. This investment offers a fixed 13.25%1 gross return and is expected to support the Income Real Estate Fund’s continued strong annualized distribution rate.

Investment overview

Saltese Creek is a brand new 192-unit multifamily apartment development that will offer premium finishes, including vinyl plank flooring, island kitchens, stainless steel appliances, high-end fixtures, and in-unit washers and dryers. The development will also feature a clubhouse with a gym, dog wash, indoor/outdoor lounge, and pool. The sponsor is an established multifamily developer with significant experience including more than 300 completed projects across the Western U.S.

Investment structure

  1. Preferred equity position: The investment is structured as preferred equity and as a result benefits from receiving priority in regards to any returns and distributions ahead of the common equity and sponsor.
  2. Strong potential return: The 13.25%1 annual gross interest rate provides a compelling yield in the current market.
  3. Experienced sponsor: The sponsor is an established multifamily developer with significant experience including more than 300 completed projects across the Western U.S.

Market dynamics

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. As the Fed begins lowering rates over the next several months, we expect that the fixed return of this and other preferred equity investments across the portfolio will only look increasingly attractive relative to what are anticipated to be lower yields on most fixed-income investments.

Impact on your portfolio

Currently, the Income Real Estate Fund boasts an annualized distribution rate of approximately 7.8%. We anticipate that the current yield of the Fund will remain robust even as interest rates decline. We have been actively evaluating and adding high-quality, high-yielding investments like the 13.25%1 preferred equity investment in Saltese Creek to our pipeline. While no one investment single-handedly drives the fund’s overall yield, our broad and diversified portfolio of quality assets, originated over different time periods with different rates of return, aims to provide stable, consistent distributions over a longer time horizon.

As always, Fundrise remains focused on sourcing investments that align with our long-term objectives of delivering strong, stable returns. Our goal is to continue delivering value to our investors regardless of the inevitable shifts in market cycles and economic conditions.

If you have any questions or require further information, please do not hesitate to reach out to our Investor Relations team at investments@fundrise.com.