Strategies That Work for Value-Add Assets

IRVINE, CA—Last week, GlobeSt.com spoke with Bill Shopoff, chairman, president and CEO of Shopoff Realty Investments, about where he sees the value-add market today and in the future. Here, in Part 2 of our interview, Shopoff talks about the strategies necessary for success with value-add assets and some important advice he has for investors in this space.

GlobeSt.com: What strategies do you expect to be most popular in the value-add market? Development? Lease-up?

Shopoff: We see numerous variations, including adaptive re-use, development and the more typical value-add that involves an infusion of capital to reposition an asset in the marketplace, coupled with a focused leasing strategy. We have been involved in a few corporate dispositions where large companies are disposing of non-essential real estate. These afford the opportunity to acquire a larger infill footprint to create a significant value-add project.

GlobeSt.com: Are there specific property types you think will be more popular in 2015 than others?

Shopoff: Infill commercial locations that are ready for urban-type redevelopment will be strong. Density is popular. Younger workers want to live in an urban environment and have a shorter commute with greater amenities that are available in thriving urban centers. This will continue to be a trend that we intend to capitalize on into 2015 and beyond.

GlobeSt.com: Anything else you'd like to tell our readers?

Shopoff: We have been involved in value-driven real estate acquisitions and operations for more than 20 years. I think this business exists in good times and bad, although the selection is better at some times than others. With a disciplined approach, solid market knowledge and an experienced team, you can not only create great returns in this space, but you can also create projects that are contributing to their communities. That is a large part of what our team strives to accomplish with each project we undertake. For investors, it is very important to do your due diligence—firms with significant experience can demonstrate a track record and ability to achieve success in the space. Success in value-add investment is a challenge and requires real expertise. For those firms that lack these essential elements, the likelihood of success will be limited, while those who possess these skills will find this to be a rewarding niche in the industry.