CRE Objectives vs Strategies
Last Updated: June 2026
Read Time: 4-6 minutes
Author: Andrew Lofredo, CEO, CRE Vertical Advisors
So, is "value add" a real estate objective or strategy? Those words are somewhat overused and encompass both an objective and a strategy. Ideally, if you are actively involved in an investment - you are doing something to add value. This answers the question; value add is the action (the strategy being executed) to achieve something (your objective).
On that note, there are four main/ commonly recognized objectives.
Preservation of Capital/Wealth – protecting that principal – safe investments.
Current Income - frequently measured by cash on cash return or some similar multiple. The focus here is on distributions either immediately after an initial investment or some point in the near future.
Capital Growth - focuses on increasing value (aka appreciation) after the implementation of a strategy, the passage of time, or a combination of the two.
Diversification - while an objective, there will be a secondary objective tied to one of those listed above.
There are other objectives, and the real aim will most likely be a mix of those listed above, depending on where the investor falls on the risk spectrum.
The main investment strategies similarly follow the risk/return spectrum.
The four main strategies are:
Core - stabilized asset in a healthy market. Consider its behavior almost bond like - with relatively steady returns. Frequently (but by no means always) categorized by a long term tenant with a NNN lease structure.
Core-Plus or sometimes referred to as Enhanced Core - similar to Core, but not quite as stable - some risk, whether that is increased susceptibility to economic trends, weaker market, or lower credit quality tenant.
Value Add - the asset has some issue that is putting it at some disequilibrium with the stabilized market. Examples include above-market vacancy, below-market rents, significant deferred maintenance, the need for capital investment, or upgrades - either aesthetic or functional. This disequilibrium, while increasing risk, also provides more possibilities for upside.
Opportunistic - think significant value add and high risk - such as purchasing an asset with no cash flow, major repositioning, or ground-up development. Such investments are inherently riskier and, therefore, have the potential for higher returns.
The strategy should be aligned with the objective. Back when I taught Asset Management and Strategic Real Estate Management, I was always surprised by the number of students who would launch into their strategies without clearly defining their investor's objectives. The presentations weren't bad - the market analysis was solid, the strategy was often well-reasoned - but they were answering a question nobody had asked yet. How could I grade the quality of an asset plan without knowing the objective? A 20% IRR may be awesome on a 4 year hold, with no distributions until a sale, but, if your objective was cash flow, than it may not be awesome for you.
Opportunistic strategies tend to be more exciting, but if your investors are single-family offices that are looking for diversification and preservation of wealth, you may be barking up the wrong tree. And the consequences aren't theoretical - a preservation-focused investor sitting inside an opportunistic play is going to get uncomfortable the moment the execution hits a snag.
Conversely, a NNN property with a long term creditworthy tenant is not going to knock the socks off an investor looking for significant capital appreciation. That investor is going to watch a stable, predictable asset do exactly what it was supposed to do and eventually make a premature disposition decision out of frustration, leaving value on the table.
I see versions of this in practice regularly. The strategy looks right on paper and the numbers check out. But somewhere in the process, nobody went back and asked whether this was actually the right vehicle for what this particular investor needed it to do.
By the way, one of the objectives we discussed was diversification. Of course, that can be splitting your investments between real estate, equities, bonds, etc – and it can also mean a core investor who enters a joint venture with a trusted partner on a value add deal.
This comes down to acting with purpose. You can develop a truly comprehensive strategy across the multiple real estate disciplines once you understand the ultimate objectives and not before.
This article is for general information, educational, and entertainment purposes only. Establishing and implementing a strategy for a particular property encompasses many unique factors, and professional advice/services should be sought for that specific transaction or investment.