We’ve acquired Williamson at the Overlook (formerly named Estraya Georgetown), a new, 270-unit apartment community in Georgetown, Texas, for a purchase price of $50 million.

At a strategic level, this investment fits within our affordably-priced Sunbelt apartment / rental housing thesis. From millennials to retirees, a broad group of Americans has been taking part in a migration from northern to southern states over the past decade, driving continued demand for well-priced, well-located real estate, and supporting steady returns for disciplined investors.

As we stated in our mid-year and year-end letters to investors, we believe that this long-term trend has only been further accelerated by the pandemic. In an economy where remote work is becoming the norm for more and more people, we expect that an increasing share of the population won’t need to live in expensive gateway cities and will instead seek out locations that offer lower living costs and more agreeable climates.

This acquisition was made by a joint venture between two Fundrise sponsored funds, the Fundrise Interval Fund, which invested roughly $22.5 million, and the Balanced eREIT II, which invested roughly $2.5 million. A senior loan in the amount of $27.5 million was provided by KeyBank. The investment amounts include a budget for financing and other soft costs.

Business plan

The community achieved stabilization in October 2020 despite the uncertainty brought about by the pandemic. The Heartland eREIT invested in the property’s development through a fixed income, preferred structure investment in November 2017; that investment paid back successfully in September 2020.

Since this is new construction, we don’t anticipate committing significant capital to improvements for the foreseeable future.

Our intent with this and other similar investments — including both single-family rental home communities and some apartment communities — is to be a long-term investor, building a scaled portfolio that generates consistent rental income, while at the same time positioning ourselves to capture what we believe will be outsized price appreciation thanks to a confluence of demographic factors driving demand across the Sunbelt.

Why we invested

While the extent of the negative impacts of the COVID-19 pandemic on the broader economy remains uncertain, we believe this investment is well-positioned not only to withstand a prolonged economic downturn, but to potentially benefit from more permanent shifts in behavior that may result.

  • Growing local economy: Georgetown, TX — identified repeatedly over the past five years as one of the top 10 fastest growing cities in the country — is an anchor of the greater Austin metropolitan area and one of its key suburbs. Largely thanks to a booming tech industry, Austin’s economy has soared over the past several years, with major increases in employee salaries, and, according to a recent study, Austin’s job market has performed better than any of the country’s other 50 largest metro areas during the course of the COVID-19 pandemic.
  • Income-generating asset: As of the date of our acquisition, 250 of the 270 units (92%) had signed leases in place. We expect to work with a professional property management firm over the coming months to finish leasing up the remaining units.
  • Attractive cost basis: We were able to acquire Williamson at Overlook for a cost basis of approximately $185k per unit. This cost basis puts it in line with the average cost per unit for properties of similar types constructed from 2010 through 2020 in the Austin area, which we believe represents a good value since it is new construction. Considered alongside a local top-of-market comparable sale, we obtained this property at a 14% discount on a per-unit basis.

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