AM -> REIB -> Acquisitions, or, AM -> Acquisitions
Alright ladies and gents - I've spent the past year trying to figure out my plan, as I'm sure many of you have done. Looking for some guidance as I'm on the fence.
I'm focused on spending the next several years in transactions. There are two paths I can take:
1) Lateral into acquisitions and stay put
2) Get REIB experience with a MM bank for a few years, then transition into acquisitions
This is a major decision, and I'm not sure which way to go. High level, I think having exposure in REIB would be extremely valuable. But, there are some drawbacks and want to see if you all can help prove/disprove these.
I'm operating under the assumption that a REIB analyst is far away from the sticks and bricks. Is this true? If so, how would this impact the ability to get back into a property-level role, like acquisitions? Also, it seems like REIB teams focus on everything from M&A to equity/debt placement to restructuring to portfolio sales. Is this true, or are there divisions within REIB? Are there any professionals that can explain to me the types of modeling that you do in REIB? Are property-level fundamentals used at all? What's the split between debt and equity modeling? I'm proficient with modeling leveraged property and partner-level transactions (ground up and operating), but have little experience with IB/corporate financial modeling. Not exactly sure what areas I'd need to work on/ if I have the ability to understand what goes on. Finally, what would you do in my situation? I recently made a move and am being extra cautious here as I don't want to keep hopping around.
My background will probably help:
- School: Semi-Target B School (BBA, Finance & Real Estate)
- First Job: Global REPE Firm (Portfolio/Asset Management, 2.5 years, Analyst)
- Current Job: US-based Equity REIT (Asset Management, 7 months, Analyst)
Thanks for your help!
bumping this. really need help as i have an interview later this week
If your end goal is acquisitions, why go into REIB? Unless I don't fully understand that role, I think it would set you up for corporate PE focused on CRE companies rather than property level investments.
If your end goal is acquisitions and you understand the bricks, I think you are better off going straight to it immediately and getting deal experience.
Thanks @thisguy22. I'm thinking an REIB M&A role would give me better exposure to the corporate level activity that goes on within RE (stuff that REPE acquisitions doesn't touch). Will that help further my market/property level knowledge? No. But a better understanding of finance within RE? Probably. I have nothing to base this off of except a few discussions with colleagues of mine. But based on your response it seems like REIB might be unnecessary for my end goal.
If you are a good equity REIT there is no reason to move imo. MM REIB vs. acquisitions will most likely give you the same opportunities if you can lateral within your firm. Also after a few years you will be able to lateral to another firm if you want to move somewhere else. In my mind REIB is good if you want to work at a megafund, but these guys recruit from BB, EB and other PE shops, not really from MM in my experience.
It would suck to put yourself through the hell of banking just because someone told you xyz PE shop hires bankers, only to find out your resume is at the bottom of the heap under the GS/BAML/Evercore candidates
.Nana Good stuff, thanks. That actually makes a ton of sense. Feel slightly dumb for starting this thread, but oh well. I'm not too concerned about breaking into a megafund, but I do want to get back to REPE. If I lateral to the acquisitions group within my firm, chances are my head will explode before I get any hands on experience...REIT world isn't really for me.
prospie You bring up a good point, thanks. I was looking at REAlerts top M&A advisors through 2Q15 and the banks I'm considering are way at the bottom (in terms of volume). Started thinking about what you said. I'll be competing with people coming out of Wells (Eastdil), Citi, BAML, GS...will probably just end up in the same spot if I avoid REIB altogether.
If you can get into i-banking and you think you might want to go another direction some day, like, i dunno, making loans to mid-market healthcare companies, then that will be easier to accomplish without starting over with grad school. But when you mention your head exploding, it sounds like you're already getting a feel for what you want in life.
I think MM i-banking would be incredible experience for anybody, even if you were 100% sure you wanna do property-level stuff later on, but it's obviously a very painful track at the junior level. It really sucks when you occasionally hear that, after 2 yrs in the trenches of MM ibanking, someone's best exit opps are in FP&A at Black & Decker in Salt Lake City. Just do your research first because RE bankers sometimes complain about their exit opps, even the guys at BB banks.
I would avoid REIB as well and just lateral to acquisitions now.
Can I ask why you left your REPE firm for a REIT to begin with and why you dislike the REIT? Not that you should stay in a job you hate, but 7 months seems a tad early to be moving around ( unless you are laterally to acquisitions inside of your current firm?).
I had a ton of hands on exposure at my REPE job (worked on numerous JVs with REITs, developers, pension funds). I learned a lot, but started to question where I wanted to be in the industry. Did some networking/research to get some advice, and decided to make a move and change things up to figure it out.
While I think REITs are great at creating value, I miss working in major markets on a mix of property types. I now have limited market exposure (brokers, leasing agents, property managers, debt), which I previously found valuable. Also, a client-driven environment is much more exciting to me. I read up on which pension funds are increasing their allocations towards RE and who is cutting advisors/hiring new ones. I unfortunately cannot apply that to my work anymore. Lastly, due to the low transaction environment at my current firm, I am not really considering lateraling internally. They run a lean team as it is, and personally don't see why they would need an additional body.
7 months is a small amount of time, yes, but I have a feel for it and now know what I want to do. Could stick it out an additional 5 months, and I intend to, unless I see a solid opportunity.
If you want to work with properties, do acquisitions. If you want to work with real estate companies, do REIB. You need to decide if you're interested in the business of real estate or the business of real estate companies. It's very close and a bit pedantic, but it's the difference, no?
Can someone please explain to me why top "megafunds" would prefer to hire someone who worked in REIB as an analyst over someone who worked in acquisitions at a REIT or some other property level function? As far as I can tell, the REIB analyst would need a ton of training compared to someone who has been modeling property level projections for some time and would command the same amount of compensation. Why would a fund focused on acquiring real estate assets or financing them at the property level prefer someone who has been modeling 3 statement financial models and LBOs? There is a difference between a real estate PE fund and a PE fund focused on investing in real estate companies.
The only thing I can think of here is that you guys are lumping in commercial real estate financing banking roles (ie cmbs, balance sheet lenders, etc) into the "REIB" category.
also interested
My guess is that it has to do with the brand name. Private equity is a client facing job. Investors are your clients and your job is to convince them that you are the best manager of their money and are able to provide good returns. When investors (especially retail investors) see that all your employees come from top schools and worked at GS/MS/JP they feel confident and safe in investing in you. I'm sure people who worked at smaller shops could be just as good or even better at making investments and generating returns, but it's harder to sell that to investors that have never heard of your firm. Its the same reason as why BB's hire from top schools. Hiring an Ivy student is the "safer" option and there are likely many alumni at the BB's that just go back to their alma mater to recruit
Bump. Any more thoughts on this?
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