Goldman Sachs-Backed Rental Fund Buys Entire Community Of 87 Single-Family Homes In Central Florida

A joint venture between two Fundrise-sponsored funds has acquired a community of 87 detached, single-family rental homes in Palm Bay, Florida.

The rental community, known as Cypress Bay, was developed by D R Horton Inc DHI and completed in February of this year. The community of homes was purchased by a joint venture between the Fundrise Interval Fund and the Growth eREIT VII for approximately $45.7 million.

According to the Fundrise website, approximately 41% of the homes were occupied at the time of acquisition.

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.

The company has been extremely active with acquisitions in the single-family rental space. Fundrise-sponsored funds have recently purchased a community of 48 single-family homes in South Carolina, 106 homes on the Gulf coast in Mississippi, 120 homes in Pensacola, FL, and started multiple single-family rental community developments.

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The Sunbelt region, including Florida, has experienced extremely high demand for rental units as migration trends from northern states has pushed home prices up at one of the fastest rates in the country. According to Zillow Group Inc. Z, Florida home values are up 31.2% year-over-year as of March 2022.

Related: Jeff Bezos-Backed Rental Property Investment Platform Crashes After Investors Flood Site For Newest Batch Of Offerings

While the Federal Reserve’s recent interest rate hike will likely help cool down the housing market, the demand for rentals is expected to continue growing since higher mortgage rates will still leave many people unable to afford to purchase a home.

Several institutional and individual investors are betting on continued demand for rentals. Invitation Homes Inc. INVH, the largest owner of single-family residential properties in the U.S. with a portfolio of more than 80,000 homes, acquired 822 homes in the first quarter of 2022. American Homes 4 Rent AMH expects to build between 2,100 and 2,400 new single-family rental properties in 2022, adding to its portfolio of more than 57,000 rental properties.

During the first quarter of 2022, the Flagship Interval Fund had average assets under management of just over $851 million and provided a net total return of 5.11% to investors.

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Photo: Courtesy of Fundrise