Everyone wants value add deals at a high teens net IRR.
I just tied up a core deal.
No heavy lifting. No lease-up risk. No construction. Just a well-located asset in a primary market, a credit tenant, and in-place cash flow.
Here is why now is one of the most interesting moments in years to be buying core.
1. Core is cheap relative to history.
Four to five years ago, institutional-quality assets in primary markets left almost no margin of safety. Today you are buying more income per dollar than at any point since 2015. The asset did not get worse. The price did.
2. Positive leverage still exists, but the window is narrowing.
Our recent Clovis acquisition, fully leased to AT&T, came in at a 150 basis point spread over our debt cost. The asset is working for you from day one. As institutional capital re-enters primary markets, and it is re-entering, that spread closes.
3. Value-add risk premium has compressed.
Right now, value-add deals in many markets are penciling at returns surprisingly close to core but with significantly more execution risk. Core is being mispriced relative to the risk you are not taking.
A durable real estate portfolio is not all one thing.
Value-add chases upside. Core preserves and compounds. The entry point on core is the most compelling I have seen since the post-GFC window.
We zigged toward IOS when people called it a parking lot.
Kelly Chang Levine and I are zigging again to build wealth for our family.
If any of this resonates with where you are building your portfolio, I would love to connect.
Why Core Real Estate Is Interesting Again
