Commercial real estate crowdfunding platform ArborCrowd announced on Thursday the launch of its 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. According to ArborCrowd, the properties exhibit strong upside potential due to Sioux Falls’ sound multifamily real estate fundamentals and notable lack of professionally managed workforce housing product.
ArborCrowd then reported that 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. It was also revealed:
“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.”
While sharing more details about the offering, ArborCrowd Co-Founder and Managing Director, Adam Kaufman, stated:
“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. 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.”
ArborCrowd went on to add that the investment has a targeted internal rate of return (IRR) of 12 to 14 percent over a three- to a five-year hold period. Tzadik has notably budgeted $5.2 million to perform a comprehensive capital improvement plan that will include upgrades to all renovated units, common areas and public spaces
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