The Rendity Rating

The Rendity Rating is an assessment system ranging from A to E. It enabled investors to quickly compare projects across the platform.
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Our assessment
a
e
Less riskMore risk
The Rendity Rating measures the relative risk-adjusted return of the individual projects. B-rated projects will have a higher inherent risk than A-rated projects. Thus, B-rated projects will generally have a higher return than A-rated projects due its relatively higher risk. The rating does not imply that investing in one project is fundamentally better, worse, or better suited for an individual investor.
Calculation of the risk
A project’s Rendity Rating matches its quantitative project assessment. The project assessment is a numerical method evaluating eight major criteria of real estate investments. Every criterion is separately evaluated, resulting in a total score ranging from 6 to 20. A score between 6 and 8, will result in A rating, between 9 and 11 in a B rating and so on.
a6 | 7 | 8
b9 | 10 | 11
c12 | 13 | 14
d15 | 16 | 17
e18 | 19 | 20
The evaluation of the location
Several factors are taken into account in the internal examination of the location. On the one hand, the immediate surroundings of the property are examined, and on the other hand, the large-scale economic area (city, municipality and region) is included. Both have an influence on the location attractiveness of the respective property. For each project, additional information on the micro and macro location of the property can be found in the description.
LocationNotesPoints
PrimaryCentral location in Top 12 European Cities (A-City)1
SecondarySuburban location or central location in B-Cities2
TertiaryRural location or emerging market3
Vacancy
Bei Entwicklungsprojekten (Growth) ist der Abschluss des Projekts der erfolgreiche Verkauf der Immobilie. Sollten vorab mehr als zehn Prozent des Objekts verkauft worden sein, fällt das Risiko geringer aus. Ist der Verkaufsstart noch nicht erfolgt, wird dies mit einem höheren Risiko bewertet. Bei Bestandsimmobilien (Income) findet kein Verkauf statt – hier wird vielmehr in vermietete Immobilien investiert. Sollten diese nahezu vollständig vermietet sein, ergibt sich ein kleineres Risiko, als wenn das Objekt bislang unbewohnt ist.
NotesPoints
>10 percent sold / Almost fully let1
0-9.9 percent sold / partially rented out2
Sales not started / Unrented3
Project stage
Rendity offers two different investment categories with Growth (development projects) and Income (existing properties). In the case of a development project, there are a number of factors to be taken into account due to the construction process, which can influence the course of the project. If the construction is far advanced, the risk is therefore lower. If the development project is only in the submission phase, the risk is higher. In the case of existing projects, on the other hand, the property has already been built. The construction process, which is associated with a certain risk, is therefore eliminated. If minor renovation work is planned with a view to increasing the value, this is taken into account in the assessment. If only the maintenance of the existing property is planned, the risk is lower.
StageNotesPoints
Maturity phaseThe shell of the building is already well advanced and interior work can begin shortly.1
Start of constructionConstruction has already started and construction activities are in full swing.2
Building permit grantedThe planning activities have already been completed and the building permit has been issued.3
Track record of the real estate partner
This involves measuring the track record of the real estate partner. The total volume of comparable real estate projects that the issuer has carried out for its own account is included in the calculation. Partners who have previously been able to implement several large-volume projects are accordingly classified as having a lower risk than those who do not yet have as much experience.
Project volumePoints
>100 Mio. €1
50-100 Mio. €2
< 50 Mio. €3
Asset class
Residential real estate - as the immediate past has once again made clear - is crisis-proof. For example, it is much easier to find a new occupant than it is to find a new business for a commercial property. Commercial real estate also involves a higher risk because it is generally larger and more complex.
Asset classNotesPoints
ResidentialProperty is used mainly for residential purposes0
CommercialProperty is mainly used for commercial purposes1
Financing structure (ratio between equity and mezzanine capital)
Real estate projects are usually financed by a bank loan (debt capital) and equity capital. This equity can be raised by the developer itself and/or via mezzanine capital. If a major part of the equity is raised by means of mezzanine capital, the risk is higher than if the developer himself or herself contributes a major part from his or her own funds.
Finance StructureNotesPoints
<60%Less than 60 percent of equity is mezzanine capital1
60-80%60-80 percent of equity is raised through mezzanine capital2
>80%More than 80 percent of equity is raised through mezzanine capital3
Security
In this category, different measures are included to reduce the risk, which is brought in by the real estate partner. For each individual project, the collateral(s) is addressed individually. The most common measures include a (hard) letter of comfort, personal guarantee and mortgage.
SecurityNotesPoints
YesThe issuer is liable by means of one or more securities0
NoThe issuer does not contribute any collateral to the project1
Bank Financing
A real estate project usually involves a bank, which provides a significant part of the financing by means of loan capital. Before the money is made available, the bank conducts an extensive review. In interaction, a suitable financing concept is then worked out, with the focus on minimizing risk or maximizing return.
Bank FinancingNotesPoints
YesAn audit of the bank has already been made0
NoBank financing is not yet available1
Disclaimer
The Rendity Rating is not a measure of the quality or suitability of the investment and is NOT meant to serve as a replacement for individual due diligence. Importantly, the Fundrise Rating system is NOT similar or comparable to ratings from agencies such as Standard and Poor’s or Moody’s.
Das Rendity Rating are for informational purposes only. Each rating is impersonal and not individualized for any specific investor's financial situation and is not investment advice. These ratings are not intended to be, nor should you interpret them to be, a prediction of how a particular investment will actually perform. Each investor should always carefully consider investments in any security and be comfortable with his/her understanding of the investment.
Risk notice: An investor may also consider consulting investment professionals due to the potential risk.