Core properties exhibit the lowest risk and lowest potential returns amongst the four major commercial real estate risk profiles, and represent generally safer investments than core-plus, value-add or opportunistic investments.
Core properties generally feature characteristics such as stabilized occupancy, investment grade tenants, long lease terms, high quality construction with little to no immediate capital needs and locations in highly desireable areas (relative to property type) in major markets.
Properties in this risk profile are generally limited to the “major” property types including multifamily, office, industrial or retail. Core properties often have longer-term expected holding periods and have a high degree of income security but exhibit minimal opportunity to increase yields in the near term.
Total expected returns for core properties are typically comprised mostly of income with a small degree of capital appreciation.