Moving from REPE to Development
I’m curious if, your goal is to work in development, if starting as an analyst at a REPE MF firm before switching to development is a better route to take than starting at a smaller development shop?
For reference I currently work as a development analyst for a medium sized developer in NYC. I have a few classmates that work at MFs (BX, TPG, etc). Are they in a better position than I am? Even though I’m already in development are they going to have an easier time switching between different roles in the industry? Or if they were to start their own fund, would they have an easier time raising money from investors? I can’t help but think I should’ve spent more time trying to break in at a top ~20 REPE firm.
Probably about the same, depending on what your development firm needs. If the institutional developer you're targeting has a separate acquisitions team, then a candidate with extensive financial modeling experience from an MF might have an edge; however, if you are also proficient at financial modeling, then I think it would be about the same. Financial modeling isn't rocket science. You need to be good at it up to a certain point and then it's diminishing returns after that.
However, if the institutional developer you're targeting has one development team that manages both the acquisitions and the project, then it depends. How small are the developments that you currently work on? If your developments are all 10ish units or smaller and the MF REPE guy works on multihundred unit developments, then he may be preferred. But on the other hand, if the developments you work on are in the 50ish+ unit range and you work on everything from acquisitons, financing, coordinating architects/engineers/other consultants, running OAC meetings, familiar with local zoning regulation and the MF REPE guy knows how to model really well, but doesn't even know what FAR is, then I think you would be the obvious candidate.
For background, i came from a small development background - work for my family's business which were all sub-5 unit projects and worked for a mid-sized developer, which mostly developed sub-50 units, and landed multiple offers at institutional developers afterwards.
Also I would find it a little bit surprising to see someone from MF REPE move to development. Nothing wrong with it, but just haven't really seen it before and also they get paid way more at the MF REPE at the junior level.
As for raising capital, initially they might have an edge because of the brand name, but ultimately investors, especially sophisticated ones, are going to care more about track record. But I wouldnt really worry about this for several reasons 1.) The chances that you or your MF REPE buddies are going to raise a fund anytime soon is unlikely 2.) Your strategies would likely be very different. If you are coming from a development background, you will likely be raising capital for a development project since that is your skillset. Development projects are typically one off capital raises, not entire funds. Your MF REPE friends' strategy will likely be raising a fund to invest in other operators as oppose to being the operator themselves since that is what they learned at MF REPE. 3.) Unless your friend(s) is Jonathan Gray, no one is investing in a fund run by an MF REPE analyst/associate with 3 years of experience. 4.) If you and your MF REPE buddies all end up at an institutional developer, then you're all more or less in the same boat in terms of raising capital
Thanks for the info. I work for a P3 developer, some of our jobs consist of 500+ unit student housing, sports arenas, and then one-off developments for municipalities like court houses, etc. Would this experience be relevant albeit niche? Second, how did you go about moving to an institutional developer? Just alot of networking?
Idk what P3 is, but I think you would be a very competitive candidate for any developer. At the junior level, you just follow instructions from your manager and are mostly just pushing things along. You aren’t expected to be an expert on any asset type. If you were a VP then it may be a bit different, but even then, at that level of development, there is an expert/consultant for literally every aspect of the project.
I applied to open positions, but not through the online portals. I would find someone at the firm/team and email them my resume directly and ask for a phone call
Just to provide a counterpoint, this is not necessarily true depending on shop. I am at an institutional developer and we pay our associates as much or more than MF REPE firms, just with the caveat that comp is much more variable. In a years like 2021/2022, I would bet money our average associate made more money than the average BX REPE associate. However 2023 that is likely the be flipped. Base + Bonus REPE will always pay higher, but at some shops there is a significant promote/profit share component even for junior employees.
However yes, in general REPE pays more than Development at the junior levels, with that flipping as you get more senior
What type of dev shop would this structure fall into? Mostly what I've seen from institutional dev shops at the associate level is pretty structured base/bonus.
You are absolutely wrong if you think that gap “flips” as you become more senior. Doesn’t seem like you realize these seniors at MF’s 1) get carry and 2) make a pretty large sum of cash comp on top of that. I’d be stunned if the average senior in development is clearing more than BX MD’s regularly.
You’re overthinking this. And frankly, you are probably learning more they than are even if it is “more prestigious.” You’re closer to the asset. You’ll be able to move around positions no problem. Just use your network. There will always be people out there who want a blackstone analyst to work for them - but there are also people out there - like my firm - that probably wouldn’t hire from blackstone. It’s just different strokes for different folks. We need a certain skill set that is generally close to the bricks.
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