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Value-Add Strategies in Today's Market

Navigating different value-add strategies in today’s market.


HSR’s CEO, Joseph Penner, and CIO, Paul Perkins, discuss the key strategies that have driven the company’s success through various market cycles since its inception in 2001. They reflect on HSR’s adaptability and proven track record of leveraging market conditions to enhance asset values.

In an environment marked by significant financial distress in 2023, HSR identifies a continuing trend of financial dislocation. This scenario presents a prime opportunity to acquire high-quality assets at favorable prices, driven by increased forced sales and reduced market liquidity.

Perkins elaborated on the different types of value-add strategies HSR is set to capitalize on in the coming years. These include financial value-add opportunities, where many groups will face difficulties in restructuring their capital structures, ultimately forcing them to sell properties. HSR plans to leverage these situations to secure properties well below market and replacement costs.

He also outlines the potential in 'light value-add' opportunities, particularly in properties built around the 2000s and 2010s. The economic downturn has led many owners to halt capital improvements, creating an advantageous situation for HSR. By making modest upgrades, HSR can enhance property values, boost rental income, and remain competitive with new market entries.

Additionally, Perkins pointed to potential in traditional value-add projects involving older properties from the 1990s and early 2000s. These properties are well-located but require upgrades and offer significant potential for value increase through renovations. He emphasized the critical role of location, noting that strategic enhancements can significantly enhance a property’s market appeal, although the intrinsic value of its location is unchanged.

View the full interview with CIO Paul Perkins here.

Important Disclaimer:

The summaries, descriptions, and content in these videos are for informational purposes only and do not constitute tax, legal, or investment advice. The views expressed are those of the speakers and do not necessarily reflect the official policy or position of HSR or its affiliates. Investing in real estate involves risks, including potential loss of principal. HSR does not guarantee the accuracy or completeness of the information provided in the summaries or videos. Consult with qualified tax advisors, legal counsel, and financial planners before making any investment decisions.

Furthermore, these videos and their written summaries do not constitute an offer to sell or a solicitation of an offer to buy any securities or investment products. Any such offer will be made only by means of official offering documents and in accordance with applicable laws.

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