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In November 2016, we invested in the acquisition and renovation of the Enclave at Lake Ellenor, a 296-unit stabilized apartment community in Orlando, Florida. Renovations on the property were completed in 2017, which resulted in a 39% increase in the value of the property according to an appraisal.

Since then, the property has remained near full occupancy, generating strong cash flow. Even over the past few months, the Enclave has experienced only a modest increase in unpaid / delinquent rent as a result of the unprecedented economic shock caused by the COVID-19 pandemic.

Based on the success we saw in renovating and leasing the existing apartments, we kicked off the next phase of our business plan in late 2019 to expand the community by building 24 new apartments (an 8% increase over existing) on a previously vacant section of the property. Our goal is to boost cash flow in the near term and maximize the property’s value over the long term.

Today, we’re pleased to share that construction is well underway and ahead of schedule as of this writing. Roofing and siding installation is progressing on both building exteriors, while plumbing work gets underway. Once this phase is complete, our partner will move forward with windows and interior finishes.

Construction is expected to conclude this summer, and we plan to begin renting the new units as soon as we have a certificate of occupancy.

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

While the extent of the impact of this pandemic on the global economy remains uncertain, we’ve been cautiously encouraged by the minimal impact on unpaid / delinquent rent at the property for April and May relative to the trailing 12 months’ average.

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 East Coast eREIT’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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A brief note about 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.

In the immediate term, we expect to limit most new acquisitions and instead anticipate holding more cash in reserve. We plan to focus on pushing our 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. As we continue to monitor the ongoing effects of this disruption, we expect that over time having additional cash reserves on hand may allow us to capitalize on new opportunities that begin to present themselves.