Important note: The realized return on an individual project may vary significantly from your portfolio-level return as an investor. To learn more about why this may be the case, see the “How did this project impact your portfolio?” section.
In August 2017, we invested $6 million in the construction of the Capital Club Apartments, a 312-unit apartment community in Indian Land, South Carolina, a suburb of Charlotte.
Our loan was used to finance the community’s ground up development, with construction beginning shortly after we made our investment. Though the project encountered some early delays, due to complications related to permitting and heavy rains, it made considerable headway through 2019, as we shared later that year with drone footage, showing the layout and scope of the community. Construction wrapped up in spring of 2020 and the property began leasing up shortly after.
Today, we’re pleased to share that our sponsor has paid back our investment through a sale of the property. Per the terms of our preferred structure investment (which is similar to debt), we earned an annualized return of roughly 12% over the life of the investment.
Investor FAQ: How does this project impact your portfolio?
This investment was structured like debt, where the project’s sponsor must pay us a fixed rate of return before they can earn a return for themselves, and their equity provides us with a cushion against losses. Throughout the term of this investment, the regular income it generated supported quarterly dividends for the East Coast eREIT.
This investment is part of our broader Fixed Income strategy, which has historically consisted primarily of short to medium-term loans or financing of new development. While we are actively evaluating the most attractive strategies to deploy into new income-generating investments in the current, historically low interest rate environment, it is reasonable to expect that yields on private real estate investments in the near term would generally be lower than they have been in the past (along with most other asset classes).
As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.
