Wall Street-Backed Fund Snags Community Of 185 Rental Homes In North Las Vegas for $80 Million

A joint venture between two Fundrise-sponsored funds has acquired a community of 185 rental homes in North Las Vegas at a purchase price of approximately $80 million.

The rental community, formerly known as Moderne at Centennial, was renamed The Alowyn Homes at Centennial after being purchased from the developer, Moderne Communities founded by Randy Bury. The community of homes was purchased by a joint venture between the Fundrise Interval Fund and the Balanced eREIT II with an equity investment of $39.6 million and a short-term loan for roughly $42 million.

Fundrise launched its Flagship Interval Fund in January 2021 and received financial backing from Goldman Sachs Group Inc. GS in June 2021 with a $300 million credit facility to scale the fund’s investments in single-family homes.

During its first year, the Interval Fund posted a 29.35% return, outpacing the S&P 500’s bull run that resulted in a 28.71% total return for the year. So far, in 2022, the fund has seen a 5.7% increase in its net asset value (NAV).

The fund has been extremely active in acquiring single-family rental homes throughout Sunbelt states, purchasing several communities throughout Arizona, Texas, Mississippi, Alabama, Georgia, the Carolinas and Florida.

A portfolio update posted on the Fundrise website about the acquisition states, “At a strategic level, this investment fits within our affordably-priced Sunbelt apartment/ rental housing thesis.

“At the time of our acquisition, this property was the only rental home community of its type in its submarket, and it showcases a Wester US Variation on the Sunbelt migration trend we’ve referenced frequently: As relatively affluent California residents migrate east to states like Nevada, with lower costs of living and more appealing state taxes, we anticipate residential properties like this one will prove attractive, supporting steady returns for disciplined investors.”

According to data from Redfin, the median sale price for single-family homes in North Las Vegas has increased 32.4% year-over-year to $450,000. Fundrise purchased the 185 homes for an average price of about $432,000.

Data from Housing Tides shows a 21.3% increase in rent prices over the past year to $1,851 in the Las Vegas market and an addition of 26,800 households. According to the Alowyn Homes at Centennial website, the listed rent price for Fundrise’s North Las Vegas homes ranges from $1,662 per month for a one-bedroom home, to $2,385 for a two-bedroom home.

The real estate investment trust American Homes 4 Rent AMH, which is also the largest builder of single-family rental homes in the U.S., has shown strong interest in the Las Vegas market. As of the end of the first quarter, the REIT owns 1,597 rental homes in the market and has an additional 1,491 lots in its development pipeline. The company is generating an average of $1,920 per month in rent with its Las Vegas properties.

Unlike the Wall Street funds that have been purchasing portfolios of single-family homes throughout the U.S., the Fundrise Interval Fund was designed for retail investors, allowing non-accredited investors to own a piece of this rental community as well as a large portfolio of institutional-quality real estate assets with as little as $10.

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Photo: Courtesy of Alowyn Homes at Centennial

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