ArborCrowd announced in the second quarter of 2020 its exit from the Sioux Falls Multifamily Portfolio investment, marking the third investment on its platform to be completed while achieving outsized returns.
The exit from the portfolio, which comprised of 18 properties and 707 units in Sioux Falls, S.D., generated a net internal rate of return (IRR) of over 16%, exceeding the initially targeted net IRR of 12% – 14%. ArborCrowd successfully exited the deal in 13 months, ahead of the initially projected three- to five-year hold period.
ArborCrowd’s leadership made the decision to exit the investment based on a number of factors, one being that the sponsor sought to make changes to the business plan that could have materially impacted the initial projected returns and investment horizon.
It was determined that these changes were too much of a deviation from the original business plan, and ArborCrowd’s leadership was able to negotiate an exit from the investment that generated strong profits for investors in a challenging market environment.
“What sets ArborCrowd apart from our competitors is not only our approach to sourcing and underwriting investment opportunities, but also our commitment to active asset management and our unique ability to identify and mitigate potential risks,” said Adam Kaufman, Co-Founder and COO of ArborCrowd. “Our longstanding philosophy of responsible investing doesn’t stop when we commit capital to a deal – we closely monitor and continually evaluate each investment throughout its lifecycle. This approach is particularly important as we enter an economic and real estate downcycle.”
The two investments that were realized ahead of the exit from the Sioux Falls Multifamily Portfolio were the Southern States Multifamily Portfolio and Quarry Station Apartments in 2018 and 2019, respectively.