This one is pretty awesome because I live in DFW, so I can actually watch these ones with my own eyes.
Overall returns are 8.1% – 14.6% returns annually.
We’ve invested roughly $40.9 million in the acquisition and renovation of four apartment properties totaling 1,616 units in the Dallas area. Like many areas in the Sunbelt, the Dallas-Fort Worth metro area has experienced strong demand driven by some of the highest population and employment growth in the country.
As we shared earlier this week, all signs point to us being even later in the business cycle, with asset prices at near-record highs across the economy. However, a brief period of low interest rates and a dip in prices in Q2 2019 created a window of opportunity for us to invest equity into apartment properties like these ones at much better expected returns than we have seen at any time over the past 9 months.
Side note: If you haven’t yet, we suggest reading CEO Ben Miller’s recent letter sharing our view on the current state of the market, and how we fortify your Fundrise portfolio against turbulence by making investments like this one.
Each of these apartment communities was over 95% occupied at the time of our acquisition. While structurally sound, they could benefit from cosmetic upgrades to make them more competitive.
Our partner, American Landmark Apartments, plans to improve each community’s common amenities and renovate all 1,616 apartments as they turn over. We expect this value-add program to drive an increase in rental income, and consequently, the overall value of the property.
Following the completion of renovations, we plan to actively manage the properties for roughly ten years before seeking opportunities for exit via sale or refinance. Our goal is to earn consistent income over the duration of our holding period, with the potential for long-term upside by selling the properties for more than we put into buying and renovating them.
Why we invested
- Experienced sponsor: American Landmark Apartments (ALA) currently owns and operates over 24,000 units with a diverse real estate portfolio valued in excess of $2 billion. Prior to this portfolio, we have partnered with ALA on eleven other projects, including The Enclave at Lake Ellenor in Orlando, which achieved a 39% appreciation in appraised value in just 21 months.
- Healthy local economy: The Bureau of Labor Statistics reported a 2.9% increase in employment between May 2018 and May 2019 for the Dallas-Fort Worth-Arlington MSA, nearly double the national average of 1.5%. With Toyota, Liberty Mutual, and JPMorgan Chase has recently expanded their operations in the area, we expect continued strong demand for reasonably-priced apartment housing.
- Income-generating asset: Each of the properties was over 95% occupied at the time of our investment, generating consistent cash flow through rental income.
Details about each project
|Investment||No. of units||Occupancy|
|Laurel Heights at City View||$10,676,340||440||95.0%|