CRE Brokerage -> RE IB (Eastdil, HFF, CBRE) Possible?

Hi guys,

I have just started working at a reputable CRE brokerage Firm in NY (#1-2 according to deal size) as Investment Sales Associate. I am really happy with the job, very exciting, lot to learn and my colleagues are great and all but I am thinking about start networking to move out of brokerage for following reasons:

1. I got placed into one of branch offices (Brooklyn & Queens), so the building we are dealing with is mostly under 5mm. (Don't even use Argus)

2. Little shallow on analytic side. Although it similar to IB (Pitch books, simple valuations etc. ) I already learned everything in a week which is impossible in other financial firms.

3. I am not natural A – Type personality. I don’t really enjoy talking to clients all the time, which is essential in becoming a successful broker.

My end goal is RE PE, but I know it’s almost impossible with my credential right now, so I wanted to ask you guys for some guidance.

Is it possible for me to network into RE IB? I’m not talking about GS MS RE but like Eastdill, HFF caliber firms.
Also, do they have a rigid recruiting process like BB banks?
Or maybe REIT?

Where/how should I start networking to move into more of analytical side of real estate?

And just for a reference,

My brief profile:
Top State School (UVA, UMICH, UCLA) Econ Major
GPA 3.0 (Low)
Previous IB internship (Didn’t learn much but yeah)

I know I asked a lot of questions, but I appreciate any comments!
Always, thanks for your advice,

 

Well, you are right, but firms like Eastdil seems to deal with investment grade properties and enables analysts to gain solid experience in relatively complex transactions. Also, I heard that they have more of an investment banking feel to it. not sure how it exactly works tho

 
prospie:

CRE Brokerage -> RE IB (Eastdil, HFF, CBRE)? All three of those firms are CRE brokerage.

Yep. This entirely

I suppose Eastdil does more IB-esque stuff, but then again all major brokerage firms do capital markets work.

Commercial Real Estate Developer
 
yellowmonkey:
firms like Eastdil seems to deal with investment grade properties and enables analysts to gain solid experience in relatively complex transactions.

All brokerage firms deal with investment grade properties and complex transactions

Commercial Real Estate Developer
 
yellowmonkey:

Thanks for your answer, but since I didn't get placed into NYC office (currently in Brooklyn, queens, thus no investment grade properties). I am looking to make a switch into other major firms. Is it easy to make a swithch?

I wouldn't say it's easy. A lot of higher end RE shops want to see either a MSRE or an MBA and they definitely want you to have Argus experience and probably some more years of work experience.

That being said, it's not impossible.

Commercial Real Estate Developer
 

if anyone can answer this, it would probably be helpful for OP:

what's the difference between Investment Sales vs. Equity / Debt Placement (& other capital markets roles) in some of the big brokerages like HFF, Eastdil, and CBRE in terms of:

  1. technical / modeling skills at the analyst level?
  2. exit opps after an "analyst stint" and also at senior levels?
  3. compensation
  4. more interesting / challenging work?

and OP - while the firms you listed are brokerages, I think Eastdil actually has an IB team that deals with corporate transactions in the RE industry. In fact, on their website it lists "Strategic Advisory / M&A" and "Corporate Real Estate Advisory" among its services. Plus they're structured as teams with analysts and they do salary + bonus.

 
Best Response

1) Most of the modeling skills should be pretty similar for equity sales vs. debt placement at the analyst level. The difference would be you're underwriting deals from an equity standpoint vs. a debt standpoint. Equity underwriting is going to be more forward looking and you would be evaluating what IRR an investor could get based on the properties future performance. Debt underwriting generally is backward looking and more conservative than equity underwriting. You will be more concerned with how the asset has performed historically. It's worth noting that for Eastdil at the analyst level you would most likely be a generalist and work both investment sales and debt placement. For analysts at CBRE you would work for either an investment sales team or the debt/equity finance team (capital markets). I'm not sure what the analyst structure looks like at HFF.

2) Analyst exit opps to REPE exist at all of these places. In my opinion, exit opps would be the best at Eastdil. I know some analysts have moved from Eastdil to Mega REPE funds, not sure if this is the exception or the rule though. If you're in a good group at CBRE and get exposure to good deals exit opps would be strong as well. If you're working for CBRE in a smaller market that is going to work on average deals, exit opps may be limited.

As far as Investment Sales vs. Debt Placement exit opps, if you want to be at an equity fund its advantageous to work on the Investment Sales side. That being said, it is certainly possible to move from a debt placement/capital markets team to an equity fund at the junior level. If you want to work for debt fund doing mezz investments you should do everything you can to start off on the debt side. It seems much easier to move from debt to equity than equity to debt.

3) Compensation at analyst level will be best at Eastdil (you're going to work much longer hours at Eastdil though). However, as you move up the food chain at HFF and CBRE there are opportunities to make very large amounts of money. Compensation at senior levels is all going to depend on the amount of revenue that you bring in. In equity you are going to see larger commission for closing deals, but in my opinion its generally tougher to get a deal done on the equity side than the debt side; so there's a tradeoff b/w deal size vs. deal volume.

4) Interesting/challenging work is going to depend on the preferences of the individual and the firm/team that they are working with.

Regarding, Eastdil yes they do have REIB team (I think a lot of legacy Wachovia bankers). I'm not really sure the quality of their REIB group, I imagine it is solid but not on the level of REIB groups at BB banks. From what I'm heard, while Eastdil is called a REIB firm they are less known as M&A/IPO guys and more renown for their brokerage teams. However, as mentioned above the brokerage operations are structured similarly to the way IB groups are structured. Someone please correct me if I am wrong on these points.

 

In response to the original post...

As previously mentioned in the comments to this post, Eastdil/HFF/CBRE are brokerages as well, albeit prestigious shops where exit opps will exist. Now is it possible to break into these firms with networking? It is possible, but I think it would be difficult without some serious connections/networking and incredibly strong recommendations from your current group. You may be better served trying to lateral to a better office/group within your own firm and get experience working on larger/more complex deals with a different group. I feel it would be nearly impossible for you to break into a solid REIB group without attending a strong MBA program first.

Brokerage may not be your ideal career, but at this point it seems to be your best option and if you are able to get into a strong group at a reputable brokerage firm then there is certainly the potential to move to REPE (most likely boutique firms; larger funds are generally looking for analysts with an REIB background).

 

Thanks so much for your insight, it's the most clear-cut answer I've been hoping for. Let's assume I fail to lateral (My firm is relatively small, and I would be perceived as an asshole to leave my group right now), and I fail to network my way in to other firms. Do you think the best option is to goto strong MSRE (MIT, Columbia, NYu etc) -> REIB like Eastdil? If you want more detail like firm name, group etc, I'll PM you. Sorry for asking so many questions.

 

Yes at that point I think that a strong MSRE would be a very good option. I think it would definitely help you get into firms like Eastdil or HFF. I don't think that its enough to get you into a BB REIB group; my inclination is you would need to complete a full MBA program to have a chance at that. However, I wouldn't say I'm the most knowledgable person on this matter and you may be better served getting an answer from someone with more knowledge on what it takes to break into REIB at the Associate level.

 

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