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 March 2019, we invested $5.8 million in the construction of Mosby University City, a 309-unit apartment community in Charlotte, North Carolina.
Throughout the duration of development, the project hit all major milestones, and the sponsor delivered the finished project according to our initial timeline. Note that this is exceptional, particularly given the onset of the pandemic. All four of the property’s residential buildings have been leasing up throughout 2021, achieving 87% occupancy in September of this year.
Today, we’re pleased to share that our sponsor has successfully sold the nearly stabilized property and paid back our investment in full. (In the world of real estate investing, “stabilized” refers to a property that is almost completely leased up — typically an occupancy rate over 90%, therefore producing a stable flow of rental revenue.) Per the terms of our preferred structure investment (which is similar to debt), we earned an annualized return of roughly 11% 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 Growth eREIT II.
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.
