I am interested in breaking into real estate investment banking. I am a senior finance student at a non target with a 3.7 gpa. I had an internship with a commercial real estate brokerage during last summer. I wasn't able to secure an offer at a IB, but I have some opportunities to potentially work in acquisitions at a couple of REITS. What is the best way to break in?
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Well, if that's your only option, then joblessness versus acquisitions at a REIT should be easy. But to answer your question, yeah, I could see someone lateraling into IBD (lodging/gaming) from that position. Wouldn't be easy, but to maximize your chances, I'd say: - try to make the jump while you're young (a year or two after college) - keep an open mind as far as smaller/mid-market shops like Stifel etc and be willing to move across the country or work in a shitty regional office - do anything in your power to put something corporate finance/corp accounting-related on your resume, such as classes, pursuing CPA or CFA, learn everything you can about the capital structure and capital raising at your REIT. best case scenario you somehow get involved with corp fin at your REIT.
If you don't get into banking, not the end of the world. Believe it or not, you see former i-bankers at REITs on occasion, so don't beat yourself up over it. And in a few years, if you're still dying to do it, get an MBA.
Thanks for the advice. I would like to work at a REIT in the long term, but I have seen that most of the executives at these firms went into IB initially.
So you want to do REIT-REIB-REIT?
In my opinion I can learn more doing RE banking than while working at a REIT.
Can someone expand if the above comment is potentially true? I heard most of RE banking jobs is to finance deals.
Hi Cagee. I've done the REIT-REIB-REPE route, so I might be able to give you some confidence that it can be done, but we're into atypical territory here, and one anecdote does not a trend nor generalization make.
Whilst it's true that many execs in REITs started out in REIB, I wouldn't necessarily agree with your assumption that you can learn more while doing the latter. Perhaps that is the case for some people; just not for me. When I moved to IB after 3 and a bit years at the REIT, I was pretty surprised at the lack of sophistication that I found there - and I'm talking about corporate finance principles, not real estate fundamentals. What I found was that - generally speaking - the REIB guys skimmed the surface of too many deals, which meant that they never really went into quite the level detail that was expected of us when we would only look at one or two really big deals at any one time.
The other benefit of going REIT first is that you'll understand the really un-sexy nitty gritty of leasing and operations and development better, and thus speak the jargon like a seasoned pro, which counts for far more than it should in this industry, and goes a long way to being a trusted RE banker when dealing with clients. Typically, though, the path to trusted industry banker is usually out of a REIT and into equity research, and then later, if you're so inclined, to banking, so keep that in mind if ER is of any interest; they like poaching direct from industry.
As for the comment about REIB being mostly about financing deals, I'm sure that's the case in some parts of the world - particularly the US. Also, if you're talking about joining a commercial bank then yes, there's no doubt you'll be financing deals and nothing else. If it's an IB, then check to see what deals they've done in the past - there's a hell of a lot of M&A and ECM activity for RE companies and REITs in some areas. Often it might not be a nice, sexy corporate M&A deal, but a very big portfolio transaction, that basically ends up being almost the same amount of headache in terms of valuation, tax, structuring and tactical negotiation issues; just with fewer accounting issues to nut out.
Like prospie said, just make damn sure you focus on the acquisitions from a financial perspective, and do whatever you can to move to the corpdev type roles within the REIT. Hope that helps.
Wow, great answer and perspective. How long did you spend in banking before PE? It sounds like you found much more value at the REIT, so what were the strengths you gained in banking; or do you think you could have gone from the REIT>>REPE?
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