UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 1-U
CURRENT REPORT
Pursuant Regulation A of the Securities Act of 1933
March 28, 2019
(Date of Report (Date of earliest event reported))
FUNDRISE GROWTH EREIT III, LLC
(Exact name of registrant as specified in its charter)
| Delaware | 83-2162909 |
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
| 1601 Connecticut Ave., Suite 300, Washington, DC | 20009 |
| (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 E353 Controlled Subsidiary – Los Angeles, CA
On March 28, 2019, we directly acquired ownership of a “wholly-owned subsidiary”, E353 (the “RSE E353 Controlled Subsidiary”), for an initial purchase price of approximately $775,000, which is the initial stated value of our equity interest in the RSE E353 Controlled Subsidiary (the “RSE E353 Investment”). The RSE E353 Controlled Subsidiary used the proceeds to close on the acquisition of a multi-tenant building containing four residential units totaling approximately 1,800 square feet of gross rentable area on an approximately 7,300 square foot lot (the “E353 Property”). The four units average approximately 460 square feet per unit, consisting of two two-bed and one bathroom units and two studio units. The property has the potential to be redeveloped to six units. The closing of both the initial RSE E353 Investment and the E353 Property occurred concurrently.
The RSE E353 Controlled Subsidiary is managed by us.
Pursuant to the agreements governing the RSE E353 Investment (the “RSE E353 Operative Agreements”), we have full authority for the management of the RSE E353 Controlled Subsidiary, including the E353 Property. In addition, an affiliate of our sponsor earned an acquisition fee of approximately 2.0% of the RSE E353 Investment, paid directly by the RSE E353 Controlled Subsidiary.
The E353 Property was acquired for a purchase price of approximately $775,000, which includes the acquisition fee of approximately $15,000. We anticipate minor hard costs of approximately $20,000 to perform minor repairs and plumbing upgrades, bringing the total projected costs for the E353 Property to approximately $795,000. The repairs are expected to be completed while the rest of the tenants are still occupying the Property. No financing was used for the acquisition of the E353 Property.
The E353 Property made up of one building and is located in the 90018 zip code of Los Angeles, CA. As of March 28, 2019, all four residential units were occupied at the Property. The Property was constructed in 1951 and the build is of wood framing and stucco.
The West Jefferson neighborhood is one of the oldest neighborhoods in Los Angeles with most of its buildings constructed from 1880 to 1925. 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 and the University of Southern California. With the city-wide housing shortage, 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 Renovation Cost |
Projected Average Annual Rent Growth |
Projected Average Annual Expense Growth |
Projected Gross Exit Price |
Projected
|
| E74 | 7.2% - 13.6% | $20,000 | 3.0% | 3.0% | $1,139,000 - $1,485,000 | 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 III, 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 December 21, 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 III, LLC | |||
| By: | Fundrise Advisors, LLC | ||
| Its: | Manager | ||
| By: | /s/ Bjorn J. Hall | ||
| Name: | Bjorn J. Hall | ||
| Title: | General Counsel | ||
Date: April 3, 2019