Institutional CRE Lending vs. Institutional Investment Sales/DE Placement
Having an argument with a friend right now -
What do y'all think is the better starting spot in terms of skills learned and exit ops?
100% - Institutional Investment Sales / DE Placement
more detailed analysis, better exit ops. institutional cre lending is like what u mean cmbs and shit? my man that is purely for excel wizards. there is no fun. investment sales you get like a sick azz travel budget too.
D/E Placement > Lending >>> IS
Idk dude if you're at debt fund and doing mezz, bridge, acquiring performing loans (hopefully below par) and understanding how loan on loan financing works, the players in that space, capital sources, etc, Id say that's better experience than d/e placement. You get experience across the risk return spectrum, get exposure to structuring of docs, etc.
Agreed, it’s on a case by case basis. Personally, I think capital markets is a bit overrated for some of the reasons you listed (such as getting exposure to making actual investment decisions in lending). But you’re able to build a lot of relationships early on in capital markets. Lots of layoffs at brokerages these days though, so I’m sure lending is safer atm
Lending is superior in my opinion. You are investing in the deal with a caped return and have more money at risk than the equity.You learn about what rights you have, how to evaluate risk (D/E brokers don't do this), and how to workout a loan if it goes bad. Additionally, you work closely with the Sponsor so you have the chance to develop a relationship if you want to go to the equity side as your "exit op". You probably get more underwriting reps as a D/E broker but their assumptions aren't that great usually and once you have underwritten 10 buildings, you can probably figure out every middle of the fairway asset.
Not sure if OP is in college, but a lot of kids in college write off debt because they think debt is boring and people in debt don’t make as much in people in equity and all debt is just giving out a senior 60% LTV loan and sitting back and collecting a coupon. Working at a high yield debt fund, in my opinion, is experience that is directly on par with REPE experience. There’s so much going on behind the loan the borrower is receiving and it’s great experience in structuring, hedging risk, managing a portfolio of loans, workouts (if you have some bad loans), etc.
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