Real Estate Private Equity interview
IB
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(Baboon, 171
Points)
on 7/10/09 at 2:44pm
Anyone know the technical aspects behind real estate. I did banking before but I know real estate PE interviews are a lot diff. Can someone elaborate who has been in them?






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Very interested in this as well, was about to ask the same question regarding a PE Real Estate/REIT fund.
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I work for a mid-size PE real estate firm. In our interviews we look to see if you have an understanding of cap rates (reverse PE ratios), the different types of easements and an understanding of property rights (surface rights, subsurface rights, etc). Other than that, you are mostly judged on your understanding of financial concepts and fit.
Hope this helps.
Agree. We have a massive RE
Agree. We have a massive RE portfolio underlying our existing operating portfolios and if I were interviewing you for a position I would question your knowledge of industry trends (increasing cap rates, higher vacancies, reduced rents, etc.). I would expect you to be familiar with how to value a property so for example,
say i own a retail center with 300,000 sf and I think on a highest and best use basis I could rent it out for $9.00 psf at a 7 cap...I would expect you to say ok, total market rent would be $1.8M on 300,000 sf at 9 bucks...the net property value equals the market rent $1.8M divided by 7% (the cap rate) or approximately $25M. I would then ask you what your perspective is on LTV for this type of property based on current market terms (i.e. 65% LTV). I would be familiar with the CMBS market (or lack thereof).
ha note i did the calc based
ha note i did the calc based on 200,000 sf friday give me an fing break have a good weekend
hmmm rental revenue doesnt
hmmm rental revenue doesnt equal Net Operating Income, remember that for your interview.
cap rate = noi/property value NOT cap rate = rental revenue/property value
some key ratios:
loan to value = loan amount/property value
cap rate = (above)
debt service coverage ratio = noi/ annual debt service
where i use to work, we would have guys put together cash flow statements from scratch using rent rolls and a few assumptions, though i dont know how entry-level of a position youre interviewing for. good luck, im surprised PERE is even hiring entry level. just curious, why go from ib to pere? pere is in the dumps right now and will be for a while.
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man made the money, money never made the man
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hmmm rental revenue doesnt equal Net Operating Income, remember that for your interview.
cap rate = noi/property value NOT cap rate = rental revenue/property value
some key ratios:
loan to value = loan amount/property value
cap rate = (above)
debt service coverage ratio = noi/ annual debt service
where i use to work, we would have guys put together cash flow statements from scratch using rent rolls and a few assumptions, though i dont know how entry-level of a position youre interviewing for. good luck, im surprised PERE is even hiring entry level. just curious, why go from ib to pere? pere is in the dumps right now and will be for a while.
In my case, I'm in S&T not IB, so it's even more of an unusual jump. However, the fund I am interested in, is my cousin's fund, and they have a lot of dry powder.
Thanks
Anyone else?
Also...
Also, it's for an internship, so I don't know if the interviews are different. Just became interested in RE after working on some deals.
well it sounds like your
well it sounds like your applying for a really basic, really entry level type internship since you dont have any re background. i dont think your interviewer will expect you to know much. so if you demonstrate that you know the economics behind the ratios above and you can explain what re trends are doing today, you'll be good.
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man made the money, money never made the man
Are there any good websites
Are there any good websites out there than can give you an overview of the industry and that go into the minutia like the cap rate etc. ?
Also, how transferable is the skill set from RE PE to traditional PE or hedge fund work?
monyet wrote: Are there any
Are there any good websites out there than can give you an overview of the industry and that go into the minutia like the cap rate etc. ?
Also, how transferable is the skill set from RE PE to traditional PE or hedge fund work?
look at my old posts, you'll find all kinds of useful stuff.
also, the skill sets do not tend to be transferable at all. from my expereince, i have not heard of anybody moving from repe to vanilla pe, BUT i have heard of people doing the opposite.
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man made the money, money never made the man