In November 2018, we invested roughly $3.4 million in the construction of a 139-unit apartment community in Denver.

Despite initial delays primarily related to it taking longer than expected to obtain permits, we’re pleased to share that the project is now progressing smoothly. As of our most recent report dated May 5, there have been no new delays due to the ongoing COVID-19 pandemic. As you can see from the photos, demolition and excavation have now wrapped up, while the pouring of concrete foundations and structural work is well underway.

If work continues on schedule, construction should wrap up early next year, which is roughly six months behind the original timeline. While it’s very possible that this project hits another snag before it completes (this is typical for construction, particularly in densely-populated urban areas, even during non-pandemic conditions), we remain confident in the sponsor’s ability to work through whatever issues may arise.

To mitigate the impact of delays, most of our investments in ground-up construction are structured as debt or debt-like. This means that we are entitled to earn a fixed rate of return each month until the project’s sponsor pays back our investment, which typically occurs when the completed, leased-up building is sold to a long-term buyer. As long as the project eventually reaches completion and is able to be sold for a price greater than the basis of our investment principal plus our accrued return, we would not expect that such delays would have a material negative impact on performance.

Investor FAQ: How does this project impact your portfolio?

As construction proceeds, our investment will continue to earn an annualized return of roughly 10.5%, which supports dividends for the Heartland eREIT. At the same time, the successful completion of each construction milestone reduces the overall risk of the project.

We look forward to providing you with additional updates on this project. As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.

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How we’re navigating the coronavirus (COVID-19) pandemic

Though black swan events like the current coronavirus pandemic are impossible to predict, nearly every decade has experienced some form of significant economic disruption. Recognizing this, we’ve spent the last several years structuring our investments to withstand a sudden and prolonged period of distress. Given today’s extreme uncertainty, we have begun taking decisive action aimed at further fortifying your portfolio.

Broadly, we expect to pause most new acquisitions and anticipate holding more cash in reserve. We plan to focus on pushing existing projects like this one forward, and in rare instances, look to deploy strategically into properties that we feel are particularly well suited to withstand near term stress or even benefit from the current disruption in the market. That said, given how quickly things are unfolding, we will continue to reevaluate the situation daily and keep you updated on all things relevant to your investments with us.