Important note: The realized return on an individual project may vary significantly from your overall portfolio-level return as an investor.
In September 2016, we invested $6.8 million in the acquisition of Haven Woodbridge, a stabilized 138-unit apartment community in Woodbridge, Virginia, about 30 minutes south of downtown Washington, DC.
Immediately after we closed, our partner started renovating the community’s common areas and apartments ultimately improving approximately 30% of the units and increasing our total investment amount to $7.6 million over the next four years.
Our business plan also anticipated ongoing appreciation in the property’s underlying value as a result of the thriving Northern Virginia economy, where Federal government jobs have anchored robust growth for years. Throughout the duration of our investment, the property maintained healthy occupancy levels, even in the face of the COVID-19 pandemic last year.
Today, we’re pleased to report the successful sale of the property. Between the rental income we received during the course of the investment and the profits from the sale, we achieved an annualized return of roughly 16%¹ over the four and a half years we held the investment.
As we stated in our 2020 year-end letter to investors, the real estate industry continues to experience a K-shaped recovery, where some asset classes are actually seeing increased demand due to the impact of the virus. We view the success of this investment as further reinforcing our conviction around other, similar investments in the portfolio, and we are optimistic that as the country continues to recover and overall sentiment continues to improve, we expect to see further increases in demand for well-priced, well-located properties in growing areas.
We plan to reinvest the proceeds from the sale of this property via a 1031 exchange, which affords the Growth eREIT the opportunity to defer tax payments on the capital gains from the sale, which we expect to have a positive impact on investors’ returns over the long term.
Investor FAQ: How did this project impact your portfolio?
This investment was structured as equity, i.e. we were part owners of the property along with our joint venture partner, and entitled to our share of rental income as well as any profits from the sale.
Since acquisition, the rental income earned has contributed to quarterly dividends, while the increased value of the property has been captured in prior quarters’ adjustments to the Growth eREIT’s net asset value (NAV) per share.
Note that investors who joined the platform more recently would likely not see as much of an impact to their returns from this investment, since most of the returns were realized before they joined the platform.
As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.
