Confused about what exactly is REPE

calling @IsItREPE  to help

I see, could you throw some light on the possibility of the role being able to do both acquisition and development. I saw that Hines associates do both ?

I like development but acquisition also seems interesting to me, is it easy to switch between the two say later on in career if I wanted to ? It would be very helpful to get some clarity @IsItREPE 

How did you feel about your job as a civil engineer working on design and permitting? Did you enjoy it or not really? 

Your day to day responsibilities in development will be much more similar to your civil engineering role. Although there is some financial modeling and analysis, this is probably only about 10%-25% of the job. Most of the job in development is executing and making sure the building gets built. In your engineering role, you were only focused on the civil engineering design, the site plan, utilities and you likely worked on the actual designs. As a developer; however, you are  project manager, meaning you are a jack of all trade, but a master of none. You have a general idea of architecture, civil engineering, MEP engineering, construction, etc...but your architect, engineers, construction managers are the ones who actually get into the weeds. You just manage them and check that their designs align with what the development company wants. One day you might be projecting a project's cash flows for the next year for your LP's, the next day you might be reviewing architectural plans, and the next day you might be working on a presentation to present to city officials. 

REPE/Acquisitions is a lot more repetitive. A potential investment opportunity arises. You build a financial model, out together an investment memo to present to the investment committee, if they green light it, then you submit an offer and go through the due diligence process. Once the property is closed, you hand it off to the asset management team and move on to the next acquisition. 

Which one sounds more suitable for you? You will definitely have a leg up in development given your civil engineering background; however, you will likely be seen as the construction, engineering, design guy and not the finance guy, so much of your job will probably revolve around executing and design and less about financial modeling. If you think you enjoy the finance part more, then my advice is hone in on that skill as it will help you in both development and REPE. Be able to building a development financial model from scratch within 4hrs with water falls, construction draw schedules, etc..

As for pay, REPE typically pays more at the junior levels but you also usually work more. Once you hit VP-level and above, then your pay is more closely tied to the project/investment performance for both jobs.

Nowadays everyone calls everything REPE. Its really odd to me. 

It's a term you will only see online, specifically this wesbite. You'll never hear someone say "REPE" in conversation and if they do, stay away.

The naming/bucketing thing can be annoying for those of us who've been in the industry for a little while, but the reality is that the industry can be confusing from the outside or from school.

• A narrow, traditional definition is: an REPE firm raises institutional capital and allocates capital on behalf of their investors in the form of a limited partnership with "sponsors" (aka "operators", aka "general partners")
  • Look at the real estate section of Carlyle's 10k for more color
• Sponsors write and execute a business plan on an asset/portfolio. The common types of business plans are development projects, value add projects, and recap projects.
• The REPE business is generally an attempt to allocate and fund equity capital at the deal level with the best sponsors/operators doing the best deals.
  • Sponsors fund a lesser portion of the equity capital, typically 5%-10%-15%, and they are incentivized to do a great job through "Promoted Interest" (aka "Promote", "Carried Interest", "Carry")
  • Promote is a term in a contract between LP/GPs that give Sponsors a greater participation in profit share relative to their contribution % of the total equity capitalization, and it's paid out based on the financial performance of the transaction).
• Sponsors/GPs go out into the market and find the deals, and the largest sponsors use REPE firms to capitalize the equity of the transaction and business plan, as well as give them credibility with their lender and prospective tenants.
  • Other sponsors choose to capitalize solely using their own capital, family offices, friends/family, etc. In other words, there are other sources of equity capital for Sponsors which are bucketed by risk/return profiles that are not traditionally considered "REPE firms" but engage in REPE as an activity.
• The reality is that the vast majority of the commercial real estate investment business - by that I mean, the people who are buying/operating real estate day to day - is composed of transactions which are not large enough, or lucrative enough, to be worthwhile for an institutionally-sized investor.
  • So, you have a huge swath of non-institutional equity capital that chase and do deals (i.e. the total equity required is a few million bucks or much less than that), which is a huge distinction the from corporate PE business. This part of the industry has much, much more opportunity. Anybody that's been in the business will call the non-insitutional real estate game "REPE", but it is distinct from what Carlyle, Blackstone, Starwood, etc are doing in their current fund businesses.
• On the debt side, there has been a huge capital flow from "non-bank lending" post-GFC. Debt funds, who are often labeled as REPE, are generally not in the business of funding equity into real estate projects. But they are considered by investors to be "alternative investment managers" and can give institutions an attachment point to the real estate market that produces returns with generally less volatility.

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