Is Core+ an Interesting Career Path / What about Promote Structure?

Hi guys,

Everything is in the title. Recently got approached by a few large funds to join their Core+ team. Currently working for a value-add/opportunistic fund. I was wondering how the carry remuneration is working for senior executives at Core+  funds? for example, do the Apollo guys investing for their insurance fund got hurdles at 6 and 8% and hit the big carried/promote if they generate 10-12%? or is it just generally a less lucrative career?

Thanks for your help,


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Comments (12)

  • Analyst 1 in IB - Gen
May 12, 2022 - 11:12am

Why would it work any different? It's just lower hurdles, lower returns and (hopefully) more total dollars managed since you can buy big, stabilized assets with less hair on them, meaning less time spent per $ deployed.

People ask the same thing about debt funds but they get a healthy promote after leverage

  • Analyst 3+ in RE - Comm
May 12, 2022 - 11:28am

Thanks for replying - do you know if there is any difference between the pay of Core+ and Opportunistic teams at larger funds? Is it also possible to jump back into Value-Add/Opportunistic funds if one does not like the Core+ segment after a few months/years?

Still hesitating to make the move.

  • Analyst 1 in IB - Gen
May 12, 2022 - 11:56am

No idea. Look up well known core+ funds on LinkedIn and see where people go after. You can filter by "past company"

May 12, 2022 - 1:41pm
CREnadian, what's your opinion? Comment below:

This is the same idea as equity vs debt, just more granular - Core+ is going to have lower relative returns but hurdles are going to be lower accordingly and there will be less volatility and risk in your returns/promote.

By this logic, you might have bigger paydays on peak years in opportunistic/value-add but theoretically it should balance out through the consistency of pay at a Core/Core+ fund which will do better in downturns.

You also will generally have higher AUM to work with.

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May 12, 2022 - 2:54pm
SBPref12, what's your opinion? Comment below:

You shouldn't be worried about carry/promote at the analyst level ;)

Seriously though... as a previous poster alluded, there is potential to make more at an opportunistic fund because, well, their investments are opportunistic and have much higher upside.  core+ funds still invest in light value add deals so there's more upside than at funds only focused on core assets. they should be called "Core plus some riskier shit". 

personally I'd take working on sexier deals at a core + fund over working on those headaches of deals at an opportunistic fund any day.          

  • Investment Analyst in RE - Comm
May 13, 2022 - 12:08am

I work at a large investment manager. The only difference between our core thru opp funds are the percents allocated to core vs development and investment duration. i.e. you can creat a core plus return by investing in 2 stable deals, one build and hold dev, and one build and flip dev. Idk what an investable core plus deal really even looks like today besides maybe near term expiry multitenant industrial…yeah

Most Helpful
May 13, 2022 - 9:37pm
redever, what's your opinion? Comment below:

Okay...... this is a good/legit question... and I do my best to make my thoughts simple.... warning... I think some may contradict themselves, that can happen in real life, sorry if confusing....

1. YES... personal earnings are directly related to firm and even business unit/department/division (in a large firm) profitability. The more "profitable" the firm and your team, the more you can make, this is true hands down. BUT, if you really understand the real estate investment management business, then you know that fund style/strategy is far from the most important determinant of firm revenue from their funds/SMAs/clients/etc..... What drives profitability is FEES, what sets fees are AUM first and foremost followed by "difficultly" (this is where opportunistic strategies get a bump), and of course reputation/track record of the manager (better you are, more investors want in, and you can keep fees higher). So, the stone cold reality is that a firm can make the same or more off of a 1% asset management fee of a mega fund than off of a 20% promote on a small one; its just math.....

2. Structure and means of capital raising matters tons (affects all that stuff in point 1). A lot of opportunistic strategy funds are closed-end private funds. Those take big effort to raise money (unless you are like Blackstone, and it just gets wired on demand), then you have to deploy, and you must engineer an exit or liquidity event usually by year 8. Thus, the "promotes" are in place to properly align incentives, and thus the firm makes good/great money if the fund beats expectations. Since these are closed-end funds, then use of leverage is pretty common and an easy way to juice returns to investors and managers. The opposite (common for core funds) is the open-end diversified comingled fund, which offers quarterly redemptions and purchases. These tend to be very stable and rarely churn assets and use far less leverage (being open-end makes leverage more risky, in case of big hit of redemptions). Open-end also requires a very unique feature that closed-end need not do (to my knowledge at least..), they must value themselves quarterly (or as they say... strike NAV), this is a must as they actually transact all the buy/sell orders at the new quarterly NAV. This also changes the whole game on "promotes" and "fees"... if you mark assets up (or down), then the asset management fee immediately adjusts as well. You can also "earn" promote (sometimes as a percentage of increase in value or return above hurdle/benchmark) quarterly (many only do this annually for practical sakes). With closed-end... you often have to ride to the end or have some form of "crystallization" event. With open-end, you just charge the fund and keep going. You also usually have to spend a lot less money and time on capital raising and other actual firm expenses.... that ups profitability clearly!

3. The more "difficult" the strategy (let's just say that opportunistic is harder than core, and development is hardest of all), the more people and probably the "better" people are needed. Clearly, some firms just adjust people's hours accordingly (welcome to the mega-fund world of the PE operations...) and pay them more. If you make $200k as analyst at a PE type shop but work 80-100 hrs a week often while another one (maybe at a "lifeco" style firm) makes only $100k but only works 40-50hrs, are you really making "more" (the answer is yes, but just at a clear cost, no shame in that game). Still.... all else equal... the more "skilled" the deal the more "skilled" the people and thus the higher pay (even if that skill is just working a shit ton more hours, still counts). This is easy to accomplish as the more "difficult" the higher the fees are justifiable from the investors (LPs) perspective, thus higher pay for talent can result. Of course.... strategy is only one type of "difficulty".... increasing amount of AUM and/or number of investors does the same thing.... so back to that premise... you can manage a $500 billion fund doing boring stuff and make the same someone running a $50 billion fund doing exciting stuff, that's the concept.

So... to the OP, it's not really that fair of a question to expect any generalized answer as to which is more "lucrative" or not. Different economics for each business, and that matters. Pay also goes inverse with time and WLB, and that matters (irrespective of strategy). The biggest "take away" I'm trying get across is this notion that core/core+ is less lucrative of a long-term career. People actually shift strategy (many firms do all/both), and it's not something you just stay doing the same a whole career. The key is getting promoted and being a top performer.... that's what pays, in all firms doing all types of strategies.

FYI... I've never heard of people being core vs. opportunistic specialists for a career, not saying people don't fixate on one or the other, but it's not an organizing principle.... like acq vs. am or property type specialty... those are two legit specializations.... core vs. opportunistic and points in-between is not.

May 14, 2022 - 11:24am
pudding, what's your opinion? Comment below:

So you can actually make more money in core and core plus than opportunistic. Two reasons. 
1) hurdles are lower to account for the lower risk. So your promote value will generally be the same. 
2) the strategy scales easier and requires less people. The market is larger and more liquid for core and core plus than opportunistic. This means you can raise more money and put more money to work. This means funds can be larger which equates to larger fees, larger promotes, and more nominal dollars to spread the wealth. With that said; this doesn't mean the partnership will share the wealth - that's another story. As an employee, if you can get fee and promote, there is more available in core and core plus. But generally, the partners (at both core, core plus, and opportunistic) need to be willing to share. Lastly, the more opportunistic the strategy, generally the higher the pay for the employees. This is because of the "skill set" and talent you need. It's a harder job to do opportunistic than core. With that said, it's all about getting a piece of the fees and/or equity. If you can do that, it might even out. So-more fees available in core due to size, pay is probably better in opportunistic, unless that is you can get yourself a piece of the fees and/or promote. Than it's a wash. 

to sum this up, go read what redever wrote because he summed it up better than me and explained the nuance, which I don't know if I did well, or at all 

  • Analyst 3+ in RE - Comm
May 17, 2022 - 2:25pm

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