We’ve invested approximately $4.3 million in the acquisition of The Watson Apartments, a brand new 247-unit apartment community in Grand Prairie, Texas, within the Mid-Cities region between Dallas and Fort Worth. Built in 2017, the community offers open floor plans, luxury finishes, and amenities including a pool and outdoor entertainment space.
While record asset prices have driven yields on public stocks and bonds to near-historic lows, we continue to see opportunities to target attractive yields by financing the acquisition of apartment housing in growing areas.
Business plan
At the time of our acquisition, the property was roughly 95% occupied. The project’s sponsor, Ventures Development Group, plans to hold and manage the property for roughly ten years before seeking exit opportunities.
Our investment is structured like debt, where the sponsor is obligated to pay us a fixed rate of return equal to 9.5% annually over the life of the investment before they are able to earn a return for themselves.
Why we invested
- Comfortable margin of safety: The sponsor has roughly $6.9 million of equity junior to our position. This means that the value of the property would have to decrease by nearly 18% before the principal of our investment was threatened.
- Income-generating asset: The property was roughly 95% occupied at the time of our investment, generating consistent cash flow through rental income.
- Experienced sponsor: Ventures Development Group is a Louisiana-based developer focused on apartment communities in the Southeast. To date, their team has developed nearly 4,000 apartment units valued at roughly $1 billion.
As always, please don’t hesitate to reach out to investments@fundrise.com with any questions or feedback.
