Q&A: London REPE MF Associate

I wouldn’t say that networking was a huge part of what ultimately got me the role or any offers. Maybe it’s more a European thing but most of the recruiting happens exclusively via HHs. Teams on average are really small (like 4-20 people max) so they mostly recruit if someone leaves or they increase headcount (typically when they raise a new fund), there is no “on cycle” recruiting to network in advance for unfortunately.

Moreover, teams being small means that if you cold-email someone at a certain fund asking for tips on the interview/process, they are likely going to be your interviewer so they’re not going to tell you a lot or they would give you unfair advantage compared to others. But you might be lucky.

One last point is that REPE MF/UMM analyst/associate pool in London is small, maybe 100 ppl overall, so I think it is easy to spoil your reputation if you network too aggressively becoming “the annoying LinkedIn spammer”. Even worse, you don’t want to reach out to a person who is a friend of your boss and might tell them you reached out bcs you’re looking elsewhere (happens).

That said, for me the most important part was keeping good contacts with people you worked with in the past. Maintaining that kind of network helps a lot when you get calls from funds/teams you don’t really know well and reaching out to your network of old colleagues can provide you insights on the track record, people, culture etc. and you might even get a referral if they know each other well. Also useful to get intel about dodgy small HFs and 3-ppl shops (a lot in London) that you might want to avoid even losing time interviewing for.

Would love to know this as well! 

+1 on the comp point, REPE returns are on average lower because its much easier to 5x an EBITDA. While this is a gross oversimplification, how does this affect carry and comp especially as you move into more senior roles?

Really curious also on how you are seen if you try to go from MF REPE to Corporate PE. Thanks for the help man!!

This could be a difficult move but not impossible if you are determined enough and play your hand well.

First of all, you want to be "headhunted" meaning HH contacting you first, not the other way around. You can reach out to HHs but your profile likely won't go at the top of the pile when they get a new mandate especially if you're not from a blue chip name in the industry. This is because being poached makes you more desirable than they knowing that you are looking around (why are you looking around? Do you have problems at your fund? Are you not well-ranked among other juniors at your firm? Etc.)

However, it is definitely worth a try. Especially now that the market for junior REPE professionals is EXTREMELY hot. I suggest you send them a LinkedIn message asking them if they have any active mandates for position you want and briefly explaining why you're looking around (2 lines max). You might get a decent reply ratio. I wouldn't attach the CV yet.

Cards you have in your hand are:

- I assume you're Spanish/Portuguese native speaker. Most REPE positions in London require a second language so that might be an advantage. Certainly Spanish/Portuguese help less than French/German but if they're looking for someone to cover Iberia you'll likely get a call.

- Visa/Brexit: since Brexit every non-UK national is required to get a work visa, that means that from an immigration point of view you're not that different from a continental European. Prior to Brexit I would have said that it was extremely difficult to get a visa when they could just hire a Spanish analyst with zero bureaucracy.

Good luck!

I've always liked the impact RE has on cities and communities, the fact that you can take over a derelict building and transform it into a brand new hotel or office building bringing lots of jobs and new life to the area. This is probably also related to the fact that I've grown up in a city in economic and demographic free fall leaving a lot of post-GFC Detroit like scenery around that I wanted to change.

From the financial point of view RE is way more interesting than most think, it is essentially a mix of project finance, LBO, infrastructure and other. Very technical and sophisticated modelling will make you an Excel pro very fast. You learn a lot and often the same team plays across the capital stack so you see deals a number of points of view. The downside is that it is very operationally technical and you often need to source inputs (e.g. capex, architectural features) from third parties you can't really question because you do not possess the knowledge to do it. So you "take for granted" a lot of the really RE content of the job (but a lot comes with experience).

Career-wise, REPE in Europe is absolutely excellent. The industry is booming and the junior talent pool is really really small. You get at least a couple HH calls a week for the most interesting HFs or MFs even if you're not a top firm. If you interview aggressively (and obv you are extremely good) you can land 3/4 top offers and decide. You can grow very fast and comp is in line with Corp PE or IBD. You are also hard and expensive to replace so you can use that as your advantage (ask for WLB improvements, ask for additional resources or general "be kind or I'll quit" kind of behaviour).

Not sure if I’ll stay in the industry 10 years, for sure another 3-5 years. Haven’t been long enough at current firm to answer the second part of the question. In the longer term I’d like to do my own thing (small club deals with F&F etc).

Thanks, I like to shed some light on a sector too often overlooked in Europe.

I would say top large REPE funds to work for as a junior in London could be:

• Tier 1a: BX, APO

• Tier 1b: KKR, BCC, STWD, TPG, CenterBridge, Oaktree, Fortress, Brookfield

• Tier 2: MSREI, GSAM, OZ/SCU, Harrison Street, Henderson Park, Cerberus, Ares, AG, EQT, DK, KS, CastleLake, Northwood

-Tier 3: any other MM

Very much top of my mind, might have missed a bunch. This is mostly based on brand, track record and comp. Don't have a lot of intel for WLB and culture, I would generally expect IBD-like hours for Tier 1a and 1b. Explaining the detailed rationale for each one of them would take too long sorry.

PM if you want more intel on a specific fund maybe I can help.

I think it could be not that easy and the safest way to do it could be getting a CV-washing MBA. You don't generally get HH calls for Corporate PE roles if you work in REPE and never tried to push for that with them.

But if you come from a blue-chip brand and you are willing to take a (potentially meaningful) seniority step back it shouldn't be enormously difficult.

Depends a lot on where you currently work. It can be extremely easy to make a move from BREDS, Ares, APO debt to a slightly lower Tier equity team. Can be very hard from an insurance/pension fund debt team. But given how high is junior demand right now, nothing is impossible. If you want to try the move the moment is now before the bull cycle weakens.

I am not aware of any certifications worth pursuing in PERE in the UK. 99% of people I know don't have any (no CFA etc). I think the most useful study you can do is learning/improving a new language (German first of all, then French, Italian or Spanish).

Feel free to PM if you need more detailed guidance maybe I can help

Usually, REPE is the exit opp from IB. You don't see a lot of moves from REPE to advisory roles. If one gets tired of REPE I would say they can attempt a move to Corp PE, Infra or other investing roles but likely with a seniority step-back given the pretty sectorial knowledge and skills developed in REPE.

Many people working in REPE identify a theme they want to ride (e.g. resi in Germany) and then they work as operating partners backed by a fund with massive equity upside potentially making millions if the strategy is successful. The most successful people with an outstanding track record can raise a fund on their own or do small club deals with friends and family (what I aim to do long term). 

1) Changing job always involves a meaningful amount of risk, especially if you are satisfied with your current role/firm. So make sure you are adequately remunerated for taking this risk with title, money, and "brand equity". Generally, 1 year is barely enough not to raise a "red flag" on the CV, but if you go from a no-name boutique to KKR, no one would raise questions about it. Usually, you want to do at least 2 years stints. Take the first round interview and try to get a feel of the team, strategy etc (use it a bit as a "reverse interview") then eventually say you're not interested in bringing conversations forward. Try to get a feel of expected comp from HH BUT don't rely too much on their advice (they have all the reasons to convince you to move and ZERO to do otherwise).

2) Yes lateralling from debt to debt can silo you a bit into debt but as you say can be mitigated by increased brand equity. But I wouldn't be too worried about this especially if you enjoy debt and you're very junior.

3) Yes likely you'll do the equity model and then at the discussion they'll ask you to look at the debt point of view (covenants you'd ask, peak LTV etc) as well as general comments on the deal). Usually in 2hrs you won't have to do a waterfall but you can expect a second line of debt in addition to senior (maybe a mezz with equity kicker).

PM if you want to discuss in detail.

Generally you can divide the AN/ASO work in Asset Management and Acquisitions (some shops have separate functions, meaning you'll only do one):

1. AM: taking care of portfolio deals / platforms -> weekly update calls on capex progress, ongoing sale process, any refinancing going on etc. Always updating the model with the new inputs coming from operating partners and running scenarios. Quarterly BP updates with short presentation to IC. 
2. Acquisitions: analysing new deals coming via brokers etc, running model and preliminary pricing to discuss with Principal / MD. If pricing is competitive sign LOI and proceed to IC. If IC supportive -> start DD / financing process -> additional IC steps to final approval etc

Work doesn't change a lot between AN and ASO. As AN you have more responsibility than you should have (stressful), as ASO you get more shit intern tasks than you should get (boring and soul-crushing). Unless you have an analyst staffed on the deal with you (never happened at the MM and MF doesn't have analysts lol). At the MM as ASO in general you got even more staffing as your need much less guidance than an analyst and Principals don't want to spend time explaining stuff to analysts. You have to try diverting the shitty "never going to happen" deals to analysts (you can smell them a mile away after a year or so) saying you're overstaffed etc. 

Hours at the MM were on average 70 hours (but shop was very understaffed) with peaks of 90 hours and relaxed weeks of 55/60 hours. A couple of dead weeks in August. Weekend work common during live deals and BP session, towards the end of my tenure that meant 3 weekends a month (just 6/8 hours a day tho). At the MF I am grinding 80 hours weeks at least but I have started a few weeks ago, I still need understand how that normalises. At the MM holidays were not disregarded completely but you were never totally off. You still needed to check emails 2/3 times a day as there is no one to take care of your workstreams while you are away, if you go for a boat trip with no signal you want to flag this to your VP/Principal. Happened multiple times to have holidays disrupted for deals going suddenly live (again, no one availble to step in if you are away). Seniors apologised profusely but they really didn't give a shit. No holidays taken yet at the MF so idk, I think same... 

Most junior people live near the office (for some "in the office" is more accurate), seniors often leave a bit far as they like large family homes in Chelsea/Kensington/Fulham which are not affordable/available in Mayfair/Marylebone even for them. I hate public transport in the morning so I always try to live within walking distance the from the office. You have to fetch your own lunch (order or take away and eat at desk 99% of the times), you can expense dinner and uber home if you work late. 

With £50k you'll most likely have to flatshare with someone if you don't want to live in Zone 3, rent a 200-sf sardine can or have an extremely thin budget (~60% of monthly income in rent). You can think about living on your own at ~£70k imho (avg 1-bed decent apt is ~£2k in Zone 1). That said, £50k is ~£3k net monthly so if you flatshare (try spareroom or go with friends) at ~£1k per month that leaves more than enough to have fun, eat decently etc. But you're not rich as AN1 (at least until bonus).

I was comfortable at my old shop as the "most senior junior" there for a while. So everyone trusted me, I always delivered and was pretty much free to manage my own schedule (e.g. I could take a week WFH to go back to my hometown, a few hours off during an afternoon to do errands etc). That said, despite the flexible schedule, hours were very long due to critical understaffing -> a lot of portfolio deals and new pipeline at the same time. I would say 70 hours were the norm with peaks of 90 hours and relaxed weeks of 55-60 hours. Weekend work was common with live deals, since we started aggregation strategies (lots of small deals quickly closed one by one) that meant always... Not very relaxed.

I started at the MF a few weeks ago, so I cannot really compare for now. The first weeks you always go full throttle to shine in the eyes of seniors, so "normalised" WLB is yet to be understood. But associates who have been there for a couple of years again have a lot of flexibility but still work a lot. I can say one of the main differences is that not all decision-makers are in the same room, meaning that you interact a lot with the US team and thus processes (e.g. IC docs etc) need to be more structured. Structure, format and content of IC docs etc were highly discretionary at the MM: some seniors liked giant 100-pages IC papers some others liked shorter docs in a different format. IC was deeply involved in all deals and thus could provide guidance on the smallest things and knew the deal well enough to digest these massive docs. That's not the case at the MF where IC needs clearer formats as they often don't know shit about the deal prior to getting the IC paper in their mailbox.

People overall are nice but you can feel they have more pressure to deploy and no one is a "legacy employee" that can't be laid off even if they don't meet the objectives. Some senior people at the MM were there since 2003 doing the bare minimum taking care of their pet projects and being almost alien to everything else happening within the firm. Generally way more dynamic and high-octane environment at the MF, I needed that to get out of my comfort zone and increase the steepness of the learning curve TBH... I was starting to professionally stagnate at the MM.

1. Chinese and Japanese not super useful I'm afraid, but better than nothing for sure. There are a few Koreans and Chinese analysts in London REPE (but they tend to relocate to HK, Seoul, Singapore after a few years tho). Spanish very useful for NPLs / opportunistic investments (lots of portuguese, spanish and italian ppl in HFs) as these are less core market with a generally more aggressive risk/return profile, I suggest you bring it to a level you can use on the job. But the most required language in REPE is German by far as the largest, most liquid market (and also less germans in London as no need to escape their home country where they can earn a living salary compared to third-world salaries in Spain / Italy / Portugal / Greece / CEE).
2. At MFs you'll most likely deal with platforms so a mix of asset and corporate deals. At smaller shops you'll deal with asset deals 90% of the times. You are generally correct that asset deals can be too expensive, so firms tend to work with platforms to create value on the operational level in addition to asset-level.   
3. Moving across regions can be not easy, the more senior you get the more difficult it becomes (until you become uber-senior then you only have an oversight/strategy role than can be easily cross-region). This is bcs as a VP/Principal your network and reputation can be a huge part of your value to the firm, RE is local as you say and a very non-transparent market where you need to know the right people etc (less true for MF who mostly deal with giant deals brokered via IBs, more true for small shops who target the €10m resi building in Madrid brokered by your aunt's friend). Moving region means resetting that to zero. So if you cultivate a desire to move to the US I think it's better to do it sooner rather than later (with the risk of being stuck there). But never say never...

Thanks but I don't think I'm the best person to answer this. Don't know much about the US RE development to make a comparison to the UK.

If you have 5-7 years of RE experience doing an MSc in RE would be a waste of time and money imho, usually it makes sense if you want to switch industry from say consulting to RE. And yes most of your classmates will be 21-year-olds with zero experience (coming straight out of undergrad).

If you only speak English you'll most likely find the language barrier I talked about in other answers (2+ EU languages often required), but if you want to work for a UK developer it won't be an issue... more so for investing pan-EU roles. UK citizenship will avoid the visa headaches tho, that's good.

Sorry mate not a very useful answer I'm afraid

At the MM, comp was increasingly less competitive (compared to BBs, MFs etc) as you went up the ranks (until principal, when carry kicks in). Don't know exact figures but I think you could expect like ~£275/300k total comp as VP and then ~£400/500k as principal plus some discretionary carry. Partners get a stake in the business and the bulk of the carry, so probably millions.

At the MF this is more speculation as I don't really know yet. I think total comp should go up to c. ~£300k as ASO2 then ~£350k maybe as ASO3. I think VPs could be in the range of ~£400/500k (but I think bonus can be more volatile aand less "guaranteed" as you need to actively deploy, as ASO you're just supposed to do your job well but no real responsibility to deliver business) and get carry on top of that. No idea about principals let alone partners, probably talking about millions. I've been told group head fetches a couple of dozens of millions.

Industrial (particularly multi let light industrial) is extremely hot and clearly in a bubble right now in the UK, Benelux and Germany (still frothy but less so in other countries). Blackstone led the charge on this asset class starting in 2013-2015 when it was early days (and made a shit ton of money) and a lot of other managers followed buying in at crazy valuations (see Mileway recap). In most of the outskirts of London, industrial capital values are now multiples of the residential capital values. Most of the spec developments ongoing in these regions are underwriting ~3% exit cap rates in 3 years from now based on 20% rental growth from current levels.

Resi for rent is also very hot everywhere, also here lots of managers are buying/developing schemes at ~4/5% YoC (assuming unaffordable rents at like 60% of tenant income) hoping to flip an aggregated portfolio at 3% in a couple years. This rental crazyness is driven by unaffordable home prices at 10x household annual income in large cities, when this bubble pops also rental will be affected.

Given how fast rates are moving up right now I think most of these strategies will backfire hard and we'll see a lot of repricing in the next 12-24 months. You have already seen the repricing in growth stocks, including Amazon saying it's become "too big and taken up too much space" and this is going to pass on hyper-growth real estate sectors with a lag of a few months. Equity and banks/debt investors (including my old and current employers) are balls deep into these sectors (particularly industrial) and it'll be fun to see how this ends up. Would consider moving to an HF if there will be a blow-up.

What's a good right now I think is everything operational and hotels in particular where you can pass on inflation to customers (hoping cost inflation will not outpace revenue growth) and asset values are generally not that crazy. I would buy some dominant retail at 7/8% yield (~15% CoC) with inflation indexed rents. Also life science has very strong tailwinds but very difficult to find something reasonably priced. Maybe you can bet on secondary markets.

Albeit the common definition of HF might be the one of a fund investing in public markets only, this is increasingly not the case (especially in RE but also see e.g. Tiger Management having most of their bets in unlisted VC). Usually, RE HFs are closer to a PE special sits team than a traditional L/S HF. The key difference from REPE is that their mandate is usually more flexible (in terms of geography, asset class, deal size etc) and HF might decide to invest in a distressed development in say Budapest, while a more traditional REPE might want to avoid Hungary for political, currency and other too-binary risks. This is because they think that the pricing is so attractive, maybe in a moment of exceptionally low liquidity, that they can maybe flip it in a few months when market normalises or maybe turn it around themselves. NPLs are also a big market for HFs (Davidson Kempner doing a lot in Greece, King Street etc) due to the difficulty of fitting this products in other traditional investment vehicles.

Usually, the HF angle for doing a RE deal is much more idiosyncratic (special situation) rather than traditional REPE investments due to favour from secular tailwinds, the building of large platforms etc. Alternatively (or in addition), they might invest in very niche-asset classes (e.g. golf courses, gas stations, casinos, parking lots) overlooked by traditional REPE and thus offering more attractive yields. That said, if the RE team finds that the bonds of a RE listed company are traded at discount or that there are some other opportunities in listed securities, the HF might decide to invest in that using another one of their vehicles (they usually have a multi-strategy HF as flagship fund) or maybe they can have the flexibility for doing it even in with the RE-dedicated vehicle. So you might have the opportunity to invest across multiple strategies (which I think is a lot of fun and a massive learning opportunity).

I wasn't actively looking around but the headhunting was really intense (introduced to AT LEAST 2 new roles per week) and you get to the point where it's really difficult to say no to interviews with Tier 1a and 1b (see my other answer on this) firms. Eventually, you get an offer that is significantly more attractive than your current package, you add a bit of brand equity, a larger diversified platform, a much better team track record and there you have an offer you really can't turn down.

Apart from that, I also started to suffer a bit the MM shop, a few senior ppl I didn't like, a lackluster deal flow with A LOT of useless analysis, very very few successful deals and really fkin taxing admin tasks spiraling out of control that really started to suck the life out of me. At first, this was compensated by a decent WLB and nice culture, but covid and managerial choices (i.e. let's do twice the work with half the people, and let's pay them below market. They'll be fine) annihilated both of these factors... So despite being very much well-respected and well-positioned internally, I concluded that leaving (but only worth it for Tier 1 firms, as I knew they were within my reach) was the right choice. Staying at the MM would have meant keeping my comfort zone and "settling" for something that was below what I could aim for. I think it's worth pushing hard now in my mid-20s to maybe slow down later in life when you've reached a very comfy seat somewhere.

We'll see in hindsight but for now I'm very happy that I've jumped.

Hi, I don't know these firms well unfortunately. I know that Harrison Street is attracting great talent and is very much in the rise in Europe with good track record. Don't know much about Lone Star really.

Hello.

At junior level (AN / ASO) you should definitely expect a significant discount compared to Acquisitions, especially in the bonus part of compensation. I think you can hardly get more than 50% bonus in IR until director level and base hardly above £75k until VP/Director (maybe a bit more now post salary inflation).

It then goes up significantly at senior level as you’re the one keeping contacts with LPs so very important to retain you. But still I would expect total comp to be at a fairly significant discount compared to Acquisitions. And yes you can get a % of what gets raised but also you likely won’t get carry (maybe preferable to swap fundraising for carry as less risky).

All the IR team is based in the US for the MF so I haven’t had a lot of contacts yet. At the MM we worked quite a lot together to assemble portfolio presentations and other material for investors. I think the WLB in general is much better but, to my personal taste, I think their work is pretty boring with LOADS of ppt and barely anything else. You do get a lot of exposure to partners and investors, that can be interesting. Gets much better as a senior as you’re basically just a salesperson with great WLB and compensation ramps up significantly.

This was really helpful, scroll down and there are couple of models (and answers). https://www.kahrrealestate.com/free-stuff/

Hi,

I don't think there is something that particularly applies to REPE compared to any other PE/IBD internship that helps get the return offer. In general, be a total "YES MAN" there you call pull insane hours and pace for the short 8/10 weeks and keep the mental health because you know there is light at the end of the tunnel (i.e. end of internship). At the BB I had a really grueling time (and didn't get return offer lol, shit local office with no headcount and rolling internships) but managed to survive and that experience has been the bedrock of my career.

I think the main disadvantage of REPE out of undergrad is that it is seen as very specific so if 2 years down the line you get sick of it, it can be difficult to pivot to something else while for example going to IBD at the very beginning of the career leaves much more open doors (including REPE).

PM

Hello, they’re a good shop and generally heard good things in terms of culture but never met them. No clue on comp. If you have an opportunity to meet them for a coffee chat / interview I would.

Hi, if you want to work in private equity you should definitely aim to complete a masters in finance or MBA first.

Maybe some small development shop might be willing to take you onboard without it but I think you’ll quickly find yourself in a project management role rather than investment given your skill set.

I know a couple of people with bachelors in urban planning / architecture who went to top MFs after completing a masters in finance so not impossible at all!