Advice for an Analyst at Family Shop
Thinking about jumping ship for another firm and was looking for some insight.
I currently work at a small family owned firm, all the equity is in-house and we have no outside investors. We are a really lean group, our acquisitions/development is basically myself and two other senior guys. With a construction team as well.
Our deals range from $50m-$100m, we are a very disciplined buyers. In this crazy NYC market that we are in now our deal flow has gone to zero and we are currently just coasting on a few development projects. I don't see any deal flow for at lest the next year or two and the construction side of development is probably one of the worst things about real estate. I'm happy with the culture of the firm just not the work I'm currently doing.
I already turned down an offer from a huge institutional player a couple months ago and starting to regret it.
Should I ride it out in hopes our deal flow starts increasing?
Well I suppose it all depends on what direction you'd like to take your career. Where do you want to be in 2, 5, and 10 years?
Most likely work for a private global fund manger/developer Hines, Tishman etc..
I would get moving, it seems like you're showing loyalty to the firm right? Well if the deal flow doesn't pick up there would be no firm to be loyal to...
PEREBS,
I'm sort of in the same boat in the sense that my shop is also a family shop and a lean operation. Our deal flow is relatively strong, but I've grown keen to wanting to work with institutional capital. If you don't mind me asking, how did you approach your swing into a huge institutional player? I'm probably going to stay put for some time, but I'm very interested, any advice is very helpful.
Thanks
Send me a PM and I'll explain.
I would also agree with jbone.. While your loyalty is something to be accounted for, I think it's crucial to get your hands on a good amount of deal flow, especially in real estate. My two cents.
When you guys say good deal flow what do you mean? 2 aquisitions a year? 4? 8?
For instance I would consider my shop to have decent deal flow. Aquisitions only last year, we did 4 deals for ~250million in which I was the analyst. But its easy for that to turn into 1 deal for 300M one year.
So I'm wondering what you guys consider decent deal flow in terms of # of aquisitions.
It depends, we use the same amount of sweat equity regardless of deal size. Not to mention the legal costs are pretty much the same. So we try scale as best we can.
But answer your question, my first year we deployed about 50m of equity capital across 3 deals which at around 75% LTC translated into 200m in acquisitions and around 350m-400m once we capitalize upon reversion.
So let me ask you when you say 250m do you mean 250m of equity, total project cost or total capitalization upon reversion?
Just bulk aquisition price (the number you would see in the purchase and sale agreement). We closed with 100% equity and placed debt after due to 1031 requirements.
But do you do development beyond the acquisition or are you more of a core/core plus shop?
We do developments (ground up) and core acquisitions but rarely do we do value add/opportunistic projects. The acquisitions i described were all core urban center type properties. on top of that we had one or two land acquisitions but they were relatively small and again, ground up projects.
Like you I'm at a family shop although we own about 5B in assets, we do core investing across the country and ground up developments in our "backyard"
do top MBAs favor the family real estate pe development shop?
What does this mean? Does it make you competitive for top MBA programs? Is that your question?
Yes, similar to how top MBA programs look highly on 2nd yr IB analysts.
OP, jump ship. At analyst level, nothing matters more than meaningful deal experience. It may not be as dire as to put the firm's existance into question, but slow or no deal flow doesn't help you. Even if you were putting together pitch books, you could still spin that on your resume, but you can't spin lack of deal experience. I strongly recommend jumping ship asap.
As for mba, right now your past work might be sufficient for the admission process, but wait a year longer without working on many deals and that fact just might come across in interviews or essays. Hate to be the doomsayer, here, but someone's gotta say it anyways.
Thanks for the insight!
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