Real Estate Startup Fund
(Monkey, 45
Points)
on 1/9/13 at 11:05pm
What would be the fair compensation for an associate with a solid transaction background acquired in a boutique strategy consulting firm (5years) at a startup real estate fund in a top 5 US city. Fund size ~ $150-$200m not all funded. Staff includes 1 other associate, 3 MDs/partners. Fee structure: 1.5%, 20% over 9% hurdle.
Hope to get some replies for people who have worked in small funds and/or startup funds.





Contingent upon a variety of
Contingent upon a variety of other factors but I think fair assumptions would be as follows:
Base: $80-$100k
Bonus: $50-$80k based on performance
I have always been a proponent of taking less cash comp and asking for participation in the carry or some co-invest opportunities especially in this type of start-up. It will take a number of years to monetize most of your investments so your initial comp may be lower. Shoot me a PM (if you want) once you get the comp proposal.
Based on the fee structure, I
Based on the fee structure, I imagine the company gets somewhere around $5-$7 million a year in fees assuming they hit the hurdle. This is also pre-tax by the way. Then keep in mind there are 3 partners and they are going to collect a huge chunk of whatever there is. I'd say as an associate you would probably get around $50-$60k and I have no idea what there bonus pool is like, so can't really say much on that, but I expect total comp could be between $80k-$100k. I think junkbond's estimates maybe very optimistic. I know Carlyle's RE group doesn't even pay that well for associates so I doubt a startup fund would have such strong compensations plans.
Agreed, a fund that small
Agreed, a fund that small will pay you peanuts
Teddy, what is the range for Carlyle?
I believe its somewhere
I believe its somewhere around 100k - 130k all in.
Teddy, what is your source
Teddy, what is your source for that? That sounds light as fck for an associate at a place like Carlyle.
forgot to mention that this
forgot to mention that this is the fund's first year and that it's looking more like 2 million in fees. The fund is in PE format where the 20% is taken at year 5. Partners are delaying their pay for a year or so.
My target comp is 130K all in, but not sure if it's realistic.
junkbond, That is based
junkbond,
That is based on Washington D.C. office. I am sure NYC is much more. I think its closer to 130k and that is definitely not that light based on the COL there, you would live a very nice life in D.C. on that. My college roommate's brother worked there. Again this is D.C. comp and that is really good there.
maddux,
Based on those fees, I don't think the fund is going to pay even close to that. You might get an option to take an equity stake in the business if the partners allow it. An equity stake by the partners would allow the company preferential tax treatment.
What sort of credentials does
What sort of credentials does one need to be an associate at a Carlyle-level shop? Would premier brokerage (top market, top shop, top team) --> columbia MSRED --> Carlyle Associate be a plausible progression?
I've interviewed with
I've interviewed with Carlyle, but for asset management in DC. There is a clear distinction in recruiting between their asset management team and their deal team. I would not be surprised if pay were totally different as well as the calibre of people.
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$130k all in at Carlyle seems
$130k all in at Carlyle seems pretty light for NYC. REITs are paying 100-130k all in. I always thought the big PE guys would be paying much more.
depends what team you're on
depends what team you're on
I'd be shocked if an
I'd be shocked if an associate at Carlyle made that little. I work at a comparable but arguably weaker firm then Carlyle and make over 250 as associate
I am having a hard time
I am having a hard time getting similar numbers in my models teddy. Can you elaborate how you got those fee projections?
I guess it depends on the fund and what kind of financing rates it can accomplish.
I am going off based on what
I am going off based on what the OP stated, he said the fund is between 150MM to 200MM. I am going to assume the 200MM is fully funded even though the OP said it isn't. He told us the fees are 1.5% and then 20% if returns are over 9%. So with fees alone the company makes 3MM. In order to achieve an additional 2MM in fees, management has to make a strong return that year. This is all pre-tax so with that into consideration, the fees would probably be around 2MM-4MM. Unless they have some favorable tax structure where the fees are converted in equity for the partners, I don't know what the tax rate is. However, it turns out my projections were fairly optimistic since the OP has said the fund's fees have been around 2MM.