The characteristics of the former include properties that are rented, have leases expiring on an orderly timetable, have no more than 25% debt and belong to one of the major property groups (offices, industrial, retail and multifamily housing). Portfolio definition indicates a mix of three of the four property categories, at a minimum, geographical as well as tenant/industry diversification and reasonably balanced lease rollovers spread over the whole portfolio.

A core investment strategy is a low leverage approach that assures cash is available for distributions, one that outperforms bonds in times of market equilibrium with modest risk. It does not produce higher gains than equities, however. Going forward, the researchers expect this approach to deliver superior relative performance since supply and demand for commercial real estate remains in balance. They note that vacancy rates across the country are in the single digits, rents continue to rise and new product is delivering at a reasonable rate with little chance of overbuilding.

The report, Today's Core Values, by Joseph A. Hill, M. Leanne Lachman and Daniel T. Van Dyke is available at www.lendleaserei.com.