– Value-Add Portfolio in Sioux Falls, S.D. to Undergo Renovation Plan
and Institutional Management –
– Targeting 12% to 14% Internal Rate of Return Over a Three- to
Five-Year Hold Period –
NEW YORK–(BUSINESS WIRE)–ArborCrowd, the first crowdfunding platform launched by a real estate
institution, today announced a new offering that allows investors to
acquire equity interests in the Sioux Falls Multifamily Portfolio, a
collection of class-B apartment communities located in Sioux Falls, S.D.
The properties exhibit strong upside potential due to Sioux Falls’ sound
multifamily real estate fundamentals and notable lack of professionally
managed workforce housing product.
Affiliates of Tzadik Management, LLC led by Adam Hendry (“Tzadik”)
acquired the 18-property, 707-unit portfolio, which represents 4 percent
of the Sioux Falls multifamily market, in four simultaneous transactions
in October 2018. An ArborCrowd affiliate invested in the portfolio in
January and ArborCrowd now seeks to raise $3.2 million from investors.
The transaction’s total capitalization is approximately $50.06 million,
and Tzadik’s equity group has invested more than 75 percent of the total
equity in the deal.
The Sioux Falls metro area is supported by a strong job market and
sustained population growth – both key drivers of demand for quality
multifamily housing. Its unemployment rate is currently 2.5 percent,
well below the national rate of 4 percent. Moreover, the city’s diverse
employment base ensures that its economy is not reliant on one industry,
with the healthcare, retail, manufacturing and finance industries making
up the majority of the job market. Throughout the Great Recession, Sioux
Falls’ economy demonstrated resilience as multifamily rents and
vacancies remained steady. Additionally, when the national unemployment
rate peaked at 10 percent in October 2009, Sioux Falls’ unemployment was
just 4.7 percent.
“Sioux Falls is a particularly attractive market for us, because it is a
city with very strong fundamentals and was uniquely insulated against
the global financial crisis, yet there are investment opportunities
available that are not overpriced,” said ArborCrowd Co-Founder and
Managing Director Adam Kaufman. “The Sioux Falls multifamily market has
seen a number of class-A developments come online in recent years, but
there is a shortage of quality, professionally run workforce housing.
Significant renovations coupled with institutional property management
are expected to propel the portfolio’s rent growth, while it is still
anticipated to present a significant discount compared to class-A rents
in the area.”
The investment has a targeted internal rate of return (IRR) of 12 to 14
percent over a three- to five-year hold period. Tzadik has budgeted $5.2
million to perform a comprehensive capital improvement plan that will
include upgrades to all renovated units, common areas and public spaces.
As part of the repositioning efforts, the properties – which were
previously managed independently – will be unified under a single
managerial umbrella, creating economies of scale, a heightened level of
service, and a recognizable brand in the marketplace. These efforts are
projected to generate an average rental premium of more than $100 per
unit per month.
The Sioux Falls Multifamily Portfolio is the eighth equity offering made
by ArborCrowd since its inception. Most recently, ArborCrowd’s Cove West
Hartford deal in West Hartford, Conn., subscribed $3.55 million worth of
investments in less than two weeks, reflecting the high investor demand
for its offerings. In total, ArborCrowd has raised more than $22 million
of equity for assets with a total capitalization of roughly $220
million, comprising approximately 1,790 apartments.
To learn more about the Sioux Falls Multifamily Portfolio and access the
offering overview and private placement memorandum, which includes
market reports, property details, risks, financial pro formas and more,
please visit www.arborcrowd.com/offerings.
ArborCrowd is the first real estate crowdfunding platform launched by a
real estate institution, opening up an exclusive network to a new class
of investors. As part of The Arbor Family of Companies, which includes
Arbor Realty Trust (NYSE: ABR), a leading publicly traded commercial
mortgage real estate investment trust, ArborCrowd is backed by more than
30 years of leadership experience. ArborCrowd reviews more than 500
deals a year from its proprietary network and only chooses the ones that
survive its rigorous underwriting process. ArborCrowd commits capital to
a deal prior to launching the offering to investors. This ensures the
deal closes and allows ArborCrowd to offer investors accurate and
detailed information about the property. Additionally, ArborCrowd
chooses to present one deal at a time, so there is no guessing what
property investors will actually own.
Megan Kivlehan – 646-677-1807