UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 1-U
CURRENT REPORT
Pursuant Regulation A of the Securities Act of 1933
April 8, 2021
(Date of Report (Date of earliest event reported))
FUNDRISE EQUITY REIT, LLC
(Exact name of registrant as specified in its charter)
| Delaware | 35-2536661 |
| (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
West Kernan Controlled Subsidiary - Jacksonville, FL (formerly known as the Insight One Controlled Subsidiary)
On April 8, 2021, we directly acquired ownership of a “majority-owned subsidiary” (the “West Kernan Controlled Subsidiary”) for an initial purchase price of approximately $32,759,000, which is the initial stated value of our equity interest in the West Kernan Controlled Subsidiary (the “West Kernan Investment”). The West Kernan Controlled Subsidiary used the proceeds to acquire a stabilized garden style multifamily property totaling 301 units located in 12517 Beach Blvd, Jacksonville, FL 32246 (the “West Kernan Property”). The closing of the initial West Kernan Investment and the West Kernan Property occurred concurrently.
The West Kernan Controlled Subsidiary is managed by us.
Pursuant to the agreements governing the West Kernan Investment (the “West Kernan Operative Agreements”), we have authority for the management of the West Kernan Controlled Subsidiary, including the West Kernan Property. In addition, an affiliate of our sponsor earned an acquisition fee of approximately 2.0% of the West Kernan Investment, paid directly by the West Kernan Controlled Subsidiary.
The total purchase price for the West Kernan Property was approximately $66,250,000, an average of approximately $220,100 per unit. We anticipate additional hard costs of approximately $420,000 for rebranding and miscellaneous minor capital expenditures, as well as additional soft costs and financing costs of approximately $2,527,000 bringing the total projected project cost for the West Kernan Property to approximately $69,197,000. To finance the acquisition of the West Kernan Property, a $36,437,000 senior loan with a one (1) year term at a SOFR + 1.65% interest rate with one year interest only was secured.
This acquisition completes the 1031 transaction further described in a previously filed 1-U that can be found here.
The West Kernan Property was built in 2019 and has a mix of unit types and floorplans, ranging from 644 square foot 1-bedroom to 1,357 square foot 3-bedroom/2-bath apartments. Occupancy at close was approximately 91%. Due to the new construction, it is not anticipated that material hard or soft costs will be incurred in the near term. Professional third party property management will be installed to manage the West Kernan Property.
The following table contains underwriting assumptions for the West Kernan Property. Assumptions are presented at the asset level. All of the values in the table below are assumptions that we believe to be reasonable; however, there can be no guarantee that such results will be achieved.
| Asset Name | Stabilized Economic Vacancy | Average Annual Rent Growth | Average Annual Expense Growth | Exit Cap Rate | Hold Period |
| West Kernan Property | 5.5% | 2.5% | 2.75% | 4.75% | 10 years |
Please note that past performance is not indicative of future results, and these underwriting assumptions may not reflect actual performance. Any assumptions on the performance of any of our assets may not prove to be accurate. Investing in Fundrise Equity REIT, 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 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 EQUITY REIT, LLC | |
| | | | |
| | By: | Fundrise Advisors, LLC | |
| | Its: | Manager | |
| | | | |
| | By: | /s/ Bjorn J. Hall | |
| | Name: | Bjorn J. Hall | |
| | Title: | General Counsel | |
Date: April 14, 2021
