By Steve Gelsi
The Horizon Framework Fund should be registered as a 40 Act fund for individual investors to participate in the private real estate market
Fintech Company Focused on Real Estate Investing, Cadre, Launches Cadre Horizon Fund with Minimum Investments as Low as Approximately $1,000 When Registered with the Securities and Exchange Commission as an Investment Fund real estate (REIT), MarketWatch has learned.
Benefiting from the crowdfunding regulations established in the 2012 JOBS law as well as its proprietary technology platform, the Horizon Framework Fund is expected to be registered in 2023 as a Law 40 real estate investment fund. of Act 40 refers to joint investment vehicles by an investment company registered under the Investment Companies Act 1940.
The fund is currently available to qualified investors. Once registered as a REIT, it will also be open to non-accredited investors.
Approximately 50% of the Horizon Framework Fund will focus on multi-family apartments to provide stable, dividend-like returns. It is a sector that has performed well in the upswings and downswings. The fund will be combined with investments in warehouses and industrial space for storage, with potential opportunities emerging later in hotels.
“It will be more of a defensive income strategy, like a micro-cap real estate portfolio with the ability to invest in a platform normally reserved for larger institutions,” said Ryan Williams, founder and executive chairman of Cadre.
The relatively accessible minimum investment level of $1,000 in the new Horizon Framework Fund marks a departure for most private equity firms, and even for Framework, which had a minimum of $25,000 on its first flagship fund in direct access.
A veteran of Goldman Sachs Group Inc. (GS) and Blackstone Group Inc. (BX), Williams started the firm in 2014 hoping to provide access to unaccredited Main Street investors, not just people living in Beverly Hills. or on Central Park West.
“I founded the company because I wanted more people to have a better financial future, and I wanted to democratize multigenerational wealth creation,” Williams told MarketWatch. “I grew up renting apartments. It was a pipe dream – a wild aspiration – to even own real estate. Going into these big institutions, I realized there was a whole ecosystem of real estate investments controlled by a small group of people… who made a lot of money.”
Also read: Real estate investor Cadre scores strong exit in sale of two properties
Admittedly, the cadre fund is not free.
As a registered REIT, Horizon Framework Fund’s cost structure for investors would include an initial fee of up to 3.25%, plus a management fee of 2.1%.
The vehicle is set up to issue 1099 tax returns to its investors, instead of the heavier K-1 partnership tax returns with typical private equity funds.
The Framework Horizon Fund comes after Framework closed its first fund, the flagship direct access fund, which attracted around $300 million in investments from institutions such as Harvard University, as well as high net worth individuals.
The direct access fund had a minimum investment of $25,000, which made it more accessible than many other private equity vehicles. But William has always wanted to lower the fund’s minimum so that people in his hometown of Baton Rouge, Louisiana can also participate in the asset class.
“While working at Goldman and Blackstone, I thought I could continue to make wealthy people richer, or I could build a platform that leveled the playing field and allowed less wealthy people to have those opportunities as well. “Williams said. “You don’t need to be in the insider ecosystem.”
Real estate is less volatile than stocks and generates returns comparable to public stocks.
At last check, Cadre has processed about $5 billion in transactions since 2015, with a historical rate of return of 27.5%, as of July 13 this year, according to the company’s website. Over the past seven years, he has completed 49 transactions in 25 markets.
Also Read: ‘They Broke Barriers’: On Wall Street, New Biggest Private Equity Firms Are Led by Black and Latino Billionaires and People of Color
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