In June 2019, we invested in the acquisition and renovation of The Logan Apartments, a 490-unit apartment community in Bedford, Texas, which is located between Dallas and Fort Worth. Shortly after acquiring the property, we kicked off our value-add plan, which included interior renovations on the apartments, as well as improvements to the property’s clubhouse, pool area, and landscaping.

Renovations progressed steadily through the fall and winter, wrapping up in February of this year. From our perspective, the finished product represents an excellent value for the capital we invested, and through March we had seen positive early results from our efforts, with the improved units achieving an increase of $145 per month on average above their previous rent (this was also approximately 20% higher than our original underwritten projection for the expected rent increases).

How might the impact of COVID-19 affect this investment?

Similar to other value-add and stabilized apartment properties in our portfolio, the Logan has experienced a modest increase in unpaid / delinquent rent as a result of the unprecedented economic shock caused by the COVID-19 pandemic. That said, while no one was certain how such an event would impact the broader apartment market, we’ve been cautiously optimistic that such unpaid / delinquent rent only increased by about 2% for the month of April. This is more or less in line with three other stabilized apartment communities we own in the Dallas Fort Worth area that fared similarly, experiencing increases in unpaid / delinquent rent for April ranging from roughly 1.5 – 5%.

Broadly speaking May data, so far, is looking to be similar to April in regards to rental delinquencies across the portfolio, though it’s impossible to know how things will ultimately shake out for the month. We’re hopeful that we see a similar pattern to April, where unpaid / delinquent rent levels decrease steadily over the course of the month.

It’s important to emphasize again that the period of economic uncertainty brought about by this pandemic is likely still in its infancy. If the unemployment rate continues to grow, it’s difficult to imagine that income from this property (or almost any commercial property) would not suffer for some period of time before things eventually took a turn for the better.

That said, we continue to believe that apartment assets like this one, that are relatively affordable for most renters, and are financed with modest leverage and held within a portfolio that has sufficient cash reserves, are well-positioned to sustain even a severe economic downturn.

Investor FAQ: How does this project impact your portfolio?

This investment is structured as equity, which means we are the owners of the property and entitled to our share of rental income, plus any future increase in the value of the property. As an investor, you can expect to see this impact your return in two ways. Any additional rental income would contribute to quarterly dividends, while any increase in the property value would be captured in adjustments to the Growth eREIT III’s net asset value (NAV) per share.

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.