In January 2018, we invested $2.7 million in the acquisition of a mixed-use commercial property in Washington DC’s Edgewood neighborhood. Our investment provided capital to finance the acquisition of the property as a long-term hold in an up-and-coming area.
Through ongoing land value appreciation and by signing new leases, the project’s sponsor created sufficient value to refinance the property into a larger senior loan, and consequently paid back the principal of our investment plus the accrued return. Our investment earned an annualized return of roughly 12%¹, matching 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.
