In June 2016, we acquired The Palms at Beacon Pointe, a 159-unit apartment community in Jacksonville, Florida. Last month, we sold the property at a profit. Between the rental income and profits from the sale, we achieved a 22.9%¹ annualized return, substantially outperforming our initial return projection of roughly 11 - 13% annualized.

Business plan recap

We partnered with sponsor American Landmark Apartments to buy this property at the same time as The Reserve at Mandarin, a similar apartment community in Jacksonville, which we also recently sold. Both of these investments achieved strong results by following a proven formula with three key ingredients:

  • Partner with an experienced sponsor
  • Buy existing, older apartments at an attractive price
  • Renovate to add value and increase marketability

As we stated in our exit update on The Reserve at Mandarin, these results are exceptional, in large part due to how undervalued the Jacksonville apartment market was in 2016. In today’s market, even later in the current business cycle, asset prices are at or near record highs, and opportunities to buy at an attractive cost basis much rarer.

Accordingly, we expect to hold back and keep more cash on hand than normal. While this may result in slightly lower returns for growth-focused investors in the short term, we are positioning ourselves to aggressively pursue similar future opportunities that may arise in a price correction.

Investor FAQ: How did this project impact your portfolio?

This investment was structured as equity, i.e. we were the owners of the property and entitled to our share of rental income as well as any profits from selling it.

Over the past three years, its rental income has contributed to quarterly dividends, while most of the increased property value has been captured in past adjustments to the Growth eREIT’s NAV per share. As a result, we do not expect the sale to contribute substantially to future dividends or NAV changes.

We plan to reinvest the proceeds from the sale of The Palms at Beacon Pointe into new projects as opportunities present themselves.

As always, please don’t hesitate to reach out to investments@fundrise.com with any questions or feedback.