The Fundrise real estate investing platform has a clear mission to provide investors with a solid array of wealth-building options in the real estate sector.
One of its most popular offerings has been its eREIT (real estate investment trust) series. The eREIT offerings are hybrid REITs, and there are a number of different options to choose from in this subset. Each of them are tailored to offer investors a little something different.
The Growth eREIT VII is designed to do exactly what its name indicates. This offering focuses on giving investors an ideal combination of assets with long term-growth potential while the real estate debt-backed securities portion of the REIT helps deliver the passive income they need in the meantime. If the past performance of Fundrise’s eREITs is anything to go by, eREIT VII investors will be very happy with their decision to pledge.
In many cases, REIT performance is slow out of the gates while the assets stabilize. This is often the case with growth-oriented REITs because it takes some time for the growth in asset value to occur. However, the eREIT VII’s assets have already seen a strong jump in value since the fund’s inception in January 2021.
The original net asset value (NAV) was $10 per share, and the eREIT VII closed the year strongly at $11.20, based largely on 12% asset appreciation. So far in 2022, the eREIT VII has continued its upward trend with 11.7% asset value appreciation and a 0.6% dividend bringing the NAV up to $12.51. Long story short: The NAV of the growth REIT is up 25% in less than two years. That kind of growth is certainly nothing to sneeze at.
The Growth eREIT VII’s impressive NAV is a testament to the quality of the assets in its portfolio. One thing in particular that makes the Growth eREIT VII unique is that instead of concentrating on commercial real estate assets, the fund has largely targeted single-family homes. The asset strategy for the portfolio is as follows: 67.5% core plus, 27.2% value add and 5.1% opportunistic.
The REIT also has a national focus, which means investors get the best of numerous growing markets. A brief sampling of the assets in the eREIT VII appears below.
- 163 single-family home rentals in Humble, Texas, core plus
- 120 new single-family home rentals in Foley, Alabama, core plus
- 69 new single-family home rentals in Pensacola, Florida, core plus
- 30 new single-family home rentals in St. Hedwig, Texas, value add
- 66 new single-family home rentals in Dade City, Florida, value add
All told, there are 45 active projects in the portfolio. There are also several single-family home developments under construction. When completed, they should also deliver impressive returns and growth potential.
A short breakdown of the current Growth eREIT VII’s current stats appears below:
- Inception: January 2021
- Phase: Ramping up
- Geographic focus: National
- Current NAV per share: $12.51
- Current dividend yield: 0.4%
- Tax reporting: 1099-Div
By all appearances, the Fundrise Growth eREIT VII will be another winner for investors. Even though it’s very young for a REIT and in the ramping-up stage, investors are already seeing impressive returns. Only time will tell whether that trend will continue, but considering that it’s already picked up 25% in value in spite of having a number of assets yet to come online, it has the look of a long-term winner.
There is always the potential for market downturns or a default in the debt portion of the REIT leading to investor losses. Investors must also decide whether they can handle their $5,000 minimum investment becoming illiquid for the projected five- to seven-year hold period. However, if you’re comfortable with those risks and you like the underlying assets, the Growth eREIT VII could be a great addition to your portfolio.
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