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SEC Temporarily Suspends Df Growth Reit II, LLC's Regulation a Exemption

March 16, 2022

File No. 3-20801

The Securities and Exchange Commission announced that on March 16, 2022, it temporarily suspended the registration exemption of an issuer headquartered in San Diego, California, DF Growth REIT II, LLC ("REIT II"), in connection with REIT II's January 2021 $50 million securities offering under Regulation A and its amendments.

Amendments to Regulation A, often referred to as Regulation A+, provide for two tiers of registration exemptions: Tier 1 for offerings up to $20 million and Tier 2 for offerings up to $50 million. Rule 258 under Regulation A authorizes the Commission to temporarily suspend an issuer's Regulation A exemption if the Commission has reason to believe, among other things, that the issuer has failed to comply with Regulation A's terms, conditions or requirements or that the issuer's offering statement or sales materials contain untrue or misleading statements of material fact.

According to the SEC's temporary suspension order, REIT II filed an offering statement and an amended offering statement with the SEC to obtain a Regulation A exemption for a Tier 2 $50 million offering. The amended offering statement was qualified on January 29, 2021. As explained in the order, the Commission has reason to believe that REIT II failed to comply with certain Regulation A terms, conditions or requirements. Specifically, as stated in the order, there is reason to believe that REIT II failed to commence its qualified continuous offerings within two days after its January 29 qualification, as required by Rule 251(d)(3)(i)(F) under Regulation A. In addition, the order explains that there is reason to believe that REIT II raised its maximum offering amount from $50 million to $75 million through filing an offering circular supplement rather than a new offering statement or post-qualification amendment as required by the note to Rule 253(b) under Regulation A. According to the SEC's order, the Commission also has reason to believe that REIT II's offering documents and the website used to solicit REIT II investors made materially misleading representations regarding REIT II being a separate investment vehicle from REIT I, and regarding how much capital REIT II needs to raise from investors, its plan of operation based on the amount of capital raised, and its fees.

This matter is being handled by William M. Rosenthal and supervised by Victoria A. Levin.

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