CPE’s Stars to Watch 2019: Ahead of the Crowd
- Jun 25, 2019
Adam Kaufman, 28
Co-Founder & Managing Director, ArborCrowd
Adam Kaufman leads ArborCrowd, the first crowdfunding platform launched by a real estate institution. The company’s distinctive model gives investors the opportunity to mull each deal before committing capital, unlike many platforms that first raise large amounts of money based on a generic investing strategy before homing in on specific properties.
Founded in early 2016, ArborCrowd has fully subscribed seven multifamily value-add projects totaling 1,790 apartments by raising some $22 million in equity. Among those projects are the 154-unit Tower on Ryan Park in Mobile, Ala., and the 200-unit Cove West Hartford in West Hartford, Conn. To date, the company’s investors have financed deals that have a total capitalization of roughly $220 million.
Kaufman launched the business in partnership with his father, Ivan Kaufman, who leads the group of real estate firms that includes Arbor Realty Trust. The young executive describes ArborCrowd as the natural convergence of his family background, which exposed him to real estate, and the rise of crowdfunding in 2012 and 2013.
“Ivan and I understood that there was a new class of investors in the market that we could open up our business to include,” said Kaufman. “The deals that we were seeing come across our desk from the debt side, and the relationships that we helped garner over a very long period of time—we were able to open up that exclusive opportunity to the rest of the market for the first time.”
Unlike the Regulation A+ model under which real estate crowdfunding platforms typically operate, ArborCrowd’s 506(c) model allows the company to market pre-identified investment opportunities to accredited investors on a deal-by-deal basis. The company commits capital to a deal before presenting the offering to investors, which ensures that the transaction closes.
ArborCrowd prides itself on being highly selective and thorough in the underwriting process. Last year, the Southern States Multifamily Portfolio became ArborCrowd’s first deal to complete its full investment cycle. Realized in just 15 months, well ahead of schedule, the portfolio generated an internal rate of return for investors of more than 29 percent, far exceeding the company’s target.
Kaufman graduated from the University of Pennsylvania and worked on the staff of the Senate Foreign Relations Committee before joining an advertising technology firm. The entrepreneur credits his father’s example for the confidence and tenacity that were required to get ArborCrowd up and running. From the age of three, Kaufman would often sit under his father’s desk while Arbor’s founder worked. “Seeing firsthand how resourceful and creative he was, and the risk that he was willing to take to start his first company at 24 years old” had a decisive impact, Kaufman noted.
Why He Got into Real Estate: “I’ve been around real estate my entire life. It was very common at the dinner table growing up. Essentially, one could say it was in my blood.”