Is Real Estate Asset Management Back Office?
Trying to decide between two roles, one of which is a "Strategic Finance" job for a Fortune 500 firm, that is mostly focused on corporate modeling and FP&A but also touches M&A (25% of the job allegedly), which I ration is a front office role on the M&A side at least.
The other role is a RE AM role for a REPE firm with $2.7B AUM, latest fund being $500M of equity funding. My concern with AM is that I have absolutely zero interest in being a leasing guy or operations / PM / reporting guy and from my understanding that is mostly what AM is? I understand that starting in AM leaves open the possibility of moving to Acquisitions / Dispositions later on but I'm just spooked by how bad the recruiting market is for real acquisitions roles right now so don't really want to have to count on that.
It depends on the shop but generally speaking: Yes, AM is exactly that.
Main responsibilities usually are dealing with tenants, property managers, valuers, brokers/agents, buyers, contractors if any capex is required and reporting, reporting and reporting :)
If you're lucky you get dragged into acquisitions/underwriting but this depends considerably on the shop.
To answer your question, technically it is back office because it is not a revenue generating seat in the same way acquisitions is.
If you're interested in real estate, I'd say go for it. If you end up not liking it, I don't think it'll be hard to move to acquisitions after 18 to 24 months. If this shop has $2.7 billion in AUM they must be a very solid name in the industry and a nice touch on your resume.
If you like the fortune 500 role more then just go for that one.
That's not true - they are responsible for the asset generating cash, which justifies the firm getting paid an asset management fee's. They also manage dispositions which is where deals actually make money...
Found the AM associate
Technically yes, I suppose, but I have never heard of anyone in real estate talking like that or caring about that.
I would hard disagree. AM executes the business plan and realizes the investment at disposition. The value is literally ‘created’ by the AM team. If that is not front office I don’t know what is.
Wouldn't consider it back office but yeah it's boring as fuck
Depends how the actual coverage of the AM team, but typically it's considered back office, or mid at best. But I don't agree on RE Asset Manager being far away from revenue generating, actually most of the values of RE come from good operators, aka Asset Managers. You get tons of good exposures to actual boots on the ground, and the acquisition team of a $2.7bn shop typically isn't that well connected to the whole financial world as you think. I'd say try the AM role for a bit, expand as much as you can and help with the underwriting process every time you can. You'd excel.
I would argue that both acq and AM are traditionally front office roles. Traditionally, the delineation between front and back office is - do you interface with clients/customers Y/N? Not revenue generation or closing deals. Although I’d also say that both roles are symbiotic in RE revenue generation.
Therefore, having been in and seen several asset management meetings that involve direct client (LPs in this case) interaction, I would argue that both roles are traditional front office roles. Just my 2 cents.
Edit: Experiences may vary.
As other users have pointed out, different shops have different experiences. Trust your gut and go where you think you will learn the most.
Truth is that it depends on the seniority and, most of all, the type of deals you're working on.
If you work for an institutional investor and you are the asset manager of some core office/logistic sites...well that may not be super exciting.
But if you work for a developer (Hines/Tishman/Greystar) and you have to manage every aspect of a development/value added investment (leasing, (re)financing strategy, disposal strategy, capex monitoring) that's a totally different job and that's where actual returns are delivered (no, unfortunately the strategy you have in the business plan is not going to be exceduted by itself). Similar concept if you manage a UTP/NPL pfolio, working with the lenders for the restructuring of the credit etc etc.
Completely depends on what type of person you are.
Acquisitions is really a glorified broker role at the end of the day. You have a base salary, but you eat what you kill, and once you are past the financial analysis stages, its all about how much business you are bringing in, which comes down to relationships. If you get excited about finding a good deal, are opinionated in terms of why you think something would be good, like more of a fast past nature. That's acquisitions. If you don't want to be held to some sort of standard in terms of how many deals you bring in, aren't as go-go-go, are mainly financially oriented and are more bout the nuts and bolts of a deal and want stability, that's asset management. I am on my own, but I was in acquisitions and asset management and really really didn't like the asset management side but that is just my personality. I have friends who are asset management machines and get their nut by driving optimization. Just depends on what floats your boat. FP&A is back office and probalby more akin to asset management so if you want to see deals I would double check you'll be doing true M&A stuff.
Back office generally means supportive functions that aren’t relevant to the primary driver of revenues. Examples would be accounting, compliance, HR, operations, etc.
I wouldn’t say AM is back office. AM is very much still a real estate role and is technically a revenue driver via managing the investment, executing on the business plan, and the final disposition of assets/portfolios/entities.
Depends on shop, but unless you're in debt AM or AM at an institutional LP (i.e. you're managing the actual asset managers) then it is absolutely not a back office role. You even included leasing in your description of the role - by definition leasing is transaction oriented and revenue generating, i.e. front office.
Asset managers at a GP are literally the reason a deal does or doesn't work out. They create the value and ensure the business plan actually gets executed. At most shops you're not doing the actual leasing, budgeting or property management yourself but instead are coordinating those team members and signing off on decisions. You're functioning similarly to a development manager to keep everybody on task and on plan, while tweaking strategy as necessary. Yes, there's reporting involved, but the same is true of acquisitions roles at most shops (and a lot of top calibre GPs acquisitions teams also function as asset managers). Also once you're above the junior ranks its not like you're the one compiling the reports anyways, you just review and sign off.
In my opinion, having asset management experience makes you a far better direct real estate investor. It won't help you with macro thesis, top down investing but if you like real estate and not just finance it will make you miles better at identifying individually good deals, recognizing what is/isn't realistic as a business plan, and creating value than the guys who have never actually had to deliver what they put in their model.
Agreed with you, but it still doesn't get the glitz and glimmer as an acquisitions role. The brokers aren't lining up to take and expense asset managers out to drinks and events. But good AMs know operations more than any acq guys do, and that's where the deal makes money.
The LPs, that the acquisitions guys don't know, aren't lining up to give them hundreds of millions of dollars after a 7 year career either. What's more important? Going to a bar with some blowhard broker? Or developing the network and skills you need to be the key player in your own shop?
The IS brokers aren't, but the leasing brokers are (and if you like drinks and events, frankly the leasing guys are way bigger degenerates than IS).
Also as PEarbitrage correctly points out, you actually spend more time interfacing with your LPs in an AM role and build stronger relationships with them - those relationships are usually limited to VERY senior execs on the acquisitions side.
To be fair, the leasing brokers are doing that still with AMs too, since they want the listing business. That is of course if your shop does leasing in-house.
Just want to add that AM absolutely generates revenue. All the large institutional shops literally rely on the dependable asset management fees that they charge. Acquisition fees are not always so consistent, especially in this environment where transactions are infrequent.
I view AM (assuming equity) as a front office role. They’re the ones that actually create the value. I’d even say it is relatively easy to buy an asset. It’s usually the highest bidder or the one who offers the most attractive terms. The AM team actually has to deal with the asset throughout the 3-10 year hold period. Acquisitions only is involved from sourcing to closing. If a shop treats AM as back office then I’d have serious reservations about working there. Debt AM is entirely different. That role is back office because you’re just monitoring a loan, not adding any value.
Lol some of ya’ll clearly have no clue what true AM is. Executing on the approved business plans and creating incremental value from acquisition for your firm/investors is definitely back office work…
AM is front office in real estate operating companies, and institutional funds. Depends on how active and how much capital. Some spots you manage IR too, deal with equity and dept financings, and of course do reporting, but you also implement the business plan.
The asset management team at my firm typically acts as gophers, getting coffee, food, dry cleaning, etc. Sometimes the AM team gets to model out expense growth (revenue growth is only for the smartest people at the firm who can pull up a CoStar report).
AM isn't back office. It's absolutely the best place to practically learn the business, sorry to break it to you but reporting to investors is pretty crucial if you ever want to raise money from them again. And quite frankly, the lowest guy on the totem pole (you) is going to be doing quite a lot of it regardless if they are on the acquisitions side or the asset management side. Welcome to the team: play your role, learn as much as you can, ask stupid questions, realize that menial work isn't below you, and you'll do just fine.
Depends on what you are an AM for. If you're an AM for a development shop, good luck building anything. If you're AM on fix and flip value add, then yes I think you carry much more weight.
In 90% of RE shops AM does dispositions.
AM is the most important silo in any firm. Acquisitions is flashy but they tend to have zero applicable skills when it comes to starting their own shops independently.
At the end of the day what actually matters here is what you want to do both now and in the long term. If you want to develope a career where you buy oil wells neither job makes sense. If you want to go out there and buy small businesses in a micro pe type of role, it could be argued from different positions that both are viable options for different reasons. If you want to develop a RE portfolio take the AM job 100%. If you want to go into corp dev take the f500 role. At the end of the day the job itself doesn't mean anything. What it does for your life plan is everything.
I agree with most of your post BUT having the relationships and being able to source and tie up deals is critical for starting your own firm.
AM is more important to returns and like 99% of a RE firm, but.. you can always learn what goes into it. Acquiring property is not necessarily difficult and I agree executing a business plan is harder— but acquisitions is a dance that I really think requires experience and touch (unless you’re just gonna pay the biggest number).
Deals can be sourced without acquisitions teams. But deals can not be managed to success with out top tier AM teams. I am not saying that acquisitions isn't important. I am just saying that it is pretty clear when you get a bunch of people chirping to tell who the acquisitons and brokers are. They will tell you. Take a look at the slew of MF deals that are going bust now. There is ZERO reason why any MF deal should be going under. The reason they are is because the groups that raised money to do these deals were a bunch of acquisitions people who have zero fucking idea about how to manage assets to success.
I know very few asset management guys that have gone out on their own. Almost all have been investment/acquisitions people. Not saying that's the cardinal rule, but I think acquisitions is inherently more entrepreneurial and successful people in this are generally bigger risk takers. The AM people I know like the idea of doing something on their own, but would never make the leap.
You know very few AM guys who have done that becuase it is a dime a donzen to find acquisitions guys who have done that. The thing is, those are usually the guys who run the shops that go bust too.
I don't think you can paint all AM with one brush. I have friends who work in AM and their job responsibilities sound very much like a back office role, but I also have friends doing AM at other shops where it sounds like a much more active front office role. Totally shop-dependent imo.
Came here to say exactly this. Also it is generally more challenging to go from AM>acquisitions than the other way around. Can depend on market cycle timing but wouldn't count on it being an easy transition.
At the end of the day you are looking at two very different roles. What are you more interested in? What are your long term goals?
Depends on the firm. At mine, pay is the same for both. AM does a lot and has plenty of relationships outside the firm with brokers and LPs. Lots of air time with important senior people too. Very much a front office role. Have been at other shops where AM is an afterthought and got worse comp. Really need to see how the firm is set up.
AM varies a lot more between firms compared to acquisitions. At some places AM is a very strategic and visible role, at other places you are just a glorified accountant.
As long as the role involves at least some modeling, lateraling to acquisitions shouldn't be too hard as the market thaws.
Hey everyone,
I've been absolutely engrossed in our discussions about the intricate differences between working in Asset Management (AM) at REPE firms and taking on Strategic Finance roles in big Fortune 500 companies. The insights you've all shared have been very interesting. I've taken some time to distill everything we've talked about and wanted to bounce a few more thoughts off you all.
The real creamy white juice of AM seems to be its pivotal role in not just carrying out business plans and seeing through the value at sale time but also in the nitty-gritty of managing assets. This includes everything from figuring out operational strategies, building relationships with tenants, to making calls on capital expenditures. It's becoming clear to me that being successful in AM isn't just about maintaining value, but actively boosting, nurturing, and milking it. Ideally you want to milk it dry – at least that’s what it seems is yalls consensus.
And then there's this whole interesting debate about whether AM is considered a front or back office gig. It's less about whether you're directly raking in the dollars and more about your strategic role in the life of an investment. Viewing it from this lens, AM seems to have a finger in the pulse of the investment's wet center, making it feel more front office, especially in places where AM pros are deep and hard in the fleshy tunnels of the strategy and decision-making holes.
The possibility of zigzagging and d-riding within real estate, from AM to acquisitions or the other way around, is super intriguing. Despite some voices highlighting the throating-hurdles, hearing success stories is pretty inspiring. It paints a picture where the wide array of skills homed in AM, alongside smart networking and an appetite for that white, could really swing doors wide open across the real estate landscape.
When stacking this up against Strategic Finance roles in the corporate giants, there's a noticeable shift. The latter zooms out for a broader view of corporate finance, dabbling in a mix of modeling, financial planning & analysis, and even a sprinkle of mergers and acquisitions. This path seems to carve out a different sort of strategic influence, one that's b-plugged into steering corporate growth and big-picture decision-making.
With all these rich perspectives floating around, I'm super curious about a couple more things:
• For anyone who's made a leap onto a thick one within the real estate world, from AM to acquisitions or the other way, what really tipped the scales for you to make that jump successful? Are there issues with the increase in stretching?
• And how do you all size up the long-term career paths and skill-building between Strategic Finance roles and more niche real estate positions? From a traditional finance perspective, real estate perspective, and sizequeen (or king) perspective?
I can't tell you how much I appreciate this community's insights and am all ears for more wisdom and experiences. Can't wait to hear what you think!
I think Asset Management is grossly undervalued for the work they do. Acquisitions sounds sexy and it's always cool to close a big deal, but let's be honest, unless it's an off market deal, whoever underwrites the most aggressively, and pays the most (with surety to close) wins the deal 98% of the time. Now it's up to the asset management team to make sure the investors don't lose money and the property actually gets those 10% rent bumps annually.
Oh, the acquisitions associate/analyst put only $200,000 in the budget for clubhouse renovations and you got a quote for $350,000? Too bad, go get another quote.
They underwrote for $2,000/unit in value add renovations for tile showers? Too bad, go find some miroflex subway tile look alike and make it work.
The analyst said y'all would cut expenses due to your firm's unique, best-in-class operational and management excellence (yeah right) - 10% annual rent bumps just became 15% rent bumps.
I work at a Top 5 REIT in AM and it’s way more technically intense than my previous Investments role. Pay is good but now I don’t get a deep dive on strategy development for new investments which I really enjoyed in my last job.
Can you go more into detail? What do you mean by it being way more technically intense?
Acquisitions sell the dream and asset managers execute and manage reality.
Feel like based on what I’ve seen those Strategic Finance roles you do get to touch M&A activity, but it’s driven by Corp Dev / Strategy teams and they’ll bring on EY or someone to advise. Front office ish, but I’d imagine corp dev/strategy are the ones hunting down opportunities, prob be more wrangling ‘internal’ clients and the consultants. But could be different at every company so what do I know.
FWIW I think asset management can be “front office” but as mentioned on this thread, entirely depends on the company. I’ve always looked at it as a (rare?) opportunity in RE to be sort of a generalist, and could translate nicely into running a shop one day or a very senior operations type role.
AM is absolutely back office. It's important and strategic work, but let's not kid ourselves.
Naw
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