Cadre, a technology-driven investment platform, is bringing commercial real estate investing potential to high-net-worth individual investors, based on quantitative data analytics and artificial intelligence, according to David Vincent, investment product specialist for the firm.
The firm, founded in 2014, increases the liquidity for commercial real estate investors and sets the required minimum investment at $50,000, which makes the large commercial deals attractive to high-net-worth individuals rather than limiting potential investors to pension funds and endowments, Vincent said in an interview Thursday. The firm, which is based in New York City, has secured 38 properties across the U.S.
Cadre works with advisors to give their high-net-worth and ultra-high-net clients access to commercial real estate investments. One of the firm’s goals is to get rid of the paperwork that “creates friction” between the investor and the potential investment, he said.
Cadre uses advanced models and machine learning tools to include more than “40,000 variables and three million data points to track trends across geographies and asset classes,” the firm said in an email. The firm has a 25-member technology team, which represents about 30% of the company’s personnel.
Cadre has $3.3 billion in commercial real estate investments in 20 areas of the U.S. A differentiator for the company is that it has developed an active secondary market, so that clients can achieve liquidity, rather than tying up money for five to 10 years, Vincent said. The firm has realized returns averaging 18% since its founding, he added.
By creating an active secondary market, where investors can buy or sell real estate assets, investors can sell to interested buyers through Cadre's platform if they have a sudden need for large sums of cash, he said. For two quarters, Cadre has had more buyers than sellers on its secondary market, Vincent said. In the past two quarters, almost two-thirds of the properties that were available for the secondary market were either fully filled or oversubscribed, Cadre said.
“Typical real estate investments are tied up for years. With Cadre’s secondary market, investors have the potential to sell select assets during one of the quarterly secondary windows only six months after the fundraising period,” the website explains.
Vincent added, “There is an amazing amount of data out there about real estate, but there was no no place where it was aggregated. Having that data at hand helps us understand the market and project into the future. Having that insight allows us to be more confident about what the prices should be.”
Cadre offers the real estate holdings to clients for a direct sale or through its fund, the Cadre Direct Access Fund, which has a target of $400 million to be raised to purchse multiple properties. It is a diversified portfolio of multifamily, industrial, office and hotel properties, with an average deal size of $25 million and a range of $10 million to $40 million.
Cadre undertook the job of amassing the huge amounts of data available and determining what factors were important on both the individual property level and the community level, Vincent said.
“We care about what the community is doing that supports the real estate market, such as creating a good education system, having the infrastructure to support the community and what commuting is like. The data is out there: The challenge is to evaluate and aggregate it.” Quants, computer algorithms and programs based on mathematical models to identify and capitalize on available trading opportunities, allows Cadre to do that, Vincent said.
Through its data research, Cadre has come up with 15 areas of the country where commercial real estate investing is viewed as good growth areas. When an opportunity in those favorable areas comes up, the firm has a head start on evaluating the property, Vincent said. “Having this information ahead of time, allows us to be more focused and drives a higher probability of success,” he said.