We’ve acquired The Townhomes at Woodmill Creek, a stabilized, 171-unit apartment community in The Woodlands, Texas, for a purchase price of roughly $55 million. (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.) The Woodlands is a suburb of Houston, located about 40 minutes north of downtown.
At a strategic level, this investment fits within our affordably-priced Sunbelt apartment / rental housing thesis. From millennials to retirees, a broad group of Americans has been taking part in a migration from northern to southern states over the past decade, driving continued demand for well-priced, well-located real estate, and supporting steady returns for disciplined investors.
We believe that this long-term trend has only been further accelerated by the pandemic: In an economy where remote work is becoming the norm for more and more people, we expect that an increasing share of the population won’t need to live in expensive gateway cities and will instead seek out locations that offer lower living costs and more agreeable climates.
This acquisition was made by a joint venture between two Fundrise sponsored funds, the Fundrise Flagship Fund, which invested roughly $24 million, and the Balanced eREIT II, which invested roughly $2.7 million. A senior loan in the amount of roughly $30.3 million was also provided. The investment amounts include a budget for financing and other soft costs, bringing our total projected cost to approximately $57 million.
Strategy
Core Plus
Acquire and operate stabilized, cash flowing real estate
- Risk-return profile: Moderate
- Expected timing / delay of returns: Shortly after acquisition
- Expected source of returns: Income with some growth
Note that this section is intended to provide a general overview of the Core Plus 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
Construction on the community was completed in 2016, and at the time of our acquisition, the 171-unit community was approximately 91% occupied.
Our intent with this and other similar investments — including both single-family rental home communities and some apartment communities — is to be a long-term investor, building a scaled portfolio that generates consistent rental income, while at the same time positioning ourselves to capture what we believe will be outsized price appreciation thanks to a confluence of demographic factors driving demand across the Sunbelt.
Since this is new construction, we don’t anticipate committing significant capital to improvements for the foreseeable future.
Why we invested
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Fast-growing area: The property is located within the Houston metropolitan area, just 40 minutes north of downtown. Between 2010 and 2019, the Houston area’s population grew 19% to approximately 7 million residents, making it the fifth largest MSA in the country, according to the U.S. Census.
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High-quality asset: Delivered in 2016, The Townhomes at Woodmill Creek is relatively new construction, with high-quality amenities and details throughout, presenting no need for renovations or updates in the near future.
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Income-generating asset: The property was roughly 91% occupied at the time of our investment, generating consistent cash flow through rental income.
As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.
Additional Information: An investor in the Fundrise Real Estate Interval Fund (the “Flagship Fund”) should consider the investment objectives, risks, and charges and expenses of the Flagship Fund carefully before investing. The Flagship Fund’s prospectus contains this and other information about the Flagship Fund and may be obtained here. Investors should read the prospectus carefully before investing.
