IRVINE, CA—As cap rates decline on class-A properties in core markets, many firms are turning to value-add opportunities to maximize yield. In Part 1 of a two-part interview, GlobeSt.com spoke with Bill Shopoff, chairman, president and CEO of Shopoff Realty Investments, which specializes in value-add investments, about this growing segment of the market and where it is heading. In Part 2, to post at a later date, we discuss popular value-add strategies and property types.

GlobeSt.com: Where do you think the value-add market stands today?

Shopoff: The general market has clearly recovered since the lows of the recessionary economy, but there are still numerous opportunities. We tend to look at markets on a micro level; this perspective shows some cities and submarkets have been in a robust recovery for many years, while some are still in the midst of recovery like Las Vegas and Phoenix. In the best of times, there are still owners of real estate who are either undercapitalized or lack the skill set to manage the opportunities presented to them, and that is where a firm like ours steps in, with both capital and the requisite skill set to tackle challenging projects, with the plan to achieve outsized returns. There is still a large volume of debt maturities coming up over the next three or four years, many of which will face resizing issues and require a sale or additional capital invested to create a viable business plan.