Core Plus

In real estate investment strategy jargon, Core Plus refers to properties or portfolios that are high-quality and relatively stable (similar to Core assets), but with some potential to increase value or cash flow through light enhancements or improved management. These investments sit in the low-to- moderate risk range: they generate solid current income like core assets, but also offer a “plus” – perhaps slightly higher leverage, minor property improvements, or leasing up some remaining vacancy – to provide a bit more return. For example, imagine a 15-year-old apartment complex in a strong market that’s 95% occupied. It’s in good shape but maybe the units could be updated over time to push rents slightly. That’s classic core plus: a mostly stabilized asset with a growth kicker. High-net-worth investors often gravitate to core plus deals because they balance safety and performance. These deals usually yield more than bond- like core assets – perhaps targeting total returns in the high single digits or low teens – without veering into the heavy execution risk of value-add projects. From Lightstone’s perspective, aligning with a “growth and income” mindset (as core plus is sometimes described), core plus offerings would appeal to investors who want some reliable cash flow (to feel “seen and cared for,” valuing consistent income) yet also want to outpace inflation and grow wealth (the vision aspect). Core plus matters in a portfolio context: It can play a role as a steady income generator with a touch of appreciation. For accredited investors building a diversified real estate allocation, they might mix core, core plus, and value-add – core plus sits in the middle, providing a blend. A core plus fund or deal might use moderate leverage (say 50-60% loan-to-value), and target maybe 8-10% annual returns comprised of, hypothetically, 5-6% cash yield and the rest in appreciation. Importantly, core plus properties are usually in good locations and are well-occupied – the downside risk is lower because even in a downturn they tend to stay leased (perhaps at reduced rents) given their quality. But because they may involve some repositioning or re-tenanting (e.g., rolling over leases to higher rents), they do require active asset management – not quite “buy and forget.” Investors should look at the sponsor’s plan: what is the “plus” factor? Is it reasonable (like upgrading a few units at turnover) or overly optimistic (like relying on major rent jumps that effectively move it into value-add territory)? In summary, Core Plus is all about “stable income with a bit of upside.” It matters because it’s a strategy that many high-net-worth investors find aligns with their goals: a degree of wealth preservation (through quality assets) combined with enough growth to make a meaningful contribution to their portfolio’s expansion over time.