Real Estate Investment Banking Internships
What are the top firms for real estate investment banking and/or general real estate investment and do these firms offer internships? Currently work for a developer and would like to further my experience in the finance/real estate area and know most REPE and REIT are generally pretty small and don't have much room for interns. Would love to get experience at a bank on a real estate team..
There are plenty of opportunities to intern at a REIT or REPE firm if that's really what you want to do. Do some more research.
You also say you work for a developer but want to "further Your experience in the finance/real estate area." Your development company works intimately with banks to secure financing for their projects. Why not ask your managers for more exposure to the process?
If you want to work for a bank, BofA, Deutsche Bank, and Wells Fargo both have excellent commercial real estate lending arms. WF in particular has a very well-known financial analyst program that would be a great 3 year experience that would allow you to move up the lending ladder or transition into REPE.
You can also target debt funds or debt brokerage firms. CBRE, HFF, Eastdil Secured, Newmark, etc. all have active debt teams that work with banks, life companies, debt funds, and agency entities (Fannie and Freddie) to secure debt capital for REPE firms. Examples of debt funds would be Mesa West or Mosaic Real Estate Investors.
It sounds like you're very early in your research process and not quite sure of what you want to do. If that's the case, working for a brokerage firm on their investment sales team would be a great introduction to commercial real estate investment that would allow you to build a network with REPE firms. As I mentioned above, companies like CBRE, HFF, Eastdil Secured, and Newmark would be the top firms in this space.
I have an offer from Cushman Wakefield in the Capital Markets Group doing investment sales in NYC this summer. Would you suggest that this is a good move considering my interest in ultimately ending up in REPE / REIT ?
That's a great first job in commercial real estate. You'll learn a ton.
summer REIB internship enough experience for REPE? (Originally Posted: 09/05/2012)
If, having no real estate experience pre-mba, I do my summer internship in a real estate investment banking group, will that be enough experience to land a REPE job post mba? Most of the advice that I've seen around here suggests the the REPE firms only hire ex bankers.
Any other summer gigs that i should look at to help land a REPE job post MBA?
One's best shot as an MBA trying to get into REPE is landing a job as a summer associate at MSREF. Outside of that, I think REIB has a very low probability of turning into a good REPE opportunity. I worked in REIB as an analyst, and ~60% of my analyst peers made it to a good REPE shop. 0% of summer associates and associates have made it...though virtually all have expressed a strong desire to make the move.
Would you still regard MSREF as a good place to start given Dodd Frank? Are they simply managing assets at this point or still doing new deals?
thanks for the info. Sounds like I'll be targeting some of the smaller/newer funds.
Curious to hear why the REIB experience isn't as valuable post MBA.
I think the main victim of Dodd-Frank will be proprietary trading where banks are risking their own capital, and much less so the limited partnership investment vehicles using primarily third-party capital like MSREF. It shouldn't be too easy to structure the GP contribution, which is generally 1% of fund size at most, around the law.
MSREF is definitely still doing deals. I don't necessarily think that they--or bank-affiliated funds in general--are the most sophisticated of opportunistic investors, but like I said, they are one of the few large firms with established reputations that actively recruit at the MBA level.
As for why REIB isn't as valuable post-MBA...there are a lot of factors and many have been exhaustively discussed on this forum. It's not limited to real estate...private equity in general is difficult to transition to without pre-MBA PE and IB experience. I guess the easiest explanation is to remember the structure of a PE firm. They're generally much leaner than banks, and do not need nearly as many mid-level professionals. For their associate classes, they're generally heavily inclined to hire banking analysts (for a host of reasons, among which they are perceived to be younger, more technical, and better suited to the entry-level work...also, there's a tendency to hire one's own kind). Since there are far fewer PE associate positions than qualified banking analysts, there's no need to really go outside of the box here. And since there are far fewer mid-level PE professionals (VPs / Sr. Associates), PE funds can stick to promoting or hiring existing PE associates without going and retraining an IB associate. Accordingly, IB associates tend to find their exit opportunities much more limited than their analysts.
re-ib-ny, I'm interested as to why would refer to MSREF or any other bank fund as not being "sophisticated" compared to other funds. Do you mean in terms of underwritig/deal evaluation, access to deal flow, or just overall firm best practices? From my experience, those groups leverage the "sophistication" and best practices of their IBD groups, and deal flow is just as strong, if not stronger, than that of other firms due to their capital markets capabilities, brands and networks.
Sorry. I don't mean to offend anyone and prefer not to get into an argument as to the relative "sophistication" (a difficult adjective to quantify, and a poor choice on my part) of one firm vs. another. I'm sure the deal evaluation / underwriting is of similar analytical integrity to that performed by other RE PE fund shops. There seems to be a perception in the industry, however, that bank-affiliated and pure "capital allocator" funds have gotten themselves into some pretty bad deals over the last few years thanks to a focus on leverage, strategy drift, and excessive reliance on third-party managers.
There's also a general observation that bank-sponsored PE funds have performed incredibly poorly through the last cycle. In fact, MSREF is one of the few that has survived, but has still faced very disgruntled investors. They were able to negotiate an extension to their investment period by allowing their LPs to cancel a portion of their commitments. I will be curious to see how their fundraising goes in the next cycle. In the boom years of 2004-2008, there was a huge proliferation of fund managers, many of whom are being wiped out today as LPs retrench to a handful of established names. Blackstone and Lone Star have widely dominated real estate fundraising over the past two years, with a select handful of other managers that have apparently met success on the fundraising circuit (mostly well-known names like Carlyle, Starwood, Angelo Gordon, Westbrook, Northwood, and AREA).
Your post was certainly not offensive. Was just interested in hearing a little more color on your statement.
It will be interesting to see how the REPE landscape shakes out moving forward. Obviously the problem for bank opportunity funds like GS, MSREF and JPM has been performance from their 2007-2010 vintages and the public barage that has followed. But, some of the groups you mentioned have had significant trouble as well (Westbrook and Beacon have had a couple of funds that tanked, Starwood has had trouble, Carlyle was forced to raise the pref on their most recent US fund to 11% - way above the 9% market - in order to drum up interest, Apollo has been largely unsuccessful).
For the time being, Blackstone seems to be the only large "opportunity" fund that has come out clean, which is why they're dominating the fundraising market. But, I think it will be tough for them to hit opportunistic returns (18-25%) going forward while maintaining their size. With that much money to put to work, you just don't have time to look at smaller off-market deals that may be more interesting. They can still be successful and everyone there will make a lot of money, but returns in the 10-15% range are probably more realistic.
Lonestar on the other hand isn't really an opportunity fund. Although they will own RE assets, they're strategy is more geared towards debt and has lower return thresholds.
I don't think you can underestimate the fundraising ability of the banks, especially as they start tapping their high net worth and retail pipelines. When these groups decide to put their full weight behind fundraising, I think they'll get it done.
By "these groups" I assume you mean their Private banking and PWM divisions correct? Do you think a bank can raise a PE fund using only money from their HNW and retail pipelines or do they still need some institution or family office to serve as anchor investor?
Also I think it is interesting that DB just restructured their divisions so that Asset Management and private wealth is now under a new combined division. I wonder what impact, if any, will this reorganization have on their fundraising and investment product placements in general.
They can probably still raise funds using only money from PWM and retail channels, but the funds would likely be small and more and structured more like private REITs. The economics on retail money is usually much better, but it's also a huge pain to have to report and call money from them to close a deal. Plus, when things go bad, there is greater likelihood that the retail guys may simply choose not to fund.
PE funds need anchor investors who are sophisticated and willing put up a big chunk of money (think CalSTRS or sovereign wealth funds) in order to gain momentum and credibility in raising additional institutional dollars. In today's fundraising market there is a massive heard mentality which is why you see institutional investors flocking to a handful of funds. It comes down to safety in numbers.
Thanks for the clarifications. By the quote above, you mean that if the market takes a nose-dive or something else get on the HNW guys' nerves, they tend to back out of existing commitments?
Real Estate IBD - Starting internship at BB (Originally Posted: 01/25/2012)
Hi,
I'm starting an internship in a BB soon and have been assigned to the Real Estate group. I don't know that much about real estate so I have some questions, would be great to get some answers!
Do / Did Real Estate IBD groups have any part in the securitisation / CDO business or was that handled by Securitised Products groups?
How is valuation different for Real Estate groups to generic valuation? I know that depreciation plays a larger role. Are mortgage / lease payments separate line items or can they be lumped in with Interest Income?
What key metrics are used?
Is there any degree of travel out to sites?
Help would be extremely appreciated!
Thanks.
I can't answer most of your questions, but I know for sure that funds from operations (FFO) is used. FFO = net income + D&A - proceeds from sales of properties. I am sure that CDO and other structured securities are related to Structure Finance, not RE IBD. RE IBD deals with REIT valuations, hotel and condo acquisitions, etc.
some key metrics to look at would be FFO/AFFO (adjusted funds from ops), cap rates, CF per square foot, sometimes NAVs depending on the purpose of the analysis. know the different classes of properties and which are more/less profitable,
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