Cadre To Fully Launch Secondary Investment Platform To Democratize Real Estate
Cadre is about to fully launch the next wave of its offerings intended to allow individuals to invest in institutional-grade commercial real estate.
Cadre Secondary Market will be live on May 15 for all members after coming online as a pilot program for handpicked members in October. The new platform allows members to sell their investments in assets listed on Cadre after one year, rather than being forced to hold until the asset is fully disposed.
“We said, let’s also let those same folks [who invest on Cadre] have liquidity, because that’s another barrier to entry,” Cadre co-founder and CEO Ryan Williams told Bisnow. “An individual investor doesn’t have the liquidity levels of a wealth fund or institution, and will maybe need to pull it out faster.”
For buyers, the advantage comes from having a year's worth of information to add a level of certainty over pure projection, no matter how well-researched. With perhaps less favorable terms, a member gets more certainty, which Williams hopes expands the pool of potential members.
Distinct from a pure crowdfunding platform, Cadre spends most of its resources analyzing and vetting buildings that operators or property managers submit, ultimately selecting about 2% of all submissions, Williams said. Its staff researches the properties and its investment committee, led by former Vornado President Michael Fascitelli, makes the final decision on whether to back a project.
Cadre fully guarantees to provide all of the equity the operators are asking for, and if its members do not account for all of it, Cadre has a $250M "backstop" that it would use to make up for any shortfall. Williams said that it has not had to use its backstop for any projects listed so far, as no project has had to wait more than a few weeks to meet its funding goal.
Members can pick and choose what project to invest in, but many assets are fully committed within a day or two of being listed, due to Cadre's selectivity about how to list, he said. The secondary market will alleviate some of that bottleneck, in exchange for more volatility as properties can be treated more like company stock but not too much more.
“We’re not interested, frankly, in creating a high-frequency trading platform,” Williams said. “We’re not even interested in creating day-to-day trading. What we’re really trying to address is that there’s no efficient way to get liquidity into the market, and [also to] increase the efficiency of getting information about real estate, which will reduce the discount investors have to take to invest.”
To circumvent the competitiveness for investors more focused on simply deploying the capital rather than finding the right project, Cadre also has an alternate model called Cadre Managed Portfolio. Up to 60% of any project on Cadre's platform will come from Cadre Managed Portfolio, which behaves much like a traditional real estate investment manager.
Cadre has recently lowered the minimum investment threshold for its Managed Portfolio program, and will look to keep lowering barriers to entry as its scale can provide enough security. So far, only accredited investors are allowed to join Cadre, but in time, Williams hopes to bring in retail investors as well.
Former Kushner Cos. CEO and current White House Senior Adviser Jared Kushner is among Cadre's investors, as are Goldman Sachs, SL Green Realty and the Ford Foundation.
CORRECTION, MAY 10, 3:30 P.M. ET: A previous version of this article mislabeled the committee that signed off on properties listed by Cadre and the longest a property has taken to meet its fundraising goal. It also misstated the launch date for the secondary market. This article has been updated.
