Filed Pursuant to Rule 253(g)(2)
File No. 024-10844
FUNDRISE INCOME EREIT II, LLC
SUPPLEMENT NO. 6 DATED SEPTEMBER 11, 2019
TO THE OFFERING CIRCULAR DATED MAY 30, 2019
This document supplements, and should be read in conjunction with, the offering circular of Fundrise Income eREIT II, LLC (“we”, “our” or “us”), dated May 30, 2019 and filed by us with the Securities and Exchange Commission (the “Commission”) on June 19, 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:
| · | Asset acquisition. |
Asset Acquisition
Acquisition of Controlled Subsidiary Investment – Evergreen Park Twenty LLC
On September 5, 2019, we directly acquired ownership of a “majority-owned subsidiary”, Evergreen Park Twenty LLC (the “Evergreen Park Controlled Subsidiary”), in which we have the right to receive a preferred economic return, for a purchase price of $7,000,000, which is the initial stated value of our equity interest in the Evergreen Park Controlled Subsidiary (the “Evergreen Park Controlled Subsidiary Investment”). The Evergreen Park Controlled Subsidiary plans to use the proceeds to develop a single mid-rise multifamily property totaling approximately 195 units located at 10227 20th St. SE, Lake Stevens, WA 98258 (the “Evergreen Park Apartments Property”). $100 of the $7,000,000 commitment was funded at closing and the remaining commitment is expected to be funded in draws as construction progresses.
The Evergreen Park Controlled Subsidiary is managed by Evergreen Housing Development Group (“Evergreen”). Evergreen was founded in 2005, with a current portfolio, pipeline, and track record of 3,200 units valued in excess of $585 million. Evergreen seeks to combine thoughtful design, construction expertise and a comprehensive approach to the development process. The group concentrates on 3 and 4 story wood frame multi-family housing in land constrained and underserved suburban Pacific Northwest locations.
Pursuant to the agreements governing the Evergreen Park Controlled Subsidiary Investment (the “Evergreen Park Operative Agreements”), our consent is required for all major decisions regarding the Evergreen Park Property. In addition, we are entitled to receive a preferred economic return of 11.75% on our Evergreen Park Controlled Subsidiary Investment, all of which will accrue until redemption. In addition, an affiliate of our Manager earned an origination fee of approximately 1.5% of the Evergreen Park Controlled Subsidiary Investment.
The Evergreen Park Controlled Subsidiary is expected to redeem our Evergreen Park Controlled Subsidiary Investment by September 1, 2029 (the “Evergreen Park Redemption Date”). In the event that the Evergreen Park Controlled Subsidiary Investment is not redeemed by the Evergreen Park Redemption Date, pursuant to the Evergreen Park Operative Agreements, we have the right, in our discretion, to force the sale of the Evergreen Park Property outright. The Evergreen Park Controlled Subsidiary may redeem our Evergreen Park Controlled Subsidiary Investment in whole or in part without penalty during the term of the Evergreen Park Controlled Subsidiary Investment.
Simultaneous with the closing of the Evergreen Park Controlled Subsidiary Investment, senior financing was provided through a $26,175,000 secured loan from Washington Federal Bank (the “Evergreen Park Senior Loan”). The Evergreen Park Senior Loan features a 10-year term, with 2-years interest-only and an interest rate of LIBOR plus 2.50%, declining to LIBOR plus 2.25% once the Evergreen Park Apartments Property has achieved a debt service coverage ratio of 1.15x. Aggregate with the Evergreen Park Senior Loan, the Evergreen Park Controlled Subsidiary Investments features an LTC of approximately 79.7% based on the construction budget. LTC, or loan-to-cost ratio, is the amount of the Evergreen Park Senior Loan plus the amount of the Evergreen Park Controlled Subsidiary Investment, divided by the total anticipated cost to construct the Evergreen Park Apartments. We typically use LTC to define leverage for properties that are under development.
The Evergreen Park Apartments Property, once completed, is expected to feature 6 three-story buildings, consisting of one, two, and three bedroom residential units. It is also expected to feature amenities such as a state of the art workout facility, barbeque area, patio, and pool. Interiors are expected to feature best-in-market finishes and include 9’ ceilings, designer laminate countertops, vinyl hardwood plank flooring, afull complement of white kitchen appliances, which is consistent with the market, electric vehicle charging stations, and indoor/outdoor bicycle storage.
The Evergreen Park Apartments Property is located within the City of Lake Stevens’s annexation of the 20th Street Subarea, which is an 850 acre plot of prime located, under-developed, Snohomish County Land. The 2011 annexation created 40 acres of multifamily land with mixed-use zoning and one of the first opportunities at dense multifamily development in Lake Stevens. The Evergreen Park Apartments Property is located 18 minutes away from Boeing, 14 minutes from Providence Regional Medical Center, and approximately 12 minutes from The Everett Clinic. There is a planned Costco within the 20th Street SE Subarea development, as well as several big box commercial retail pads and commercial corridors, which is expected to raise the Evergreen Park Apartments Property’s desirability for tenants.
