Acquisitions Before Development

Neal, I worked at a big acquisitions shop prior to going into development, and I thought the experience was very valuable for my future goals within development. I can rattle off many, many benefits (including stories of partying as an analyst, the network, etc). I'll share three (no particular order):

1) You have the capital markets perspective (you worked on JV's from the equity side and now the sponsor/developer side). How do you add value in development? By de-risking a project and moving the project from high risk/opportunistic to a core investment. That means understanding higher risk capital as well as lower risk capital. If you work in acquisitions at a big firm, you will see how "10 buckets of money" see deals during each part of the investment cycle (fundraising/sourcing/DD/development/operations/exit). The prospect of doing a deal with your old firm is also really cool, and no matter what, there will be some kind of "relationship" you bring to the table that will likely make you look like you have executive potential.

2) Diversity. Yes, you are spot on in terms of development being a "longer game" experience thus giving you a deep experience but maybe less broad. You might not see the really big picture in regards to macro-economic, real estate cycle, arbitrage, etc that will define and hopefully signal to you the next step/trend in development, capital markets, etc. My mantra is this: if you can get geographic, product type (4 food groups and more - apartment, retail, industrial, office, plus hotel, mezz, storage, etc), and deal flow, you will get a great perspective as an investor and even understanding for mixed use. Relative value comparison is a huge part of our day to day analyses.

3) Managing Director / Principal. If you look at the men and women who lead development companies or regions, you see people who have some similar traits. At least from what I observed. An organization starts/expands development into a MSA/region and then over time develops a pipeline and hires a bunch of people, including development managers. How does one develop a pipeline? Acquisitions. Good development starts off as being a good investment. If you ever want to be the head person or start your own firm, you need to be able to build a pipeline. How do you build a pipeline? By doing a combination of things including building relationships, deep insights in a market, access to capital from co-invest, sponsor equity, to 3rd party LPs, to lenders, etc; and a well thought out investment thesis, hopefully refined from your experience seeing many diverse deals at different times of the real estate cycle.

I'll caveat and say that everyone's experience is different. If you could get into development very early on in your career and build upon it, you will probably be ahead of someone who started in Acq and then moved to Dev, say for the first 10-15 years. Beyond that is anyone's guess where any of us will end up. That's the beauty of our industry, but if you can connect as many dots in your life path to your life passion, you will likely be richly rewarded.