Portfolio Update: New preferred equity investment in North Myrtle Beach, SC

New preferred equity investment with a 16% gross return to fund a 372-unit multifamily development.

Dec 6, 2024

We're excited to announce a new addition to your Fundrise portfolio: a preferred equity investment in North Myrtle Development, a 372-unit multifamily development in North Myrtle Beach, SC. The investment carries a very attractive 16.00%¹ gross return, underscoring our continued focus on high-quality credit investments further supporting our current annualized distribution rate, even as the Fed continues lowering interest rates. The investment was made through a joint venture between two Fundrise-sponsored funds, the Income Real Estate Fund and the Opportunistic Credit Fund.

Investment overview

North Myrtle Development is a 372-unit multifamily community consisting of sixteen three-story buildings with a mix of one-, two-, and three-bedroom units. The community will feature high-end finishes with amenities including a resort-style pool, state-of-the-art fitness center, and co-working spaces, making the North Myrtle Development a highly attractive place to live in this growing market.

Investment structure

Preferred equity position: The investment is structured as preferred equity, providing priority returns ahead of common equity and ensuring stability in investor distributions.
Attractive yield: The 16.00%¹ annual gross interest rate provides an extremely compelling yield in the current market.
Substantial downside protection: With over $10.9 million in equity subordinate to Fundrise’s position, this investment offers significant downside protection, in line with our conservative risk management approach.

Local market insights

North Myrtle Beach is a fast-growing market with strong population and employment growth. The area's affordability and high quality of life continue to attract residents, contributing to increased demand for quality rental housing. North Myrtle Development is well-positioned to benefit from this demand, with local demographic trends, including population growth projected at roughly 2% annually and employment growth outpacing the national average.

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 continues 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

The addition of North Myrtle Development to the Income Real Estate Fund and the Opportunistic Credit Fund is aligned with our ongoing strategy to invest in high-quality, income-generating assets that deliver attractive returns. We anticipate the current yield for both funds to remain strong, delivering value to our investors as market conditions evolve.

As always, Fundrise remains committed to sourcing investments that align with our long-term objectives of delivering strong, stable returns. Our broad and diversified portfolio aims to provide consistent distributions over the long term, regardless of market cycles and economic conditions.

If you have any questions, please feel free to reach out to our Investor Relations team at investments@fundrise.com.

1. This solely represents a fixed rate of preferred return due to the Fundrise Income Real Estate Fund under the terms of its investment agreement(s) and does not reflect either a gross or net return that an investor in the Fundrise Income Real Estate Fund may expect to receive as a result of this fixed rate return. Due to the uncertainty of other factors that will ultimately determine the return to any investor (such as leverage, cash drag, and other potential financings), the performance of this asset to the investor is currently unknowable and undeterminable, and may ultimately be lower or higher than the stated fixed rate of preferred return.

Disclosure: An investor in the Fundrise Income Real Estate Fund should consider the investment objectives, risks, charges, and expenses carefully before investing. The Fund’s prospectus contains this and other information and may be obtained here. Investors should read the prospectus carefully before investing.