From August 2019 through September 2020, we invested roughly $17.8 million in the acquisition of three adjacent properties in the West Jefferson area of South Los Angeles, resulting in our ownership of an entire city block. The three combined investments totaled approximately 27,000 square feet of improved office and retail space, plus an additional 7,000 square foot parcel of land. As we stated when we completed assembly of the block, our belief was that owning the extended space creates both near-term and long-term opportunities to reimagine the property as a unified concept, with the potential to be more valuable than the sum of its parts.

Today, we're pleased to share that we have secured a tenant for the entire space, through an agreement with the creative advertising company Mother Industries. Founded in 1996 in London, Mother now has over 500 employees in offices around the world, including spaces in New York, Shanghai, and, of course, LA. Their global clients have included Uber, Ikea, and TikTok, while the LA branch has designed for Postmates and Sonic. Due to the creative nature of Mother's work, and the culture of openness that surrounds it — "Everybody who is passionate about great work is always welcome at our table," they write on their website — their business is ideally suited to take advantage of the expansive creative office property we've acquired.

As Bloomberg recently highlighted in an article covering some of our investments throughout the West Jefferson corridor, the area is proving to be fertile ground for a next wave of Los Angeles' creative and artistic growth. The introduction of such an established agency as Mother — sporting a portfolio of decades of work for major brands around the world — adds further momentum and undeniable credibility to the corridor's trajectory. "We have been set on this area since Mother first opened in Los Angeles," said Romain Naegelen, Managing Director of Mother in LA. "It's a historic neighborhood that's part of the fabric of the city. As we keep growing our business and partnerships, this is the perfect location for us to create a home for our expansion for years to come and connect with the local community."

Our lease with Mother Industries took effect in mid-August 2021, and we plan to spend the next few months building out the space to fit the tenant's needs, with the goal of their team beginning to move into the renovated space in early 2022.

The lease has an initial term of 10 years, with one 5-year renewal option for the tenant, and the initial rental rate is in line with our originally underwritten projections. By signing a single tenant for the entire block, we're able to capture many synergies during construction and occupancy, and it ultimately increases our potential upside on the eventual disposition of the asset, which can in turn lead to stronger returns for our investors.

Investor FAQ: How does this project impact your portfolio?

This investment is structured as equity, i.e. we are the owners of the property and entitled to our share of rental income as well as any profits from its eventual sale. Rental income it produces over the duration of our investment will contribute to quarterly dividends, while increases to the property value will be captured in adjustments to the Development eREIT's NAV per share.

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