Ask Me Anything: REPE Investment Professional

I can help answer this for the op (I am a senior acquisitions analyst for a good sized REIT). Analysts/Associates come from a similar type background as REPE (REIB, brokerage, commercial lending, etc.) There is no one who came straight from undergrad on my team because we prefer people with some type of experience. Career path is also similar: Analyst -> Associate -> VP/Principal -> Director -> Managing Director with usually 2-3 years at each level (maybe 4 at the VP level). Analyst/Associates mainly do the underwriting. VPs may source some deals but are principally in charge of quarterbacking the deals. Directors/Managing Directors are the rain makers.

Overall, not much difference in background, progression or main job function. The difference is the asset type/risk profile/etc. GENERALLY, REIT acquisitions are much easier to underwrite when compared to REPE deals since REITs generally invest in more core products as opposed to value-add or opportunistic.

handullz:

Acquisition analysts/associates in REITs... What's the professional pathway for those guys? I see a lot of stuff around REIB and REPE... But I wonder what's the path for acq guys... seems like they get a lot of good experience from a deal perspective but no one really talks about them.

AcquisitionsGuy covers this pretty well. The progression of title / rank and day-to-day roles are pretty similar.

I'd like to add that many on the forum often ask about the distinctions between publicly traded REITs and REPE firms (I'm noting that REITs are "publicly traded" as this is often the context in which REIT is used, though a REIT is really just a tax structure, and can take private or public and non-traded forms). Functionally, we've established REITs and REPE firms are pretty similar. However, from my perspective, the main differences are 1) the source of the equity and 2) investment style (though as a disclaimer, there are exceptions).

Generally speaking from an equity capitalization standpoint, REITs will use public equity to fund acquisitions while REPE firms will invest in assets via a private pool of capital comprised of third-party institutional and REPE firm capital (together, private equity). Therefore, REPE really derives its name from the fact that equity is invested out of a private equity fund, not that it makes exclusively equity investments (plenty of opportunistic funds make debt investments as well).

In terms of investment style, it is true that REPE firms generally make more value-added and opportunistic investments. The reason for this is that REITs pay out dividends, therefore non-cash flowing assets that fall within the realm of a value-added or opportunistic risk profile are not as attractive.

mookeyisland:

Have a ton of questions for you. I understand that for REPE recruiting, many REIB analysts jump after a year. What are your thoughts on leaving your REIB group after a year since REPE is hired on more of an as needed basis? Are there benefits to staying/ would a senior really recommend you if you were jumping ship early? Are there REPE that hire 2 years out? Can you work you way up in most REPE shops or do they kick you out after 2 years to get an MBA? Do you enjoy your job or is number crunching all day boring? Did you think about doing corporate PE over REPE and how similar do you think they are? Which large REPE firms are more asset level versus corporate level? Which do you prefer? In corporate PE recruiting, there is a huge focus on what group and bank you are coming out of. If you are in a REIB group at a BB, is that a check the box, or are the RE groups at certain banks a lot more highly desired than others. I've been looking for an AMA like this for YEARS! Thanks so much.

A lot of these questions are entirely situational, but I'll answer as best I can.

It's up to you to weigh whether or not it's beneficial to stay for two years or lateral to the principal side after one. I felt ready after one year, and decided to make the switch.

I built a great rapport with my team at my bank, and felt comfortable enough to ask for a recommendation (though I recognize the culture isn't like this at most places). Again, you'll have to judge for yourself whether you can make the ask.

Nearly all REPE firms do not hire two years out - most are immediate start. MBA is firm-dependent, but not at mine - people have moved up through the ranks.

I like the current role I'm in - I have a lot of discretion in the deals we take on. I've always had a real estate background and never considered corporate PE.

REPE firms that do corporate real estate investments will likely also manage buyout funds. Asset-level REPE aligns more so with my background.

It's actually hard to find good REPE candidates. If you have REIB experience at a good brand bank, you have a better chance at getting an interview slot, though you'll have to hustle through the aforementioned headhunter and networking grind. It's shop-dependent, though REPE in general is less focused on prestige.