These three categories are best considered existing on a range of risk and return. One Value Add opportunity will vary in its profile from an alternate. The subtle elements matter. Likewise, knowing your danger tolerance and portfolio needs will go far in helping you explore these categories
Ovur's invesmtent Strategies
Higher Risk/Higher Return. These properties require the most improvment in order to generate the a higher returns. What this includes depends on the specific asset and can range from ground-up development that can include a change of use to redeployment of existing structures. The potential for high returns here is very likely, but accordingly the risk is highest as well.
Medium-to-High Risk generates a Medium-to-High Return. This type of investment is defined by the opportunity to improve an exisiting real estate asset in some way, to add value to it. This improvement usually and be done in two ways, to enhance the physical property itself or improving the operational efficiency. The added risk of Value Add opportunities stems from the expectation that this improvement will generate higher cash flows and returns.
Moderate Risk with a Moderate Return. In most cases a core plus investments has some similar characteristic to a Core investment. Like Core investment, Core-Plus assess generally have minimal to no issues with securing financing, are typically located in a strong retail market. The difference is found in a limited elevation of risk and potential for increased Return on Investment.