Grant Cardone, founder of Cardone Capital, has warned that the commercial real estate market is experiencing what he calls a historic “Armageddon.” He pointed to rising interest rates, currently at 6.4%, which are driving property values below replacement costs and putting significant pressure on property owners and investors.
Real estate under pressure
In his assessment, Cardone stated that high interest rates have changed the calculus for commercial property investment, leaving many projects underwater. He said that existing property values can no longer be supported by cash flows when debt is serviced at current rates. This situation, according to Cardone, presents both risks and opportunities, depending on how market participants respond to the crisis.
Cardone, whose investment firm Cardone Capital manages real estate assets with an emphasis on multifamily units, has a target of acquiring 25,000 apartments and an equivalent 25,000 Bitcoin. He described this dual approach as a way to hedge against both currency depreciation and market instability.
He referred to his real estate holdings as a “Trojan horse” for Bitcoin, indicating that integrating digital assets onto the balance sheet gives his company a strategic advantage in uncertain times.
Bitcoin as a hedge
Cardone revealed that he adds Bitcoin to his company’s balance sheet to offset risks from declining property values and the financial challenges facing the real estate sector. He argued that this combination creates what he considers to be a hybrid asset, which he believes has potential for both stability and growth, amid broader economic volatility.
Cardone explained that “real estate is my Trojan horse for Bitcoin,” emphasizing a unique approach to wealth protection that he says most real estate investors cannot easily replicate.
He further noted that he is aiming to expand Cardone Capital’s Bitcoin reserves from 3,000 to 25,000 BTC, positioning the company to navigate what he considers a prolonged downturn in the commercial property market.
Cardone compared his company’s strategy to REITs, saying that these publicly traded real estate investment trusts are unable to own Bitcoin directly, offering Cardone Capital what he sees as a competitive “moat.”
Mini dictionary: REITs (Real Estate Investment Trusts) are investment vehicles that allow individuals to invest in large-scale, income-producing real estate, but regulations often prohibit them from directly holding cryptocurrencies like Bitcoin.
He also highlighted a recent $335 million property transaction in Boca Raton as a case study, suggesting that Cardone Capital is actively navigating both the real estate reset and the crypto market’s movements.
Future outlook and public plans
Cardone addressed the possibility of Cardone Capital eventually going public, but stopped short of making a definitive statement. He said that while other investors may attempt to imitate his firm’s strategy, the unique combination of large-scale property holdings and significant Bitcoin reserves would be difficult to reproduce.
He also commented on the outlook for single-family residential properties, stating that, unlike the commercial sector, he does not expect a significant correction for home prices in the near term.
Cardone concluded by describing Bitcoin and real estate as complementary assets, each serving different but reinforcing roles during a period of increased economic and financial uncertainty.
He suggested that “combining real estate and Bitcoin positions us to weather severe market corrections better than relying on traditional assets alone.”
