CRE Asset Management Learning Materials
Hi everyone, long time lurker and beneficiary of the information dispersed on this forum here. I've recently accepted a role as an Asset Management Associate with a lower PERE30 fund (think Angelo Gordon/Ares/Fortress/Cerberus) in NYC. The fund invests in all of the four major asset classes, as well as up and down the capital stack. Any advice on reports/books that would be helpful in getting up to speed for such a role? As my current job isn't very quantitative, I've been self-training with the BWIS/REFM, but I was wondering what else I'd be able to do to start off on the right foot. Any help would be greatly appreciated!
i don't see how BIWS or REFM will help you with asset management. those courses are kindof teaching you to be slightly average at Excel for the most part. and while Excel is a great tool, nobody with a company like that should be hiring you to BUILD their asset management platform in Excel.
personally, i prefer to see people stay entirely out of Excel when learning real estate analysis, but for this particular situation that recommendation is even more applicable. Excel has nothing to do with the position.
first off, if you have never worked with investment real estate (ie - not buying deals, but building them) and you are getting into asset management that involves leased investments (office, industrial, retail, STNL), i'd say you still have quite a lot to learn about that side of the business.
i suggest you really figure out leases. everything starts with the lease. and while you have several years of experience in development it is a whole different ballgame when you are buying a deal that has existing leases in place that you are contractually bound to honor. that means caring about renewal options, TI/LCs on tenant turnover, and all sorts of other ways that leases work together to either mitigate or compound risk in a particular property.
what you are trying to do with asset management is understand the interactions between properties in a portfolio or fund in the same way you would do with individual leases in a property. so learning leases helps you in this way as well.
then, i suggest you learn at least the basics of some standardized software that is used for asset management. argus enterprise does asset management, so does mri now that they bought cougar, and i think realpage is a newer entrant that has some software that does this. there should be basic videos on youtube or floating around the web for all the above. the reason i suggest learning on some standardized software is b/c by understanding the inputs and outputs, and getting your hands dirty quickly, you will kindof learn what is "normal" in that role.
to me, Excel just gets in the way of this whole process and people start focusing on coding spreadsheets and learning VLOOKUP and pivot tables instead of real estate.
Excel is a great tool, but for most it's like kindof "programming lite" where people can learn the basics of programming and logic in real time with some basic functions.
real estate math for underwriting and asset management is not complicated. there are no partial differential equations involved. there is no value in being "better at excel" IMHO, but there is a ton of value in understanding the principals of real estate and experience.
i feel like there are some books on asset management on PEI or somewhere on amazon that will help with the higher level concepts, i'll have to look a little bit later.
my recommendation for learning real estate analysis is as follows:
1) read a ton of leases and abstract them. get an abstract form online somewhere and learn how to extract the important info. this teaches you the foundation of value in all investment real estate, which is the lease. understanding how the relationship between landlord and tenant works over a long period of time is crucial. to understand how you can make money, you must understand what can go wrong. that also means things most people never think about, such as how two leases can affect each other, even if the tenants have no formal relationship, with co-tenancy or occupancy clauses. if you don't have any leases, look some up on SEC EDGAR.
2) learn to use argus or some other standardized underwriting software. this can be a standardized excel template, if you can find a good one, but the key is to NOT CHANGE ANY FORMULAS. do not try to "build a model" b/c you won't even know what's in it. you should know how to ride a bike before you go out and design one. just learn to underwrite deals. the deals can be fictitious. take your abstracts from #1 above and enter them into a fake model, pretend they are in the same shopping center, for instance. what happens over time? do lots of tenants expire at the same time? do you get saddled with a lot of cap ex at once? throw some debt on the deal. what does that do to it? do you go cash-flow negative at any point? how would you solve that problem? where is your profit coming from, appreciation or cash flow? how does that mix affect the certainty of your returns? what is a reasonable going-in cap or exit cap? why? think through this as if you had to actually own it.
3) along the way, you will need to use excel to do cool stuff. but most of it will be doing stuff with the outputs from a standardized model. or manipulating data from another system into a standardized model. and by the time you are doing really cool stuff you won't need someone to tell you how to do real estate stuff in excel, you will need general excel chops that you, through your experience, apply to real estate. a good exercise is to build an argus model and then build it in excel and see if you can get them to match up. my favorite excel training/solution sites are chandoo, mrexcel and peltier tech.
if you already have the job, dig into the real deals your company is doing. find the most senior analyst accessible to you and make them your very good friend. offer to get their AE models started for them. everybody hates setting up the models, entering rent rolls, etc. it's very time-consuming and allows them to hit the ground running but you will get a lot of experience understanding the key things that you need to care about as an analyst. see if you can underwrite a deal separate from them and compare notes.