Everything about CRE Lending
Long time lurker here finally making a post under a throw away account to learn more about this role. I recently received and accepted a full time offer as credit banking analyst in the commercial real estate banking group at a bulge bracket (Wells/JP Morgan/BofA/Goldman) this is the only group I'll be in so im not sure if im shooting myself in the foot by being too niche. A couple of friends have said the role is similar to Wells Fargo FAP program and I am just trying to find out what the basics to this role are. Basically just want to learn everything about this and get ready for it as much as possible so i can excel and do well. Pros and Cons:
How do deals usually get to you at a big bank? Is there a lot of bureaucracy? What will I learn? Learn Argus before? Exit opportunities: Whats the most exciting part of this role? Whats the least exciting part of this role? Hours: Main responsibilities: Day to day tasks: Quarterly tasks: Skills to brush up on: How easy was it to transition to PERE/REPE? How easy would it be to switch to a debt fund? and how do these work exactly and what would be my main role? Skills transferable? How and why would I work in debt funds? How would you make connections if you're not on the field meeting people? Whats the usual dress code? Salary and Bonus:
Any other suggestions and or tips would be extremely appreciated. Also happy to chat with anyone that wants some tips
Thanks
Anybody?
I'd suggest narrowing this down to 5 questions, and you may have a better response rate.
Yeah you basically just listed exam-type questions related to your role. I'd say you follow what the above commented and narrow down the questions to those that you are most curious about
Also search the forum - many of these questions will answer themself if you just search for “lending” in the RE forum. Put in a little effort and I’d be happy to fill in the gaps
I work at a D/E brokerage and have worked at Debt Funds, so I can help answer some of these. TBH, you can search through the forums and find a lot of these answers, but I have some time and will help you out. Please excuse any snarky comments, I may make -- they're not personal.
First off, congrats on the new role! CRE is an incredibly interesting space to be in, and you'll learn a lot, especially if you have a chance to be exposed to a variety of deal structures/product types/asset classes/markets, as I imagine you will have at a large bank.
Out of curiosity, what's your background? Recent undergrad graduate? Finance major? Overall, you'll find that the majority of your peers did some sort of business school, but CRE as a business isn't that technical.
My experience summed up is solely in CRE lending with a large international bank (i.e. Barclays, ING, HSBC etc.). I started several years ago coming out of undergrad (business degree, but no finance or any sort of experience in finance/CRE) in the bank's graduate analyst program as part of the CRE team. Did mostly deal support in underwriting, credit write-ups, and portfolio management, with no originations expectations, but directly supported the relationship managers in active deals. Moved markets, now in NYC as a relationship manager focused on originations.
Everything I learned, I learned on the job, so don't worry too much about 'preparing' for this ahead of time, you're already hired!
I'll try to address each of your questions:
How do deals usually get to you at a big bank? As an analyst, the relationship managers (RMs) and the teal leader usually originate the deals through repeat business w/ existing relationships/clients, participating in new deals that other banks have originated as part of a syndicate, or through brokers.
Is there a lot of bureaucracy? Yes; it's just a fact of life. I would imagine I deal with a touch more than a US BB, but because it's what I 'grew up with' and all I've ever known, it doesn't really bother me. Annoying for sure, but you learn to deal with it.
What will I learn? Initially, what makes a good credit? How to underwrite a property's cash flows, tenancy, market risk, borrower/sponsor risk etc. How to mitigate those risks. You are helping present a case on whether or not a given deal is a strong credit that's worth the risk, or one that isn't worth pursuing on the flip side.
Learn Argus before? I didn't have any knowledge of it and learned on the job. The bank sponsored a 2 day training course with it as well. Towards the end of my analyst/associate days (recently), I was training new analysts in Argus. Argus is definitely valuable in modelling cash flowing properties, particularly office/retail/industrial properties with multiple leases.
Exit opportunities: The natural progression upwards is as an RM with your own portfolio on the originations side. Also syndications. Debt funds and credit unions. Some move onto the borrower side in development. Not really sure on the big PE funds, but can't imagine the skill set on an analyst level is too different; just have to learn the equity side vs debt.
Whats the most exciting part of this role? You'll find the #1 reply in threads here about "Why CRE?" is the tangibility of it. It's real property where people live and work, and all sorts of macro and micro factors play a role. You get to walk downtown and point to things that you've helped build and develop!
Whats the least exciting part of this role? The bureaucracy lol, all the forms you have to fill and boxes you have to tick for someone else in the bank that have to tick different boxes too.
Hours: Very good; I was typically 9-530 on most days, occasionally past 630 and very rarely on weekends as an analyst/associate. My organization is very open to working from home.
**Main responsibilities: Day to day tasks: Quarterly tasks: ** Supporting relationship managers in underwriting new deals (market analysis, borrower financial statement analysis, property cash flow analysis, analysis of comparable properties etc.) is the best part for sure. You will also have to manage the portfolio as well, meaning annual reviews for existing deals already on the books, dealing with any changes to existing deal terms, and miscellaneous requests from Borrowers/bank admin staff/credit department.
Skills to brush up on: Excel modelling skills are necessary, as well as articulate, concise business writing and being able to effectively summarize a lot of information for your target audience, usually your credit department. I would also suggest good presentation skills to, to 'pitch' deals as well!
How would you make connections if you're not on the field meeting people? Attend industry events and conferences, join young professional groups. Whats the usual dress code? Eh, depends on the group. Mine's not too strict so I usually do dress shirt (no tie, but keep one in drawer for client meetings), dress pants and shoes. In summer, if not seeing clients, i'll keep it looser.
I'll be happy to elaborate on any of my points
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