Multifamily Price Surpasses Original Return Target
The Quarry Station Apartments’ $49.35 million sale price generated an internal rate of return of 20.31%, surpassing the original return target of 16% to 19% and in less than the originally projected two-year period.
SAN ANTONIO—ArborCrowd’s Quarry Station Apartments investment has been realized in less than two years, providing investors with returns higher than initial projections. The property’s $49.35 million sale price generated an internal rate of return of 20.31%, surpassing the original return target of 16% to 19%.
ArborCrowd is the first crowdfunding platform launched by a real estate institution.
The sale of Quarry Station, which is located downtown, represents the second ArborCrowd deal to be realized ahead of schedule and above the projected return target. The first realized investment occurred in July 2018 with the sale of the Southern States Multifamily Portfolio, which generated an IRR of more than 29% for ArborCrowd investors. Like the Southern States portfolio investment, the Quarry Station offering was well received by investors, raising $1 million of ArborCrowd’s total $3.2 million equity commitment in the first day. The outcomes of both transactions reflect the quality of ArborCrowd’s rigorous underwriting standards.
“Since inception, our focus has always been on bringing quality deals to the crowd,” said ArborCrowd co-founder and COO Adam Kaufman. “This is a responsibility we take incredibly seriously, and it’s why we employ such a deliberate vetting and underwriting process. We prioritize strong real estate fundamentals over volume of deals, which is an exception to the norm in real estate crowdfunding. This ‘real estate first’ approach differentiates us, and the solid returns we’ve delivered to our investors validate our business model.”
Quarry Station’s value was enhanced through a comprehensive capital improvement program and implementation of institutional property management. Changes included a rebranding of the asset and interior and exterior renovations. These actions created a desirable asset that capitalized on the property’s location in the popular Alamo Heights neighborhood.
“Property improvements included upgrades on roughly 160 units and gut renovations of approximately 35 units were completed,” Kaufman tells GlobeSt.com. “Individual unit upgrades included the installation of granite countertops, new fixtures, luxury lighting, new cabinetry and stainless steel appliances. Additionally, property-wide improvements included a new clubhouse, upgraded fitness center, new security gates and foundation repairs.”
In San Antonio, effective rents rose 3.7% since last year, above the national average of 3.2%, according to a report by Berkadia. Despite this rise, San Antonio’s annual share of wallet remains lower than the national average, still keeping San Antonio affordable among major markets. Developers have been tapering deliveries to achieve supply/demand parity, with rents elevating in a market that has a stable occupancy rate of 93.7%, says Berkadia.