We’ve invested $13.6 million in the acquisition and renovation of Lexington on the Green, a stabilized 216-unit apartment community in Lithonia, Georgia, part of the greater Atlanta metropolitan area.

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.

Business plan

Built in 2001, the community has been well maintained. Apartments consist of a variety of one, two, and three-bedroom floorplans, plus modern amenities such as a fitness center, a media room, and a theater. The business plan calls for roughly $2.4 million of additional hard and soft costs, of which we expect to contribute roughly $900,000, bringing our total investment to about $14.5 million over time.

In the year leading up to our acquisition, rent collections averaged 91%. While the property is currently cash flowing, we believe there is an opportunity to grow property income through a combination of focused management and cosmetic upgrades to the unit interiors (something you’ve probably heard from us many times before if you’ve been investing with us for a while).

Together with our partner, we plan to be long-term owner-operators, holding the property for roughly the next seven to ten years before seeking an exit. Our goal is to earn consistent cash flow from rent payments, with the potential for long-term upside by eventually selling the community for more than we put into it.

This investment is part of a 1031 exchange, in which we’ve reinvested the proceeds from the sale of the Haven Woodbridge Apartments into this acquisition. By executing a 1031 exchange, the Growth eREIT has 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.

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.

  • Experienced partner: Peak Capital Partners is a Utah-based apartment investment company with experience managing over $4 billion of apartment communities all across the United States, earning them recognition by the National Multifamily Housing Council as one of the top 50 owners in the country.
  • Income-generating asset: Rent collections at the property averaged roughly 91% in the year leading up to our acquisition, generating consistent cash flow for us as the owners.
  • Growing local economy: Located about 20 minutes east of downtown Atlanta, Lithonia has shown continuously growing rents year after year, with some of the best growth in the entire metropolitan area, while the Atlanta area overall has been the destination for some of the highest migration rates in the country for the past five years. Additionally, within an immediate 5-mile radius around Lexington on the Green, there are no current plans for additional apartment development, putting the property in an excellent position to capture housing demand as supply stays steady.

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