In August 2018, we invested roughly $3.8 million in the construction of the Walcott Hackensack, a 235-unit apartment community in Hackensack, NJ, located about eight miles west of Manhattan.

As is typical for new development in built-up areas, the project encountered early delays due to permitting issues. Additionally, the general contractor encountered financial difficulties unrelated to this project. Toward the end of last year it became clear that they would be unable to continue working, and after consulting with our team, the project’s sponsor made the decision to replace the general contractor. Since then, work has proceeded more smoothly. Although the jobsite closed down in April due to COVID-19, it reopened within a week in a phased manner to include additional safety precautions.

Today, we’re pleased to share that despite all the various delays, construction has made significant progress over the last several months, with the structure expected to “top out” shortly. The revised timeline now has the first units scheduled to deliver in the spring of next year, roughly 9 - 12 months behind the initial timeline.

Though we always prefer to see work proceed on schedule, the inherent complexity and uncertainty of a major construction project means that finishing on time is the exception, rather than the rule (if you’ve been investing with us for a while, or have any other experience with construction, this is likely not the first time you’re hearing about a project that has encountered serious delays). For this reason, at Fundrise, we typically structure investments in construction like debt, where we are entitled to a fixed rate of return — in this case, roughly 10.3% annually — even if the project takes longer to finish than initially expected.

The Walcott Hackensack is one of nine projects on which we have partnered with Waypoint Residential, a Florida-based apartment owner and developer with over $3 billion invested across 22,000 units nationwide. Their strong track record — including the successful payback of two of our investments with them (Estraya Falcon Pointe in San Antonio, TX and Estraya Westover Hills near Austin, TX) — reinforces our confidence that this investment will succeed as well.

Investor FAQ: How does this project impact your portfolio?

This investment is 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 generates supports quarterly dividends for the East Coast eREIT.

As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.