We're pleased to announce a new addition to your Fundrise portfolio: a preferred equity investment in a 178-unit active adult multifamily and retail development in Lake Mary, Florida. The investment carries a 12.75%¹ gross return, reflecting the compelling opportunities we continue to identify in the commercial real estate credit markets. The investment was made through a joint venture between two Fundrise-sponsored funds, the Income Real Estate Fund and the Opportunistic Credit Fund II.

Investment overview

The mixed-use development will include a four-story active adult residential building alongside 13k square feet of standalone retail. The residential community will feature amenities designed specifically for active adult living, including a great room, gaming lounge, fitness center, an organic garden, and a lushly landscaped interior courtyard with a pool deck and heated pool.

Units will include high-end finishes such as quartz countertops with tile backsplash, stainless steel appliances, full-size French door refrigerators, designer lighting and plumbing fixtures, private balconies and patios, tile showers with glass enclosures, full-size washers and dryers, and luxury vinyl plank flooring.

Investment structure

  • Preferred equity position: Structured as preferred equity with priority positioning in the capital stack ahead of common equity.
  • Attractive yield: The 12.75%¹ gross return aligns with OCF II's 9-11% target net yield and supports the Income Fund's 7.5%2 annualized distribution rate.
  • Experienced sponsorship: The development is backed by two experienced sponsors—one who has developed 25,000 apartment units across 76 projects, with 47 projects in Florida, and another who has completed over $2 billion in real estate transactions and developed more than 6,500 residential units across 10 states.

Local market insights

The property is located in the desirable Lake Mary/Heathrow market within the Orlando MSA and North Orlando submarket. Lake Mary features a rapidly expanding senior population, with projected growth of 22.8% by 2029 for residents aged 55 and older. The median household income within one mile of the property is $141,997—nearly 2x the MSA median—and the average housing unit value for the same radius is $623,000.

The development benefits from excellent visibility and accessibility at the intersection of International Parkway (I-4) and SR-417, with direct access to the 14-mile Seminole Wekiva Trail. It sits within walking distance of Colonial TownPark, the retail and entertainment hub of the Lake Mary and Heathrow communities. Across the street, plans call for up to 515,000 square feet of Class A office space, a five-story hotel, and over 58k square feet of destination and amenity-focused retail.

Notably, there are no additional planned or proposed active adult communities in the Lake Mary area, positioning this development to capture strong demand in an underserved market segment.

Market dynamics

This investment highlights that attractive opportunities continue to exist in the commercial real estate credit markets. The Federal Reserve lowered interest rates by 25 basis points yesterday, bringing total cuts to 75 basis points in recent months. Going forward, the Fed signaled a more measured approach.

The specialized nature of active adult housing, combined with favorable demographic trends in the Orlando market and limited competition in this segment, creates a particularly compelling investment environment. Given the recent rate cuts, we expect that the fixed 12.75%¹ return on this and other preferred equity investments across the portfolio will only look increasingly attractive relative to yields on most traditional fixed income investments.

Impact on your portfolio

The addition of this investment to the Income Real Estate Fund and the Opportunistic Credit Fund II aligns with our ongoing strategy to invest in high-quality, income-generating assets that deliver attractive returns. We anticipate the strong yield from this investment will support both funds' distributions as market conditions continue to 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.