Grant Cardone, CEO of Cardone Capital, has announced a new investment vehicle that combines income-producing real estate with cryptocurrency. The new company, which is slated for a public offering, will fuse large-scale property assets with significant holdings in Bitcoin, creating a hybrid investment model designed to leverage the stability of real estate and the growth potential of digital assets.
The first project under this model involves a $235 million apartment complex in Boca Raton, Florida, paired with a $100 million investment in Bitcoin. Cardone plans to take the new entity public by the end of the year, converting early investments into publicly traded shares.
Key Takeaways
- Grant Cardone is launching a new company that merges commercial real estate with Bitcoin.
- The inaugural project combines a 366-unit Florida apartment building with 883 units of Bitcoin.
- The strategy uses cash flow from property rentals to purchase more Bitcoin, especially during market downturns.
- Cardone intends to take the hybrid company public, offering shares to initial investors.
A New Approach to Asset Management
The core of Cardone's strategy is to create a new type of asset class that balances two fundamentally different investments. Real estate, particularly multi-family residential properties, is often seen as a stable investment that generates consistent cash flow through rent collection. Bitcoin, on the other hand, is known for its high volatility and potential for significant price appreciation.
By fusing the two, the model aims to create a symbiotic relationship. The real estate provides a predictable income stream, while the Bitcoin allocation offers exposure to a high-growth, though riskier, asset class. This structure is intended to appeal to investors seeking a diversified portfolio within a single investment vehicle.
Inspiration from a Crypto Pioneer
Cardone mentioned that the idea to structure the company for a public offering was influenced by a conversation with Michael Saylor, a prominent Bitcoin advocate. Saylor reportedly advised him to combine his real estate and Bitcoin assets and take the company public to scale the concept.
The Boca Raton Project in Detail
The first application of this hybrid model is a 366-unit apartment complex in Boca Raton. The property was acquired for $235 million from Blackstone in a bankruptcy sale. Alongside this real estate acquisition, the company purchased $100 million worth of Bitcoin, which amounted to 883 units at the time of purchase.
The financial projections for the real estate portion are based on conventional property management strategies. Cardone stated that a modest rent increase of just $25 per unit each year would be sufficient to meet the performance targets for the property itself. The goal is for the Net Operating Income (NOI) to increase by approximately 5% annually.
Project by the Numbers
- Property: 366-unit apartment complex in Boca Raton, FL
- Purchase Price: $235 million
- Bitcoin Investment: $100 million
- Bitcoin Holdings: 883 BTC
Strategy for Managing Bitcoin Volatility
A central challenge of incorporating Bitcoin into a real estate fund is its price volatility. Cardone has outlined a specific strategy to address this. Instead of being a passive holding, the Bitcoin component will be actively managed using the cash flow generated by the apartment complex.
"If [Bitcoin] got cut in half... I would buy more Bitcoin each month out of the cash flow," Cardone explained. "I wouldn't sell either one of these assets. I would keep both of them fused together."
This approach turns potential market downturns into buying opportunities. The steady income from tenant rents provides the capital to acquire more Bitcoin when its price is low, a strategy known as dollar-cost averaging. This is designed to mitigate the risk of a sharp price drop while positioning the fund for greater gains during a market recovery.
The Path to a Public Company
The long-term plan for this real estate and Bitcoin hybrid is to transition from a private fund to a publicly traded company. Cardone announced his intention to pursue an initial public offering (IPO) before the end of the year.
For early investors in the project, their initial capital will be converted into shares of the new public entity. Cardone provided a hypothetical example:
- An investor contributes $200,000 to the fund.
- Upon going public, the stock is listed at an initial price of $5 per share.
- The investor's $200,000 is converted into 40,000 shares of the company.
From that point, the investor's return is tied to the performance of the company's stock on the open market. Cardone, known for his "10X" branding, stated his ambition is to increase the stock value from $5 to $50 per share, which would turn the initial $200,000 investment into $2 million.
This move to go public would make the unique investment model accessible to a much broader range of investors through the stock market, potentially disrupting traditional Real Estate Investment Trusts (REITs) by introducing a cryptocurrency component into a typically conservative sector.
