Saturday, July 25, 2020

Class A Investment Properties Bring Stability to a Portfolio


Barclay Grayson has worked with Portland, Oregon’s BPM Real Estate Group as senior vice president since 2003. His current responsibilities include directing the operations of BPM’s acquisition of commercial, hotel, multi-family, and senior living properties, as well as financing for new development. In handling acquisitions and financing, Portland’s Barclay Grayson and the BPM team focus on Class A buildings and complexes in upmarket locations across the country, with purchase prices in the $10 million to $50 million range.

In real estate buying and lending terms, Class A properties represent the best-quality investments in a market and geographic region in locations with upscale demographics. A Class A property also usually features newer construction, presents fewer infrastructure problems, and is characterized by a low rate of vacancy and tenant turnover. These properties can command the highest rents in an area, and they are considered the lowest investment risk among commercial investment buildings. Building aesthetics, infrastructure, location, amenities, and other factors are also typically of higher quality in Class A properties.

For investors in any type of commercial property, property class (“A,” “B,” or “C,” in decreasing order of building and location quality) is an important factor to take into account when assessing potential risk, as well as when gauging long-term expenditures. Each of the three classes of properties can offer investment advantages, but each also presents characteristic ratios of risk to return. Potential investors will need to strategize how a particular class of investment will play out regarding the needs of their overall portfolio.

The class type into which an investment falls can be expected to produce specific effects over the life of the investment. Class A properties, for example, offer the highest degree of stability and predictability in a portfolio.