Core-plus strategies in real estate

Following up on our August’s article about value-add strategies in real estate we wanted to explore another strategy within the world of real estate – core-plus strategy. A core-plus strategy offers investors a balanced risk / reward approach, with both steady income and potential for value appreciation.

In this article we will cover some key features of a core-plus strategy and explain what types of funding is available for investors.

What is a core-plus strategy?

In short, a core-plus strategy combines characteristics of core and value-add strategies. Similar to core strategies (which focus on well stabilized properties with certain cash flow and limited capital appreciation), core-plus strategies are based on high-quality properties in prime locations. However, the “plus” element in core-plus enhances the strategy by providing potential for significant capital appreciation, just like value-add strategy would.

Key features of core-plus strategies

Core-plus strategies combine core and value-add strategies, resulting in the following characteristics:

Stable income streams, making these strategies suitable for income-focused investors.
Limited potential for capital appreciation.

Combination of these two features make core-plus strategies suitable for income-oriented investors who are seeking additional return via capital appreciation. However, it is worth noting that core-plus strategies are unlikely to achieve the same capital appreciation as value-add strategies.

What type of funding is available for core-plus strategies?

One of the advantages of core-plus strategies over value-add strategies is increased availability of capital due to their inherently lower risk profile. Available funding options include short term funding (bridging finance and refurbishment loans) which could be particularly useful when an investor is considering speed of closing or renovations, as well as long term loans (with or without amortization feature) which are typically suitable once the “plus” element of the strategy has been carried out.

Depending on the type of asset and location investors can take advantage of financing offered by international and local banks as well as specialist real estate lenders and private debt solutions.

Get in touch with Holocene Impact Capital today to discuss your requirements and we will help you with exploring all available options.