Real estate investor Grant Cardone is expanding his multifamily housing fund strategy, which combines traditional commercial property investments with Bitcoin allocations, presenting a hybrid approach to real estate and digital asset exposure.
The company recently launched its fifth commercial multifamily investment property. This property is a 366-unit multifamily housing complex that was acquired for approximately $235 million. Additionally, $100 million in Bitcoin (BTC) was added to the fund, as reported by Grant Cardone.
Cardone explained that the fund benefits from the combination of real estate's low volatility, tax advantages, income generation, and stable value, alongside Bitcoin's high volatility. This allows for rental income to be channeled into further Bitcoin purchases, offering the "best of both worlds." He further elaborated:
“The goal is to take that vehicle public and turn it into shares. We believe the real estate and the bitcoin combined as a stock, trading as a public company, is like digital asset treasuries. But we have a real product, a real asset, real income, real tenants, real customers. We have free cash flow.”
Cardone stated that the property is projected to generate $10 million in net operating income annually, which can then be used to acquire more Bitcoin.
This innovative combination could potentially pave the way for new strategies within real estate investment trusts (REITs), which are portfolios of physical properties listed on stock exchanges offering investors passive exposure to real estate.
Crypto Treasuries Without Operating Businesses Face Structural Vulnerabilities
Many companies that hold crypto on their balance sheets primarily raise funds through issuing corporate debt and equity to finance their digital asset purchases. However, these companies often lack an operating business that generates consistent cash flow.
Cardone emphasized the advantage of his fund's structure: “If the company's just bitcoin, why am I investing in that company? Real estate is the best treasury company you can build because it's not a product that is discretionary — you have to buy housing.”
According to venture capital firm Breed, the absence of operational businesses is a significant factor contributing to why only a limited number of treasury companies are expected to survive the next crypto market downturn.
Treasury companies experienced a broad market downturn in September. This was marked by a collapse in the multiple on net asset value (mNAV), which represents the price premium above a company’s total asset holdings.
When mNAV is above one, these treasury companies can access additional financing to fund their purchases. However, when mNAV contracts to one or less, their access to financing becomes restricted.
This situation can create a precarious position for overleveraged companies. If they are unable to meet their debt servicing obligations, they may be compelled to sell their cryptocurrencies on the market to repay debt, which further depresses asset prices, or face bankruptcy.