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No
Super worried bout what summer analyst return offer rates are going to be like. Curious if anyone has any insight here
Investment mangement business is fee based on AUMs of the respective firm, so unless your firm is losing mandates/getting redemption requests from investors, it's business as usual. Transactional jobs like acquisitions will definitely take a hit on the bonus end, since no one is doing deals at the moment.
Blackstone and Starwood are seeing record redemption requests from investors.
https://finance.yahoo.com/news/analysis-blackstone-reit-restriction-pos…
https://www.barrons.com/articles/starwood-reit-blackstone-breit-withdra…
They had to put restrictions and limits.
I saw someone point out that a lot of that is likely due to NAV arbitrage, i.e. if NAV is marked at $100 and savvy investors know that since values are going down, that $100 figure is stale and the true value is $90, they will withdraw.
Very few people would be laid off in December...super bad look to lay people off around christmas.
Buyside firms with standing AUM will have persistent fee revenue as a result, as such, the pressure to layoff is much much lower compared to firms that exist on transactional fee revenue (i.e. investment bankers and all forms of real estate brokers). That said, going "pencils down" on deals (which is where a lot of firms are today) will probably delay, cancel, or otherwise re-shift hiring priorities (clearly, this will vary greatly firm by firm).
Also, if you can't buy/sell its very difficult for the 'private equity' model of investing to generate the large promotes, acq. fees, exit fees, etc. that become the source of the large bonuses these type of firms payout. Further, the rising/high cost of debt makes the overall business model less profitable if not shaky for some (this is relative to a say a core fund which may have less 30% leverage overall). So, if firm/fund profitability falls.... so will bonuses. Thus, don't be shocked is 'base pay' is only pay for some (clearly tons of variance firm by firm and maybe even team by team). Upside is 'pencils down' probably means fewer if any super late nights and fire drills, so 80+ hr weeks might be 35+ hr weeks for some transactional teams.
Final point, asset mngt needs go up substantially in times like these, so I'd expect some 'acq' and 'cap markets' people to be floated into those assignments at some places (this is what happened in 08 times).
Caveat.... these are just generalized thoughts... will vary a lot firm by firm... and yeah... there could be some implosions especially if get pinched due to term expiring leverage. Like maybe a debt fund who gets squeezed out by rising leverage costs. Promote/carry values could also get totally fucked for some deals/funds (i.e. will go to zero and never recover, just managing out for the base fee). Those firms may cut headcount out of necessity. Same goes for firms that can't raise money or gets ungodly amount of redemptions (which will happen to some, I'd guess).
We are generally pencils down on acqs at the moment. Currently working with asset management teams to help clear out building violations and ive never been more depressed and uninterested at work.
yeah... that does not sound fun or interesting... on the bright side.... at least you still have the job and you are actually doing good work in terms of building a well rounded resume. AM experience can be valuable if you want to move up the ranks or even start your own venture, so while probably not the greatest day to day, try and think long-term about it.
That can be boring but it's also a super important part of the life cycle of a deal. Understanding how violations get removed will make you a better acquisitions analyst (or whatever title you have), so if you have to spend 6 months getting into the weeds on how money actually gets made on a deal, that can only help you get better at your job or prep you to do it on your own.
It's never a popular opinion to hear, but 95% of the important work in real estate happens after closing. You can underwrite anything you want, or negotiate deal docs all day, but if you cannot execute it's all meaningless. A deeper insight into how violations get removed, why certain buildings get more of certain types of violations, the challenges in the process, etc will all help when you pick up pencils again and start working on new deals
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