We’ve acquired Highland Exchange, a 276-unit apartment community in North Charleston, South Carolina, for a purchase price of roughly $54.6 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 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 acquisition was made by a joint venture between two Fundrise sponsored funds, the Fundrise Interval Fund, which invested roughly $23.1 million, and the Balanced eREIT II, which invested roughly $2.6 million. A senior loan in the amount of roughly $31.4 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 2020, the community has been leasing up consistently over the past year and a half. As of the time of this writing, units had achieved approximately 94% occupancy, with over 96% of units leased. In the months leading up to our acquisition, the vast majority of economic vacancies in units that had secured tenants were due to concessions, or lease-up incentives common among brand new apartment communities. 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.

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: In 2017, Charleston surpassed Columbia as the most populous city in South Carolina, while North Charleston — Charleston’s northern neighbor, where Highland Exchange is located — was found by the US Census to be the state’s third largest city. Overall, the Charleston MSA contains five of South Carolina’s ten largest towns and cities, some of which grew as much as 33% over the past decade.

  • High-quality asset: Delivered in late 2020, Highland Exchange 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 is currently about 94% occupied, and an additional 2.5% of units have signed leases in place.

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