Cadre Launches Cadre Direct Access Fund II to Target Real Estate Assets with Attractive Pricing and Supply Dynamics
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New Fund to Employ Primarily Value-Add Strategy Focused on Renovation, Lease-Up, and Improving Operations, Alongside Select Ground-Up Development
New York, NY – March 22, 2023 – Cadre, a leading technology-driven commercial real estate (CRE) investment manager, today announced the launch of the Cadre Direct Access Fund II (CDAF II) – the latest offering in Cadre’s suite of products that aims to provide institutions and accredited investors with access to actively managed commercial real estate assets. As price dislocations materialize in private markets, the fund will allow both institutions and individuals to invest in a diversified portfolio of assets.
Institutions have historically allocated more than 10% of their portfolio to real estate given its potential to offer attractive risk-adjusted returns, even in volatile market environments.[1] Validating this approach, a recent Cadre analysis revealed that private real estate has yielded stronger risk-adjusted returns than both stocks and bonds over the past 20 years.[2] Now, following a volatile period for traditional asset classes, individuals are expected to begin allocating to strategies like real estate historically pursued by institutions. Individual wealth invested in alternative assets is expected to rise about 12% annually over the next 10 years, according to a recent Bain & Company report.[3]
“We believe current dislocations in the market are creating attractive investment opportunities to acquire assets at a discount to recent pricing,” said Dan Rosenbloom, Chief Investment Officer at Cadre. “With our deep sourcing relationships, rigorous diligence, and active management of each asset in the fund, we are confident in our ability to construct a portfolio of high-quality investments with growth potential for our investor base.”
CDAF II will follow a similar strategy to its predecessor fund, CDAF I. It will primarily focus on value-add opportunities, purchasing assets in need of capital expenditures, improved operations, lease-up, and may include ground-up development. Cadre plans to allocate approximately 50% of the fund to multifamily assets with the remainder to be spread across industrial, hospitality, and office assets. The fund will focus primarily on mid-cap ($50 - $150 million) assets across U.S. markets with attractive growth dynamics.
CDAF II will be supported by Cadre’s high-tech/high-touch approach, which leverages decades of investment experience and proprietary technology at the firm. Cadre’s Investments team typically spends hundreds of hours executing due diligence, underwriting, and structuring for each closed transaction. The firm only closes on 2% of all opportunities it reviews each year and manages each asset throughout the hold period. To align interests with investors in CDAF II, Cadre will co-invest alongside limited partners.
“As we see macroeconomic growth slow, interest rates rise, and impending loan maturities reset values across commercial real estate, there are many opportunities for today’s investor base,” said Ryan Williams, Cadre Founder and Executive Chairman. “I launched Cadre following the Great Financial Crisis, noticing the wealth that was built among a relatively small cohort in commercial real estate at that time. As we weather another period of volatility, I am excited by the prospect of giving investors the ability to not only diversify their portfolios but also find compelling opportunities for growth.”
Cadre’s first Direct Access Fund, CDAF I, was launched in 2020 and closed to new investors in early 2022. With investments from the Harvard Management Company, MacArthur Foundation, and a partnership with the BlackRock Impact Opportunities Fund, the fund empowered individuals to invest directly alongside premier institutions. In September 2022, Cadre also announced the launch of the Cadre Horizon Fund, which provides income-oriented investors the opportunity to access a diversified portfolio of assets positioned for long-term growth. For more information on all of Cadre’s investment products, please visit cadre.com.
About Cadre
Cadre is a commercial real estate investment manager that invests alongside individuals and institutions on its tech-driven platform. As a fiduciary, Cadre has a distinct responsibility to investors. Their highly disciplined process features innovations in market selection, asset management, and rigorous due diligence. Cadre is committed to expanding access to this essential asset class, which has long contributed to legacy wealth.
- Source: Cornell Baker Program in Real Estate and Hodes Weill & Associates Institutional Real Estate Allocations Monitor (2022). ↩︎
- Source: Cadre asset allocation study (2023). Study compares risk-adjusted returns of S&P 500 Index, Bloomberg Barclays Aggregate Bond Index, and NCREIF Open-End Diversified Core Index between 12/31/2002 and 12/31/2022. Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred. ↩︎
- Source: Bain & Company Global Private Equity Report (2023). ↩︎
Disclaimer
Educational Communication
Not AdviceThe views expressed above are presented only for educational and informational purposes and are subject to change in the future. No specific securities or services are being promoted or offered herein.
Not Advice
This communication is not to be construed as investment, tax, or legal advice in relation to the relevant subject matter; investors must seek their own legal or other professional advice.
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Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance.
Risk of Loss
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Investments offered by Cadre are illiquid and there is never any guarantee that you will be able to exit your investments on the Secondary Market or at what price an exit (if any) will be achieved.
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Opportunity Zones Disclosure
Any discussion regarding “Opportunity Zones” — including the viability of recycling proceeds from a sale or buyout — is based on advice received regarding the interpretation of provisions of the Tax Cut and Jobs Act of 2017 (the “Jobs Act”) and relevant guidances, including, among other things, two sets of proposed regulations and the final regulations issued by the IRS and Treasury Department in December of 2019. A number of unanswered questions still exist and various uncertainties remain as to the interpretation of the Jobs Act and the rules related to Opportunity Zones investments. We cannot predict what impact, if any, additional guidance, including future legislation, administrative rulings, or court decisions will have and there is risk that any investment marketed as an Opportunity Zone investment will not qualify for, and investors will not realize the benefits they expect from, an Opportunity Zone investment. We also cannot guarantee any specific benefit or outcome of any investment made in reliance upon the above.
Cadre makes no representations, express or implied, regarding the accuracy or completeness of this information, and the reader accepts all risks in relying on the above information for any purpose whatsoever. Any actual transactions described herein are for illustrative purposes only and, unless otherwise stated in the presentation, are presented as of underwriting and may not be indicative of actual performance. Transactions presented may have been selected based on a number of factors such as asset type, geography, or transaction date, among others. Certain information presented or relied upon in this presentation may have been obtained from third-party sources believed to be reliable, however, we do not guarantee the accuracy, completeness or fairness of the information presented.
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