We’ve acquired Luna at Lake Shadow, a 300-unit apartment community in Maitland, Florida, for a purchase price of roughly $83 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.

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 $36 million, and the Balanced eREIT II, which invested roughly $4 million. A senior loan in the amount of roughly $46 million was also provided. The investment amounts include a budget for financing and other soft costs.

Strategy

Core Plus

Acquire and operate stabilized, cash flowing real estate

  • Risk-return profile: Moderate
  • Expected timing / delay of returns: Shortly after acquisition
  • Expected source of returns: Income with some growth

More about our strategies

Note that this section is intended to provide a general overview of the Core Plus strategy for educational purposes only, and is not meant to be representative of the specific details of any individual investment. All investments involve risk and there are no guarantees of any returns.

Business plan

Built in 2019, the community has been leasing up consistently over the past year. As of the May 2021 rent roll, units had achieved approximately 90% occupancy. Rent collections have also been strong, with concessions — a lease-up incentive common among new apartment communities — accounting for most economic vacancies.

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

  • Great location: Easy access to several key expressways puts Luna at Lake Shadow in a great position for commuting to a variety of major local employers in both Maitland, FL, and downtown Orlando, including notable companies such as JP Morgan Chase, ADP, Amazon, and Lockheed Martin. Close proximity to excellent dining, shopping, and entertainment makes the property an attractive draw to a range of tenants.
  • High-quality asset: Delivered in late 2019, Luna at Lake Shadow is a brand new construction, with high-quality amenities and details throughout, presenting no need for renovations or updates in the near future.
  • Income-generating asset: The property achieved rent collections of approximately 80% in the months leading up to our acquisition; excluding rent concessions, rent collections were up to roughly 87% in April 2021. As of July 1, 2021, 273 of the 300 units (91%) are physically occupied, while an additional 5% have 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 and reduce concessions to maximize rental income at the property.

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