Fundrise eREIT LLC
11/12/2026 | Press release | Distributed by Public on 11/12/2026 14:51
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Quarterly Report. The following discussion contains forward-looking statements. See "Statements Regarding Forward-Looking Information" within this Quarterly Report.
Business
Fundrise eREIT, LLC (the "Company") invests in and manages primarily a diversified portfolio of residential and commercial real estate and real estate-related investments throughout the United States. The Company may make investments directly or through subsidiaries, joint ventures, and co-investment arrangements.
The Company is externally managed by Fundrise Advisors, LLC (the "Manager"), an SEC-registered investment adviser and wholly owned subsidiary of Rise Companies Corp. Fundrise, LLC, an affiliate of the Manager, operates the Fundrise investment platform located at www.fundrise.com through which investors purchase interests in the Company. The Manager is responsible for identifying, underwriting, acquiring, financing, managing, and disposing of the Company's investments, while the Sponsor provides asset management, investor relations, marketing, and administrative services. As a result, the Company has no employees.
Merger
Effective April 29, 2026, Fundrise Development eREIT, LLC, Fundrise Equity REIT, LLC, Fundrise East Coast Opportunistic REIT, LLC, Fundrise Growth eREIT II, LLC, Fundrise Growth eREIT III, LLC, Fundrise Midland Opportunistic REIT, LLC and Fundrise West Coast Opportunistic REIT, LLC (collectively the "Merger Entities") merged with and into the Company, with the Company as the surviving entity (the "Merger"). For accounting purposes, Fundrise Equity REIT, LLC has been identified as the predecessor entity. In connection with the Merger, we issued to the shareholders of each Merger Entity's common shares based on an agreed upon exchange ratio ("Exchange Ratio"). The Exchange Ratio was based on each Merger Entity's respective net asset value per share that was effective as of the date of the Merger. For more information, see the prospectus filed on April 27, 2026 (the "Prospectus"), which is available here.
Results of the Business
We remain encouraged by both the performance of the alternative investments held by the Company and by our own ability to navigate the evolving economic landscape. Despite ongoing challenges and macroeconomic headwinds such as persistent inflation, elevated interest rates, tariffs and volatility in real estate markets, our investments continue to demonstrate resilience. Despite renewed inflation, rising Treasury yields, and higher borrowing costs during the three and nine months ended September 30, 2026, the portfolio's fundamentals remained resilient, supporting current year-to-date performance.
Recent Developments
Subsequent to September 30, 2026, the Company received a distribution from the sale of a property held through an equity method investment and had additional lending activities with affiliated entities. Refer to Note 16, Subsequent Events in the notes to the condensed consolidated financial statements included in this Quarterly Report for more details on recent developments.
Our Investments
During the three months ended September 30, 2026, we acquired an additional equity method investment for approximately $21.6 million, received repayment of one investment in real estate debt totaling approximately $2.4 million, and redeemed an investment in equity securities for approximately $19.1 million. For additional information regarding these transactions, refer to Notes 4, 5, and 7 to the condensed consolidated financial statements included in this Quarterly Report.
Results of Operations
Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
For the three months ended September 30, 2026 and 2025, our results of operations are as follows (dollar amounts in thousands):
| Results |
For the three months ended September 30, 2026 |
For the three months ended September 30, 2025 |
% Change | Explanation | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Rental revenue | $ | 6,653 | $ | 2,045 | 225 | % | The increase in rental revenue was primarily attributable to the additional real estate properties held and available to rent during the current period and following the Merger. | |||||||||||||
| Interest revenue | 728 | 275 | 165 | % | The increase in interest revenue was primarily attributable to the consolidation of National Lending during the current period and following the Merger. | |||||||||||||||
| Other revenue | (a) | 856 | 271 | 216 | % | The increase in other revenue was primarily attributable to the additional real estate properties held and available to rent during the current period and following the Merger. | ||||||||||||||
| Total revenue | $ | 8,237 | $ | 2,591 | 218 | % | ||||||||||||||
| Expenses | ||||||||||||||||||||
| Property operating and maintenance | (b) | $ | 3,568 | $ | 1,269 | 181 | % | The increase in property operating and maintenance expenses was primarily attributable to the additional real estate properties held and available to rent during the current period and following the Merger. | ||||||||||||
| Investment management and other fees - related party | 1,822 | 393 | 364 | % | The increase in investment management and other fees - related party was primarily attributable to the net assets acquired in connection with the Merger, as investment management fees are calculated as a percentage of net assets each quarter. | |||||||||||||||
| Depreciation and amortization | 4,084 | 510 | 701 | % | The increase in depreciation and amortization expense was primarily attributable to the additional real estate properties held and available to rent during the current period and following the Merger. | |||||||||||||||
| General and administrative expenses | 745 | 118 | 531 | % | The increase in general and administrative expenses was primarily attributable to higher audit, legal, and tax expenses resulting from the Company's expanded operations following the Merger, including additional costs associated with the acquired entities. | |||||||||||||||
| Total expenses | $ | 10,219 | $ | 2,290 | 346 | % | ||||||||||||||
| Other income (expense) | ||||||||||||||||||||
| Equity in earnings (losses) | (6,255) | 6,293 | (199) | % | The decrease in equity in earnings (losses) was primarily attributable to (i) the inclusion of additional losses from equity method investments acquired in the Merger and (ii) a gain of approximately $6.8 million recognized during the three months ended September 30, 2025 on the disposition of an equity method investee. | |||||||||||||||
| Dividend income | 166 | 163 | 2 | % | Dividend income remained relatively consistent period-over-period. | |||||||||||||||
| Interest expense, net | (3,231) | (953) | 239 | % | The increase in interest expense, net was primarily attributable to the assumption of three mortgages and one credit facility during the period. | |||||||||||||||
| Interest expense - related party | (1) | - | 100 | % | Interest expense - related party remained relatively consistent period-over-period. | |||||||||||||||
| Increase (decrease) in fair value of derivative financial instruments | 22 | (87) | 125 | % | The increase in fair value of derivative financial instruments was primarily driven by changes in the valuation of the interest rate cap agreements associated with mortgage payables due to changes in market interest rates, remaining term to maturity, and market volatility relative to the prior period. | |||||||||||||||
| Unrealized gain (loss) on equity securities | (1,082) | - | 100 | % | The decrease in unrealized gain (loss) on equity securities was attributable to the reversal of previously recorded unrealized gains on one equity security that was redeemed during the current period. No equity securities were held in the prior three month period. | |||||||||||||||
| Realized gain (loss) on equity securities | 1,097 | - | 100 | % | The increase in realized gain (loss) on equity securities was attributable to the gain recognized on the redemption of one equity security during the current period. The gain was largely offset by the reversal of previously recorded unrealized gains on the same security, as discussed above. | |||||||||||||||
| Total other income (expense) | $ | (9,284) | $ | 5,416 | (271) | % | ||||||||||||||
(a)Other revenue consists primarily of common area maintenance charges, real estate tax refunds, and utility billback income billed to tenants.
(b)Property operating and maintenance expenses consist primarily of real estate taxes, property management fees, and costs associated with routine maintenance, cleaning, turnover services, and landscaping.
Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
For the nine months ended September 30, 2026 and 2025, our results of operations are as follows (dollar amounts in thousands):
| Results |
For the nine months ended September 30, 2026 |
For the nine months ended September 30, 2025 |
% Change | Explanation | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Rental revenue | $ | 14,525 | $ | 6,285 | 131 | % | The increase in rental revenue was primarily attributable to the additional real estate properties held and available to rent during the current period and following the Merger. | |||||||||||||
| Interest revenue | 1,882 | 804 | 134 | % | The increase in interest revenue was primarily attributable to the consolidation of National Lending during the current period, as well as interest income earned on related party notes issued to National Lending prior to the Merger. | |||||||||||||||
| Other revenue | (a) | 2,152 | 816 | 164 | % | The increase in other revenue was primarily attributable to the additional real estate properties held and available to rent during the current period and following the Merger. | ||||||||||||||
| Total revenue | $ | 18,559 | $ | 7,905 | 135 | % | ||||||||||||||
| Expenses | ||||||||||||||||||||
| Property operating and maintenance | (b) | $ | 7,654 | $ | 3,599 | 113 | % | The increase in property operating and maintenance expenses was primarily attributable to the additional real estate properties held and available to rent during the current period and following the Merger. | ||||||||||||
| Investment management and other fees - related party | 3,680 | 1,232 | 199 | % | The increase in investment management and other fees - related party was primarily attributable to the net assets acquired in connection with the Merger, as investment management fees are calculated as a percentage of net assets each quarter. | |||||||||||||||
| Depreciation and amortization | 7,993 | 1,688 | 374 | % | The increase in depreciation and amortization expense was primarily attributable to the additional real estate properties held and available to rent during the current period and following the Merger. | |||||||||||||||
| General and administrative expenses | 1,538 | 437 | 252 | % | The increase in general and administrative expenses was primarily attributable to higher audit, legal, and tax expenses resulting from the Company's expanded operations following the Merger, including additional costs associated with the acquired entities. | |||||||||||||||
| Total expenses | $ | 20,865 | $ | 6,956 | 200 | % | ||||||||||||||
| Other income (expense) | ||||||||||||||||||||
| Equity in earnings (losses) | (10,247) | 21,481 | (148) | % | The decrease in equity in earnings (losses) was primarily attributable to (i) the inclusion of additional losses from equity method investments acquired in the Merger and (ii) approximately $21.7 million of gain on sale recognized during the nine months ended September 30, 2025 from the disposition of three equity method investees. No comparable gains or dispositions in the current period. | |||||||||||||||
| Dividend income | 605 | 248 | 144 | % | The increase in dividend income was attributable to increased cash invested in a money market sweep account during the current period. | |||||||||||||||
| Interest expense, net | (6,911) | (2,843) | 143 | % | The increase in interest expense, net was primarily attributable to the assumption of three mortgages and one credit facility during the current period. | |||||||||||||||
| Interest expense - related party | (1) | (200) | (100) | % | The decrease in interest expense - related party is attributable to the consolidation of National Lending during the current period, as well as the payoff of the note payable prior to the Merger. | |||||||||||||||
| Increase (decrease) in fair value of derivative financial instruments | 5 | (313) | 102 | % | The increase in fair value of derivative financial instruments was primarily driven by changes in the valuation of the interest rate cap agreements associated with mortgage payables due to changes in market interest rates, remaining term to maturity, and market volatility relative to the prior period. | |||||||||||||||
| Unrealized gain (loss) on equity securities | (361) | - | 100 | % | The decrease in unrealized gain (loss) on equity securities primarily reflects unrealized depreciation on one equity security not held in the prior nine month period. | |||||||||||||||
| Realized gain (loss) on equity securities | 1,097 | - | 100 | % | The increase in realized gain (loss) on equity securities was attributable to the gain recognized on the redemption of one equity security during the current period. No equity securities were held in the prior period. | |||||||||||||||
| Total other income (expense) | $ | (15,813) | $ | 18,373 | (186) | % | ||||||||||||||
(a)Other revenue consists primarily of common area maintenance charges, real estate tax refunds, and utility billback income billed to tenants.
(b)Property operating and maintenance expenses consist primarily of real estate taxes, property management fees, and costs associated with routine maintenance, cleaning, turnover services, and landscaping.
Key Factors We Expect to Impact Our Future Performance
Sources of Operating Revenues and Cash Flows
We expect to primarily generate cash flows through the rental operations of our real estate properties, the distributions received from our investments in equity method investees, and the interest earned on our investments in real estate debt. We may also generate cash flow from interest income on related party notes, and seek to acquire other investments which generate attractive returns without any leverage. See Note 2, Summary of Significant Accounting Policies-Revenue Recognition in the notes to the condensed consolidated financial statements included in this Quarterly Report for further detail.
Interest Rates
During its September, October, and December 2025 meetings, the Federal Reserve (the "Fed") voted to cut its benchmark interest rate by 25 basis points each time, which was the first rate decrease since late 2024. Rates remained unchanged in the first half of 2026. In September 2026, the Fed voted to increase its benchmark interest rate by 25 basis points. As of the date of this filing, the Fed has expressed uncertainty about whether rate increases will continue. Real estate markets have faced persistent challenges following the Fed's interest rate increases beginning in late 2022. An increase in rates may negatively impact real estate values in future periods, creating lower returns for our real estate investments.
Liquidity and Capital Resources
We obtain the capital to fund our investment activities and operating expenses from multiple sources, including secured or unsecured financings, borrowings under credit facilities, cash flow from operations, distributions from equity method investments, net proceeds from asset repayments and sales, and other financing transactions. We use this capital to invest in and manage a diversified portfolio of real estate investments and fund our operations. Our material cash requirements are primarily (i) funding new investments as opportunities arise, (ii) ordinary-course operating expenses and capital expenditures, and (iii) debt service. As of September 30, 2026, we had no unfunded commitments, have not identified any material capital expenditure requirements over the next twelve months, and have the credit facility scheduled to mature during the same period, for which we expect to exercise an available contractual extension option in accordance with the terms of the loan agreement.
As of September 30, 2026, we had deployed approximately $566.6 million in net capital for 51 investments and had approximately $20.6 million in cash and cash equivalents. In addition, as of September 30, 2026, we had approximately $38.2 million of distributions payable and $14.1 million of redemptions payable. The redemptions payable were settled subsequent to quarter-end in cash. The distributions payable will be settled in cash, through the issuance of common shares of the Company, or a combination thereof. The distributions payable are expected to be settled within the next 12 months. We anticipate that (i) unrestricted cash on hand; (ii) National Lending promissory notes receivable repayments from affiliated funds; and (iii) if necessary, proceeds from asset dispositions or cash obtained from external financing would be sufficient to supplement our resources and fund remaining obligations over the next twelve months following the issuance of these financial statements. Management has evaluated the Company's ability to meet its obligations and believes its available and expected resources will be adequate to do so.
We may selectively employ leverage to enhance total returns to our shareholders through a combination of senior financing on our real estate acquisitions, secured facilities, and capital markets financing transactions. As of both September 30, 2026 and November 12, 2026, we had outstanding unsecured Company level debt (inclusive of accrued interest) of approximately $5.0 million. This does not include any debt secured by the real property of our consolidated or unconsolidated investments. Our targeted portfolio-wide leverage is between 50-85% of the greater of the cost (before deducting depreciation or other non-cash reserves) or fair market value of our assets. We seek to secure conservatively structured leverage that is long-term, non-recourse, non-mark-to-market financing to the extent obtainable on a cost-effective basis. To the extent a higher level of leverage is employed it may come either in the form of government-sponsored programs or other long-term, non-recourse, non-mark-to-market financing. Our Manager may from time to time modify our leverage policy in its discretion in light of then-current economic conditions, relative costs of debt and equity capital, market values of our assets, general conditions in the market for debt and equity securities, growth and acquisition opportunities or other factors. It is our policy to not borrow more than 85% of the greater of cost (before deducting depreciation or other non-cash reserves) or fair market value of our assets. We cannot exceed the leverage limit of our leverage policy unless any excess in borrowing over such level is approved by our Manager's investment committee.
Additionally, because certain of our investments include both current interest payments and interest paid-in kind upon redemption of our investments, there may be differences between net income from operations and cash flow generated from our investments.
We seek to manage liquidity and capital resources to support our long-term investment strategy. Our ability to grow and diversify our portfolio is influenced, in part, by our ability to raise additional capital through the issuance of common shares. To the extent capital raising activity is lower than anticipated, the pace of new investments and portfolio diversification may be reduced. In addition, because we incur certain fixed operating expenses, slower capital growth could increase such expenses as a percentage of gross income and may affect the level of distributions over time.
Other Details
Redemption Plan
As of September 30, 2026, the Company had received redemption requests for approximately 17,854,000 common shares since the closing of the Merger on April 29, 2026. During the nine months ended September 30, 2026, the Company honored approximately 3,843,000 common shares pursuant to its share redemption plan at a weighted-average redemption price of $9.94 per share. As of September 30, 2026, the related cash payments of approximately $38.2 million were funded or will be funded using available cash. Approximately $24.2 million was paid subsequent to June 30, 2026 and approximately $14.1 million will be paid subsequent to September 30, 2026. Redemption requests for approximately 14,011,000 common shares remain outstanding as of September 30, 2026.
Under the Company's redemption plan, the Company intends to limit redemptions in any calendar quarter to shares whose aggregate value is 2.50% of the NAV of all of the Company's outstanding shares, which the Manager, in its sole discretion, may elect to increase to up to 5.00% if redemptions for the relevant quarter exceed 2.50% and the Manager determines there is sufficient liquidity to satisfy the additional redemptions. For the quarter ended September 30, 2026, the Manager elected to redeem shares having an aggregate value equal to 2.50% of the Company's NAV. The redemption requests that remained outstanding as of September 30, 2026 were not honored because the aggregate redemption requests received exceeded this quarterly redemption limit.
Distributions
The Company intends to continue to make distributions as necessary to qualify as a REIT and to minimize federal income and excise taxes on retained taxable income and gains, subject to available cash flow and other factors deemed relevant by the Manager. Approximately $248,000 of distributions were paid during the three months ended September 30, 2026.
For further details, please see Note 8, Distributions in our condensed consolidated financial statements.
Off-Balance Sheet Arrangements
As of September 30, 2026, the Company's off-balance sheet arrangements consist of guarantee obligations related to a mortgage credit facility, a mortgage loan, and a mezzanine loan secured in part by properties owned through unconsolidated equity method investees. For a description of these guarantee obligations, including the nature, maximum potential future payments, and conditions for termination, see Note 13, Commitments and Contingencies, in the notes to the condensed consolidated financial statements included in this Quarterly Report. As of December 31, 2025, we had no off-balance sheet arrangements.
Related Party Arrangements
For further information regarding "Related Party Arrangements," please see Note 11, Related Party Arrangements, in the notes to the condensed consolidated financial statements included in this Quarterly Report.
Critical Accounting Estimates
Management's Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report is based on our condensed consolidated financial statements, which are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the
circumstances. By their nature, these estimates and assumptions are subject to an inherent degree of uncertainty and actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. For a complete description of our accounting policies, see Note 2, Summary of Significant Accounting Policies in our condensed consolidated financial statements included in this Quarterly Report.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has released several Accounting Standards Updates ("ASUs") that may have an impact on our financial statements. See Note 2, Summary of Significant Accounting Policies-Recent Accounting Pronouncements in the notes to the condensed consolidated financial statements included in this Quarterly Report for discussion of the relevant ASUs. We are currently evaluating the impact of the ASUs not yet adopted on our financial statements and determining our plan for adoption.
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