“Core” real estate is the foundation upon which most investors build their real estate portfolios. These investments are expected to provide stable cash flow and capital appreciation over the long term with characteristics such as long-duration lease terms, in-fill locations in major markets and favorable demographic and employment demand drivers. Core assets typically include office, logistics, retail and residential property types of exceptional quality and recent vintage and/or peerless location characteristics with high barriers to competition. While generally offering the lowest yields for investors, Core properties should offer more stable returns and, therefore, less volatility and risk. Most Core investors and Core funds capitalize their investments with a majority equity to minimize volatility of returns and expect to hold their assets for ten years or more.

“Core-Plus” properties typically represent many attributes associated with Core assets, but additionally offer owners the opportunity for enhanced returns through higher utilization of the property. Leasing vacant space, light capital improvements and rebranding may accomplish this upside, but expectations are usually for a modest lift in returns. Core-Plus assets offer investors expected returns that are higher than Core, but not as high as Value-Add and are typically capitalized with about 50% equity. Hold periods are generally from five to ten years.

The majority of assets in the commercial real estate market represent “Value-Add” opportunities, where experienced and skilled owner/operators can significantly improve the returns of a property through capital investments and operating enhancements that make the property more desirable, attractive and cost effective, such as lobby and common area renovations, energy saving systems, conference facilities, bike storage, dog parks, coffee shops and restaurants and other lifestyle amenities. These are the types of capital investments that can redefine a property and place it in a superior competitive position in the market allowing it to garner higher rents and stabilized occupancies versus its competition. While Value-Add assets offer real estate investors returns that are higher than Core and Core-Plus, those higher returns come with greater risk. Value investments are typically capitalized with 30 to 40% equity and held three to five years or upon realization of the business plan’s objectives.

“Opportunistic” investments represent the highest risk investments for real estate investors and seek to provide higher compensatory returns. These investments typically involve significant owner/operator activity to unlock the value creation and upside from highly speculative projects such as land entitlement and development, ground up vertical development of new commercial properties and substantial repurposing and/or restorations of existing properties. Opportunistic assets typically utilize 25 to 35% equity and are sold quickly upon value enhancement in order to maximize returns.

TIG believes in the utilization of data analytics to evaluate markets and help inform decision-making processes associated with real estate investment and asset management. TIG utilizes industry leading practices and proprietary analytical methodologies to evaluate and underwrite sectors, markets, specific locations and assets to enhance investment and portfolio decision-making and, thereby, investment performance. TIG uses both external and proprietary data sets to develop iterative data science models that use machine learning and artificial intelligence to continuously innovate their processes.