Important note: The realized return on an individual project may vary significantly from your portfolio-level return as an investor. To learn more about why this may be the case, see the “How did this project impact your portfolio?” section.
In May 2018, we provided a $9.9 million loan for the acquisition of a 16.5 acre property in Daly City, California, on the southern border of San Francisco. In September 2019, we increased our original investment by $6 million, to roughly $15.9 million.
We’re pleased to report that the borrower successfully executed on their business plan to secure the entitlements necessary to build 133 single-family homes on the lot, and complete the initial site work to market the construction-ready property for sale.
Recently, the borrower successfully sold the property to a homebuilder and paid back our investment in full, with interest. We earned an annualized return of roughly 10% over the life of the investment.
Investor FAQ: How does 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 West Coast eREIT.
This investment is part of our broader Fixed Income strategy, which has historically consisted primarily of short to medium-term loans or financing of new development. While we are actively evaluating the most attractive strategies to deploy into new income-generating investments in the current, historically low interest rate environment, it is reasonable to expect that yields on private real estate investments in the near term would generally be lower than they were in the past (along with most other asset classes).
As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.
