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Built in 2022, Harvest at Marmalade (the “Asset”) is a 252-unit, soon to be completed multifamily asset, with an additional 4.7k sf of retail space, located in the Marmalade District of Downtown Salt Lake City, Utah. Cadre is partnering with Ethos Investments (“Sponsor”), to acquire the Asset at Certificate of Occupancy. We were attracted by the potential to purchase a brand new, high-quality asset with upside through accelerated lease-up in the high-growth Salt Lake City market, alongside an experienced partner with local and asset-level expertise.
Vibrant Location, Adjacent to the Urban Core
New Construction with Upside Potential
Experienced, Minority-Owned Sponsor
Driven by its business-friendly environment, diverse economy, and strong growth engines in technology, financial services, and biotech/medical industries, Salt Lake City has been a nation leader in job and population growth.
Our business plan calls for leasing-up Harvest at Marmalade, which we expect to be completed by Q3 2023. Post-pandemic, the Downtown SLC market absorbed 140% of new supply in just the past 12 months and there are few available units currently in the market, giving us confidence in the underwritten lease-up pace. The Charli, the most recent delivery in the comp set, is projected to stabilize 7 months after opening.
We are financing the acquisition of the Asset with an $87.3mm loan, with an additional $3mm of future funding proceeds available. The loan is a 4 years, interest only with a rate of SOFR+285 bps.
The Sponsor and its affiliates are committing approximately $1.9mm (5%) of total equity to the transaction. The remaining share, approximately $40.3mm (95%), will be roughly evenly split between Cadre’s investor partnerships (including Cadre Direct Access Fund) and a strategic equity investor.
We have committed to backstop the transaction; Cadre’s senior partners and employees invest personally in this transaction through the Cadre Direct Access Fund.
We are acquiring Harvest at Marmalade in Q2 2022 (“Asset Close”). We anticipate holding an initial investor close in Q2 2022 (“Initial Close”).
Ethos Investments is a vertically integrated operating partner with in-house acquisitions, asset management and development capabilities. Based in Los Angeles and founded in 2021 by the senior management of Watt Investment Partners (“WIP”), the founders of Ethos are responsible for the acquisition and capitalization of $850mm in transaction volume across 14 investments, including the development of more than 1.1k units and acquisition and rehab of over 850 units.
Founders Jennifer McElyea and Adam Siegman have been partners for eight years. Ethos has deep relationships with public housing agencies as well as state and local housing departments. Ethos Investments is minority and woman-owned by Jennifer McElyea, Founder and Managing Partner of the company. Partnering with Ethos supports Cadre’s diversity and inclusion goals, which aim to increase the representation of underrepresented minorities across all aspects of our business.
Previous investment partners include several well known commercial real estate institutional investors and private equity funds. The founders of Ethos have realized nine investments generating a weighted average deal level IRR of 33%.
Please see the Sponsor Overview section of the Investment Memo for additional detail.
The primary risks include: lease-up, exit price, and market supply dynamics. We believe these are mitigated by (i) strong early demand from renters; (ii) conservative exit assumptions; and (iii) high absorption rates in the local market.
Please reference the Investment Memo for Sensitivity Analysis, as well as additional risk factors.
Investors who commit or fund after the Initial Close (defined above) and after the date that Cadre closes on the underlying Asset will be subject to contribution interest calculated at a 6% annual rate from the Initial Close to the date of the subsequent investor close. The contribution interest is paid to a Cadre affiliate that funds remaining equity between the date Cadre closes on the underlying Asset and subsequent investor closings. Any such cost will be deducted from the investor’s initial distribution(s).Regardless of when they commit or fund, all investors are entitled to their share of Asset cash flows (if any) from the Initial Close onward. More details can be found under "Subsequent Closings" in the "Summary of Principal Terms of the Investor Partnership" of the Final Investment Memo.
Cadre charges investors the following:
3.5% commitment fee on each investor’s capital commitment;1.5% annual asset management fee and 0.5% annual administration fee on the fair value of the applicable Cadre fund’s investment in the joint venture. Refer to Section 8.7 of the Partnership Agreement for a determination of “fair value”
Other deal fees are charged by the LLC joint venture. Investors should review the Investment Memo for complete fee disclosures and descriptions.
We intend to make regular (roughly quarterly) distributions from available cash flow once the Project is stabilized. These distributions may vary depending on each period’s cash flow and capital requirements.
Through the Cadre Secondary Market, you may have an option to offer your position for sale on our platform at a target sale price based on the net asset value (“NAV”) of the investment at that time. Investments are typically eligible to post on the Cadre Secondary Market six months after the initial investor closing. However, liquidity and pricing are not guaranteed. Prior to investing, you should assume that you may be required to hold your investment for the duration of Cadre’s hold period.See important disclosures below.
Investors will purchase an ownership interest in a Delaware limited partnership managed by Cadre. The Cadre partnership) and an affiliate of the Sponsor entered into an LLC joint venture that indirectly owns the property.
Certain non-U.S. or tax-exempt investors may alternatively opt to purchase ownership interests through a parallel blocker partnership.
The Sponsor is responsible for providing Cadre with reporting data that we use to prepare updates for the investor partnership. Investors can expect to receive the following:
Property Updates: We provide quarterly updates for each property within 45 days of quarter-end. An online summary and full downloadable report can be accessed through our Portfolio page.
Capital Balance Statements: We publish investor capital balances on our Portfolio page. We also provide quarterly downloadable statements roughly 60 days after quarter-end. All current and historical statements are available for download on our Documents page.
Tax Reporting: For U.S. taxpayers, we aim to provide annual K-1 statements by the first week of April. All current and historical statements are available for download on our Documents page.