What are core, value-add and opportunistic?

Core holds mature, well-leased or regulated assets with predictable income. Core-plus adds some risk, such as leases ending soon or revenue that moves with usage. Value-add improves an asset that is underperforming, and opportunistic develops, repositions or rescues assets, with returns resting mostly on growth rather than income. Managers apply these labels with some latitude, and an asset can move toward core as it becomes stable.

Say one fund buys a fully let office building for its rent, and another buys a half-empty one to refurbish and re-let. The first is core and the second is value-add, with more risk and more hoped-for gain. Simple example. Terms vary by fund.

The label tells investors how much of the return is meant to come from steady income rather than from improving or building something, and so roughly how much risk the strategy takes.

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