Dear Martin,
Very good article. But I think why core fund doesn't increase their leverage is that the gross rental yield (not total return) is hard to cover interest expenses and meet the banker interest coverage ratio requirement after deducting asset level expenses since core funds are using long-term operating loan. On the other hand, the value add or opportunistic fund are using construction loan or acquisition loan which is to be totally paid back though asset sale or refinance. In conclusion, the market is segmented as core, value add and opportunistic through realistic market practice. Simply gearing up core funds may only be theoretical. Hope to discuss further with you.