In February of this year, we invested in the Tapteal on the Columbia Apartments — a 98-unit apartment complex in Richland, Washington. The borrower’s plan was to complete unit and exterior renovations aimed at increasing apartment rents.
After completing a portion of the apartment renovations, the borrower opted to pay back our investment early. We’re pleased to announce that our investment earned an annualized rate of return of roughly 12%¹ over the shorter than anticipated nine-month term.
Our investment, structured like debt with a stated maturity date, did not include a penalty for paying back the investment early, a penalty typically charged by traditional lenders. Borrowers are often attracted to this flexible payment structure, giving us the opportunity to earn a more attractive risk-adjusted return, while potentially freeing up capital to pursue other opportunistic investments.
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This investment was like debt, where the borrower must pay us a fixed rate of return before they can earn a return for themselves, and their equity provides us with a cushion against losses. Throughout the term of the investment, the regular income it generated has supported quarterly dividends for the West Coast eREIT.
Being cognizant of our current economic climate — late in the expansion phase of the economic cycle — we continue to focus on debt and debt-like investments in an effort to fortify your Fundrise portfolio for times of turbulence, while preparing to aggressively pursue future opportunities that may arise as a result of that same turbulence.
