In February 2018, we invested roughly $3.8 million in the acquisition of a 10-unit apartment building in the Echo Park neighborhood of Los Angeles.
Our investment was structured as a loan to the property’s developer, who planned to renovate the existing units and build two additional apartments on the site. We expected this process to take roughly 18 months. While the project made some progress, due to unexpected permitting issues and a change in the general contractor that delayed construction, work is not yet complete.
We expected to hold this investment through the completion of construction, however, our loan was set to come due on February 23, 2020, well before the work would be finished. Accordingly, the developer recently refinanced the property and paid back our investment.
Our investment earned an annualized return of roughly 10%¹ over the 22-month duration, which is consistent with initial projections.
Investor FAQ: How does an individual project impact your portfolio?
This investment was structured as a loan (debt), where the project’s sponsor was required to pay us a fixed rate of return before they could earn a return for themselves, and their equity provided us with a cushion against losses. Throughout the term of this investment, the regular income it generated supported quarterly dividends for the West Coast eREIT.
As always, please don’t hesitate to reach out to investments@fundrise.com with any questions or feedback.
