Upcoming changes to eREIT and eFund redemption policy

Updated redemption policy aims to simplify the redemption process and provide you with improved access to liquidity at a generally lower fee.

Key takeaways:

In an effort to simplify the redemption process and provide you with improved access to liquidity at a generally lower fee, we’re updating the redemption policy for our eREITs and the Fundrise eFund.
The major changes include the eREITs and the Fundrise eFund adopting a flat 1% early redemption penalty and operating with a “first in, first out” (FIFO) share redemption process.
No action is needed — beginning October 1, 2021, all redemption requests submitted for shares held in the eREITs and the Fundrise eFund will be subject to this updated redemption policy.

We’re excited to announce upcoming changes to the redemption policy for our eREITs and the Fundrise eFund aimed at providing you with improved access to liquidity at a generally lower fee. We expect the updated redemption policy will be effective on October 1, 2021.

If you’ve been investing with us for a while, then you know that we are constantly working to improve the overall Fundrise experience, using technology to reduce costs and make investing simpler and more efficient.

We built Fundrise with the goal of providing investors with the opportunity to outperform the stock market over the long term by investing in real properties that offer many benefits including higher potential returns and generally greater stability. However, those benefits come with a tradeoff, primarily liquidity.

While we aim to highlight the importance of understanding the illiquid nature of our product for each new investor on the platform, it continues to be one of the more complex areas of the product.

As a result, we’re excited to announce these changes that we believe will make liquidating eREIT and eFund shares easier to understand and ultimately create a better experience for you, the investor.

Current policy Effective through September 30, 2021	New policy Effective October 1, 2021
Early redemption penalties
Shares held less than 5 years are subject to a penalty of up to 3%, except for shares held less than 90 days, which can be redeemed at the full, initial purchase price.	Shares held less than 5 years will be subject to a flat 1% penalty, including shares held less than 90 days.
Order of redemption processing
“Last in, first out,” meaning the shares you’ve held the least amount of time will be redeemed first.	“First in, first out,” meaning the shares you’ve held the most amount of time will be redeemed first.

To be clear, these changes will not impact the liquidity for the Fundrise Interval Fund, which is the flagship fund that powers the core of investor portfolios. The unique structure and liquidity requirements of the Fundrise Interval Fund made it possible for us to offer a penalty-free quarterly repurchase process.

Understanding this new policy

Flat early redemption penalty for the eREITs and the Fundrise eFund

We’re getting rid of the laddering fee structure, which includes an early redemption penalty of up to 3% depending on the amount of time the shares were held. Instead, we’re adopting a flat 1% penalty on redemption requests submitted for shares held for less than five years. We believe this new flat penalty is easier to understand and generally lowers the early redemption penalties for investors.

As part of this change, we’re removing the 90-day introductory period during which investors currently have the opportunity to redeem their shares at the full, initial purchase price. Under the updated policy, redemption requests for shares held for less than 90 days will be subject to the 1% flat penalty. However, investors will be eligible to keep any dividends earned while their shares remain on record, plus any appreciation earned prior to the redemption request submission, which was previously not possible through the introductory period.

Our eREITs and the Fundrise eFund will operate with a “first in, first out” (FIFO) share redemption process

Thanks to feedback from investors like you, we’re updating our approach for partial redemptions to allow you to redeem shares held for more than five years at no penalty, regardless of subsequent investments made into the same fund.

This means that if you request to redeem a portion of the shares you own in a given fund, we’ll automatically redeem the shares that you’ve held the longest first, with the goal of minimizing your early redemption penalties. Any shares that you request to redeem that have not yet reached the five-year mark will be processed on a “first in, first out” basis, subject to the 1% flat penalty.

You can now add funds to your account, via manual investment, auto-invest, or dividend reinvestment, with confidence that you should be able to request to redeem your initial investments penalty-free after you’ve held them for at least five years.

What’s not changing?

While we’re excited about these updates to the redemption policy, it’s important to remember that real estate investments are inherently long-term and illiquid. As a result, some of the key aspects of our redemption policy still apply, including:

Five-year investment term: Fundrise investments, like all real estate investments, should be viewed as a long-term (5+ years) investment. Early redemption penalties will apply to requests submitted for eREIT and eFund shares held for less than five years.
Redemption processing timeline: Redemption requests submitted for eREITs will be reviewed at the end of the calendar quarter during which they were submitted, and redemption requests submitted for the Fundrise eFund will be reviewed at the end of the month following a 60-day waiting period after they were submitted.
Redemption requests are not guaranteed to be approved: While our eREIT and eFund programs strive to provide early liquidity to investors who need it, we may suspend or limit these programs during times of economic turbulence.

As always, if you have any questions or feedback regarding these changes, please don’t hesitate to reach out to our team at investments@fundrise.com.

Frequently asked questions

Does this change apply to the interval fund?

No. These changes will not impact the Fundrise Interval Fund, which powers the core of investor portfolios. The unique structure and liquidity requirements of the Interval Fund made it possible for us to offer a penalty-free quarterly repurchase process.

When can I redeem shares under this new policy?

All redemption requests submitted on or after October 1, 2021 will be subject to the updated redemption policy. For administrative purposes, investors will be temporarily unable to submit redemption requests for the Fundrise eFund on October 1, 2021.

Can I request to redeem my shares prior to this change?

Yes. Any redemption requests, including outstanding redemption requests submitted prior to September 30, 2021, at 11:59 PM EST, should be processed on approximately October 2, 2021, pursuant to the current redemption plan.