We’ve invested roughly $3.8 million in the final stages of construction of the Walcott Hackensack, a 235-unit apartment community in Hackensack, New Jersey, just outside of New York City. The goal of this investment is to produce an attractive income stream through financing the creation of new housing in a growing area.

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

Prior to this investment, the project’s sponsor successfully completed virtually all major construction milestones with a construction loan provided by the Fundrise East Coast eREIT, and the community is expected to receive its certificates of occupancy by the end of this year. Now that they’ve made substantial progress, they’ve refinanced the property and paid back our initial investment.

By investing again in the project’s recapitalization, we’re able to continue earning an attractive return as our investment risk decreases with the successful completion of each major milestone, such as substantial completion of construction, securing certificates of occupancy, and leasing up the units.

Our new preferred equity investment, provided by the Income eREIT II, will be used to finance the final stages of construction of this new community, and will subsequently support operations while the community leases up. Once the property has achieved stabilization, the project’s sponsor plans to pay back our loan via a sale or by refinancing.

Our investment at Walcott Hackensack 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.

Why we invested

  • Paid first upon exit: Upon sale or refinance, we are entitled to receive a return equivalent to 10% annually before the sponsor can earn a return for themselves.

  • 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 $32.2 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.