There are two main benefits to having a core-plus approach in today’s market: flexibility and keeping the portfolio young. In terms of flexibility, we can take advantage of market dislocation, as we are seeing right now. And we can benefit from the whole cycle – secular dynamics and shifting demand – in any style or sector. Right now, we’re selectively looking to take advantage of market dislocation when possible, then adding value to the assets through tailored capex and management.
The second point is keeping the portfolio young. We don't have a specified benchmark as a core-plus fund, so we look at the NFI-ODCE index as a guideline. The average age of properties in the index is 27 years, and investors are talking about redemptions. But because of the lack of liquidity, the ODCE funds are not investing in their assets, and these assets are getting even more obsolete. Properties in our portfolio are 12 years old on average.
The excerpt above originally appeared from HUSPP Fund Manager Adriana de Alcantara’s interview with IREI Americas
Buying, building and managing to core
Adriana de Alcantara
Fund Manager - HUSPP