DiversyFund in 2026: One REIT Winding Up on $87,920 of Cash, One Worth $4.12 on a $10 Share

Why this is worth writing down

DiversyFund stopped being a news story a while ago. The SEC matter is four years old, the coverage moved on, and the company's investors were left with the hardest kind of uncertainty, which is the quiet kind.

But the filings never stopped. Regulation A issuers must file an audited annual report every year, and DiversyFund's arrived on April 27 and May 1, 2026. They are free to read, they are audited, and nobody appears to have gone through them. This article does exactly one thing: it reports what they say.

Our DiversyFund review covers the history and the enforcement action. This is the current financial state.

September 30, 2026: Growth REIT II pushes its end date to December 31, 2027

On September 30, 2026, DF Growth REIT II filed a Form 1-U (accession 0001213900-26-104852) under "Item 9. Other Events", attaching a letter sent to investors the same day. The operative sentence: "the Manager has determined that it is in the best interests of the Fund and its members to extend Fund II's dissolution date. The new dissolution date is December 31, 2027."

What the letter says, and what a holder should take from it:

• This looks like the last extension the manager can grant. The letter describes the fund as "initially set up with a five-year term and the Manager's discretion to extend up to two additional years." The FY2025 annual report had already recorded one one-year extension, to December 31, 2026; this is the second. On the letter's own description, the end of 2027 is the outer limit of the extensions, after which REIT II would enter a winding-up period as REIT I did at the end of 2025.
• The sale window is longer than the extension. The manager says it will "monitor property performance and local market cap rates, with the goal of selling each asset over the next 12–36 months." Counted from the date of the letter, that runs from roughly September 2027 to September 2029 (our arithmetic), so some sales could fall well after the new dissolution date, inside a winding-up period that the letter says "can last up to several months or years."
• The reason given is price, not distress. The letter says the extension is "not to postpone distributions, but to attempt to maximize investor value by selling our multifamily properties in what we expect to be a more favorable market environment", and that "all acquisitions and renovations are complete, and most assets are in the Stabilization Stage."
• The illustration rests on cap rates falling. The letter's worked example values $1,000,000 of net operating income at $16.7M at a 6% cap rate and $20.0M at 5%, "a 20% increase in value purely due to market conditions", and it labels this "for illustration purposes only". The same paragraph expects cap rates "may stabilize over the next 12–24 months as interest rates stabilize or increase slightly." A holder should read the example as the manager's hope for the exit market, not as a figure for this fund.
• What the letter does not contain: no current value per share, no property-by-property status, no estimate of proceeds and no date for a first distribution. The latest figures remain the June 1-SA below: $177 of cash at REIT II itself, no revenue at the fund level in the half (its capital sits in equity stakes in five projects), and equity of $4.11 per $10 share.

What the June 2026 reports added (filed September 28, 2026)

Both REITs filed their semiannual reports on Form 1-SA on September 28, 2026: Growth REIT I under accession 0001213900-26-104093, Growth REIT II under 0001213900-26-104096. They are unaudited and, unlike the annual reports, contain no notes to the financial statements, so several movements below arrive without any explanation from the company.

Growth REIT I. The net loss for the six months was $1,844,365, against $2,384,559 in the first half of 2025; rental revenue edged up from $3,673,484 to $3,765,100. No property was sold in the half: the cash-flow line for proceeds from sales of real estate is blank, against $5,998,736 in the same period of 2025. The report says "No new real estate investments were acquired by the Company since June 30, 2026, other than additional investments into assets in the Company's portfolio."

Two lines deserve attention. First, "Rental security deposits and other liabilities" went from $73,903 to $2,858,436, an increase of $2,784,533 (our arithmetic) in six months, and the report says nothing about what it is. Second, interest payable is $1,207,504 at both dates, to the dollar: the line we suggested watching did not move at all, and with no notes the report does not say whether any interest was paid or accrued against it in the half. On distributions the report does not agree with itself: the statement of members' equity shows no distributions declared on Class A shares in the half, while the cash-flow statement shows $249,543 of "Payments made to investors for dividends", the same amount as the half's "other revenues" line. The filing does not reconcile the two.

What the report does not say is as important for a holder. The FY2025 annual report stated "The Company is now in its winding up period." The 1-SA neither repeats nor withdraws that: it contains no reference to winding up, liquidation, a timetable, a liquidating distribution or a redemption programme. It carries no going-concern language either.

Growth REIT II. Cash fell from $3,024 to $177. "The Company received no revenue during the period"; the net loss was $4,843. Equity of $4,666,179 across the 1,134,678 shares shown in the statement of members' equity is $4.11 per $10 share (our arithmetic; the balance-sheet caption gives 1,108,312 shares, which would make it $4.21). No distribution was declared, and "No new real estate investments were acquired or sold by the Company since June 30, 2026." The report describes the suspended offering as one "whereby we sought to raise $75,000,000".

Growth REIT I: the wind-down is now official

The most important sentence in the whole filing is a plain one: "The Company is now in its winding up period."

The LLC agreement provided a five-year term with up to two one-year extensions. The manager used both, carrying the term to December 31, 2025. That date has passed. What follows, in the filing's own words, is that the manager "will seek to generate liquidity for investors and realize any gains in the value of our investments by selling or refinancing our properties and returning capital to investors on an orderly basis over the approximate 12 to 24+ month winding up period."

Read literally, that puts a return of capital somewhere between the end of 2026 and the end of 2027, with the "+" doing real work. The stated goal is "to preserve capital and maximize Investors' potential profits by waiting for local market conditions to reach favorable pricing levels," and the filing is careful to add that "sales will be subject to prevailing market conditions and there is no guarantee" of success.

The balance sheet the wind-down starts from

Three lines deserve attention, and they do not all point the same way.

Rental revenue grew 27.9%, from $8.21M to $10.50M, and the annual loss narrowed by roughly $1.9M. The underlying properties are producing more rent than they were, which is a genuinely positive operational fact and should be said plainly.

Cash fell 95.5%, from $1,953,984 to $87,920. A fund entering a wind-down with under $88,000 of cash against a $91M balance sheet has very little margin for a slow sale, an unexpected capital expenditure, or a lender negotiation that takes longer than planned.

Interest payable rose from $11,235 to $1,207,504, roughly 107 times, while notes payable grew by $3.16M. Interest payable is interest that has been incurred but not yet paid. A jump of that size on a portfolio the manager describes as having "experienced operating deficits as a result of rising interest expenses stemming from the Federal Reserve Bank's multiple interest rate increases in 2022, 2023 and 2024" is the clearest single indicator in the document of how tight the position is.

The fee that runs during a liquidation

Worth knowing before the sales start: the filing's own compensation table shows that in the liquidation stage the sponsor is entitled to a disposition fee of 1% of the property sale price, plus a "Promoted Interest" in distributions from capital transactions. There is nothing unusual or improper about a disposition fee. But it does mean the sponsor earns on each sale during the wind-down, whether or not the sale returns capital to investors, and an investor reading a sale announcement should know that.

Growth REIT II: a $10 share carried at $4.12

Growth REIT II is a smaller and structurally different vehicle. It is essentially unleveraged: total liabilities of $130,443 against $4,801,465 of assets. There is no debt wall here.

What there is instead is a straightforward decline in carrying value.

The arithmetic closes exactly: equity of $5,436,793 at the end of 2024 minus the $765,771 net loss gives $4,671,022, which is assets minus liabilities to the dollar. You can check it yourself in the statement of members' equity.

What is driving the loss matters. Operating expenses are tiny, $71,797 of general and administrative costs for the year, and fund management fees of $0. Almost the entire loss is an unrealized investment loss of $761,331, which is a writedown in the carrying value of the projects rather than cash going out of the door. That is a meaningfully different thing from a fund burning money on overheads, and anyone reading "net loss" as "spent your money" would be misreading it.

The FY2025 annual report recorded the term of REIT II as extended by one year to December 31, 2026, with the same 12 to 24 month wind-down language to follow. On September 30, 2026 the manager extended it again, to December 31, 2027 (see the section at the top of this page), so REIT II is now roughly two years behind REIT I on the same path.

The third REIT withdrew its later offering

On February 12, 2026, Value Add Growth REIT IV filed a Form 1-A-W to withdraw the offering statement it had first filed a year earlier, on February 6, 2025. The stated reason is that "REIT IV has determined it is not in its best interests to continue with this Offering Statement," and the filing confirms that none of the securities that are the subject of that offering statement have been sold. That is not the whole REIT IV story: its earlier offering, qualified September 27, 2023 and terminated December 11, 2024, had raised $2,111,519 as of June 30, 2026 (with $65,250 redeemed in a rescission offer), per its Form 1-SA filed September 28, 2026.

Nothing about a withdrawal is inherently alarming. Issuers pull offerings for many ordinary reasons. But taken with the other two filings it completes the picture: the flagship fund is winding up, the second fund is carried at 41% of contributed capital with no distributions declared since 2022, and the newest fund was withdrawn without raising a dollar.

On the SEC matter, in the company's own words

Because this comes up in every discussion of DiversyFund, here is how Growth REIT II's FY2025 filing itself describes it, and I am quoting the company's characterisation rather than endorsing it.

The filing states the company was a respondent in an SEC administrative proceeding; that the SEC began an investigation in November 2021 and initiated a related enforcement action in February 2022 (the SEC's own order is dated March 16, 2022: Release No. 33-11040, File No. 3-20801, an order temporarily suspending REIT II's Regulation A exemption, so the filing's month does not match the order); and that the SEC alleged failures to comply with "two technical requirements of Regulation A", specifically not beginning the offering within two calendar days of qualification, and using an offering circular supplement rather than a post-qualification amendment to raise the maximum offering from $50 million to $75 million, along with inaccurate statements on the company's website.

The filing then asserts: "None of the SEC's complaints alleged any intentional wrongdoing or financial or accounting violations, and accurate information about the offering was available to investors at all times."

That is the issuer's framing, in its own audited annual report. It is also the reason REIT II's offering was suspended after raising $11.3M; the company's September 2026 report describes it as an offering "whereby we sought to raise $75,000,000". (Correction, September 29, 2026: an earlier version of this page gave the target as $50M.)

The shareholder suit is over. Both September 2026 semiannual reports add that the putative class action brought in December 2022 by plaintiffs against both REITs, DiversyFund, Inc. and its principals Craig Cecilio and Alan Lewis ended on March 20, 2026: "the parties entered into a stipulation of dismissal and filed a joint motion to dismiss the action with prejudice", each side bearing its own fees; "No class was ever certified in connection with the action." The reports do not mention that, on November 10, 2025, after the defendants' law firm withdrew and no new counsel appeared, the court struck the defendants' answer and the clerk entered default against all five defendants (court docket, entries 72 and 73). The reports do not say whether any payment was made. For a holder, the practical meaning is that there is no pending class action to wait for.

What an investor can actually do with this

1. Read your own fund's filing. Growth REIT I is CIK 1750695, Growth REIT II is CIK 1824154, on SEC EDGAR. They are different vehicles with very different balance sheets, and platform-level commentary, including this article, is no substitute for the one that holds your money.
2. Expect the wind-down to take the stated time, and possibly longer. "12 to 24+ months" from December 31, 2025 means realistically 2027 for REIT I, and the manager has explicitly said sales depend on market conditions.
3. Book value is not a redemption price. $4.12 per share on REIT II is a carrying value in an audited statement, not an amount anyone is offering you. There is no redemption programme and no secondary market.
4. Watch the interest payable line next year. (September 29: it was $1,207,504 at June 30, 2026, identical to December; the line that moved instead was "rental security deposits and other liabilities", up to $2,858,436 with no explanation.) On REIT I it is the number that will tell you soonest whether the debt position is stabilising or tightening, faster than the loss line will.
5. If you are choosing where to put new money, judge the exit first. That is the whole lesson of this category in 2026, and we rank platforms on exactly that axis in Cardone Capital Alternatives and the liquidity ranking.

Sources

• DF Growth REIT II, LLC, Form 1-U with letter to investors, filed September 30, 2026 (CIK 1824154): dissolution date extended to December 31, 2027
• DF Growth REIT, LLC, Form 1-K for FY2025, filed May 1, 2026 (CIK 1750695)
• DF Growth REIT II, LLC, Form 1-K for FY2025, filed April 27, 2026 (CIK 1824154)
• Value Add Growth REIT IV, LLC, Form 1-A-W, offering withdrawal filed February 12, 2026 (CIK 1949029)
• DF Growth REIT II, LLC, Form 1-K for FY2023, filed July 11, 2024 (CIK 1824154), the source for the $291,160 of distributions declared in 2022

Internal links: DiversyFund Review · Cardone Capital Alternatives · What Landa Investors Actually Got Back · Real Estate Crowdfunding Liquidity 2026 · Real Estate Crowdfunding Failures · Red Flags in SEC Filings

Last updated: October 1, 2026. Every figure is transcribed from the SEC filings linked above and the percentages and per-share values are our arithmetic, shown so they can be checked. Descriptions of the SEC matter are the issuer's own characterisation as recorded in its audited annual report, not our assessment and not findings of fact. We have no position in any DiversyFund vehicle, no relationship with the company, and earn nothing from this page. This is analysis, not investment advice.