Q&A with PERE: An attractive vintage for core and core-plus investing

Higher interest rates and constrained liquidity have created an unusually attractive vintage for selective core and core-plus real estate investors able to generate returns through asset selection, structuring and operational expertise rather than market beta.

• Higher rates have prolonged the period of muted returns after the global financial crisis, while unlevered underwriting is around 7% and projected returns are generally 6.5%-7.5%.
• Redemption queues in open-end core funds, higher debt costs and a limited buyer pool are creating capital-market dislocations that can produce returns above traditional core and core-plus profiles.
• The opportunity is concentrated in broken capital stacks, refinancing or recapitalization needs and sellers seeking differentiated liquidity solutions, where structuring can align incentives and improve downside protection.
• Broad sector allocation is less likely to drive outperformance, so the managers emphasize hyper-local analysis of micro-locations, operating metrics, demographics and supply-demand imbalances.
• Targeted areas include industrial outdoor storage, cold storage, AI-adjacent industrial assets and affordable housing, while the U.S. and Canada offer deep capital markets, legal protections and transparent governance.

Takeaway: Core real estate may offer attractive risk-adjusted entry points over an extended buying period, but investors need capital, liquidity and detailed asset-level and seller analysis because valuation gaps, low transaction volumes and redemption constraints remain unresolved.