Debt Fund

As an equity investment person, can someone just high-level walk me through the different roles at a debt fund / mortgage reit?

I know there is obviously an origination portion and then I am sure its fund / shop specific but is there another investment management kind of function that does the underwriting/AM of the existing portfolio? Is that broken out into seperate teams? 

Does everyone just want to get into originations? Would you be able to leave an investment management type of role to go to a place like MSD/BDT or another shop that is doing more special sits across the capital stack stuff that operates more like an equity fund and achieves equity like returns due to where they are sitting in the stack and most likely not leveraging there postion?

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Depends on the size of the fund. At a lot of smaller funds, the originations person does everything (underwriting/origination, AM). 

For example, if you raise a 500mm fund with a 3 year investment period. You start investing in 30-50mm deals, meaning that over 3 years, you have 15 deals total/5 year. Then you have a 4 year harvest period, but haven't raised a 2nd fund yet. If you had separate groups, then your AM didn't do much the first year of your fund while you ramped up and the originations guy does nothing the last 4 years of the fund because there is no money to put out. It is more efficient to have a hybrid person in this case.

For the larger funds or ones that are further along in their series, they usually have at least some separation. It would be really hard to be in your 2nd or 3rd large fund (>1bn) without separate teams because there are most likely some problem children from fund 1 still lurking around, deals on fund 2 are active and you are putting out money in fund 3. An originator wouldn't be able to focus on new stuff if they were still dealing with fund 1 stuff.

The AM teams tend to be a lot leaner than originations, but also way more insulated on the ups/downs of the market.  

the split between originations and underwriting is usually non-existent at funds (you see the separation more at banks). Originators usually have some sort of junior person they work with to help crunch numbers, but they are all the "investments team"


Not everyone wants to be in originations. There are people (like me) that actually enjoy the AM side more. At a high yield fund, you will actually find the jobs more similar than different, especially in smaller groups, and that the teams are highly collaborative.

High risk = high reward = higher chance of problems. High yield funds want their AM people to be just as sharp as the originations side, especially when handing workouts or restructures. That is why the high end AM spots are paid just as well as the high end originations spots.

Just this week, one of the originators went on vacation so i jumped in to wrap up a closing for him. One of the mods I'm currently working on, the original originator is jumping in to help me update models, while I'm the face to the borrower.

We are all here to make money, so less about "roles" (even though we all have our own expertise) and more about getting it done. 


Do these firms give returns to interns? Friend working here sophomore yr said they don’t have a pipeline


Hard to get a return offer as a sophomore intern no matter where as companies don't usually hire 2 years out for analyst classes.

These teams tend to be pretty lean so while it is possible that you get an offer to return for your junior summer summer, I would assume you have to be pretty awesome for that.

Most of the smaller funds I know don't take a whole lot of interns (sophmores or juniors) in any year because they don't have a whole lot of room to train people on such a lean team.


Thanks! Is it possible then to go from junior summer -> full time or are chances slim as well?


Yes as a junior. My last firm and current firm only have as many junior interns as we can offer. Meaning if we have 6 potential spots, we only take 6 junior interns. 

It becomes binary then. If we like you, then return offer. If not, then you are out. 

My fund is pretty lean so we probably only have 1 spot for a junior in any given year. So highly competitive, but if you make it to us for the summer, you have as good of a chance as you are going to get.


Thanks! Besides delivering high quality work and being proactive, what more can we do to “get the team to like us” in scenarios like this?


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