For many years, the most common mantra among commercial real estate investors was, “You make money on the buy.” The common wisdom was that what mattered most was the going-in capitalization rate, the exit capitalization rate, and how much debt — at a reasonable rate — could be loaded into the capital stack to lever and boost the equity yield between the point of acquisition and the point of disposition.

But the Great Recession taught us some hard lessons. We became clearly aware of two truths. The first was debt matters, and more debt is bad because it exaggerates the impact of poor operations. Second, we learned asset management leading to outstanding operations matters because that is what produces net operating income, or NOI, arguably the most important element of value stability and value creation.

Adhering to real estate fundamentals can never be ignored, but portfolio managers who entered the Great Recession with a strategy to use debt to drive equity yi