Real estate investor Cadre scores strong exit in sale of two properties

The firm sold Lincoln Place, a 240-unit multifamily asset in Sacramento, Calif., with backing from 29th Street Capital, and the Lodge at Copperfield property, a 330-unit multifamily property in Houston, with backing from Knightvest Capital, for more than $125 million combined. The two deals rank among the largest property sales in the firm’s history.

Through the exit, Cadre generated an internal rate of return of about 22% and nearly doubled investors’ money in about four years in the sale of two properties, Cadre said.

Ryan Williams, CEO and founder of Cadre, started the private equity real estate investing firm after growing up in a middle class family in Baton Rouge, La., and landing jobs at Goldman Sachs and Blackstone Group earlier in his career.

“My entrepreneurial bug got a hold of me,” Williams said. “When I was at Blackstone and Goldman, I asked why Main Street investors couldn’t invest in their funds. I didn’t get any good answers other than it’s too challenging to reach the masses.”

He then set about building a financial technology platform that could act like a real estate private equity fund in some ways, but also allow individuals to participate through a website as a way to diversify their portfolio into alternatives.

Cadre focuses on high quality, yield-oriented investment opportunities and is accessible through its digital platform.

Cadre is exploring a couple of offerings to everyday investors – not just wealthier accredited investors – possibly in the form of registered funds. It’s currently hiring for the product and plans to launch a new product in the next six to eight months, according to a source.

While Cadre has backing from Goldman Sachs
GS,
-4.35%,
the MacArthur Foundation and Harvard University’s endowment, it’s also taking in investments from individual investors, and thereby weaving in an element of crowd funding into its fabric.

For now, the firm is only targeting relatively wealthy people that fit the accredited investor guidelines by the Securities and Exchange Commission.

The SEC defines accredited investors as anyone with $200,000-plus (or $300,000-plus with a spouse) in each of the prior two years or has a net worth more than $1 million excluding the value of their primary residence.

Even with these restrictions, Cadre now counts about 35,000 investors since it works with so many individuals.  It’s now sold nine properties including the ones in Texas and California to be announced Tuesday.

Cadre initially raised more than $250 million with backing from Goldman Sachs and its wealthy clients. The firm planned to launch its own fund but initially that plan moved to the back burner when the pandemic hit in 2020.  Cadre then launched the Direct Access Fund in 2021 and has raised more than $300 million.

Williams founded Cadre as a commercial real estate investment platform in 2014 after working as an investment pro at Blackstone Group
BX,
-1.80%
from 2012-2014 and on technology, media and telecom deals for Goldman Sachs from 2010 to 2012.

The first home Williams ever owned was an investment property he bought in 2008, before Blackstone Group
BX,
-1.80%
got into the space with its purchase of Invitation Homes. He raised money from his classmates at Harvard College starting in 2009 and built a 1,500-home portfolio of residential units, incorporating rent-to-own opportunities.

“You can’t just buy houses and flip them and not help the community,” Williams said. “Community has to be one of, if not the top focus if you take a long-term view on real estate investing.”

All told, Cadre has handled about $4.5 billion in transactions and has returned $300 million to its investors as a commercial real estate specialist.

Looking ahead, investments in workforce housing remain Cadre’s bread and butter, with a focus on multi-family homes by partnering with local property managers. It’s also shopping for industrial space and two sub-sets of office space – suburban office space and life sciences office space. It’s avoiding retail space and big city office space, which continue to lag in the face of the COVID-19 pandemic.

Cadre now counts 100 people on its payroll and the firm expects to add “significantly more” employees by the end of the year, Williams said.  The firm currently operates out of New York and Chicago and may add a third location.