Filed Pursuant to Rule 253(g)(2)
File No. 024-11162
FUNDRISE GROWTH EREIT VII, LLC
SUPPLEMENT NO. 25 DATED DECEMBER 12, 2023
TO THE OFFERING CIRCULAR DATED DECEMBER 14, 2022
This document supplements, and should be read in conjunction with, the offering circular of Fundrise Growth eREIT VII, LLC (“we”, “our” or “us”), dated December 14, 2022 and filed by us with the Securities and Exchange Commission (the “Commission”) on December 15, 2022 (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:
| · | Our Net Asset Value (“NAV”) Per Share as of December 12, 2023; |
| · | Historical NAV Information; and |
| · | Real Estate Performance. |
Net Asset Value as of December 12, 2023
As of December 12, 2023, our net asset value (“NAV”) per common share is $9.50. This NAV per common share shall be effective until updated by us on or about December 31, 2023 (or as soon as commercially reasonable thereafter), unless updated by us prior to that time.
As described in the section titled “Valuation Policies” of our Offering Circular, our goal is to provide a reasonable estimate of the value of our shares on a periodic, ongoing basis. However, the majority of our assets consist of commercial real estate assets and, as with any commercial real estate valuation methodology, the conclusions reached by us are based on a number of judgments, assumptions and opinions about future events that may or may not prove to be correct. The use of different judgments, assumptions or opinions would likely result in different estimates of the value of our commercial real estate assets and investments. To the extent quantifiable, if a material event occurs in between quarterly updates of NAV that would cause our NAV per share to change by 5% or more from the last disclosed NAV, we will disclose the updated price and the reason for the change in an offering circular supplement filed on the SEC’s EDGAR website as promptly as reasonably practicable, and will update the NAV information provided on our website.
Our sponsor’s internal accountants and asset management team calculate our NAV per common share using a process that reflects, among other things, estimated values of each of our commercial real estate assets and investments, including related liabilities, which may be updated upon the occurrence of certain material events. For joint venture or direct equity investments, our sponsor primarily relies on the income method, such as discounted cash flow method and the direct capitalization method. Under the discounted cash flow method, our sponsor’s asset management team calculates the distributions due to the respective investment based on a property-level pro forma measured against ongoing actual performance over the projected likely-hold period. The direct capitalization method converts a single year’s estimated stabilized net operating income into a value indication by applying a market-based capitalization rate. Discount rates, market-based capitalization rates, and growth assumptions utilized in the income approach are derived from market transactions as well as other financial and industry data.
On December 7, 2023, the sponsor’s internal accountants and asset management team became aware of information derived from market transactions as well as other financial and industry data that indicated changes to key assumptions to the NAV calculation which would change the NAV per share by more than 5% from the last disclosed NAV. The following summarizes the key assumptions that were updated in the valuation methods to arrive at the value of each of our commercial real estate assets and investments:
| Valuation Technique | Unobservable Input (1) | Range | Portfolio Weighted Average | |||
| Income Approach, Direct Capitalization Method | Capitalization Rate | 4.65% - 5.50% | 5.00% |
| (1) | Represents the significant unobservable inputs used to fair value the financial instruments of the joint ventures. The fair value of such financial instruments is the largest component of the valuation of such entities as a whole. |
The following sets forth the calculation of NAV for our common shares:
BALANCE SHEETS (UNAUDITED)
| (In thousands, except share and per share amounts) | December 12, 2023 (1) | September 30, 2023 (1) | Change | |||||||||
| ASSETS | $ | 76,832 | $ | 81,008 | $ | (4,176 | ) | |||||
| LIABILITIES | $ | 3,282 | $ | 3,282 | $ | 0 | ||||||
| NET ASSETS | $ | 73,550 | $ | 77,726 | $ | (4,176 | ) | |||||
| NET ASSET VALUE PER SHARE, on 7,742,054 shares outstanding, net of offering costs | $ | 9.50 | $ | 10.04 | $ | (0.54 | ) | |||||
(1) Estimated Balance Sheets as of December 12, 2023 and September 30, 2023.
The determination of our NAV is not based on, nor intended to comply with, fair value standards under U.S. Generally Accepted Accounting Principles (“GAAP”), and our NAV may not be indicative of the price that we would receive for our assets at current market conditions. In addition, our published NAV per share may not fully reflect certain material events, to the extent that the financial impact of such events on our portfolio is not immediately quantifiable. As a result, the calculation of our NAV per share may not reflect the precise amount that might be paid for your shares in an arm’s length transaction with an unrelated third party, and any potential disparity in our NAV per share may be in favor of either shareholders who redeem their shares, or shareholders who buy new shares, or existing shareholders.
Beginning on December 12, 2023, the per share purchase price of our Common Shares will be $9.50 per share, as the per share purchase price shall equal the then-current NAV per common share. This price per share shall be effective until the next announcement of price per share by the Company, which is expected to happen within a commercially reasonable time after December 31, 2023, unless updated by us prior to that time. Redemptions of Common Shares shall be made pursuant to our redemption plan based on the then-current NAV per Common Share.
Historical NAV Information
Below is the NAV per common share, as determined in accordance with our valuation policies, for each period presented from June 30, 2021 to December 12, 2023.
| Date | NAV Per Share | |
| June 30, 2021 | $10.23 | |
| September 30, 2021 | $10.65 | |
| December 31, 2021 | $11.20 | |
| March 31, 2022 | $11.74 | |
| June 30, 2022 | $12.51 | |
| September 30, 2022 | $11.60 | |
| December 31, 2022 | $10.66 | |
| March 31, 2023 | $10.79 | |
| June 30, 2023 | $10.41 | |
| September 30, 2023 | $10.04 | |
| December 12, 2023 | $9.50 |
Real Estate Performance
The Company experienced a slight decrease in NAV driven by (among other things) macroeconomic headwinds, which resulted in slightly higher cap rates for some of the Company’s stabilized single-family rental assets where interest rate increases outpaced net operating income growth.
However, the majority of the assets continue to perform as expected and are progressing through their respective business plans. As of December, the 2023 stabilized occupancy of the build-to-rent portfolio was approximately 92% with continued rent growth.
We remain confident in the stability of the Company's portfolio and its long term return potential, even in the current macroeconomic environment.
