1-U 1 tv523429_1u.htm FORM 1-U

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

 

FORM 1-U

 

CURRENT REPORT

Pursuant Regulation A of the Securities Act of 1933

 

June 5, 2019

(Date of Report (Date of earliest event reported))

 

FUNDRISE GROWTH EREIT II, LLC

(Exact name of registrant as specified in its charter)

  

Delaware 61-1775079
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)

 

11 Dupont Circle NW, 9th Floor, Washington, DC 20036
(Address of principal executive offices) (ZIP Code)

 

(202) 584-0550

(Registrant’s telephone number, including area code)

 

Common Shares

(Title of each class of securities issued pursuant to Regulation A)

 

 

 

 

 

Item 9.                Other Events

 

Asset Acquisition

 

RSE W39 Controlled Subsidiary – Los Angeles, CA

 

On June 5, 2019, we directly acquired ownership of a “wholly-owned subsidiary”, W39 (the “RSE W39 Controlled Subsidiary”), for an initial purchase price of approximately $3,120,000, which is the initial stated value of our equity interest in the RSE W39 Controlled Subsidiary (the “RSE W39 Investment”). The RSE W39 Controlled Subsidiary used the proceeds to close on the acquisition of three buildings comprised of one residential unit, and four commercial units totaling approximately 8,900 square feet of gross rentable area on an approximately 13,300 square foot lot (the “W39 Property”). The property has the potential to be redeveloped to a mix of creative office, retail, and residential uses. The closing of both the initial RSE W39 Investment and the W39 Property occurred concurrently.

 

The RSE W39 Controlled Subsidiary is managed by us.

 

Pursuant to the agreements governing the RSE W39 Investment (the “RSE W39 Operative Agreements”), we have full authority for the management of the RSE W39 Controlled Subsidiary, including the W39 Property. In addition, an affiliate of our sponsor earned an acquisition fee of approximately 1.0% of the RSE W39 Investment, paid directly by the RSE W39 Controlled Subsidiary.

 

The W39 Property was acquired for a purchase price of approximately $3,120,000, which includes the acquisition fee of approximately $31,000. We anticipate incurring development costs of approximately $1,800,000 in order to reposition the asset, bringing the total projected costs for the W39 Property to approximately $4,920,000. The development work is anticipated to occur within three years; however, there can be no guarantee that such results will be achieved. No financing was used for the acquisition of the W39 Property.

 

The W39 Property made up of three buildings and is located in the 90016 zip code of Los Angeles, CA. As of June 5, 2019, all units were occupied at the Property. The buildings were constructed in various years: 1927, 1937, and 1951 and the build is of wood framing, stucco, and concrete masonry.

 

The West Jefferson neighborhood is one of the oldest neighborhoods in Los Angeles with most of its buildings constructed around the turn of the 20th century. It is one of the most densely populated areas per square mile in the Los Angeles area and we are expecting continued gentrification over the next seven to ten years due to its proximity to downtown Los Angeles, west-side affluent neighborhoods, and the University of Southern California. With high demand from creative office and retail user/operators, we feel this well-located investment will provide attractive returns over our holding period.

 

              The following table contains performance assumptions and projections. Individual assumptions and projected returns are presented at the asset level. All of the values in the table below are projections and assumptions that we believe to be reasonable; however, there can be no guarantee that such results will be achieved.

 

Asset
Name		 Projected
Returns		 Total
Projected
Development
Cost		 Projected
Average
Annual
Rent
Growth		 Projected
Average
Annual
Expense
Growth		 Projected
Exit Cap
Rate		 Projected
Hold
Period
W39 7.7% - 10.7% $1,800,000 3.0% 3.0% 5.00% - 5.25% 10 years

 

 

 

 

Please note that past performance is not indicative of future results, and these asset performance projections may not reflect actual future performance. Any projections on the future returns of any of our assets may not prove to be accurate and are highly dependent on the assumptions described above. Investing in Fundrise Growth eREIT II, LLC is an inherently risky investment that may result in total or partial loss of investment to investors.

 

We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

  

Safe Harbor Statement

 

This Current Report on Form 1-U contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in our Offering Statement on Form 1-A dated August 22, 2018, filed with the Securities and Exchange Commission (“SEC”), as such factors may be updated from time to time in our periodic filings and prospectus supplements filed with the SEC, which are accessible on the SEC’s website at www.sec.gov.  Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in our filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

  

 

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  FUNDRISE GROWTH EREIT II, LLC
       
  By: Fundrise Advisors, LLC  
  Its: Manager  
       
  By: /s/ Bjorn J. Hall  
  Name: Bjorn J. Hall  
  Title: General Counsel  

 

Date:      June 12, 2019