I don’t have much public co investing experience (RE or otherwise) and I am interviewing with the RE group of a hedge fund. What should I know? I have 4 years of REPE and 2 years of REIB before that.
Thanks in advance for your help!
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Kurtis Blow can likely help with this
A belated congratulations on the receiving the opportunity to interview! Having strong experience on the property level will provide you with a competitive advantage over your competitors. While real estate is not an inherently complicated industry, you will be surprised at the level of disconnect among professionals in the listed securities side. Perhaps it is some form of the “ivory tower syndrome”, but lacking experience in underwriting individual properties truly detriments their understanding of the fundamentals drivers of the industry.
Since you are coming from the property side, I would suggest you focus learning the basic valuation jargon for REITs, i.e. FFO, AFFO and NAV before the interview. Also, it would be prudent to review generic 3-statement modeling and accounting.
Perhaps more pertinently – and I don’t mean to discourage you – I would truly evaluate if this is the right move for the future. Your typical long-only and long/short hedge funds have been struggling to justify their fees for years now, as investors continue to migrate to passive investing. Now with an additional economic stimulus, this trend is going to accelerate. Simultaneously, there are not as many distressed or special situation opportunities in comparison to other industries. To cap it off, REITs have been generally underperforming against the market.
I could be wrong. Maybe I am just an ignorant dickhead. However, I am confident enough in stating that real estate PE is one of the few bastions left where investors can attain alpha.
Awesome, thanks so much!
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