As credit markets reprice risk and the cost of leverage increases, cash buyers and those with more traditional levels of debt will likely be seeing a more hospitable environment to invest in. Pension funds and large institutional money fund managers have generally stayed away from the riskier value-add and opportunistic investments and focused on “core” investments traditionally meaning those properties with stable and predictable cash flows.

The rise of cheap debt coupled with a general bullish market sentiment on rents had transformed many core assets into value-add plays and thus invited fierce competition from opportunistic real estate funds who often looked for opportunities to raise rents, renovate, or other catalyst which would allow them to quickly add value.

An article in yesterday’s P&I outlines what will likely be a reversion in the profile of the buyers of core asset real estate.

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