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
October 14, 2021
(Date of Report (Date of earliest event reported))
FUNDRISE BALANCED EREIT II, LLC
(Exact name of registrant as specified in its charter)
| Delaware | 84-4465115 |
| | |
| (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
Tarpon Springs Controlled Subsidiary - Tarpon Springs, FL
On October 14, 2021, we directly acquired ownership of a “majority-owned subsidiary” (the “Tarpon Springs Controlled Subsidiary”) for an initial contribution of approximately $3,030,000, which is the initial stated value of our equity interest in a new investment round in the Tarpon Springs Controlled Subsidiary (the “Tarpon Springs Balanced II eREIT Investment”). Fundrise Real Estate Interval Fund, LLC acquired ownership of the remaining equity interest in the new investment round in the Tarpon Springs Controlled Subsidiary, for an initial contribution of approximately $27,270,000 (the “Tarpon Springs Interval Fund Investment” and, together with the Tarpon Springs Balanced II eREIT Investment, the “Tarpon Springs Investment”). The Tarpon Springs Controlled Subsidiary used the proceeds of the Tarpon Springs Investment to acquire a stabilized multifamily property totaling 236 units located at 1185 S Pinellas Ave, Tarpon Springs, FL 34689 (the “Tarpon Springs Property”). The Tarpon Springs Balanced II eREIT Investment was funded with proceeds from our Offering, and the closing of the Tarpon Springs Investment and the Tarpon Springs Property occurred concurrently.
The Tarpon Springs Controlled Subsidiary is managed by us.
Pursuant to the agreements governing the Tarpon Springs Balanced II eREIT Investment, we have authority for the management of the Tarpon Springs Controlled Subsidiary, including the Tarpon Springs Property. In addition, an affiliate of our sponsor earned an acquisition fee of approximately 1.0% of the total purchase price for the Tarpon Springs Property, paid directly by the Tarpon Springs Controlled Subsidiary.
The total purchase price for the Tarpon Springs Property was approximately $65,650,000, an average of approximately $278,000 per unit. We anticipate additional hard costs of approximately $56,000 for rebranding and miscellaneous minor capital expenditures, as well as additional soft costs and financing costs of approximately $1,594,000 bringing the total projected project cost for the Tarpon Springs Property to approximately $67,300,000. To finance the acquisition of the Tarpon Springs Property, a $37,000,000 senior loan with a one (1) year term and an interest rate of LIBOR + 1.65% with one (1) year interest only was secured.
The Tarpon Springs Property was built in 2020 and has a mix of unit types and floorplans, ranging from a 718 square foot 1-bedroom to 1,309 square foot 3-bedroom/2-bath apartments. Professional third party property management will be installed to manage the Tarpon Springs Property.
The following table contains underwriting assumptions for the Tarpon Springs 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 | Stabilized
Economic
Vacancy | Average
Annual Rent
Growth | Average
Annual
Expense
Growth | Exit Cap
Rate | Hold Period |
Tarpon
Springs
Property | 5.50% | 2.85% | 2.48% | 4.50% | 10 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 Balanced eREIT II, 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 BALANCED EREIT II, LLC |
| | | |
| | By: | Fundrise Advisors, LLC |
| | Its: | Manager |
| | | |
| | By: | /s/ Bjorn J. Hall |
| | Name: | Bjorn J. Hall |
| | Title: | General Counsel |
Date: October 19, 2021
