Recent Sales Highlight Attractive Value Opportunity of Multifamily Investments for Investors Relative to Single Family Investments
Cadre, the leading technology-driven real estate investment platform, today announced the successful sale of two multifamily assets in the areas of Baltimore, MD and Atlanta, GA. Cadre’s investments are expected to generate 20.7% and 29.2% net annualized returns to its investors, showcasing the compelling relative value multifamily investments provide, especially relative to single family pricing at record high pricing.2
With the latest sales, Cadre further enhances its industry-leading track record of delivering outsized returns to its clients, solidifying its position as a premier online real estate investing platform for individuals, and the only platform in which individuals are able to invest alongside institutions such as Goldman Sachs, Harvard University, and BlackRock. The Atlanta and Baltimore-based properties bring Cadre’s fully realized investments to 13, representing $1.19 billion of enterprise value. These sales highlight Cadre’s prudent underwriting approach and the benefit of ownership of private real estate as a hedge against macro volatility and inflation. As a result, Cadre investors may benefit from strong, stable returns in an uncertain and challenging macro environment.
Cadre’s recent sales further reinforce the promising value creation opportunities multifamily assets provide relative to single family housing. Specifically, recent and projected increases in single family mortgage rates have created greater challenges for investors to generate yield given the operational intensity of owning single family housing. In contrast, investors and owners in a defensive asset class such as multifamily continue to benefit from operations that scale more efficiently across units. Further, rising rates have made it more challenging for many prospective buyers to own single family homes and increased the number of renters in today’s market.3 The resulting demand for alternative housing options has driven up multifamily occupancy and investment value in several markets, especially those supported by attractive demographic and fundamental trends. As high-growth cities attract new residents and many buyers are priced out of single-family housing options, Cadre’s data science team projects multifamily will outpace other CRE asset classes in price appreciation over coming years.4
In aggregate, Cadre has delivered an average net IRR of approximately 28% to its investors through thirteen total deal exits, including two property sales announced in July.2 In total, the firm has returned more than $462 million in aggregate capital to investors to date.5 Cadre has now eclipsed more than $5 billion in total transaction volume and continues to advance its efforts to improve more individuals' financial futures by generating outsized returns from institutional-quality investments.
Cadre’s sale of Hudson Ridge, a 434-unit multifamily asset in Atlanta, GA is expected to achieve 29.2% net IRR (nearly triple its underwritten target) and 2.1x net multiple on invested capital for investors. Cadre recapitalized the property in 2019, and the firm was influenced by a number of factors in the area. At the time of purchase, Atlanta had seen over 20% job growth and double the national average for population growth since 2011.6 Cadre’s Hudson Ridge investment benefited from demand drivers at the submarket level as well, such as new entertainment and retail developments and limited multifamily supply. At the time of purchase, Cadre also calculated median home prices were 32% more expensive than renting a renovated unit at Hudson Ridge.7 In combination with Cadre’s business plan to renovate units and common areas, these tailwinds contributed to strong occupancy and rent growth. Ultimately, given the strength of offers for the asset, Cadre sold nearly five years ahead of the expected timing.
The sale of Versailles Apartments, a 210-unit multifamily asset in Towson, MD is anticipated to achieve 20.7% net IRR (nearly double its underwritten target) and 2.2x net multiple. Partnering with Ross Companies and GMF Capital, Cadre purchased the property in 2017. Cadre identified strong demand drivers in the greater Baltimore area, such as a high concentration of medical employees and proximity to higher education institutions.8 Cadre also projected Versailles Apartments would offer a 24% discount to homeownership in the area and a lower cost option for would-be buyers.9 The firm bought the asset with the intent to execute light value-add renovations to a portion of the units and provide an attractive return on cost. Given strong performance and cap rate compression, Cadre exited the asset three years ahead of the initially targeted sale timing.
“Our most recent property sales demonstrate Cadre’s ability to respond to market trends and deliver value for our investors, a feat we are especially proud of in light of increased volatility in the investing market. We are excited about the opportunities ahead of us and remain highly focused on continuing to level the investing playing field for individual investors and institutions alike,” said Ryan Williams, Cadre Founder, Executive Chairman, and Co-Chairman of Cadre’s Investment Committee. “Current challenges in the housing market provide yet another example as to why it is crucial for individuals to have access to the same quality real estate opportunities as institutions. We believe ownership of a more diversified portfolio of real estate assets is one of the greatest ways to empower more investors seeking to build generational wealth. These sales are two more significant steps in bringing this aspiration to reality.”
About Cadre
Cadre is a groundbreaking technology-driven commercial real estate investment platform that offers both institutional and individual investors the opportunity to access expertly curated real estate assets with lower minimums, low fees, and unprecedented potential for liquidity. Via its data-driven and transparent approach, Cadre expands participation in a historically opaque and illiquid asset class.
Along with its traditional investment offerings, Cadre also provides investors with the ability to pursue highly vetted commercial real estate opportunities and the opportunity to seek liquidity through its proprietary secondary market, a unique offering within the industry.
Since Cadre’s founding, Cadre has closed more than $5 billion in real estate transactions across 25 U.S. markets. Cadre has exited thirteen investments with an approximate 27.5% realized average net IRR and in total has returned approximately $462 million of capital to Cadre investors to date.2, 5 For additional information, please visit www.cadre.com.
Disclaimer
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.
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 investments 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.
1 Refers to equity weighted targeted net equity multiple that would be generated by Hudson Ridge and Versailles. See footnote 2 below for additional information regarding the calculation of net equity multiple.
2 IRR calculation represents an equity-weighted average annualized internal rate of return (IRR) for realized real estate investments of offerings by Cadre since the formation of our Investment Committee through to the date of calculation, after deduction of fees and expenses. Equity multiple represents the investment multiple on equity, which is calculated by dividing the aggregate realized proceeds for the applicable investment after deduction of fees and expenses. For recently realized investments, an estimate of proceeds to vehicles managed by Cadre may be used. The use of a different methodology may result in a materially different return metric. As of 9/1/2022, our realized investments consist of: (1) Astoria Portfolio, a 143-unit multifamily asset in Queens, NYC, acquired January 2015, with a realized net IRR of 16.2% and a net equity multiple of 1.4x, (2) Sugarloaf trails, a 268-unit multifamily asset in Suburban Atlanta, acquired April 2017, realized net IRR of 27.4% and net equity multiple of 1.8x, (3) Skyridge Apartments, a 364-unit multifamily asset in suburban Chicago, acquired November 2016, with a realized net IRR of 15.0% and net equity multiple of 1.4x, (4) Avida, 421-unit multifamily project, located in Salt Lake City UT, acquired August 2017, realized net IRR of 16.8% and realized net equity multiple of 1.4x, (5) Crestleigh Apartments, a 389-unit multifamily asset in Laurel, MD, acquired September 2016, with an updated target net IRR of 10.2% and a net equity multiple of 1.6x, (6) Trails Portfolio, two multifamily properties totaling 810 units in Houston, TX, acquired January 2018, with an updated target net IRR of 22.4% and a net equity multiple of 2.0x, (7) Solis at Winter Park, a 596-unit multifamily asset Winter Park, FL, acquired, September 2018, with an updated target net IRR of 18.1% and a net equity multiple of 1.7x, (8) Lodge at Copperfield, a 330-unit multifamily asset in Houston, TX, acquired November 2018, with a updated target net IRR of 21.8% and a net equity multiple of 1.9x, (9) Lincoln Place, a multifamily asset in Sacramento, CA, acquired July 2018, with a updated target net IRR of 22.0% and a net equity multiple of 1.9x, (10) Key West Crossings, a life science asset in Rockville, MD, acquired August 2020 with an updated target net IRR of 40.2% and a net equity multiple of 1.8x, (11) 10 West Commerce, an industrial asset in Phoenix, AZ, acquired February 2021 with an updated target net IRR of 67.3% and a net equity multiple of 2.1x, (12) Versailles Apartments, a multifamily asset in Towson, MD, acquired November 2017 with an updated target net IRR of 20.7% and a net equity multiple of 2.2x, and (13) Hudson Ridge, a multifamily asset in Atlanta, GA, acquired September 2019 with an updated target net IRR of 29.2% and a net equity multiple of 2.1x.
3 Source: YCharts, US New Single-Family Houses Sold for the time periods 1/1/2022 - 7/31/2022.
4 Source: Cadre Price Trend Indices (PTI), a proprietary data model tracking repeat commercial real estate sales across markets and property types and forecasting expected price appreciation for the next 24 months. The Cadre PTI can track and forecast appreciation for any U.S. market, CRE asset class, or cross section of specific asset classes within specific markets.
5 Aggregate capital to investors refers to the sum of any income distributions, sales gains, and return of capital without deduction for any investor specific withholding or contribution interest.
6 Sources: United States Department of Labor, Bureau of Labor Statistics; US Census Bureau’s 2011-2017 American Community Survey.
7 Source: Zillow home value index estimates for 30339 zip code, 2019.
8 Source: Location of Towson University and Greater Baltimore Medical Center.
9 Source: Zillow home value index estimates for 21204 zip code, 2017.
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Contacts
Patrick Lovett, Communications
patrick@cadre.com
