Value add, opportunistic and core plus are the three strategies Valad applies across its five sectors. Each describes a different balance of existing income, risk and required execution.
- Core plus: stable income, light asset management.
- Value add: sound fundamentals, income improved through execution.
- Opportunistic: the highest execution risk and return.
- The strategy follows the asset, not the other way round.
Core plus
Core plus assets generate stable income from the outset and require relatively light intervention. Returns come mainly from the income itself, with modest improvement through leasing or refurbishment.
The profile suits assets in established locations with sound occupiers, where the priority is protecting income rather than transforming the building.
Value add
Value add assets have sound underlying fundamentals but income or occupancy that can be materially improved. Returns depend on execution: releasing space, restructuring leases, refurbishing the building or repositioning it for different occupiers.
Existing income provides visibility during the hold period while the business plan is delivered, which is a different risk profile from building speculatively.
Opportunistic
Opportunistic strategies carry the highest execution risk and the highest return expectations. They typically involve substantial capital expenditure, significant repositioning or development, and often limited income while the work is carried out.
Because there is less existing income to fall back on, the quality of the underwriting and the deliverability of the business plan matter more than in either other strategy.
How the strategy is chosen
The strategy follows the asset rather than being decided in advance. Valad assesses the location, the existing income, the occupier base and the actions available, then determines which profile the opportunity genuinely fits.
Applying a strategy label to an asset that does not support it is one of the more common ways underwriting goes wrong, because it sets return expectations the property cannot meet.
Frequently asked questions
What is value add real estate?
An asset with sound fundamentals whose income or occupancy can be materially improved through releasing, lease restructuring, refurbishment or repositioning.
What is the difference between value add and opportunistic?
Value add relies on existing income while the business plan is delivered; opportunistic involves greater capital expenditure and often little income during the work, with higher risk and return.
What does core plus mean?
An asset producing stable income from the outset that needs only light asset management, where returns come mainly from the income itself.