CRE N Illinois

Q&A with Dan Rosenbloom

Q&A with Dan Rosenbloom,ph1

Technology-enabled real estate investment platform Cadre recently announced the opening of a Chicago office, the third location for the New York City-based startup. Dan Rosenbloom, a Chicago native with deep ties to the region’s real estate opportunities, will expand his role at Cadre as partner and managing director when he heads up the new office.

Rosenbloom previously held positions at JP Morgan, Fortress Investment Group and GEM Realty Capital. He has been at Cadre, which has closed more than $1.2 billion in investments to date, for close to two years. We recently caught up with him to understand more about the company’s platform and how it can change CRE investing.

Tell me about the Cadre platform. How does it perform differently than other real estate investment vehicles?

Cadre was formed about four years ago by Ryan Williams. Today, we’re a technology-enabled real estate investment platform, aiming to provide data-driven real estate investment opportunities. We are institutional real estate investors on one side and obviously we kind of have a technology platform on the other side, which is helping us not only figure out what’s going on in the market, but really it enables better user experience for both our investors as well as our operating partners.

I look at it as there are two sides to the coin. Structurally trying to align interest with our investors and our operating partners, but also utilizing technology to not only drive better data decisions but then also give better transparency and better information on institutional real estate investing to the investors. Obviously we’re trying to build a different mousetrap than a traditional private equity, co-mingled fund model, and I think it stems from aligning interest between everybody involved.

We’re trying to utilize that technology to help us invest in better markets, help us to have better visibility into what is going on in the real estate market on a much more real-time basis. This gives a better experience to the investor, vis-á-vis less paper, more technology-driven experience from the handheld to your laptop to everything of that nature.

I feel like we have a better way to drive investment decisions with the technology, but also we’re a better fee-efficient investment platform. We don’t do the double promote, which is what a lot of these allocator funds obviously have. So right off the bat, depending on the risk profile of the deal, our investors can save anywhere between 100 and 200 basis points of IRR on an opportunity because of that double promote.

Deal transparency is a big part of your marketing pitch. Is this something that investors have been looking for and how do you deliver?

I think transparency is something that our investors really appreciate. First and foremost, for our investors to come in on a deal-by-deal basis, everything that we do from a due diligence standpoint is up on our website. So they can go and look at our investment committee memo, they can look at all of our third party reports, they can literally do as much or as little due diligence as they want.

We are able to understand how much or how little our investors are utilizing those tools; we get a lot of feedback from our investors that they really do appreciate it. When you’re first coming into a deal it’s extremely important, but it’s also important through the life of the investment. Understanding where the values are, such as how we are performing compared to our pro forma or how we compare to the marketplace. Then ultimately when and if the investors want liquidity, having that transparency and being able to understand what the value of their position is to the extent that they need to sell for whatever reason, that’s obviously something that’s paramount to the platform.

One challenge in streamlining real estate investment in a technology-forward platform is that due diligence process. How do you interact with investors looking to do a deep dive before committing?

I’ve seen platforms that are trying to do this who have good real estate investors, but not great engineers on the tech side. Then there are guys who have great tech but haven’t really gone the route of institutional real estate investment professionals. We’re differentiated in that we have guys from great pedigrees on the technology side of our business as well as obviously the investment side.

That enables us to show that we’re doing the due diligence the same way we all did in our prior lives. We’re going to put it out there, not hide but highlight our operating partners. I firmly believe in the operating partner model; most of these allocator funds utilize operating partners, so it’s not something new and revolutionary. We put everything that we do up on our website so a qualified investor can go on there and not only look at the due diligence of the investment, but also the due diligence of our operating partners as well. I vet the operating partners as much as I do the deal, if not more, because I just believe you outperform the market with better operating partners.

Why did you choose Chicago for your latest expansion?

I think it’s a combination of things. First and foremost, we’re a national platform looking at all asset classes. I found in my prior life that we’re always getting on planes to see all the assets. In order to be a good fiduciary to all of our investors, you need to get on planes, you need to see real estate, you need to meet the operators and you need to be in the market. I think it’s a lot easier to do that from Chicago.

There’s great talent in Chicago, it’s a great market, and then I also happen to live here. It made a lot of sense and I’m a firm believer that for our business, to get to the West Coast, to get the East Coast, to get to the South, Chicago is a great, centrally located market with a deep talent pool of real estate professionals. It’s a combination of that and then I just love the city. I didn’t have to sell many people on that aspect. I’m really excited about it. It’s the right time and the right market, in my opinion.