Investment & Underwriting
Core
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Also called: core investment · core asset
Core is the most conservative point on the CRE risk spectrum (core, core-plus, value-add, opportunistic): fully leased or near-fully leased assets, strong tenant credit, minimal near-term capital needs, in established locations. Return expectations are the lowest of the four strategies and come primarily from in-place income rather than repositioning or lease-up.
Core buyers are typically institutional capital, insurance companies, or high-net-worth investors prioritizing capital preservation and stable cash flow, often using 1031 proceeds where predictability of income matters as much as absolute yield. Underwriting a core deal is less about identifying upside and more about confirming the in-place income is durable — lease term remaining, tenant financials, and renewal probability carry the analysis.
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Terms that travel with this one
- Value-AddAn investment strategy targeting underperforming or undermanaged property with the intent to increase income and value through renovation, releasing, or operational improvement, sitting between core and opportunistic on the risk spectrum.
- OpportunisticThe highest-risk, highest-return point on the CRE investment spectrum, involving ground-up development, major repositioning, or distressed assets with substantial vacancy or capital needs.
- Cap RateCapitalization rate — a property's net operating income divided by its purchase price or value, used as the primary shorthand for pricing and comparing income-producing real estate.
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