Core-plus strategy
What is it?
It is a real estate investment strategy that combines elements of the core strategy with the pursuit of value-added opportunities. In addition to acquiring stable assets, it seeks improvements or enhancements that can increase long-term returns.
The core-plus strategy is characterized by a blend of stability and growth. While the assets in this strategy are generally solid and well-located, there is also potential to improve their profitability through operational changes, renovations, or management adjustments. This may include improving occupancy rates, modernizing facilities, or optimizing lease contracts.
Key aspects to consider
The main characteristics of the core-plus strategy include:
- Stability with growth potential: The assets remain high quality and located in strategic areas, but with more room for improvement than in the core strategy.
- Operational and management improvements: Rather than focusing solely on passive income, the core-plus strategy involves active management to increase returns through property improvements.
- Incremental returns: While the assets continue to generate stable income, the aim is to increase returns through asset appreciation and lease optimization.
Compared to the core strategy, the core-plus strategy assumes a slightly higher risk as it involves active efforts to improve the assets, but in return, it offers the potential for greater long-term returns.
This strategy is suitable for investors seeking a balance between stability and growth, with an active management strategy that can generate additional value.