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Windwater at Windmill Lakes is an opportunity to invest in a multifamily asset curated deal sourced through the Cadre network. This 150-unit asset is located in the booming Houston market and has a strong historical occupancy averaging over 95%. The Bascom Group is our institutional sponsor who has ranked among the top 50 multifamily owners in the United States.
Vintage Asset with Strong Occupancy and Value-add Opportunity
The business plan calls for investing $3.0mm in total capital expenditures, including $2.5mm in interior and exterior renovations and accretive capital to capture identified demand at an attractive return on investment. The sponsor is also reserving $0.5mm for deferred maintenance.
Bascom is a private equity firm specializing in value-added multifamily, commercial, and non-performing loans and real estate related investments and operating companies. Bascom sources value-added and distressed properties including many through foreclosure, bankruptcy, or short sales and repositions them by adding extensive capital improvements, improving revenue, and reducing expenses by realizing operational efficiencies through implementation of institutional quality property management. Bascom, founded by principals Jerry Fink, David Kim, and Derek Chen, is one of the most active and seasoned buyers and operators of apartment communities in the U.S. Since 1996.
Bascom has completed over $20.6 billion in multifamily value-added transactions encompassing 349 multifamily properties and over 90,120 units Since 2005.
Bascom has been very active in Texas, acquiring 40 properties totaling 14,569 units, including 9 properties and 3,093 units in Houston.
Bascom has ranked among the top 50 multifamily owners in the U.S.
Please see the Sponsor Overview section of the Investment Memo for additional details.
As with most multifamily investments, primary risks include occupancy, capital spend, rent growth, and exit cap rate. We believe these are mitigated by (i) a business plan consistent with prior business plans undertaken by the Sponsor, including at the Asset; (ii) the Sponsor’s directly relevant experience and track record; and (iii) acquisition at a discount to replacement cost in high growth markets. Please reference the Investment Memo for Sensitivity Analysis, as well as additional risk factors.
Please reference the Investment Memo for additional risk factors.
The Sponsor is committing approximately $787k (10%) of total equity to the transaction. The remaining share, approximately $7.08mm (90%), will come from Cadre’s investor partnership.
Cadre has committed to backstop the investor partnership’s share of the transaction.
We closed on a $16.55mm acquisition loan which includes $13.55mm of initial proceeds and $3.0mm of future proceeds for capital renovations. The loan has an initial term of 48 months with a 12 month extension option. The rate is SOFR+220 bps. The loan is interest only for 36 months.
We closed the underlying Asset on April 19th, 2022 (“Asset Close”). We anticipate holding an initial investor closing on or around May 26, 2022 (the “Initial Close”).
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.
Cadre is offering unique opportunities to invest in a curated selection of deals sourced through our network of sponsors. All sponsors have been evaluated by Cadre.
Please see below to learn more about the differences between curated and principal deals at Cadre.
We intend to make regular (~quarterly) distributions from available cash flow. These distributions may vary depending on each period’s cash flow and capital requirements.
As a curated deal, the Sponsor will generally solely control whether and when distributions are made from the joint venture to the Cadre investor partnership (but we’ll generally participate pro rata in most distributions prior to promote payments). If funds are received by the investor partnership we work to distribute as efficiently as possible but, given the involvement of multiple parties, timing can and does vary.
Cadre charges investors the following:
3.25% acquisition fee on Cadre’s all-in cost in acquiring the Asset ; 1.75% annual asset management fee on the fair value of the Cadre fund’s investment in the joint venture. Refer to the Partnership Agreement for a definition 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.
Investors who commit or fund after the Initial Close (defined above) 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 the 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.
Investors will purchase an ownership interest in a Delaware limited partnership managed by Cadre. The Cadre partnership entered into an LLC joint venture formed and managed by the Sponsor that directly or indirectly owns the property.
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 with a targeted delivery of 45 days after 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 in a timely manner but cannot guarantee that they will be available prior to April 15th. All current and historical statements are available for download on our Documents page.