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
May 12, 2021
(Date of Report (Date of earliest event reported))
Fundrise Balanced eREIT, LLC
(Exact name of registrant as specified in its charter)
| Delaware | 84-2015448 |
| (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)
Asset Acquisition
Acquisition of Controlled Subsidiary Investment – Alon JV LP
On May 12, 2021, we directly acquired ownership of a “majority-owned subsidiary”, Alon JV LP (the “Alon Controlled Subsidiary”), in which we have the right to receive a preferred economic return, for a purchase price of $6,100,000, which is the initial stated value of our equity interest in the Alon Controlled Subsidiary (the “Alon Controlled Subsidiary Investment”). The Alon Controlled Subsidiary used the proceeds of the Alon Controlled Subsidiary Investment to recapitalize a stabilized garden-style multifamily property totaling 306 units located at 1835 Lockhill Selma Rd San Antonio, TX 78213 (the “Alon Property”). The Alon Controlled Subsidiary Investment was funded with proceeds from our Offering.
The Alon Controlled Subsidiary is managed by American Landmark LLC (“ALA”). ALA originally closed on Alon Property in April 2019. ALA is an apartment owner and operator with over 23,000 units across the southern United States. ALA manages a diverse real estate portfolio valued in excess of $2 billion.
Pursuant to the agreements governing the Alon Controlled Subsidiary Investment (the “Alon Operative Agreements''), our consent is required for all major decisions regarding the Alon Property. In addition, pursuant to the Alon Operative Agreements we are entitled to receive an economic return of 8% on our Alon Controlled Subsidiary Investment at sale or refinancing. While the Alon Controlled Subsidiary Investment is outstanding, we will receive current payments on a monthly basis, which will be paid from operating cash flows. We will receive our pro rata share of operating cash flows based on our percentage ownership of the Alon Controlled Subsidiary. In addition, an affiliate of our sponsor earned an origination fee of 1.50% of the Alon Controlled Subsidiary Investment.
ALA assumed financing of $24,000,000 through a senior secured loan from Arbor – Fannie Mae (the “Alon Senior Loan”). The Alon Senior Loan was secured on January 31, 2017 and features a 10-year term and 3 years interest-only at a fixed rate of 4.75%. Aggregate with the Alon Senior Loan, the Alon Controlled Subsidiary Investment features a loan-to-value (“LTV”) of 68.8%. The combined LTV ratio is the amount of the Alon Senior Loan plus the amount of the Alon Controlled Subsidiary Investment, divided by the appraised value of the Alon Property. LTV is the approximate amount of the total commitment amount plus any other debt on the asset, divided by the anticipated value based on the valuation of the property. We generally use LTV for properties that are generating cash flow.
The Alon Property is a 306-unit, garden-style apartment property in San Antonio, TX. As of April 3, 2021 rent roll, the property is 92.48% occupied. In the year leading up to our acquisition, economic occupancy averaged roughly 91%. The property was constructed in 1999, and the build is of wood frame construction.
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 prospectus 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 Balanced eREIT, LLC |
| | | | |
| | By: | Fundrise Advisors, LLC |
| | Its: | Manager | |
| | | | |
| | By: | /s/ Bjorn J. Hall | |
| | Name: | Bjorn J. Hall | |
| | Title: | General Counsel | |
Date: May 18, 2021
