Uniondale, N.Y.—ArborCrowd, an online commercial real estate company, is venturing beyond its home market of greater New York to offer accredited investors a piece of a multifamily portfolio in the southern United States. Known as the Southern States Multifamily Portfolio, the offering features three multifamily properties in Alabama and Mississippi.
Varden Capital Properties (VCP), the sponsor, acquired the $24.4 million Southern States Multifamily Portfolio in November 2016 as a value-add repositioning. ArborCrowd investors have the opportunity to own some of the $2 million equity stake in the portfolio, which has a targeted 17 percent to 20 percent IRR and an investment hold period of two to three years.
The Southern States Portfolio, acquired concurrently by the sponsor, consists of 607 rental units across three properties located in Huntsville, Ala., and Robinsonville, Miss. According to ArborCrowd, combining the assets into a single portfolio may produce several key benefits for investors.
For one thing, investing in more than one market reduces potential risk. Also, by acquiring the properties together, VCP is able to be competitive on rental rates while making the necessary improvements to increase occupancy at the portfolio. Early cash distributions for investors are expected because of the potential to quickly reposition the assets.
VCP specializes in multifamily acquisitions in the southern and southeastern United States. The company currently owns 40 properties, has sold more than 42 properties, and has acquired 82 apartments valued at about $1 billion.
Huntsville is the largest city in northern Alabama, and from 2005 to 2015, employment in the metro area rose by a net of 21,000 jobs, a 10.4 percent increase. The average asking rent for apartments in metro Huntsville reached $695 in 2016, a 10 percent increase from 2012, according to commercial real estate research firm Reis.
Legalization of dockside gaming in 1990 brought dramatic economic change for Robinsonville, which is about 30 miles southwest of Memphis, and on the Mississippi River. The city’s Tunica casinos and resorts employ about 5,500 people and generated revenue that exceeded $649 million in 2015. From 2000 to 2016, the population within five miles of the property increased to nearly 63 percent.