We're pleased to announce the recent payback of our preferred equity investment in a horizontal multifamily development in Phoenix, Arizona. The investment generated an 11.24%1 gross IRR for investors over its 41-month term.
Investment overview
In February 2021, we provided preferred equity financing for the development of a horizontal multifamily community in Phoenix. The project exemplified an innovative housing format that combines the convenience of apartment living with the privacy of single-family homes – a value proposition that has proven increasingly attractive to renters.
Exit details
- Hold period: 41 months
- Gross IRR achieved: 11.24%1
- Exit type: Refinance
- Original term: 36 months
The sponsor elected to refinance the property slightly ahead of schedule to take advantage of current market conditions, which enabled them to lower their cost of capital and access additional proceeds for their development pipeline. While the investment extended briefly beyond its initial 36-month term, the property's strong performance and stabilized cash flows supported a successful refinancing in today's capital markets environment.
Partnership success
This represents our sixth successful investment exit with our trusted partner. Our ongoing partnership exemplifies our commitment to working with best-in-class operators who are helping define emerging residential asset classes.
The success of this investment validates several key aspects of our investment thesis:
- The growing demand for single-family rental alternatives
- The resilience of the Phoenix market
- The importance of strong operator relationships
- The effectiveness of our preferred equity structure in managing development risk
Looking ahead
We continue to see compelling opportunities in the build-for-rent space and maintain strong conviction in working with proven partners. The successful exit of this investment reinforces our strategy of providing flexible capital solutions to experienced sponsors in growing markets.
As always, if you have any questions about this investment or our broader strategy, please reach out to our Investor Relations team at investments@fundrise.com.
