The holding period is the amount of time an investment is held before being sold, refinanced, or otherwise exited. In real estate, projected holding periods commonly range from a few years for value-add or opportunistic strategies to a decade or more for core, income-focused assets, though the actual holding period can end up shorter or longer than originally planned based on market conditions.
Holding period affects returns in several ways. It determines how depreciation and other tax benefits accumulate over time, it influences whether gains qualify for long-term capital gains tax treatment, and it shapes the total return an investor earns, since a longer hold gives a property more time to appreciate and pay down debt but also ties up capital for longer. Sponsors typically project a target holding period in their offering materials as part of the business plan, though most deals include flexibility to sell earlier if market conditions create an attractive opportunity, or to extend the hold if conditions warrant patience.
Further reading: Lightstone's Track Record
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