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 April 2019, we provided a $3 million loan for the acquisition of two neighboring lots, totaling roughly 13,800 square feet (0.32 acres), in the Mid-City neighborhood of Los Angeles, California.
Today, we’re pleased to report that the borrower successfully executed on the business plan to secure the permits and entitlements necessary to build a 31-unit apartment community on the site.
With the property shovel-ready, the borrower has sold the property and paid back our investment in full with interest. We earned an annualized return of roughly 9.4% over the life of the investment, per the terms of our loan agreement.
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 West 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.
