Fundrise Announces Fund with Big 13% Dividend

Real estate investment platform Fundrise has announced a new fund that currently offers a large 13% dividend.

In an email, Fundrise said the interest rate policy has “created a period of dislocation”  that has created a “wave of potential distress for borrows” while also creating an opportunity for credit investors.

The Fundrise Opportunistic Credit Fund is a closed-ended fund for accredited and institutional investors that aims to deliver higher returns due to the dislocation in real estate credit markets.

According to the offering page, the minimum initial investment is $100,000 with a term of 1 to 5 years. Distributions will be made quarterly, and there is no availability for secondary transactions.

The fund is expected to target “fast-growing Sunbelt markets like Dallas-Fort Worth, Atlanta, Phoenix, Orlando, Tampa, and Charleston.”

The fund will provide “rescue capital” for high-end borrowers in need of liquidity.

To quote the offering page:

“Our strategy is to focus on bridging the funding gap and providing rescue capital to borrowers in the midst of the liquidity crunch. By lending into the gap, we are able to invest at a healthy margin of safety, concentrating on high-quality assets with creditworthy borrowers—those who are experiencing circumstantial liquidity needs as a result of interest rates rising so rapidly through 2022 and 2023.

In these instances, the underlying assets themselves are typically unaffected by the financial turbulence happening in capital markets. Most frequently, the borrower is in the middle of a business plan to enhance the value of the property, such as new construction, renovations, or lease-up, and simply needs more time to reach stabilization and be ready for long-term, fixed-rate debt.”

Assets may include restructured real estate loans, senior mortgages and more. This is for residential construction which continues to be in high demand, unlike commercial real estate, which has struggled in some markets. At the same time, some banks have pulled back in providing capital for real estate developments.

Of course, all investments include risk, and each investor should consider their personal needs and risk tolerance prior to participating in an offering.


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