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 3, 2022
(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
S Hardy Controlled Subsidiary – Tempe, AZ
On June 3, 2022, we directly acquired ownership of a “majority-owned subsidiary,” FRIND-Hardy, LLC (the “S Hardy Controlled Subsidiary”) for an initial purchase price of approximately $1,100,000 which is the initial stated value of our equity interest in the S Hardy Controlled Subsidiary (the “S Hardy 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 S Hardy Controlled Subsidiary for an initial purchase price of approximately $9,900,000 (the “S Hardy Interval Fund Investment” and, together with the S Hardy East Coast Opportunistic REIT Investment, the “S Hardy Investment”). The S Hardy Controlled Subsidiary used the proceeds of the S Hardy Investment to acquire a fully leased industrial building containing approximately 56,240 square feet of net rentable area on an approximately 15-acre site located at 8123 S Hardy Drive, Tempe, AZ 84284 (the “S Hardy Property”). The initial S Hardy East Coast Opportunistic REIT Investment was funded with proceeds from our Offering, and the closing of the initial S Hardy Investment and the S Hardy Property occurred concurrently.
The S Hardy Controlled Subsidiary is managed by us.
Pursuant to the agreements governing the S Hardy East Coast Opportunistic REIT Investment, we have authority for the management of the S Hardy Controlled Subsidiary, including the S Hardy Property. In addition, an affiliate of our sponsor earned an acquisition fee of approximately 1.0% of the total S Hardy Property purchase price, paid directly by the S Hardy Controlled Subsidiary.
The total purchase price for the S Hardy Property was approximately $11,000,000, or approximately $151 per rentable square foot. We have budgeted approximately $2,700,000 to convert the space to a traditional warehouse. We anticipate soft costs, financing, and other fees of approximately $160,000 bringing the total projected project cost for the S Hardy Property to approximately $13,860,000. No financing was used to close the transaction. Additional financing may be pursued at a later date.
The S Hardy Property was delivered in 1998. The property is 100% leased to a single office tenant. The tenant has vacated the space and plans to end their lease prior to year-end. The project is estimated to be completed prior to year-end with plans to market the space while under construction and re-tenant the space once delivered. Professional third-party property management will be installed to manage the S Hardy Property.
The S Hardy Property is located on approximately 15 acres of improved land at 8123 S Hardy Dr, Tempe, AZ, in Maricopa County. The S Hardy Property is located 22 miles from the Phoenix-Mesa Airport, and 12 miles from central Phoenix. The property is located 2 miles from I-10 within a dense, high-income area of Phoenix which is ideally located for last mile distribution and corporate users.
The following table contains underwriting assumptions for the S Hardy 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 |
| S Hardy | 6.00% | 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: June 9, 2022
