Fundrise Real Estate Interval Fund, LLC
Only share
Fundrise, LLC
04/13/23
03/30/24
$1.1B
100,000,000 shares
Growth
Washington, DC
Accredited and Non-Accredited Investors
$1,000
0.22%
4% annualized return
2021: +29.3%
2022: -1.9%
2023: -11.8%
Strategy
The Fundrise Flagship Real Estate Fund is designed to deliver long-term appreciation from a diversified portfolio of real estate investment strategies. These strategies include build-for-rent housing communities, multifamily, and industrial assets in the Sunbelt region. Fundrise Real Estate Interval Fund, LLC is be taxed as a real estate investment trust (a “REIT”).
“The Fund’s investment objective is to seek to generate current income while secondarily seeking long-term capital appreciation with low to moderate volatility and low correlation to the broader markets. Generally, the Fund’s investment strategy is to invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in a diversified portfolio of private real estate and publicly traded real estate-related investments.”
The Manager pursues its investment objective by investing at least 80% of its assets in a diversified portfolio of private commercial real estate in the form of equity and debt, as well as publicly traded real estate debt and equity securities. As of Dec. 31, 2023, the underlying real estate assets currently include a majority of single-family residential properties (57.4% of portfolio), multifamily residential (17.7%), industrial properties (17.3%), and other property types (7.6%). These are all commercially owned, financed and managed.
For clarification purposes regarding their website, the "Flagship Real Estate Fund" is another name for the "Fundrise Real Estate Interval Fund, LLC," which is also simply called the "Flagship Fund."
Examples of property types held within this fund:
Style
| Value | Core | Growth | |
| Large | |||
| Mid | |||
| Small |
Fit Check
The Fundrise Flagship Real Estate Fund is available to both accredited and non-accredited investors. Any investor can invest in this fund, regardless of their net worth. The minimum initial investment amount into the fund is only $1,000.
This fund is designed for both current income and long-term capital appreciation. Investors in this should have a long-term focus despite it producing monthly income. For example, the value of the fund dipped -11.8% for calendar year 2023. This is a significant decline for any fund. If investors are able to stick it out during this decline, this is considered only a loss on paper. It may be a good entry point.
Investors in the fund need to also be aware of the limited liquidity of the Fund’s shares. Hence, another reason that this Fund should be viewed as a long-term investment.
The monthly dividends from the fund are taxed as current income at one’s annual tax rate. But Fundrise does offer their funds in tax-advantaged (tax shelter) accounts via Traditional and a Roth IRA account options.
Portfolio Snapshot
As of 12/31/2023
Assets
Geography
End Market
Score Breakdown
BULLS SAY
Diversification: Prioritizes importance of diversification as a means of balancing risk with target goals. Claims to utilize the golden cross of both asset type diversification and as well as risk profile diversification.
Regular income: Intention to generate a blend of income from tenant rent payments and asset appreciation.
Strong demand: The strong buyer demand and shortage of homes for sale create a prime opportunity to invest in private real estate. Industrial facilities involved in manufacturing, and distribution have also created lucrative opportunities in conjunction with the recent boom in electronic commerce.
BEARS SAY
Unstable Dividend Payouts: The Fund paid monthly dividend out to investors throughout all of 2021 and 2022. But it did not make any regular monthly dividend payments throughout 2023.
Risk misalignment: Several of the value-add properties require extensive repositioning, siphoning off cash from shareholder distributions (monthly dividends).
Competition: The residential real estate market especially in the Southeast becoming competitive. There is a plethora of new entrants and increased supply, which can lead to reduced rental income.
Volatile Performance: The Fund had a total net return of -11.8% for calendar year 2023 and -1.9% for 2022. But during 2021, it had a standout year of +29.3%.
Fees
|
Fees & Expenses |
Only Class |
|
Minimum initial investment |
$1,000 |
|
Availability |
Fundrise platform (app and website) |
|
0.0% |
|
|
0.85% |
|
|
2.16% |
|
|
-(0.65%) |
|
|
Total Annual Expenses |
2.36% |
To help you compare the cost of investing in this offering with other offerings, Apollo has provided an example of the projected dollar amount of total expenses that would be incurred over various periods with respect to a hypothetical investment for each class of common stock.
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In calculating the projections above, we made a few assumptions:
(1) A hypothetical 5.0% annual return, as required by regulation of the SEC and applicable to all registered investment companies. The assumed return is not a prediction of, and does not represent, the projected or actual performance of the Fund. Performance will vary and may result in a return greater or less than 5.0%
(2) Annual operating expenses and offering expenses remain at the levels set forth in the Price Tag table above.They should not be considered a representation of future expenses. Actual expenses may be greater or less than those shown.
(3) Net return after payment of fees and expenses is distributed to shareholders and reinvested at NAV.
Managers
-
Industry Experience 27+ years.
Career highlights CEO of Fundrise Advisors, LLC since 2012. Co-Founder of Fundrise LLC, President of Western Development Corporation- one of the largest mixed-use real estate companies in the DC metro area, co-founder and Managing Partner of US Nordic ventures- a private equity company hoping to help Scandinavian green building firms enter the U.S. market.
Education B.A. Economics, University of Pennsylvania.
Full Review
BELOW AVERAGE
The Fund does not charge a performance fee (aka carry fee). This may lead to a poor alignment of interests. The Fund may aim to be more of an asset gather and generate income for itself that way instead of focusing on delivering higher returns.
As an Interested Director , Mr. Miller receives no compensation from the Fund for his service as a Director. No other compensation or retirement benefits are received by any Director or officer from the Fund.
AVERAGE
Full year 2023, experienced very poor performance. During the full calendar year, the Fund’s performance was negative at -11.79%. In all fairness to the Fund, 2023 was the most diffucult year for real estate returns since the Great Financial Crisis.
But as of 2024, the Fund appreciated +0.3% in January and +0.4% in February. So, it’s off to in the proper direction this year after such a dismal 2023. Given such a poor 2023, this poor performance may lead to a real buying opportunity for those who are able to capture it. If interest rates do come down later this year, this may help boost returns for the Fund.
If one had invested an initial $10,000 into the Fund in Jan 2021, the dollar investment value today would be $11,460. The Fund has a 4% annualized total net return.
3 Full Years of Operations with a $10,000 Investment
AVERAGE
This fund is exposed to various market risks including geographic risk, illiquidity of properties, illiquidity of the Fund’s own shares, the Fund may use leverage, and general risks associated with real estate investing. General risks associated with real estate investing includes changes in interest rates, financing costs, property devaluations, etc.
One of the risks related to the fund is interest rate risk which is related to inflation. As inflation increases, the Federal Reserve will raise interest rates. Interest rate increases negatively affect the Fund for multiple reasons. But fortunately, the fund managers believe we are at a turning point with inflation now easing. If this is true, then the Fund has likely bottomed, and we will see gains going forward. A significant risk to the fund but probably unlikely is a reacceleration in inflation during 2024.
AVERAGE
The Manager's Core Plus strategy leverages resource-intensive methods to create value for the acquired assets. Many of the value-add properties included in the portfolio require extensive strategic repositioning and operational improvements, siphoning off cash from shareholder distribution.
AVERAGE
The Fund operates as an "interval fund" pursuant to which it will conduct quarterly repurchase offers of at least 5% and up to 25% of the Fund's outstanding common shares at NAV. The repurchase offer policy allows the Fund to provide a limited degree of liquidity to shareholders. In 2023, it repurchased about 23.3M shares. In 2023, the Fund repurchased $283,512,000.
In 2022, it repurchased about 5.4M shares, which amounted to approximately 10% of outstanding shares at 2022 year-end. In 2022, the Fund repurchased $72,437,000.
HIGH
Fundrise discloses a lot on their website. Their online dashboard provides an organized and interactive interface to display relevant information and analytics, allowing users to quickly access and understand critical data points regarding the fund and its investments.
The Interval Fund has an investor relations department to provide investors with increased transparency and accessibility to information about the Fund and its portfolio. After contacting their team, we were able to confirm that their REIT election was indeed effective. When questioned about their portfolio's concentration risk and failure to achieve its primary goal of generating income, the IR team acknowledged their unbalanced portfolio and poor performance: "We hope to do better", they said.
Their customer service was quick to reply to several questions via email.
Peer Group
 |
 |
 |
|
|---|---|---|---|
| Vehicle name | Fundrise Flagship Real Estate Interval Fund, LLC | RealtyMogul Apartment Growth REIT | NOYACK Logistics Income REIT, Inc. |
| Minimum investment | $1,000 | $5,000 | $20,000 |
| Holding period | Permanent capital | Permanent capital | 7 years |
| Annual management fee | 0.85% | 1.25% | 0% |
| Distribution and Servicing Fee | 0% | 0.5% | 0% |
| Sales Load | 0% | 0% | 0% |
| Inception Date | May 2021 | August 23, 2017 | 2022 |
| 1-Year Net Returns | -11.8% (as of 12/31/2023) | -5.11% (as of 12/31/2023) | - |
| Net Returns Since Inception (Annualized) | 4% | 5.88% (as of 12/31/2023) | - |
| Annualized Distribution Rate | 0.23% | 4.5% | - |
| NOYACK® Score |
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