Opportunistic
A high-risk, high-return investment strategy involving ground-up development, major repositioning, or distressed acquisitions. Opportunistic investments target returns of 18%+ IRR and often involve significant construction or lease-up risk. They require specialized expertise and typically use higher leverage with more expensive capital.
Related Terms
Value-Add
An investment strategy focused on acquiring underperforming properties and increasing their value through renovation, re-tenanting, operational improvements, or repositioning. Value-add deals typically require bridge financing and target returns of 13-18% IRR. The strategy involves more risk than core investments but offers higher potential returns.
Construction Loan
Short-term financing used to fund the development of new commercial real estate projects. Construction loans are disbursed in draws as work is completed, with interest accruing only on funds advanced. They typically feature floating rates, 18-36 month terms, and require personal guarantees. Upon completion, the loan is paid off through permanent financing or sale.
Ground-Up Development
New construction of a commercial property from raw or improved land. Ground-up development involves significant execution risk, including entitlement, construction, and lease-up phases. It typically requires construction financing with recourse guarantees, followed by bridge or permanent financing upon stabilization.
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