Hello all: when interviewing with a new fund in a sector that's very overheated (ie a 'winner' in the pandemic), how do you stay bullish and positive on the prospects, when it feels like they're probably late to the party? Being in this sector for 6 years dealing directly with buyers and sellers, I can't see much more room to run in cap rate compression. And when they're generally core, long-term, net-leased properties, you can't really lean on the asset management / operational acumen as a generator of excess return.
Or do you be brutally honest about the challenges in deploying significant capital in an asset class that many others are chasing (and where many others have a significant head start)? The fund has a second mandate with a more out-of-favor asset class where the existing principal has expertise and has been making deals, and I'm going to be the lead on this very overheated class. He must be bullish on the prospects for this overheated class if he's raising/deploying new capital into it, so how do I reconcile what I think he wants to hear and what I really think? I'm an investment sales broker in the niche asset, and see firsthand the crush of capital/buyers/brokers who have followed the money into the class in the past 18 months. Being a broker, the expectation is that I'm a fountain of optimism, bullishness and boosterism for it - will I show a 'keen eye' by being honest about what I've seen? Or do I just smile, and say yeah market was 6-cap in 2018, 5.5-cap in 2019, 5.0-cap in 2021 and will be 4.5-cap in 2022-2023?
Thank you in advance to this terrific community!
What is the interview for? Acquisition sourcing? If so then just be a go getter, hands in the dirt, scrappy deal finder. They will ask you your opinion about markets but for a director of acquisitions position first and foremost you should be talking about how you will be bringing in opportunities not how difficult it will be to do your job.
Yes - acquisitions in the job title and execution in the job description. The recruiter also asked about experience with due diligence in my current role. Being an investment sales broker, and conduit between buyer and seller, I'm quite comfortable with the due diligence / underwriting side of things - less so with the capital markets / financing side. Being an investment sales broker, sourcing (canvassing, cold-calling, etc) has been my lifeblood for 6 years now, so very comfortable to that end.
The real rub is with the transition from an agency role to a principal role - the expectation with the former is rose-colored glasses and bullishness, while the latter requires a degree of conservatism. Will I be rewarded for caution/pessimism/conservatism, or will they want to see unbridled bullishness? Or is that a 'read' I have to make during the course of the interview? Mind you - the interviewer/employer has significant expertise in a tangentially related space, but I am going to be the expert in this new space, where, again, a crush of capital/buyers/etc have followed the herd in the past 18 months. Then again, I thought $500/ft+, sub-6-cap deals made in 2018 were the top of the market, and we're now $700/ft+ and 5-cap, so what do I know?
I will be painfully honest with you, I had been interviewing for a SVP of acquisition position for the better part of a year (it was stretched out due to the pandemic). I did not get the position, the feedback from my recruiter was that I was one of two at the end and the other guy got the nod because he was more aggressive about the prospects of placing capital and that I put my feet in the owners shoes too much.
In my current position I have influence in the direction and investment philosophy of our holdings being a part of a UHNW family office. And I'm sure they would have appreciated my insights if I were a part of the company but at the end of the day they were looking for someone to place capital first and foremost.
I think I even remember the particular conversation (one of many) that did me in as this was an industrial acquisitions position and right now things are insane and it was a conversation about how some funds are returning capital because its so difficult to place it atm.
Anyways, acquisition work is not portfolio management. They dont want you concerned about returns or investment philosophy, they want you to PLACE CAPITAL. They want you out there winning deals. They will give you a box and you find things that fit inside it, only later down the road will they trust you to have a say in the shape of the box.
Thank you - I will take your experience to heart. In the interview game, nice/honest guys sometimes finish last, so I will keep my investment sales broker hat and rose-colored glasses on for the interview.
It's a fund, so it's OPM - other people's money. If they want their money in an overheated sector, I will put it there - as long as they know we're not using 2018/19 comps, because it ain't 2018/19 anymore!
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