Cardone REIT I (CRI)

Verdict

• ALIGNMENT: Low

  Managers have not disclosed meaningful personal investment in the fund, and the fee structure is designed to benefit management regardless of performance. There is little incentive for the team to outperform or protect investor capital, and the lack of a performance fee means no upside for investors if things go well.

• Performance: Low

  Since inception, Cardone REIT I has delivered a negative annualized return of approximately -11%, with NAV dropping from $10,000 to $7,047 per $10,000 invested. Distributions have been below target, and the fund has underperformed every major asset class, including bonds and cash.

• Market Risk: High

  The fund is highly concentrated in South Florida multifamily properties, making it vulnerable to local economic downturns, natural disasters, and regulatory changes. The lack of geographic and asset diversification amplifies risk for investors.

• Business Risk: High

  The fund’s structure, reliance on variable-rate debt, and lack of redemption options create significant business risk. Management’s focus on aggressive marketing and fee collection, rather than long-term performance, further increases risk for investors.

• Debt Risk: High

  With leverage below 54% of tangible asset cost and variable-rate loans at 7.687% to 8.397%, the fund is highly sensitive to interest rate increases. Rising rates have already impacted cash flow and forced distribution cuts in other Cardone funds.

• Liquidity Risk: High

  There is no redemption program—investors are locked in for at least 10 years, with no secondary market for shares. This lack of liquidity is a major drawback for anyone who may need access to their money before the fund liquidates.

• Transparency: Low

  While the fund files required SEC reports, there is limited property-level disclosure, no independent third-party NAV verification, and little detail on actual performance. The marketing focus often overshadows clear, investor-friendly reporting.

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