In October 2017, we invested $8 million in the acquisition and renovation of The Aventine at Oakhurst North, a 464-unit apartment community in Naperville, Illinois, a western suburb of Chicago.
The business plan involved the project’s sponsor performing value-adding renovations across the community — some of which were already in progress at the time of our investment — then holding the property for several years before paying back our investment via sale or refinance. The renovations were in progress throughout the duration of our investment and successfully drove increases in the property’s rental income, which increased our margin of safety.
Today, we’re pleased to report that the project’s sponsor recently paid back our investment in full, resulting in an annualized return of roughly 9% over the life of the investment, which is consistent with our underwritten projections.
As we stated in our recent letter on how we plan to invest through the current crisis, we believe that attractive investment opportunities will begin to present themselves in the coming months. A payoff like this one serves to further bolster our cash reserves as we look to acquire assets that have the potential to outperform over the long term due to more permanent structural changes that emerge from the pandemic.
Investor FAQ: How did this project impact your portfolio?
This investment was structured like debt, where the project’s sponsor must pay us a fixed rate of return before they can earn a return for themselves, and their equity provides us with a cushion against losses. Throughout the term of this investment, the regular income it generated supported quarterly dividends for the Income eREIT.
As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.
