Filed Pursuant to Rule 253(g)(2)
File No. 024-10691
FUNDRISE FOR-SALE HOUSING EFUND – LOS ANGELES CA, LLC
SUPPLEMENT NO. 1 DATED JUNE 28, 2019
TO THE OFFERING CIRCULAR DATED MAY 10, 2019
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, 2019 and filed by us with the Securities and Exchange Commission (the “Commission”) on May 22, 2019 (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:
· | Portfolio projection updates. |
Asset Performance Projections
The following tables contain updated performance assumptions and projections for certain real estate equity assets held by us. This disclosure is in addition to previous disclosures made regarding such assets. The projected performance is based on the actual performance of each asset, as of May 31, 2019, plus the following forward-looking assumptions. All of the values in the tables below are projections and assumptions that we believe to be reasonable; however, there can be no guarantee that such results will be achieved.
Single Family Rental Portfolio Investment Assumptions
Asset Name | Number of Assets in Rental Portfolio | Projected Annual Returns | Total Projected Annual Price Appreciation | Target Leverage | Projected Expense Ratio |
Los Angeles eFund Single Family Rental Portfolio | 20* | 6.4% - 12.9% | 3.5% - 7.0% | 50% - 55% | 35.0% - 37.5% |
*Assets included in the Los Angeles eFund Single Family Rental Portfolio included the following controlled subsidiaries:
Single-Family Home Rental Controlled Subsidiaries | Location | Date of Acquisition | Approximate Purchase Price | Asset Status |
W48 | Los Angeles, CA | 8/9/17 | $553,000 | Leased |
H412 | Los Angeles, CA | 8/18/17 | $509,000 | Leased |
H41 | Los Angeles, CA | 6/22/17 | $486,000 | Leased |
416 | Los Angeles, CA | 8/10/17 | $485,000 | Leased |
413 | Los Angeles, CA | 9/12/17 | $435,000 | Leased |
511 | Los Angeles, CA | 8/1/17 | $435,000 | Leased |
291 | Los Angeles, CA | 12/13/17 | $451,000 | Leased |
463 | Los Angeles, CA | 7/7/17 | $532,000 | Leased |
J28 | Los Angeles, CA | 6/12/18 | $717,000 | Leased |
L60 | Los Angeles, CA | 8/3/18 | $794,000 | Listed for Rent |
S15 | Los Angeles, CA | 8/17/18 | $716,000 | Leased |
L602 | Los Angeles, CA | 9/11/18 | $952,000 | Leased |
E62 | Los Angeles, CA | 12/12/18 | $512,000 | Leased |
W18 | Los Angeles, CA | 12/14/18 | $512,000 | Leased |
E855 | Los Angeles, CA | 12/20/18 | $415,000 | Under Renovation |
E42 | Los Angeles, CA | 2/14/19 | $717,000 | Leased |
W41 | Los Angeles, CA | 1/11/19 | $494,000 | Leased |
S41 | Los Angeles, CA | 1/31/19 | $527,000 | Under Renovation |
G55 | Los Angeles, CA | 3/21/19* | $728,000 | Leased |
H30 | Los Angeles, CA | 2/22/19 | $651,000 | Leased |
*Date of acquisition was incorrect in the original 1-U report filed with the SEC on April 22, 2019. The correct acquisition date for the “G55 Property” was 3/21/19.
Single family rental property purchase prices, acquisition and renovation costs to rent, and rental rates are empirically based on actuals, derived from the performance of subject property units that have been purchased and leased to date. Projection ranges are based on the range of inputs provided above, and assume minimum debt service coverage ratio (DSCR) of at least 1.20 with a 30-year amortization rate and an average vacancy rate of 4.5%, projected average annual rent growth of 3% per annum, and an approximate 10 year hold period. We anticipate operating expense ratios across the LA eFund Single Family Rental Portfolio range from 35.0% to 37.5%. We expect that this percentage will decrease as we increase the number of assets in our rental portfolio and achieve economies of scale. In the conservative “base-case” projection, average annual price appreciation rates are discounted by approximately half, lowering the annual growth rates by about 50% of the 19-year Los Angeles, CA metro-wide and neighborhood-specific appreciation rates according to NeighborhoodScout as of Q4 2018. The historical appreciation rates data from NeighborhoodScout is the latest neighborhood statistics available as of May 31, 2019 from several leading government sources, including the U.S. Bureau of the Census, the U.S. Department of Justice, the National Center for Education Statistics, and the U.S. Geological Service, among others. The high-end of the projections are derived portfolio assumptions of appreciation rates from NeighborhoodScout's historical appreciation rates for the Los Angeles, CA sub-markets where the properties are located. The projected return range is primarily driven by the ranges provided varying the annual property price growth, rent increases, leverage and interest rates, operating expense ratio, and hold period. However, there can be no assurance that any of the foregoing assumptions will prove to be accurate and are provided for informational purposes only.
Single Family Home Renovation and Sale Investment Assumptions
Asset Name | Projected Return on Investment | Total Projected Holding Costs | Projected Gross Exit Price |
N/A* | N/A* | N/A* | N/A* |
*There were no assets in the LA eFund Single Family Home Renovation and Sale portfolio as of May 31, 2019.