REPE: asset management vs acquisition
Hi folks!
I'm very interested in REPE and would like to find out about the perspectives one has within a REPE firm's Asset Management and acquisition division respectively in terms of duties, pay, responsibility and the possibility of becoming a partner. Moreover what are the possibilities of switching within both areas?
I'd really appreciate any insights!
Duties: Acquisitions sources, underwrites, diligences, and closes the deal. At closing, the deal is handed off to Asset Management. The asset manager is responsible for managing the deal going forward: interacting with the partner about management issues, dealing with lenders or other counterparties, preparing reporting on the deal's performance, and managing the disposition. If the deal goes south, the asset manager manages the workout.
Comp: Asset management is not as well-paid as acquisitions. Junior people get paid less, and the ceiling is much lower. High-level asset managers tend to get more of their comp in their salary vs. acquisitions (who tend to get more as performance bonus/carry).
Partnership prospects: Every shop needs asset managers, although there are typically less than there are acquisitions people. If you're good, your ceiling is running asset management for a fund, but you'll almost always be reporting to someone with an acquisitions background.
Possibility of switching: At the junior levels, it's definitely possible, if you're a star in your asset management group. As you get more senior, it becomes more difficult.
In general, if you're just picking based on comp and upside, you'd pick acquisitions. If you're looking for a job right now, though, you might be better off focusing on asset management. It's a lot easier to lay off acquisitions staff in a downturn than asset managers--acquisitions people are pretty useless if you have no capacity to do deals, and you need asset managers to do workouts and actively manage difficult positions. Also, I bet people who have experience during this downturn are going to be pretty heavily in demand in the future.
hoover, thanks so much for your detailled reply!
It makes sense that in the current market environment there is more work in Asset Management.
Concerning value creation: who works out the plans for creating value? is it acquisitions or asset management? I guess the acquisitions team analysis the assets and works out a value creation/business plan and the asset management team then executes it, would that be an adequate description?
How would you assess an asset management position with hudson advisors, which is the asset manager for lone star? could that be a good stepping stone into real estate private equity? also in regard of maybe switching to acquisitions later on?
if we talk about compensation, what are the prospects in asset management compared to acquisitions? I saw a job posting for a asset manager at a repe fund (4y exp. required) with a compensation of around EUR 250k, which is not too bad I guess?
regards, panta
hoover, still here? or anybody else?
Acquisitions Analyst vs Asset Management Analyst: Which is better for B-School and long term? (Originally Posted: 07/13/2015)
Role A
Currently, I'm in a summer internship at a small REPE shop. To be honest, it's closer to a Real Estate Investment Management shop in the sense that we do not have a typical, large fund and instead find specific LPs for each deal that we do. Being that it is a small shop, we do all the heavy lifting. This includes, but not is not limited to, finding deals, underwriting, due diligence, Asset Management, etc.
This internship has the potential to convert to a full time role. Comp is low but I have a feeling that I WILL be able to get equity on our deals.
Pros - Finally a shot at a "preftigious" role in PE. -Get face time with MD -Get an inch deep and mile wide perspective of REPE -Will gain Underwriting Experience
Cons -Low deal flow relative to larger firms -Relatively unheard of shop -Low exposure to institutional practitioners (which I would like for relationship-building purposes) -Not how sure the role will be viewed by B-School adcoms
Next...
Role B
The other role is as a direct report to the Director of Asset Management at a boutique brokerage/advisory firm that seems to be growing rapidly. The principal brokers seem to be making 2-3MM a year which is unbelievable. What I like about AM compared to Acq Analyst is (as many have said) that it really does provide the best knowledge base of how successful CRE properties operate. At the end of the day, optimally operating a property is where returns are realized. However, I'm not sure how robust the exit opps are from AM into PE AND I'm not sure how great a AM role plays into my goal of getting my MBA.
I'm really at a crossroads since Option A provides better technical experience and better career ops (MBA/Professionally); however, Option B is at a growing firm in which I'll get more 'reps' in terms of deal flow and better understanding of the operational aspects of CRE.
I know I sound like every WSO Dweeb in asking this sort of question but I've found that some of frequent forum participants (V.Tech, Prospie, DCD) have a tremendous knowledge and have replied with some phenomenal answers.
Thanks in advance!
Bump? I'm Ron Burgandy?
Neither would be better for B school. Doesn't matter worth a shit.
I'm a little confused by your description of the AM job. If you can describe it without giving it away, some more detail would help. Asset Management team at a brokerage/advisory firm? Managing what?
Ha. I really have been posting a lot in a short amount of time. I was mostly a lurker but figured I might as well get more active in the RE Epiphany forums.
As far as the AM role, I'll lay out the bullet points
-monitor and track work orders and other service requests -maintain relationships with property owners, tenants, vendors, etc -assist with collection of rent, payment of expenses, and compliance with lease terms -prepare lease abstracts and new leases -assist in budget prep for senior mgmt -blah blah, other AM related duties
I'm not sure how this compares to AM roles at more institutional firms. This particular AM division was created to provide a free, value-add service to our clients (property owners) when acquiring or disposing their positions.
Also, when you say neither really matter for B-School. Are you saying that pre-MBA experience in Real Estate are all viewed the same or that both roles are not viewed positively by MBA admissions?
This sounds like the AM position may be related to loan servicing, which a lot of brokers/advisors offer as part of a one-stop shop package deal of services. If it is, then loan servicing would be considered very low on the "preftige" scale. I would go for the acquisitions role because there is a skillset there that translates to any position in real estate finance.
What you described sounds more like a mix between a property manager (not a very good job) and an asset manager (a decent to great job).
They are different enough roles though that it will come down to preference a lot of time. Asset manager is an ops role that focuses on increasing the profitability of properties. Acquisition is obviously buying (and probably selling) the assets. They're different positions that require different skill sets.
There is a ton of diversity in the role of AMs from firm to firm, even within the same sector of real estate. Institutional firms are a bit less likely to do "hands on" AM where the AMs are talking directly to tenants to negotiate leases, manage the property managers, oversee capex projects, etc. Hands on AM, in my opinion, is the best experience if you are interested in learning how to run a property. Many firms, especially institutional firms, use their AMs in much less hands on role, primarily doing financial analysis, property performance, budgeting, etc., almost like a portfolio manager. Some firms don't even have AMs, they only have PMs and property managers.
My firm is a medium-sized private owner who does everything in-house, including very hands on AM. I have worked in both the acquisitions and Asset Management departments, for several years each, currently in AM. A word of caution - while running the property "optimally" IS where returns are ultimately realized, asset management is seen as a cost center and compensation will reflect that. Acquisitions is a profit center. You will never make as much money in AM as in ACQ, in the long run. You will not have nearly as many opportunities to earn equity in AM as in ACQ. I can only think of earning equity in AM if you are VP or higher level at a REPE firm, or other type of fund setup. Not in other situations. That is not to say that there is no good money in AM, but it is not as available as in ACQ (or leasing).
As far as the experience, I actually think that both areas are very useful. If you are planning to stop working after a couple of years to pursue an MBA full time, and then get your post-MBA position at a different firm, you might want to try one pre-MBA and the other post-MBA. For example, the pre-MBA experience in ACQ doing due diligence, sourcing and underwriting deals, and going through the process of bringing a new property into the portfolio would all serve you well later in AM. Likewise, pre-MBA experience managing a property would give you functional perspective that would help you in a post-MBA ACQ position. It could also help you determine which area you want to stay in, long term.
Sounds a hell of a lot like property management. I surely wouldn't enjoy that role but to each his own.
Quis facilis autem unde neque velit commodi molestias consequatur. Voluptates possimus quod aut. Voluptas occaecati numquam eaque eum omnis eos fugit.
Dignissimos maxime alias eligendi aut est. Voluptatem veritatis qui qui quo quia voluptatem dolore.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...