We asked scores of investors what they wanted from an investment; the responses weren’t all that surprising. They want wealth creation and preservation, liquidity, and yield - the last of which is of special importance of late.
Over the past few years, yields from traditional low-risk alternatives (like highly rated corporate and Treasury bonds, some municipal bonds, and CDs) are, well, “lousy” - that’s how Barron's characterized it. Five year and 10 year bond yields are below 1%, barely hovering above historic lows reached earlier this year. And, have you looked at the interest rate you’re getting in your money market account at your bank or brokerage firm? Barron’s called those returns ‘paltry.’
In the search for returns, some investors may have turned to stocks - specifically dividend paying stocks, to generate the yield they used to get from bonds and CDs. But for those investing in securities, they soon faced the reality of market volatility. The market, as measured by the Dow Jones Industrial Average, never rose or dropped more than 1,000 points in a day - not until this year. In 2020, there have been six 1,000-point swings, including three declines of more than 2,000 points and one 2,000+-point gain.
The hunt for yield may have led some investors to riskier parts of the investing world, such as Master Limited Partnerships (MLPs) and Emerging Market bonds. In some cases, such as with MLPs, which have a 7% average yield over the past 10 years, investors saw the downside of these higher risk investments; The Alerian MLP Index, the leading gauge of energy infrastructure, dropped nearly 75% from more than 300 in 2018 to below 80 earlier this year.
Savings accounts that formerly touted high-yield APY are no better in today’s environment. Savings account interest rates have significantly declined in 2020 - the national average is 0.05% and the Federal Reserve has said it expects to hold its benchmark interest rate near zero through 2022.
With rates so low, it’s no wonder investors crave a better return on cash.
We heard you. To address investors’ pressing desire of earning something more than a scant return on their cash, we’re launching Cadre Cash to offer a 3% annualized reward on investors’ cash deposits for 12 months up to the amount they are investing in Cadre real estate - Cadre’s reward is 4x higher than leading banks and 60x the national average.
How Cadre Cash Works
It’s a simple, step-by-step process to open a Cadre Cash account in order to earn 3% on your cash, and deposits in the Cadre Cash account are insured by the FDIC at our partner banks up to $750,000:
How Cadre Cash works:
- Decide how much you want to invest with Cadre.
- As part of our sign up flow, we will open a Cadre Cash account for you so you can begin earning a 3.0% annualized reward on your cash balance up to the amount you commit to invest in Cadre’s real estate products.
- Fund your real estate investments using your Cadre Cash account and deposit or withdraw from your Cadre Cash account regularly.
- To earn your maximum reward for 12 months, deposit additional cash into your account up to the amount you are investing in our real estate opportunities.
Wealth Creation and Preservation
What about those other investor needs? For years, real estate has ranked among the top wealth creators in the U.S. Real estate investments are designed to be a steady, reliable source of income. While no investment can guarantee attractive returns, real estate investments have the potential to appreciate in value over time and power long-term gains in wealth. The issue for many investors has been that access to institutional-quality commercial properties that are hand picked and managed by experienced, proven professionals has been limited to all but a select few. Cadre was created to level the playing field and provide access to these deals to all accredited investors.
Among many attributes, real estate has proven to be far less volatile than stocks and has low correlation with the public markets, meaning it can serve as a potential income-producing investment that typically doesn’t track to the ups and downs of stocks and bonds. Therefore, as a source of return and of diversification, real estate plays an important role in the composition of a well-constructed investment portfolio.
Real estate values can, of course, rise and fall through economic cycles. But some assets, such as multifamily housing, can be more recession resistant for the simple reason that people continue to need places to live and the propensity to rent, versus buy a home, can increase during a period of economic uncertainty.
Finally, investors want liquidity, the ability to tap their cash when they need it. That’s not something that real estate is known for; in fact, most real estate investments can be highly illiquid - a key reason behind us creating a groundbreaking secondary market which lends liquidity to an asset class for which it was lacking.
Cadre’s secondary market opens up on a quarterly basis. Liquidity is not guaranteed and subject to asset eligibility and buyer demand. But, in an industry known to lock up investments for years, the potential to cash out on some holdings on a quarterly basis is an innovation that could provide the liquidity investors crave.
The three investor needs - wealth creation and preservation, liquidity, and yield - might be non-controversial. But they aren’t easily attainable, especially not in one platform.
With Cadre, investors have the potential to attain all three of those goals in one place, with one investment allocation. We created this company to provide access to institutional-quality commercial real estate properties to any accredited investor. We added in a secondary market for potential liquidity and, now, with Cadre Cash, we’re offering yield.
The offering is especially timely. Today’s market is characterized by high levels of uncertainty; returns are difficult to predict with the impact of the coronavirus still unknown. Interest rates and yields are mired near historic lows and few expect them to budge for a while. Investors want a solution to those issues - we listened and Cadre Cash is our answer.
Cadre Cash LLC offers Cadre Cash which facilitates the opening and managing of Cadre Cash Accounts. Neither Cadre Cash LLC nor Cadre is a bank. Banking services provided by Evolve Bank & Trust (“Bank”), Member FDIC.
Barrons, “Money Market Yields Are Lousy. The Pluses and Minuses of the Alternatives,” July, 2020. https://www.barrons.com/articles/money-market-yields-are-lousy-here-are-some-options-51595525352 ↩︎
Fox Business, “The Dow’s biggest single-day gains and losses in history,” June, 2020. https://www.foxbusiness.com/markets/the-dows-biggest-single-day-drops-in-history ↩︎
Forbes, “Don’t Sweat DAPL,” July 2020. https://www.forbes.com/sites/greatspeculations/2020/07/11/dont-sweat-dapl-theres-still-life-in-midstream-stocks/#609696ab629d ↩︎
Business Insider, The Fed sees near-zero interest rates lasting through 2022, June, 2020. https://markets.businessinsider.com/news/stocks/federal-reserve-interest-rates-holds-near-zero-through-2022-fomc-2020-6-1029298397# ↩︎
The “Reward” refers to monthly payments from Cadre equal to a 3% annualized return based on funds held in the Cadre Cash Account up to the amount invested in eligible Cadre real estate products for a promotional 12-month period associated with your account. The Reward is not bank interest, is not an annual percentage rate and is solely an obligation of Cadre Cash LLC (not a bank). Rewards is a promotion and can be discontinued, restricted or modified at any time. Click here to learn more. ↩︎
National APY and Leading Bank APY based, respectively, on FDIC and Bankrate.com reports. ↩︎
Banking services are provided by Synapse’s bank partners, Member FDIC. Funds deposited into a Cadre Cash account are eligible for up to $750,000 of FDIC insurance provided by our partner banks through the Multi-Bank Program. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in partner banks are not protected by SIPC. ↩︎
The 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.
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.
Performance Not Guaranteed
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
All securities involve a high degree of risk and may result in partial or total loss of your investment.
Liquidity Not Guaranteed
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.
Not a Public Exchange
The Cadre Secondary Market is NOT a stock exchange or public securities exchange, there is no guarantee of liquidity and no guarantee that the Cadre Secondary Market will continue to operate or remain available to investors.
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.