Over time, the real estate industry has developed conventions for discussing and categorizing investment strategies which reflect the relative risk and return investors can expect. These four categories – Core, Core Plus, Value Add, and Opportunistic – span the risk spectrum from low risk (Core) to high risk (Opportunistic). The following major risk factors are idiosyncratic to real estate and help define the four categories: market (capital markets, economic), leasing, credit, operating, development, property repositioning and leverage. Below, we have offered our definition of these categories which conform with industry practices and norms.


Core investors focus on owning high quality, well-leased commercial properties in major metropolitan areas. Typically, Core investing focuses on apartments, office buildings, industrial warehouses, and shopping centers. The majority of the investment return is generated from recurring rental income derived from investment grade tenants on longer term leases. Because of their good condition, Core assets require little in ongoing capital expenditures and appreciation is driven by broad market-based movement in property values over long hold periods, e.g. 7 to 10+ years. Leverage is conservatively used at 40-50% loan-to-value (LTV). With strong in place cash flow and modest use of leverage, Core properties tend to be less volatile than properties in other categories. Net Return Range: 6 – 8%

Core Plus:

Core Plus investors also focus on high quality buildings in major metropolitan areas but seek somewhat higher returns by taking modestly more risk associated with leasing and capital improvements. A Core Plus property has in-place tenancy which provides some level of operating cash flow, but may have vacant space, e.g. 15-20% vacancy for an office building, which needs to be re-tenanted. Further, there may be deferred maintenance or cosmetic physical improvements which can be undertaken to enhance asset value. Similar to Core investing, hold periods can be relatively long, e.g. 7+ years. Leverage is used conservatively to enhance returns, e.g. LTV 50-60%. The contributions to return are relatively balanced between income and appreciation. Net Return Range: 8 – 10%

Value Add:

Value Add investors seek higher returns by taking more risk associated with leasing, asset repositioning, property operations, market selection, and the use of leverage. While focusing on existing buildings, Value Add investors target buildings which have underperformed due to mismanagement and/or physical deficiencies, allowing them to be acquired at a discount to the replacement cost of the property. Value is created by successfully executing an asset improvement plan that results in renovating the physical asset and re-tenanting of the property to full occupancy. Hold periods tend to be shorter (3-7 years) as properties are sold once operations have been stabilized and value can be realized. Leverage is used to enhance returns, e.g. LTV 60-70%. Net Return Range: 10 – 12%


Opportunistic investors seek high returns by taking elevated risks associated with all dimensions of real estate investing. Often this includes capitalizing on market dislocations that create distress across property sectors. Opportunistic investing can encompass land speculation, development, acquiring buildings with low or no occupancy, and converting existing buildings to new uses. Financial engineering and more aggressive use of leverage, e.g. 70%+ LTV, can play an important role in deal structuring although debt levels can be lower based on the speculative nature of some of the strategies employed. All types of property are pursued including those, such as hotels, which are very operationally intensive. Hold periods tend to be short (3-5 years) as properties are sold once operations have been stabilized and value can be realized. Usually, Opportunistic investing may provide little to no cash flow as the principal objective is to maximize asset appreciation, and equity multiple, upon the disposition of the property. Net Return Range: 12+%

Additional Thoughts:

The categorization of strategies developed over time as the real estate investment management industry grew and as strategies proliferated. Within each category, some investment managers have developed specialized or niche strategies in which, for example, they focus on a single property type, while others are agnostic to property type and focus exclusively on the return potential of the asset. However, it is important to recognize that one category is not better than another – they are simply different investment approaches for targeting returns commensurate with the risks being undertaken. To that end, understanding these categories is helpful to investors in building a portfolio that is suitable to their risk tolerance and return objectives. It is also why, at Cadre, we focus on risk adjusted returns, making sure that we are being adequately compensated for the risks being undertaken. Given the uncertainties and unknowns the current market presents, the diligent application of this notion has rarely been more important.


Educational Communication

The views expressed above are presented only for educational and informational purposes and are subject to change in the future. No specific securities or services are being promoted or offered herein.

Not Advice

This communication is not to be construed as investment, tax, or legal advice in relation to the relevant subject matter; investors must seek their own legal or other professional advice.

Performance Not Guaranteed

Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance.

Risk of Loss

All securities involve a high degree of risk and may result in partial or total loss of your investment.

Liquidity Not Guaranteed

Investments offered by Cadre are illiquid and there is never any guarantee that you will be able to exit your investments on the Secondary Market or at what price an exit (if any) will be achieved.

Not a Public Exchange

The Cadre Secondary Market is NOT a stock exchange or public securities exchange, there is no guarantee of liquidity and no guarantee that the Cadre Secondary Market will continue to operate or remain available to investors.

Opportunity Zones Disclosure

Any discussion regarding “Opportunity Zones” ⁠— including the viability of recycling proceeds from a sale or buyout ⁠— is based on advice received regarding the interpretation of provisions of the Tax Cut and Jobs Act of 2017 (the “Jobs Act”) and relevant guidances, including, among other things, two sets of proposed regulations and the final regulations issued by the IRS and Treasury Department in December of 2019. A number of unanswered questions still exist and various uncertainties remain as to the interpretation of the Jobs Act and the rules related to Opportunity Zones investments. We cannot predict what impact, if any, additional guidance, including future legislation, administrative rulings, or court decisions will have and there is risk that any investment marketed as an Opportunity Zone investment will not qualify for, and investors will not realize the benefits they expect from, an Opportunity Zone investment. We also cannot guarantee any specific benefit or outcome of any investment made in reliance upon the above.

Cadre makes no representations, express or implied, regarding the accuracy or completeness of this information, and the reader accepts all risks in relying on the above information for any purpose whatsoever. Any actual transactions described herein are for illustrative purposes only and, unless otherwise stated in the presentation, are presented as of underwriting and may not be indicative of actual performance. Transactions presented may have been selected based on a number of factors such as asset type, geography, or transaction date, among others. Certain information presented or relied upon in this presentation may have been obtained from third-party sources believed to be reliable, however, we do not guarantee the accuracy, completeness or fairness of the information presented.