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
December 29, 2021
(Date of Report (Date of earliest event reported))
FUNDRISE EAST COAST OPPORTUNISTIC REIT, LLC
(Exact name of registrant as specified in its charter)
| Delaware | 30-0889118 |
| | |
| (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
Candlewood Road Controlled Subsidiary – Hanover, MD
On December 29, 2021, we directly acquired ownership of a “majority-owned subsidiary” FRIND-Candlewood, LLC (the “Candlewood Road Controlled Subsidiary”) for an initial purchase price of approximately $2,410,000 which is the initial stated value of our equity interest in the Candlewood Road Controlled Subsidiary (the “Candlewood Road East Coast Opportunistic REIT Investment”). Fundrise Real Estate Interval Fund, LLC acquired ownership of the remaining equity interest in the new investment round in the Candlewood Road Controlled Subsidiary for an initial purchase price of approximately $21,690,000 (the “Candlewood Road Interval Fund Investment” and, together with the Candlewood Road East Coast Opportunistic REIT Investment, the “Candlewood Road Investment”). The Candlewood Road Controlled Subsidiary used the proceeds of the Candlewood Road Investment to acquire a fully leased industrial building containing approximately 253,330 square feet of net rentable area on an approximately 13-acre site located at 7441 Candlewood Road Drive, Hanover, MD 21076 (the “Candlewood Road Property”). The initial Candlewood Road East Coast Opportunistic REIT Investment was funded with proceeds from our Offering, and the closing of the initial Candlewood Road Investment and the Candlewood Road Property occurred concurrently.
The Candlewood Road Controlled Subsidiary is managed by us.
Pursuant to the agreements governing the Candlewood Road East Coast Opportunistic REIT Investment, we have authority for the management of the Candlewood Road Controlled Subsidiary, including the Candlewood Road Property. In addition, an affiliate of our sponsor earned an acquisition fee of approximately 1.0% of the total Candlewood Road Property purchase price, paid directly by the Candlewood Road Controlled Subsidiary.
The total purchase price for the Candlewood Road Property was approximately $48,100,000, or approximately $190 per rentable square foot. We anticipate soft costs, financing, and other fees of approximately $1,450,991 bringing the total projected project cost for the Candlewood Road Property to approximately $49,550,991. To finance the acquisition of the Candlewood Road Property, we secured a $24,000,000 senior loan with Hingham Institute for Savings with a three year term and an interest rate of 3.25% per annum. Additional financing may be pursued at a later date.
The Candlewood Road Property was delivered in 1986. It is 100% occupied by one tenant. We have budgeted for lease up costs in year three presuming the tenant vacates the property. Professional third party property management will be installed to manage the Candlewood Road Property.
The Candlewood Road Property is located on approximately 13 acres of improved land at Candlewood Road Drive, Hanover, MD, in Anne Arundel County. The Candlewood Road Property is located in the BWI submarket, is approximately 12 miles from Baltimore, MD and 30 miles from Washington, D.C. The Candlewood Road Property is located less than one mile from I-195, which offers linkages to I-95.
The following table contains underwriting assumptions for the Candlewood Road 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 | Projected
Average
Annual
Rent
Growth | Projected
Exit Cap
Rate | Projected
Hold
Period |
| Candlewood Road | 6.0% | 4.25% | 5 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 East Coast Opportunistic 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, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 offering circular 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 EAST COAST OPPORTUNISTIC REIT, LLC |
| | | |
| | By: | Fundrise Advisors, LLC |
| | Its: | Manager |
| | | |
| | By: | /s/ Bjorn J. Hall |
| | Name: | Bjorn J. Hall |
| | Title: | General Counsel |
Date: January 5, 2022
