Introduced in late 2018, our Secondary Market is the first online platform to enable the trading of private real estate investments. Now entering its second phase, the platform is doubling the number of eligible assets and participants, making it easier for investors to diversify their portfolios, while providing the potential to seek liquidity when life demands it.
Here’s what you need to know to effectively incorporate the Secondary Market into your investment strategy.
What is the Cadre Secondary Market?
The best way to understand the Secondary Market is in relation to initial offerings. Cadre’s initial offerings are carefully evaluated investment opportunities across various property types and markets. Once an initial offering is fully syndicated, it’s considered closed and additional commitments are no longer accepted. Most deals are then held between five and ten years, from acquisition to disposition.
But what if an investor wants to sell their position before the disposition of the project? Historically, marketplaces have not existed for the listing of these positions for sale.
Enter Cadre’s Secondary Market, where investors have the flexibility to buy and sell positions in ongoing deals. And after a one year regulatory hold period, investors have the potential to sell their investment on the secondary market, thus increasing their liquidity options and giving buyers the opportunity to enter properties through secondary market investments.
(Find more detail about Cadre’s Secondary Market in our FAQ.)
Why should I consider investing in a secondary offering?
Immediate Value. Investors who enter deals on the Secondary Market have the opportunity to realize immediate value, since listings may be offered at a discount. Plus, these properties are also closer to their exit date, giving investors the ability to invest in shorter hold periods and realize gains sooner.
Invest in properties with established business plans. Properties listed on Cadre’s Secondary Market will be at least one year into their business plan. So, instead of relying solely on underwritten projections — which despite every effort can change as the deal progresses — investors can enter into a partnership that has built familiarity with the property and executed on some, if not all, of the original business plan.
Cadre reassesses and updates the go-forward projection for every property after the one-year mark. For investors evaluating secondary market offerings, the go-forward projections are intended to reflect Cadre’s latest view of the property, incorporating actual market and operating experience since acquisition. This is one reason why some investors may decide to opt for a position with a lower Internal Rate of Return (IRR) on the secondary market versus a higher IRR opportunity on the primary market — especially if stability and risk are key concerns.
A second chance. The Secondary Market can give investors the opportunity to enter deals they otherwise missed on the primary market — Cadre’s offerings can sell out quickly. Interested investors may be able to invest in those properties on the Secondary Market should any participating investors decide to exit the position.
Portfolio diversification. The Secondary Market affords investors the opportunity to quickly invest across various markets and property types. Instead of investing only in Cadre’s primary market deals, secondary market offerings can significantly reduce the time an investor might need to wait for an opportunity that meets their specific investment criteria.
For existing investors
The Secondary Market introduces one huge benefit for current investors — the potential to seek liquidity through listing a position before the deal’s exit.
Historically, individual real estate interests have typically lacked any consistent access to liquidity. Now, the Secondary Market platform allows investors to list sale opportunities in a property long before the hold period expires. This is critical for investors who need liquidity, or for those who want to lock in gains and transition into another investment.
By expanding this opportunity to its investor base, Cadre’s Secondary Market represents a step forward in the world of commercial real estate investing. Investors who have questions about Cadre’s Secondary Market can learn more here. To become an investor, please request access to the Cadre platform.
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.