Value-add strategies are frequently sold on the improvement and underwritten on the exit. When those two diverge, the improvement is real and the return is not.
An exit agreed at entry means a named buyer type, a plausible financing environment for that buyer, and a hold period long enough to deliver the works with contingency. Anything less is an assumption wearing the clothes of a plan.
The most common failure is not construction overrun but liquidity: a repositioned asset in a market with no natural buyer at the target yield is a good building and a bad investment.
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