Fundrise Income Real Estate Fund, LLC
Consolidated Schedule of Investments
(unaudited)
(Amounts in thousands)
Par/Shares | Description | Acquisition Date | Value as of September 30, 2022 | |||||||
Private Real Estate – 96.2% | ||||||||||
Equity – 24.1% | ||||||||||
Multifamily – 8.6% | ||||||||||
N/A (5) | 23Hundred JV, LP (Cost - $4,232) (1)(2) | (6) | $ | 6,812 | ||||||
N/A (5) | FR MP Brandon Glen JV, LLC (Cost - $7,501) (1)(2) | (6) | 9,948 | |||||||
N/A (5) | Fundrise Insight Two, LLC (Cost - $1) (1)(2)(4) | (6) | 1 | |||||||
N/A (5) | Liberty Hills JV, LP (Cost - $7,031) (1)(2) | (6) | 7,019 | |||||||
N/A (5) | Luxe JV, LP (Cost - $7,670) (1)(2) | (6) | 7,822 | |||||||
N/A (5) | Presley JV, LP (Cost - $4,852) (1)(2) | (6) | 4,979 | |||||||
N/A (5) | The View JV, LP (Cost - $6,105) (1)(2) | (6) | 6,297 | |||||||
Total Multifamily (Cost - $37,392) | $ | 42,878 | ||||||||
Development – 15.5% | ||||||||||
N/A (5) | FR Clinton Corner, LLC (Cost - $2,384) (1)(2)(3)(4) | (6) | $ | 2,633 | ||||||
N/A (5) | FR Vaughn Farms, LLC (Cost - $1,810) (1)(2)(3)(4) | (6) | 2,141 | |||||||
N/A (5) | FR Wilsons Walk, LLC (Cost - $1,304) (1)(2)(3)(4) | (6) | 1,341 | |||||||
N/A (5) | FR Arbor Place, LLC (Cost - $1,676) (1)(2)(3)(4) | (6) | 1,887 | |||||||
N/A (5) | FR Beeson, LLC (Cost - $9,234) (1)(2)(3)(4) | (6) | 9,400 | |||||||
N/A (5) | FR Berry Creek, LLC (Cost - $3,342) (1)(2)(3)(4) | (6) | 3,345 | |||||||
N/A (5) | FR Eastwood, LLC (Cost - $4,188) (1)(2)(3)(4) | (6) | 4,299 | |||||||
N/A (5) | FR Meadow Park, LLC (Cost - $5,607) (1)(2)(3)(4) | (6) | 5,692 | |||||||
N/A (5) | FR Providence Gardens, LLC (Cost - $2,456) (1)(2)(3)(4) | (6) | 2,579 | |||||||
N/A (5) | FR Washington Street, LLC (Cost - $1,951) (1)(2)(3)(4) | (6) | 2,048 | |||||||
N/A (5) | FR Castlewood, LLC (Cost - $2,876) (1)(2)(3)(4) | 05/02/2022 | 2,865 | |||||||
N/A (5) | FR Crescent Mills, LLC (Cost - $2,824) (1)(2)(3)(4) | 05/03/2022 | 2,826 | |||||||
N/A (5) | FR Holmes, LLC (Cost - $2,022) (1)(2)(3)(4) | 05/27/2022 | 2,037 | |||||||
N/A (5) | FR Tom Miller, LLC (Cost - $6,878) (1)(2)(3)(4) | 06/15/2022 | 6,869 | |||||||
N/A (5) | FR Berry Hills, LLC (Cost - $1,531) (1)(2)(3)(4) | 07/29/2022 | 1,554 | |||||||
N/A (5) | FR Legacy Hills, LLC (Cost - $4,255) (1)(2)(3)(4) | 07/29/2022 | 4,277 | |||||||
N/A (5) | FR Trailside, LLC (Cost - $3,746) (1)(2)(3)(4) | 08/22/2022 | 3,752 | |||||||
N/A (5) | FR Wong Tract, LLC (Cost - $1,666) (1)(2)(3)(4) | 08/31/2022 | 1,684 | |||||||
N/A (5) | FR Swope LB, LLC (Cost - $5,190) (1)(2)(3)(4) | 08/31/2022 | 5,244 | |||||||
N/A (5) | FR Swope LH, LLC (Cost - $2,280) (1)(2)(3)(4) | 08/31/2022 | 2,306 | |||||||
N/A (5) | FR Willow Landing, LLC (Cost - $4,321) (1)(2)(3)(4) | 09/13/2022 | 4,324 | |||||||
N/A (5) | FR Cade’s Bluff, LLC (Cost - $4,104) (1)(2)(3)(4) | 09/23/2022 | 4,105 | |||||||
Total Development (Cost - $75,645) | $ | 77,208 | ||||||||
Total Equity (Cost - $113,037) | $ | 120,086 | ||||||||
Preferred Equity – 9.6% | ||||||||||
Multifamily – 9.2% | ||||||||||
$ | 4,500 | Breckenridge Group Springfield Missouri, LLC, 13.00%, 01/01/26 (Cost - $4,500) (1)(2) | (6) | $ | 4,513 | |||||
6,820 | C V Fort Myers Investor, LLC, 10.50%, 3.50% PIK, 07/10/23 (Cost - $8,389) (1)(2)(7) | (6) | 8,395 | |||||||
6,835 | Fort Myers Reef Holdings, LLC, 10.90%, 4.07% PIK, 09/01/28 (Cost - $8,378) (1)(2)(4)(7) | (6) | 8,383 | |||||||
16,700 | SFR Reflections I, LLC, 10.10%, 4.10% PIK, 12/01/30 (Cost - $16,700) (1)(2)(7) | (6) | 16,707 | |||||||
3,294 | WP Gainesville MF-FL Holdings, LLC, 11.00%, 11.00% PIK, 09/21/25 (Cost - $3,494) (1)(2)(7) | (6) | 3,498 | |||||||
3,750 | WP Walcott Hackensack Sub, LLC, 11.00%, 11.00% PIK, 01/29/24 (Cost - $4,273) (1)(2)(7) | (6) | 4,278 | |||||||
1 | Encore Narcoossee, LLC, 9.85%, 9.85% PIK, 12/09/25 (Cost - $1) (1)(2)(7) | 06/29/2022 | 1 | |||||||
Total Multifamily (Cost - $45,735) | $ | 45,775 | ||||||||
Hospitality – 0.5% | ||||||||||
$ | 2,275 | Y Hotel Leveraged Lender, LLC, 15.50%, 11/13/19 (Cost - $2,229) (1)(2)(3)(8) | (6) | $ | 2,330 | |||||
Total Hospitality (Cost - $2,229) | $ | 2,330 | ||||||||
Total Preferred Equity (Cost - $47,964) | $ | 48,105 |
Par/Shares | Description | Acquisition Date | Value as of September 30, 2022 | |||||||
Mezzanine Debt – 8.6% | ||||||||||
Multifamily | ||||||||||
$ | 14,142 | NexMetro Grand Member, LLC, 10.55%, 10.55% PIK, 01/20/24 (Cost - $15,336) (1)(2)(7) | (6) | $ | 15,353 | |||||
10,755 | NexMetro Lakeridge Member, LLC, 12.50%, 12.50% PIK, 11/20/23 (Cost - $12,377) (1)(2)(7) | (6) | 12,398 | |||||||
12,612 | NexMetro Oakridge Member, LLC, 12.50%, 12.50% PIK, 10/23/23 (Cost - $15,069) (1)(2)(7) | (6) | 15,092 | |||||||
Total Mezzanine Debt (Cost - $42,782) | $ | 42,843 | ||||||||
Senior Debt – 16.5% | ||||||||||
Multifamily – 3.8% | ||||||||||
$ | 3,350 | 1550 South Fairfax, LLC, 11.00%, 04/15/22 (Cost - $3,350) (1)(2)(9) | (6) | $ | 3,350 | |||||
3,000 | 4927 Washington, LLC, 12.90%, 04/19/22 (Cost - $3,000) (1)(2)(9) | (6) | 3,000 | |||||||
12,500 | Vose-Van Nuys, LLC, 10.25%, 08/30/22 (Cost - $12,463) (1)(2)(9) | (6) | 12,463 | |||||||
Total Multifamily (Cost - $18,813) | $ | 18,813 | ||||||||
Land – 12.7% | ||||||||||
$ | 28,000 | The Station East Owner, LLC, 10.00%, 09/03/22 (Cost - $28,000) (1)(2) | (6) | $ | 28,003 | |||||
19,255 | The Station East Owner II, LLC, 9.50%, 11/20/23 (Cost - $19,255) (1)(2) | (6) | 19,262 | |||||||
16,000 | The Station East Owner III, LLC, 9.50%, 12/15/22 (Cost - $16,000) (1)(2) | (6) | 16,000 | |||||||
Total Land (Cost - $63,255) | $ | 63,265 | ||||||||
Total Senior Debt (Cost - $82,068) | $ | 82,078 | ||||||||
Promissory Notes – 31.1% | ||||||||||
Development | ||||||||||
$ | 4,295 | FR Clinton Corner, LLC, 10.50%, 09/30/23 (Cost - $4,295) (1)(2)(4) | (6) | $ | 4,304 | |||||
2,125 | FR Vaughn Farms, LLC, 10.50%, 09/30/23 (Cost - $2,125) (1)(2)(4) | (6) | 2,127 | |||||||
193 | FR Wilsons Walk, LLC, 9.00%, 10/04/23 (Cost - $193) (1)(2)(4) | (6) | 193 | |||||||
2,087 | FR Arbor Place, LLC, 9.50%, 07/21/23 (Cost - $2,087) (1)(2)(4) | (6) | 2,091 | |||||||
28,160 | FR Beeson, LLC, 8.50%, 08/31/23 (Cost - $28,160) (1)(2)(4) | (6) | 28,209 | |||||||
6,333 | FR Berry Creek, LLC, 9.50%, 03/09/24 (Cost - $6,333) (1)(2)(4) | (6) | 6,346 | |||||||
17,866 | FR Eastwood, LLC, 9.00%, 11/17/23 (Cost - $17,866) (1)(2)(4) | (6) | 17,867 | |||||||
8,462 | FR Meadow Park, LLC, 9.50%, 09/01/23 (Cost - $8,462) (1)(2)(4) | (6) | 8,468 | |||||||
7,702 | FR Providence Gardens, LLC, 8.50%, 02/24/24 (Cost - $7,702) (1)(2)(4) | (6) | 7,715 | |||||||
2,215 | FR Washington Street, LLC, 9.00%, 11/15/23 (Cost - $2,215) (1)(2)(4) | (6) | 2,216 | |||||||
1,294 | FR Castlewood, LLC, 9.00%, 05/02/24 (Cost - $1,294) (1)(2)(4) | 05/02/2022 | 1,296 | |||||||
2,165 | FR Crescent Mills, LLC, 9.00%, 05/02/24 (Cost - $2,165) (1)(2)(4) | 05/03/2022 | 2,168 | |||||||
4,054 | FR Holmes, LLC, 8.00%, 05/27/24 (Cost - $4,054) (1)(2)(4) | 05/27/2022 | 4,059 | |||||||
902 | FR Tom Miller, LLC, 9.00%, 06/15/24 (Cost - $902) (1)(2)(4) | 06/15/2022 | 903 | |||||||
8,135 | FR Berry Hills, LLC, 8.50%, 07/29/24 (Cost - $8,135) (1)(2)(4) | 07/29/2022 | 8,137 | |||||||
3,682 | FR Legacy Hills, LLC, 8.50%, 07/29/24 (Cost - $3,682) (1)(2)(4) | 07/29/2022 | 3,675 | |||||||
4,268 | FR Trailside, LLC, 8.50%, 08/22/24 (Cost - $4,268) (1)(2)(4) | 08/22/2022 | 4,277 | |||||||
9,442 | FR Wong Tract, LLC, 8.50%, 08/31/24 (Cost - $9,442) (1)(2)(4) | 08/31/2022 | 9,438 | |||||||
17,162 | FR Swope LB, LLC, 8.00%, 08/31/24 (Cost - $17,162) (1)(2)(4) | 08/31/2022 | 17,187 | |||||||
12,921 | FR Swope LH, LLC, 8.50%, 08/31/24 (Cost - $12,921) (1)(2)(4) | 08/31/2022 | 12,926 | |||||||
5,626 | FR Willow Landing, LLC, 9.50%, 09/13/24 (Cost - $5,626) (1)(2)(4) | 09/13/2022 | 5,626 | |||||||
5,724 | FR Cade’s Bluff, LLC, 9.50%, 09/23/24 (Cost - $5,724) (1)(2)(4) | 09/23/2022 | 5,724 | |||||||
Total Promissory Notes (Cost - $154,813) | $ | 154,952 |
Par/Shares | Description | Acquisition Date | Value as of September 30, 2022 | |||||||
Residential Mortgage-Backed Securities – 6.3% | ||||||||||
Non-U.S. Government Agency Issues | ||||||||||
$ | 22,000 | New Residential Mortgage Loan Trust 2022-SFR2 (F Class), 9.18%, 09/17/27 | 08/18/2022 | 17,408 | ||||||
14,745 | Progress Residential 2022-SFR7 (E1 Class), 7.75%, 10/01/27 | 09/29/2022 | 14,108 | |||||||
Total Residential Mortgage-Backed Securities (Cost - $31,516) | $ | 31,516 | ||||||||
Total Private Real Estate (Cost - $472,180) | $ | 479,580 | ||||||||
Corporate Bonds – 0.01% | ||||||||||
$ | 42 | Essex Portfolio, LP, 3.25%, 05/01/23 (Cost - $42) | (6) | $ | 42 | |||||
Total Corporate Bonds (Cost - $42) | $ | 42 | ||||||||
Short-Term Investments – 11.80% | ||||||||||
$ | 58,831 | Allspring Government Money Market Fund, 2.79% (Cost - $58,831) (10) | 58,831 | |||||||
Total Short-Term Investments (Cost - $58,831) | $ | 58,831 | ||||||||
Total Investments – 108.0% (Cost - $531,053) | $ | 538,453 | ||||||||
Liabilities in excess of other assets – (8.0)% | $ | (39,831 | ) | |||||||
Total Net Assets – 100.0% | $ | 498,622 |
(1) | Restricted security. | |
(2) | Represents investments classified as Level 3 within the three-tier fair value hierarchy. See the accompanying notes to the consolidated financial statements for an explanation of this hierarchy, as well as a list of significant unobservable inputs used in the valuation of these instruments. | |
(3) | Represents a non-income producing investment. | |
(4) | Represents an investment in an affiliate. | |
(5) | The Fund owns LLC or LP membership interests in restricted security not traded in public markets. | |
(6) | These assets were acquired by the Fund on March 31, 2022, in connection with the Merger. See Note 1, Formation and Organization, for more information on the assets acquired from the Merger. | |
(7) | Rate disclosed for investments with payment in kind (PIK) interest. The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the investment, rather than being paid in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment. | |
(8) | As of September 30, 2022, this investment had incurred an event of default due to non-payment of outstanding principal and contractual interest, and is non-accrual. The real estate investment is secured by the underlying property. | |
(9) | As of September 30, 2022, this investment was past the stated maturity date. Extension negotiations are ongoing as of the report date. | |
(10) | Rate disclosed is representative of the Fund’s seven-day effective yield as of September 30, 2022. |
See Notes to Consolidated Schedule of Investments.
Fundrise Income Real Estate Fund, LLC
Notes to Consolidated Schedule of Investments
For the Period Ended September 30, 2022
(unaudited)
1. | Formation and Organization |
Fundrise Income Real Estate Fund, LLC (the “Fund” or the “Registrant”) is a Delaware limited liability company and intends to elect to be taxed as a real estate investment trust (a “REIT”) for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ending December 31, 2022. The Fund is organized as a continuously offered, non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), that operates as an interval fund. The Fund’s registration statement was declared effective on February 3, 2022. On March 31, 2022, Fundrise Income eREIT II, LLC (“Income eREIT II”); Fundrise Income eREIT III, LLC (“Income eREIT III”); Fundrise Income eREIT 2019, LLC (“Income eREIT 2019”); Fundrise Income eREIT V, LLC (“Income eREIT V”); Fundrise eREIT XIV, LLC (“eREIT XIV”); and Fundrise Real Estate Investment Trust, LLC (“Income eREIT”) (individually a “Target Company” and collectively the “Target Companies”) reorganized and merged with and into the Fund, providing for the transfer of all assets and liabilities of each Target Company to the Fund, with the Fund being the surviving entity of the tax-free reorganization (the “Merger”). The Merger took place on March 31, 2022, prior to commencement of investment operations of the Fund. The Fund commenced investment operations on April 1, 2022.
The Fund’s investment objective is to seek current income from which to pay attractive, consistent cash distributions while preserving capital. 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 residential and commercial real estate, the securities of real estate and real estate-related issuers, and real estate-related loans or other real estate-related debt securities.
The investment adviser to the Fund is Fundrise Advisors, LLC (the “Adviser”), an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended. The Adviser is a wholly-owned subsidiary of Rise Companies Corp. (“Rise Companies” or the “Sponsor”), the Fund’s sponsor. Subject to the supervision of the Board of Directors of the Fund (the “Board”), the Adviser is responsible for directing the management of the Fund’s business and affairs, managing the Fund’s day-to-day affairs, and implementing the Fund’s investment strategy.
2. | Summary of Significant Accounting Policies |
Valuation Oversight
The Board has approved procedures pursuant to which the Fund values its investments and has designated to the Adviser general responsibility for determining, in accordance with such procedures, the value of such investments. Generally, portfolio securities and other assets for which market quotations are readily available are valued at market value, which is ordinarily determined on the basis of official closing prices or the last reported sales prices. If market quotations are not readily available or are deemed unreliable, the Fund will use the fair value of the securities or other assets as determined by the Adviser in good faith, taking into consideration all available information and other factors that the Adviser deems pertinent, in each case subject to the overall supervision and responsibility of the Board.
In calculating the Fund’s net asset value (“NAV”), the Adviser, subject to the oversight of the Board, uses various valuation methodologies. To the extent practicable, the Adviser generally endeavors to maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs are to be used when available. The availability of valuation techniques and observable inputs can vary from investment to investment and are affected by a wide variety of factors. When valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment, and may involve alternative methods to obtain fair values where market prices or market-based valuations are not readily available. As a result, the Adviser may exercise a higher degree of judgment in determining fair value for certain securities or other assets.
Fair Value Measurement
The following is a summary of certain methods generally used currently to value investments of the Fund under the Fund’s valuation procedures:
The Fund applies FASB ASC Topic 820, Fair Value Measurement, as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurement. U.S. GAAP defines the fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date.
The Fund determines the fair value of certain investments in accordance with the fair value hierarchy that requires an entity to maximize the use of observable inputs. The fair value hierarchy includes the following three levels based on the objectivity of the inputs, which were used for categorizing the assets or liabilities for which fair value is being measured and reported:
Level 1 – Quoted market prices in active markets for identical assets or liabilities.
Level 2 – Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs).
Level 3 – Valuation generated from model-based techniques that use inputs that are significant and unobservable in the market. These unobservable assumptions reflect estimates of inputs that market participants would use in pricing the asset or liability. Valuation techniques may include use of discounted cash flow methodologies or similar techniques, which incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument or other valuation assumptions that require significant management judgment or estimation.
The Fund’s real estate equity investments are typically fair valued based on a discounted cash flow, or other income approach, or by appraisals conducted by one or more pricing services. The Fund accounts for properties at the individual property level and such assets are fair valued using inputs that take into account property-level data that is gathered and evaluated periodically to reflect new information (e.g., rental payment history) regarding the property or the appreciation interest, if any.
Investments in newly acquired real estate properties will initially be valued at cost. Thereafter, the Adviser expects the primary methodology used to value our properties will be the yield method, whereby value is derived by determining the present value of an asset’s stream of future cash flows (for example, discounted cash flow analysis). Consistent with industry practices, the yield method incorporates subjective judgments regarding comparable rental and operating expense data, the capitalization or discount rate and projections of future rent and expenses based on appropriate market evidence. Other methodologies that may also be used to value properties include market approaches like sales comparisons and cost approaches.
Properties held through joint ventures generally will be valued in a manner that is consistent with the methods described above. Once the value of a property held by the joint venture is determined and the Fund determines the fair value of any other assets and liabilities of the joint venture, the value of the Fund’s interest in the joint venture would then be determined by the Adviser using a hypothetical liquidation calculation to value the Fund’s interest in the joint venture.
The Fund’s real estate debt investments in loans, including senior loans and mezzanine loans, initial value will generally be the par value or acquisition price of such instrument. The Adviser will determine subsequent revaluations of the Fund’s real estate debt investments in loans and other debt instruments by considering, among other factors, the changes in value of the underlying real estate or other collateral, with anticipated sale proceeds (estimated cash flows) discounted to their present value using a discount rate based on current market rates. The Fund accounts for whole loans at the individual loan level for valuation purposes, and whole loans and fractional loans are fair valued using inputs that take into account borrower-level data (e.g., payment history) that is gathered and evaluated periodically to reflect new information regarding the borrower or loan, if any.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.
The following is a summary of the inputs used as of September 30, 2022, in valuing the Fund’s investments carried at fair value (amounts in thousands):
Description | Quoted Prices (Level 1) | Other Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
Private Real Estate Equity | $ | — | $ | — | $ | 120,086 | $ | 120,086 | ||||||||
Private Real Estate Preferred Equity | — | — | 48,105 | 48,105 | ||||||||||||
Private Real Estate Mezzanine Debt | — | — | 42,843 | 42,843 | ||||||||||||
Private Real Estate Senior Debt | — | — | 82,078 | 82,078 | ||||||||||||
Private Real Estate Promissory Notes | — | — | 154,952 | 154,952 | ||||||||||||
Corporate Bonds | — | 42 | — | 42 | ||||||||||||
Residential Mortgage-Backed Securities | — | — | 31,516 | 31,516 | ||||||||||||
Short-Term Investments | 58,831 | — | — | 58,831 | ||||||||||||
Total Investments | $ | 58,831 | $ | 42 | $ | 479,580 | $ | 538,453 |
The following is a summary of quantitative information about the significant unobservable inputs of the Fund’s Level 3 investments as of September 30, 2022 (amounts in thousands). The weighted average range of unobservable inputs is based on the fair value of investments. The tables are not intended to be all-inclusive but instead capture the significant unobservable inputs relevant to the Fund’s determination of fair value.
Investment | Fair Value | Valuation Technique | Unobservable Input (1) | Range (Weighted Average) | Impact to Valuation from an Increase in input | |||||||
Private Real Estate Equity | $ | 111,657 | Yield Method | Discount Rate | 8.0% - 11.0% (9.6%) | Decrease | ||||||
8,429 | Recent Transaction | Transaction Price | N/A | Increase | ||||||||
Private Real Estate Preferred Equity | 45,775 | Yield Method | Discount Rate | 10.6% - 13.5% (11.3%) | Decrease | |||||||
2,330 | Liquidation Approach | Liquidation Value | $10,600 - $10,600 ($10,600) | Increase | ||||||||
Private Real Estate Mezzanine Debt | 42,843 | Yield Method | Discount Rate | 11.5% - 13.0% (12.3%) | Decrease | |||||||
Private Real Estate Senior Debt | 82,078 | Yield Method | Discount Rate | 9.4% - 13.7% (9.9%) | Decrease | |||||||
Private Real Estate Promissory Notes | 143,602 | Yield Method | Discount Rate | 8.0% - 10.5% (8.7%) | Decrease | |||||||
11,350 | Recent Transaction | Transaction Price | N/A | Increase | ||||||||
Residential Mortgage-Backed Securities | 31,516 | Recent Transaction | Transaction Price | N/A | Increase |
(1) | Represents the significant unobservable inputs used to fair value the financial instruments of the investment vehicles. The fair value of such financial instruments is the largest component of the valuation of such entity as a whole. |
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value (amounts in thousands):
Investment | Private Real Estate Equity | Private Real Estate Preferred Equity | Private Real Estate Mezzanine Debt | Private Real Estate Senior Debt | Private Real Estate Promissory Notes | Residential Mortgage -Backed Securities | ||||||||||||||||||
Balance as of April 1, 2022 | $ | 123,492 | $ | 47,772 | $ | 34,002 | $ | 84,695 | $ | 82,651 | $ | - | ||||||||||||
Purchases | 41,694 | 1 | 6,447 | - | 75,374 | 31,457 | ||||||||||||||||||
Accrued discounts (premiums) | - | - | - | - | - | 58 | ||||||||||||||||||
PIK interest and dividends | - | 821 | 2,381 | - | - | - | ||||||||||||||||||
Net realized gain (loss) | 467 | - | - | - | - | - | ||||||||||||||||||
Net change in unrealized appreciation/depreciation | 1,925 | 11 | 13 | (17 | ) | 140 | - | |||||||||||||||||
Return of capital distributions | - | - | - | - | - | - | ||||||||||||||||||
Sales | (47,492 | ) | (500 | ) | - | (2,600 | ) | (3,213 | ) | - | ||||||||||||||
Transfers into Level 3 | - | - | - | - | - | - | ||||||||||||||||||
Transfers out of Level 3 | - | - | - | - | - | - | ||||||||||||||||||
Balance as of September 30, 2022 | $ | 120,086 | $ | 48,105 | $ | 42,843 | $ | 82,078 | $ | 154,952 | $ | 31,516 | ||||||||||||
Change in unrealized appreciation/depreciation for the period ended September 30, 2022, related to Level 3 investments held at September 30, 2022 | $ | 1,925 | $ | 11 | $ | 13 | $ | (17 | ) | $ | 140 | $ | - |
As of September 30, 2022, the investments in affiliates consist of investments in real estate investment vehicles used to acquire, hold, and finance multifamily properties and land for future development. The affiliated investment vehicles have not been registered under the Securities Act of 1933, as amended, and thus are subject to restrictions on resale. During the period ended September 30, 2022, investments in affiliates were as follows (amounts in thousands):
Affiliate | Balance as of April 01, 2022 | Purchases at cost | Proceeds from sales | Net realized gain (loss) and capital gain distributions | PIK Interest and Dividend Income | Return of capital distribution | Change in unrealized appreciation/ depreciation | Balance as of September 30, 2022 | ||||||||||||||||||||||||
Fundrise Insight Two, LLC (1) | $ | 1 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 1 | ||||||||||||||||
FR Clinton Corner, LLC | 2,384 | - | - | - | - | - | 249 | 2,633 | ||||||||||||||||||||||||
FR Vaughn Farms, LLC | 1,810 | - | - | - | - | - | 331 | 2,141 | ||||||||||||||||||||||||
FR Wilsons Walk, LLC | 1,304 | - | - | - | - | - | 37 | 1,341 | ||||||||||||||||||||||||
FR Arbor Place, LLC | 1,676 | - | - | - | - | - | 211 | 1,887 | ||||||||||||||||||||||||
FR Beeson, LLC | 9,234 | - | - | - | - | - | 166 | 9,400 | ||||||||||||||||||||||||
FR Berry Creek, LLC | 3,342 | - | - | - | - | - | 3 | 3,345 | ||||||||||||||||||||||||
FR Eastwood, LLC | 4,188 | - | - | - | - | - | 111 | 4,299 | ||||||||||||||||||||||||
FR Holmes, LLC | - | 2,022 | - | - | - | - | 15 | 2,037 | ||||||||||||||||||||||||
FR Meadow Park, LLC | 5,607 | - | - | - | - | - | 85 | 5,692 | ||||||||||||||||||||||||
FR Providence Gardens, LLC | 2,456 | - | - | - | - | - | 123 | 2,579 | ||||||||||||||||||||||||
FR Washington Street, LLC | 1,951 | - | - | - | - | - | 97 | 2,048 | ||||||||||||||||||||||||
FR Castlewood, LLC | - | 2,876 | - | - | - | - | (11 | ) | 2,865 | |||||||||||||||||||||||
FR Crescent Mills, LLC | - | 2,824 | - | - | - | - | 2 | 2,826 | ||||||||||||||||||||||||
FR Tom Miller, LLC | - | 6,878 | - | - | - | - | (9 | ) | 6,869 | |||||||||||||||||||||||
FR Berry Hills, LLC | - | 1,531 | - | - | - | - | 23 | 1,554 | ||||||||||||||||||||||||
FR Legacy Hills, LLC | - | 4,255 | - | - | - | - | 22 | 4,277 | ||||||||||||||||||||||||
FR Trailside, LLC | - | 3,746 | - | - | - | - | 6 | 3,752 | ||||||||||||||||||||||||
FR Wong Tract, LLC | - | 1,666 | - | - | - | - | 18 | 1,684 | ||||||||||||||||||||||||
FR Swope LB, LLC | - | 5,190 | - | - | - | - | 53 | 5,243 | ||||||||||||||||||||||||
FR Swope LH, LLC | - | 2,280 | - | - | - | - | 26 | 2,306 | ||||||||||||||||||||||||
FR Willow Landing, LLC | - | 4,321 | - | - | - | - | 3 | 4,324 | ||||||||||||||||||||||||
FR Cade's Bluff, LLC | - | 4,104 | - | - | - | - | 2 | 4,106 | ||||||||||||||||||||||||
Fort Meyers Reef Holdings, LLC (1) | 8,158 | - | - | - | 221 | - | 5 | 8,384 | ||||||||||||||||||||||||
FR Clinton Corner, LLC – Promissory Note | 4,295 | - | - | - | - | - | 9 | 4,304 | ||||||||||||||||||||||||
FR Vaughn Farms, LLC – Promissory Note | 2,125 | - | - | - | - | - | 2 | 2,127 | ||||||||||||||||||||||||
FR Wilsons Walk, LLC – Promissory Note | 193 | - | - | - | - | - | - | 193 | ||||||||||||||||||||||||
FR Arbor Place, LLC - Promissory Note | 2,087 | - | - | - | - | - | 4 | 2,091 | ||||||||||||||||||||||||
FR Beeson, LLC - Promissory Note | 28,160 | - | - | - | - | - | 49 | 28,209 | ||||||||||||||||||||||||
FR Berry Creek, LLC - Promissory Note | 6,333 | - | - | - | - | - | 12 | 6,345 | ||||||||||||||||||||||||
FR Eastwood, LLC - Promissory Note | 21,079 | - | (3,213 | ) | - | - | - | 1 | 17,867 | |||||||||||||||||||||||
FR Holmes, LLC - Promissory Note | - | 4,054 | - | - | - | 5 | 4,059 | |||||||||||||||||||||||||
FR Meadow Park, LLC - Promissory Note | 8,462 | - | - | - | - | - | 6 | 8,468 | ||||||||||||||||||||||||
FR Providence Gardens, LLC - Promissory Note | 7,702 | - | - | - | - | - | 13 | 7,715 | ||||||||||||||||||||||||
FR Washington Street, LLC - Promissory Note | 2,215 | - | - | - | - | - | 1 | 2,216 | ||||||||||||||||||||||||
FR Castlewood, LLC - Promissory Note | - | 1,294 | - | - | - | - | 2 | 1,296 | ||||||||||||||||||||||||
FR Crescent Mills, LLC - Promissory Note | - | 2,165 | - | - | - | - | 3 | 2,168 | ||||||||||||||||||||||||
FR Tom Miller, LLC - Promissory Note | - | 902 | - | - | - | - | 1 | 903 | ||||||||||||||||||||||||
FR Berry Hills, LLC - Promissory Note | - | 8,135 | - | - | - | - | 3 | 8,138 | ||||||||||||||||||||||||
FR Legacy Hills, LLC - Promissory Note | - | 3,682 | - | - | - | - | (8 | ) | 3,674 | |||||||||||||||||||||||
FR Trailside, LLC - Promissory Note | - | 4,268 | - | - | - | - | 9 | 4,277 | ||||||||||||||||||||||||
FR Wong Tract, LLC - Promissory Note | - | 9,442 | - | - | - | - | (5 | ) | 9,437 | |||||||||||||||||||||||
FR Swope LB, LLC - Promissory Note | - | 17,162 | - | - | - | - | 25 | 17,187 | ||||||||||||||||||||||||
FR Swope LH, LLC - Promissory Note | - | 12,921 | - | - | - | - | 5 | 12,926 | ||||||||||||||||||||||||
FR Willow Landing, LLC - Promissory Note | - | 5,626 | - | - | - | - | - | 5,626 | ||||||||||||||||||||||||
FR Cade's Bluff, LLC - Promissory Note | - | 5,724 | - | - | - | - | - | 5,724 | ||||||||||||||||||||||||
Total | $ | 124,762 | $ | 117,068 | $ | (3,213 | ) | $ | - | $ | 221 | $ | - | $ | 1,705 | $ | 240,543 |
(1) | Investment represents a co-investment arrangement, in which the Fund co-invested alongside an affiliate of the Fund, including those of the Adviser (“Real Estate Co-Investment Joint Ventures”). This arrangement is pursuant to the terms and conditions of the exemptive order issued by the SEC to the Fund, allowing the Fund to co-invest alongside certain entities affiliated with or managed by the Adviser. The Fund’s investments in real estate through the securities of a Real Estate Co-Investment Joint Ventures with its affiliates is subject to the requirements of the 1940 Act and terms and conditions of an exemptive order the Fund received from the SEC allowing the Fund and/or the Real Estate Co-Investment Joint Ventures to co-invest alongside certain entities affiliated with or managed by the Adviser (REITs (each, an “eREIT®”) or other non-REIT compliant real estate-related funds). The exemptive order from the SEC imposes extensive conditions on the terms of any co-investment made by an affiliate of the Fund. The Fund has adopted procedures reasonably designed to ensure compliance with the exemptive order and the Board also oversees risk relative to such compliance. |
3. | Investments |
The Fund gains exposure to commercial and residential real estate through a diversified portfolio of investments in real property; a variety of real estate loans; real estate-related debt and equity securities, and other real estate-related assets. The Fund may also invest in residential and commercial real estate-related debt securities, including commercial mortgage-backed securities, residential mortgage-backed securities, and REIT senior unsecured debt. The cost of purchases and proceeds from the sale of investments, other than short-term investments, for the period ended September 30, 2022, amounted to approximately $154,973,000 and $53,805,000, respectively.