1-U 1 tm2320336d1_1u.htm 1-U

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

 

FORM 1-U

 

CURRENT REPORT

Pursuant to Regulation A of the Securities Act of 1933

 

June 28, 2023

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

 

FUNDRISE BALANCED EREIT II, LLC

(Exact name of registrant as specified in its charter)

 

Delaware 84-4465115
(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

 

Net Asset Value as of June 30, 2023

 

As of June 30, 2023, our net asset value (“NAV”) per common share is $11.39. This NAV per common share shall be effective until updated by us on or about December 31, 2023 (or as soon as commercially reasonable thereafter), unless updated by us prior to that time.

 

The following sets forth the calculation of NAV for our common shares:

 

BALANCE SHEETS (UNAUDITED)

 

(In thousands, except share and per share amounts) 

June 30, 2023

[1]

  

March 31, 2023

[1]

 
ASSETS          
Investments, at fair value  $37,833   $46,442 
Cash and cash equivalents   15,717    10,375 
Other assets   29    12 
Total Assets  $53,579   $56,829 
           
LIABILITIES          
Accounts payable  $78   $119 
Due to related party   89    141 
Dividends payable   61    81 
Settling subscriptions   6    - 
Redemptions payable   -    2,488 
Total Liabilities  $234   $2,829 
           
NET ASSETS CONSIST OF:          
Fundrise Balanced eREIT II, LLC Members’ Equity:          
Common shares; 4,684,681 and 4,675,938 shares outstanding, net of offering costs, on June 30, 2023, and March 31, 2023, respectively  $49,517   $49,488 
Retained earnings (Accumulated deficit)   (2,340)   (2,552)
Net adjustments to fair value   6,168    7,064 
NET ASSETS  $53,345   $54,000 
NET ASSET VALUE PER SHARE, on 4,684,681 and 4,675,938 shares outstanding, net of offering costs, on June 30, 2023, and March 31, 2023, respectively  $11.39   $11.55 

 

[1] Estimated Balance Sheets as of June 30, 2023 and March 31, 2023.

 

As described in the section titled “Valuation Policies” of our Offering Circular, our goal is to provide a reasonable estimate of the value of our shares on a periodic, ongoing basis. However, the majority of our assets consist of commercial real estate assets and, as with any commercial real estate valuation methodology, the conclusions reached by us are based on a number of judgments, assumptions and opinions about future events that may or may not prove to be correct. The use of different judgments, assumptions or opinions would likely result in different estimates of the value of our commercial real estate assets and investments. In addition, for any given quarter, our published NAV per share may not fully reflect certain material events, to the extent that the financial impact of such events on our portfolio is not immediately quantifiable. As a result, the quarterly calculation of our NAV per share may not reflect the precise amount that might be paid for your shares in an arm’s length transaction with an unrelated third party, and any potential disparity in our NAV per share may be in favor of either shareholders who redeem their shares, or shareholders who buy new shares, or existing shareholders. However, to the extent quantifiable, if a material event occurs in between quarterly updates of NAV that would cause our NAV per share to change by 5% or more from the last disclosed NAV, we will disclose the updated price and the reason for the change in an offering circular supplement filed on the SEC’s EDGAR website as promptly as reasonably practicable, and will update the NAV information provided on our website.

 

 

 

 

Our internal accountants calculated our NAV per common share using a process that reflects (1) estimated values of each of our commercial real estate assets and investments, including related liabilities, which may be updated upon the occurrence of certain material events, (2) the price of liquid assets for which third party market quotes are available, (3) accruals of our periodic distributions, and (4) estimated accruals of our operating revenues and expenses. The determination of our NAV is not based on, nor intended to comply with, fair value standards under U.S. Generally Accepted Accounting Principles (“GAAP”), and our NAV may not be indicative of the price that we would receive for our assets at current market conditions.

 

We generally receive financial and other reporting from our borrowers or subsidiaries on a monthly or quarterly basis, so the estimated values of each of our commercial real estate assets and investments included on each NAV reporting date are generally based on the latest financial and other information reported to us or otherwise available to us, and considers relevant market data. We are not aware of any events that would have a material impact on the estimated values included herein that occurred between the date of the latest information we received with respect to our investments and the NAV reporting date.

 

Beginning on July 1, 2023, the per share purchase price of our Common Shares will be $11.39 per share, as the per share purchase price shall be the greater of the then-current NAV per common share or $10.00. This price per share shall be effective until the next announcement of price per share by the Company, which is expected to happen within a commercially reasonable time after December 31, 2023, unless updated by us prior to that time. Redemptions of Common Shares shall be made pursuant to our redemption plan based on the then-current NAV per Common Share.

 

Share Redemption Plan Status

 

For the quarter ended June 30, 2023, we expect to redeem approximately 182,000 common shares pursuant to our share redemption plan.

 

Historical NAV Information

 

Below is the NAV per common share, as determined in accordance with our valuation policies, for each period presented from June 30, 2021 to June 30, 2023.

 

Date  NAV Per Share 
June 30, 2021  $10.24 
September 30, 2021  $11.63 
December 31, 2021  $12.00 
March 31, 2022  $12.41 
June 30, 2022  $12.46 
September 30, 2022  $12.48 
December 31, 2022  $11.65 
March 31, 2023  $11.55 
June 30, 2023  $11.39 

 

Update to July 2023 Distribution

 

On June 29, 2023, we announced a daily distribution of 0.0001369863 per share (the “July 2023 Daily Distribution Amount”) for shareholders of record as of the close of business on each day of the period commencing on July 1, 2023 and ending on July 31, 2023. As of July 1, 2023, the July 2023 Daily Distribution Amount equates to approximately 0.44% on an annualized basis calculated at the current rate, assuming a $11.39 per share purchase price.

 

 

 

 

Real Estate Performance

 

The Company experienced a slight decrease in NAV driven by (among other things) macroeconomic headwinds, which resulted in slightly higher cap rates for some of the Company’s stabilized multifamily assets where interest rate increases outpaced net operating income growth. 

 

However, the decreases were slightly offset by the generally strong fundamentals across the portfolio, especially in properties such as the “North Charleston Property'' for example. As of June, the occupancy of the directly owned multifamily portfolio was approximately 92%. 

 

We remain confident in the stability of the Company's portfolio and its long term return potential, especially in the current macroeconomic environment.  

 

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 the most recently qualified Offering Statement on Form 1-A 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 BALANCED EREIT II, LLC
     
  By: Fundrise Advisors, LLC
  Its: Manager
     
  By: /s/ Bjorn J. Hall
  Name: Bjorn J. Hall
  Title: General Counsel

 

Date:       July 3, 2023