We’ve invested roughly $3.9 million in the construction of the Volaris Veranda, a 300-unit apartment community in Port St. Lucie, Florida, a growing city located along the Atlantic coast, halfway between Orlando and Miami.

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 reiterated in our second quarter flagship portfolio update, 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 initial investment in the project was made by a joint venture between two Fundrise sponsored funds, the Fundrise Interval Fund, which invested roughly $3.5 million, and the Balanced eREIT II, which invested $386,000.

Strategy

Fixed Income

Provide real estate backed loans or similar structured financing

  • Risk-return profile: Low to moderate
  • Expected timing / delay of returns: Typically immediately after acquisition
  • Expected source of returns: Interest income

More about our strategies

Note that this section is intended to provide a general overview of the Fixed Income 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

Our loan will be used to finance the construction of this new community, which the borrower expects will take roughly two years to complete. At that point, they expect to lease up the units and pay back our loan via a sale or by refinancing once the property is stabilized.

The goal of this investment is to produce an attractive income stream through financing the creation of new housing in a growing area. Our investment at Volaris Veranda is structured as preferred equity, which functions like debt, where we are entitled to an annual return equivalent to roughly 10% over the term of the investment.

We’ve committed to invest a total of roughly $7.73 million into the project, which will draw down over time as construction progresses.

Why we invested

  • Fast-growing area: Port St. Lucie is located along the Atlantic coast of Florida within a 2-hour drive from both Orlando and Miami. According to the U.S. Census, the Port St. Lucie area’s population grew 23% between 2010 and 2019, which was three times more than the national average. The area also ranked eighth in the U.S. News & World Report's Fastest-Growing Places in the U.S. in 2021-2022, supporting continued demand for attractive and affordable rental housing in the foreseeable future.

  • Experienced partner: Waypoint Residential has invested over $2 billion across more than 20,000 rental housing units located in the South, Southeast, and Midwest markets. Prior to this acquisition, we have invested in seven other similar projects with Waypoint Residential, including the Lotus at Starkey Ranch and Williamson at the Overlook, both of which we initially invested in to fund their construction and later acquired as stabilized communities.

  • Attractive margin of safety: The sponsor has roughly $17.8 million of equity (about 29% of the total expected costs) junior to our position. They would have to lose their entire investment before our principal was threatened.

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

Shareholder Report

On August 26, 2021, the Fundrise Real Estate Interval Fund filed its Semi-Annual Report for the six months ended June 30, 2021. For access to the shareholder report, please click here or see the “Literature” section of fundriseintervalfund.com.