NEW YORK, Feb. 22, 2018 /PRNewswire/ -- ArborCrowd, an online commercial real estate crowdfunding company, announced the opportunity for investors to own equity interest in a multifamily property with tremendous upside potential. Tower on Ryan Park (the Property) is a 141-unit, high-rise property located in downtown Mobile, AL.
The total capitalization of the deal is $12.7 million, and ArborCrowd is raising $2.6 million of equity. The Property has a targeted 16 percent to 18 percent Internal Rate of Return (IRR) and a projected hold period of three to five years.
The business plan is to implement a value-add strategy to reposition Tower on Ryan Park from an underperforming 1950's vintage-style property to a modern, desirable and quality apartment complex.
ArborCrowd is extremely selective in choosing deals. The core of ArborCrowd's business model is offering investors only one deal at a time. This ensures the company's seasoned team sources institutional-quality investments.
"ArborCrowd is a company focused first and foremost on the quality of the real estate," said Adam Kaufman, Co-founder and Managing Director, ArborCrowd. "We only present institutional-quality deals with strong real estate fundamentals. These are the types of deals sought after by national and international investment firms – but we're able to offer them to people who would not typically have access to opportunities of this caliber."
ArborCrowd Featured Sponsor
The deal sponsor is controlled by Varden Capital Properties, LLC (VCP), led by Trace McCreary. Tower on Ryan Park is VCP's second offering with ArborCrowd.
VCP's first transaction with ArborCrowd, the Southern States Multifamily Portfolio, closed in 2017 and was oversubscribed in five days. VCP delivered an early return of capital to ArborCrowd investors when it sold one of the three properties in the portfolio during the first year of the investment – returning approximately 60 percent of investors' initial equity in a year's time. This occurred while still achieving the same exit price as projected in the second year of the investment.
McCreary is a seasoned owner and operator, who, through VCP, has acquired more than 90 apartment complexes with over 18,500 units – all in the southeast.
Tower on Ryan Park Highlights
The sponsor intends to turn the property, an underperforming Class B- building, into a Class B+ apartment complex.
To execute on this strategy, the sponsor has budgeted $4.4 million to gut renovate every apartment and completely transform the Property's exterior and common areas. The sponsor anticipates that this capital expenditure will generate an average rental premium of over $165 per unit per month – which could achieve a significant return on investment. The highlights of the investment opportunity include:
- About $2.25 million ($14,500/unit) will be spent on gut renovating 141 apartments, repurposing ground floor space into 12 new studio units and converting rooftop space into a penthouse apartment.
- Over $2 million will be spent to improve the Property's common areas, exteriors, and public streetscapes.
- The sponsor anticipates this work will be completed in under 24 months.
Low Cost Basis
- The property was acquired at a basis on par with competitive sales, but located downtown, which is a better location.
- The low all-in cost basis allows the sponsor to be more competitive on rent than other nearby properties that cost more to acquire and build.
- The sponsor has identified further potential upside making use of certain local, state and federal tax incentives and subsidy programs, which can offset certain renovation costs.
- The tax incentives and subsidy programs have extensive limitations and requirements, but if applied for and maximum benefits are obtained, IRRs to investors could potentially exceed 20 percent.
ArborCrowd's leadership team has established long-term relationships with a network of institutional real estate sponsors. This is one key factor for how ArborCrowd is able to source quality deals for investors.
ArborCrowd's investment model is unlike other crowdfunding platforms – the quality of the real estate is at the core of the business. Other models pool investors' money into funds that are blindly allocated to different assets. ArborCrowd created a better way to invest by providing investors the transparency and knowledge to choose what deals their money goes into.
To learn more about Tower at Ryan Park and access the full business plan and private placement memorandum — including market reports, property details, risks, financial projections and more, go to: www.arborcrowd.com/offerings.
ArborCrowd breaks down the barrier of entry into real estate investing. By allowing people to co-invest with successful real estate deal-makers in the industry, ArborCrowd enables millions of investors to maximize their financial returns. At every step of the deal process, ArborCrowd stays alongside investors and takes the weight of managing properties off their shoulders.
ArborCrowd is part of the Arbor family of companies that includes Arbor Realty Trust, Arbor Commercial Mortgage and AMAC.
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