Filed Pursuant to Rule 253(g)(2)
File No. 024-10691
FUNDRISE FOR-SALE HOUSING EFUND – LOS ANGELES CA, LLC
SUPPLEMENT NO. 22 DATED MAY 10, 2018
TO THE OFFERING CIRCULAR DATED MAY 10, 2017
This document supplements, and should be read in conjunction with, the offering circular of Fundrise For-Sale Housing eFUND – Los Angeles CA, LLC (the “Company”, “we”, “our” or “us”), dated May 10, 2017 and filed by us with the Securities and Exchange Commission (the “Commission”) on May 12, 2017 (the “Offering Circular”). Unless otherwise defined in this supplement, capitalized terms used in this supplement shall have the same meanings as set forth in the Offering Circular.
The purpose of this supplement is to disclose:
· | Asset Acquisition. |
Asset Acquisition
RRE F1 - Controlled Subsidiary
On May 4, 2018, we directly acquired ownership of a “majority-owned subsidiary”, RRE F1, LLC (the “RRE F1 Controlled Subsidiary”), for an initial purchase price of approximately $2,023,000, which is the initial stated value of our equity interest in the RRE F1 Controlled Subsidiary (the “RRE F1 Investment”). The RRE F1 Controlled Subsidiary used the proceeds to close on the acquisition of a 28,800 square foot parcel improved with a 25,600 square foot 2-story office building built in 1925. The property is located in the San Pedro neighborhood of Los Angeles, CA (“Square One San Pedro”). Following acquisition of the Square One San Pedro property, the business plan entails completing entitlements to build 19 small lot town homes in place of the existing improvements. The closing of both the initial RRE F1 Investment and the Square One San Pedro property occurred concurrently.
The RRE F1 Investment was funded with approximately $1,600,000 in proceeds from that certain Promissory Grid Note by and between us and the sponsor.
The RRE F1 Controlled Subsidiary is managed by Root Real Estate, LLC (an affiliate of Square One Homes). Square One Homes is a full service real estate investment firm, focused on making an impact within urban infill markets throughout California. Based in Los Angeles, the company looks to capitalize on niche urban market opportunities, targeting new multifamily construction, adaptive re-use, and mixed-use projects. They currently have approximately $25,000,000 of real estate under management.
Pursuant to the agreements governing the RRE F1 Investment (the “RRE F1 Operative Agreements”), our consent is required for all major decisions regarding the RRE F1 Controlled Subsidiary. In addition, an affiliate of our sponsor earned an origination fee of approximately 2.0% of the RRE F1 Investment, paid directly by the RRE F1 Controlled Subsidiary.
The Square One San Pedro property, which is held through the RRE F1 Controlled Subsidiary, was acquired for a purchase price of approximately $2,048,000. Square One anticipates additional soft costs and financing costs of approximately $632,000 to complete entitlements yielding 19 small lot homes. The total projected project cost for the Square One San Pedro property is approximately $2,680,000. There can be no assurance that the anticipated completion cost will be achieved.
Square One anticipates the project will have an approved Tentative Tract Map in 10-14 months and will take an additional 6 months to construction permit approval.
Square One contributed $25,000 of equity at closing of the RRE F1 Controlled Subsidiary. It is anticipated that the remaining equity contributions to the RRE F1 Controlled Subsidiary will be contributed solely by Fundrise For-Sale Housing eFund- Los Angeles, CA, LLC.
Entitlement and Development Investment Assumptions
Asset Name | Projected Annual Returns | Total Projected Development Costs through Entitlements | Projected Exit Price per Lot | Projected Leverage | Projected Number of Lots | Projected Hold Period |
RRE F1, LLC - Controlled Subsidiary | 9.06% - 11.05% | $650,000 - $690,000 | $170,000 - $180,000 | 0% | 19 | 21 months |