Goldman Sachs Finances Fundrise's Expanding SFR Strategy
The vehicle will finance nearly half a billion dollars of newly constructed single-family rental units in high-growth markets across the Sunbelt.
Fundrise, a direct-to-investor real estate investment platform, is closing a $300 million credit facility with $150 million in credit committed with Goldman Sachs. The vehicle will finance the purchase of nearly half a billion dollars of newly constructed single-family rental units in high-growth markets across the Sunbelt.
Fundrise entered the SFR space last December when the firm won a purpose-built, 124-home SFR community built by DR Horton in Conroe, Texas. The Conroe deal is the first of many large-scale initiatives Fundrise plans in the near term to scale its operations across several key markets.
With the credit facility, Fundrise will deepen its investment in the burgeoning SFR market with Fundrise co-founder and CEO Ben Miller securing financing from other financial institutions along with Goldman Sachs.
Fundrise closed on its first deal under the Goldman facility in January. Now it has 30 communities, encompassing roughly 2,500 units under contract in markets like San Antonio, Phoenix, Tampa, Washington DC and Orlando. “Every time you stand up a market, there’s just a lot to do, like inspections or getting refrigerators in Texas,” Miller tells GlobeSt.com. “It’s a lot of work.”
In its early years, the firm invested in apartments in neighborhoods like Brooklyn. Then around 2015, it began buying Class B apartments. SFRs represent the next step in its quest to invest in housing options that offer affordability.
“The last two years, we’ve been trying to figure out how to get to a residential product that we thought fit a family,” Miller says.
Miller met with homebuilding executives and committed to buying communities, giving the builders certainty around their exit. The firm has now partnered with six of the largest homebuilders in the US. It wants to expand those relationships and provide a consistent source of demand for builders.
“They see us as a complement because we would forward buy by a year, two years or even three years ahead of time and sort of complement their flow,” Miller says. “We like it because it supplies a product to the market that we’ve been chasing for ten years, which provides affordability and livability.”
With evergreen funds, Fundrise intends to be a long-term investor in the space. It will use third-party property managers to operate its properties.