Cadre Sells Baltimore, Atlanta Assets for $206M
The online real estate investment platform exited the investments several years ahead of schedule.
Cadre, a New York-based technology-driven real estate investment platform, sold two multifamily properties in Atlanta and the Baltimore market with a total of 644 units for more than $206 million.
The assets were the 434-unit Hudson Ridge in Atlanta and the 210-unit Versailles Apartments in Towson, Md., near Baltimore. Hudson Ridge sold for $143.5 million to L+M Fund Management, achieving a 29.2 percent net internal rate of return. Versailles Apartments sold for $62.8 million to Livingston Street Capital, achieving a 20.7 percent IRR, according to Cadre.
Cadre said the Georgia and Maryland assets brought Cadre’s fully realized investments to 13 and represented $1.19 billion of enterprise value. Since its founding, Cadre has closed more than $5 billion in real estate transactions across 25 markets in the United States.
The online commercial real estate investing platform offers individual and institutional investors the opportunity to invest in real estate assets including multifamily and industrial properties. It is the only platform to allow individuals to invest in real estate alongside institutions, including Goldman Sachs, Harvard University and BlackRock. In a recent deal, Cadre partnered with BlackRock Impact Opportunities Fund to acquire Harvest at Marmalade Apartments, a 252-unit community in downtown Salt Lake City for a reported $100 million. The two firms worked with Ethos Real Estate to close the deal with the unidentified seller.
Ryan Williams, Cadre founder, executive chairman & co-chairman of Cadre’s investment committee, said in prepared remarks the firm’s most recent sales demonstrates Cadre’s ability to respond to market trends and deliver value to its investors despite increased volatility in the investing market. Williams said current challenges in the housing market provide an example of why it’s crucial for individual investors to have the same access to the same quality real estate opportunities as institutions.
In December 2017, Cadre partnered with Ross Cos. and GMF Capital to buy the Versailles Apartments. Light value-add renovations were made to the common areas and interior units at the property located at 111 Versailles Circle. The property has one-, two- and three-bedroom floorplans ranging from 1,016 to 1,544 square feet. Units feature full-size washer/dryers, private balconies or patios, large closets, energy-efficient windows, spa bathrooms with ceramic tile and marble surfaces.
Strong demand drivers in the Baltimore region include proximity to higher education institutions and high concentrations of medical employees. Cadres had projected Versailles Apartments would offer a 24 percent discount to homeownership in the area and a lower cost option for would-be buyers.
Given strong performance and cap rate compression, Cadre exited the asset three years of ahead of the initially targeted sale timing.
Cadre recapitalized Hudson Ridge, located at 3505 Windy Lane in Atlanta’s Cumberland submarket, in 2019. It had been purchased by Hudson Capital Properties in 2016. At the time of Cadre’s investment, the area had seen more than 20 percent job growth and double the national average for population growth since 2011. Cadre said Hudson Ridge benefited from demand drivers including new entertainment and retail development and limited multifamily supply.
Renovations were made to the units including new cabinets, granite or quartz countertops, vinyl plank flooring in kitchens and living areas and new plumbing and lighting fixtures throughout the apartments. Improvements to the common areas included expanding the leasing office space, redesigning the clubhouse to include a multi-use kitchen, and making exterior upgrades to the common area upgrade.
Cadre calculated median prices for single-family homes were 32 percent more expensive than renting a renovated unit at Hudson Ridge.
In combination with the business plan execution of renovating units and common areas and tailwinds from the demand drivers, there was strong occupancy and rent growth. Cadre had strong offers for the property and sold nearly five years ahead of expected timing.