We’ve invested $6.5 million in the acquisition of a property in Long Beach, CA as the future site of a luxury apartment community.
By opportunistically financing new housing creation in supply-constrained markets like LA, we can continue to target attractive yields — in this case 8% annually — while record prices have driven yields on public stocks and bonds to near-historic lows.
Business plan
The borrower intends to finalize permits and entitlements to build 345 apartments on the 1.2 acre site, a process that we expect will take around 13 months. Upon securing the necessary permits and entitlements, they plan to secure construction financing and pay back our investment. Our goal is to earn consistent cash flow from interest payments through the maturity of the loan.
Why we invested
- Attractive margin of safety: The borrower has roughly $1.2 million of equity (about 18% of total costs) junior to our position. This serves to reduce our risk, as they would have to lose their entire investment before our principal was threatened.
- Experienced local sponsor: Ensemble Real Estate Investments is a national real estate firm that has extensive experience in the development of homes in Long Beach, California. The principals of the firm have collectively acquired, entitled, and constructed approximately 40 projects to date, valued at approximately $1.2 billion.
- Desirable location: The project is located in downtown Long Beach within a block of a Metro light rail station. This area has undergone a major revitalization, becoming a culinary and nightlife destination with numerous restaurants and bars opening up.
As always, please don’t hesitate to reach out to investments@fundrise.com with any questions or feedback.
