First time poster here. Wanted to see if you guys could give me some advice on post MBA real estate gigs.
Background: I have spent 4 years at a major bank working in Real Estate Finance. Experience includes distressed mortgage workout as well as CMBS origination/underwriting where I have created hundreds of asset level models. This fall I will enroll at a top 10 MBA program that has a strong real estate program. Following MBA school, I see my options to be as follows:
1st Choice - Acquisitions for REPE, REIT, Institutional Investor: At the end of the day, this is what I want to do. I think my skill set fits it, as my focus has been on asset level analysis and these companies generally invest at that level. However, these shops are usually light on employees and thus the job market will be very tight. What makes the decision more difficult is to have a shot at these positions, I will have to bypass recruiting for my second choice, Real Estate I-banking. Another factor is the wide range in pay level. I don’t know from experience but I get the impression that all REPE groups pay well, and only some REITS/Investors do.
2nd Choice – Real Estate I-banking: Would much prefer my first choice over this one, but it appears that many companies see this as a pre-req for REPE despite the focus on company level analysis vs. asset level. The advantage for this choice is that I know that there will be jobs here. Banks hire associates for these jobs every year and pay is very strong, but comes with a much worse lifestyle.
Can anyone speak to transitioning from CMBS/Workout to REPE/REIT jobs? Would I be competitive for such jobs or would I be better served to gut it out in REIB for a couple of years and then transition. Any advice will be much appreciated.
Hi MBA--
First, I think it's helpful to break down your "1st Choice" tier. You are right that the established real estate opportunity funds and the multistrategy megafunds tend to hire investment bankers. But note that they act like generalist PE funds in that they almost exclusively hire analysts, and rarely hire MBAs with no pre-MBA PE experience until you hit the MD level.
The REITs and other institutional buyers are less picky on background, and I think tend to gravitate to real estate experience more so than banking experience (with the exception of perhaps the handful of very large office REITs in NYC, eg VNO/BXP/SLG).
You're more or less right about a wide pay gap in the industry. The "true" PE funds pay much better generally than REITs, but I wouldn't say all "PE groups" pay well. There are a lot of firms that could be called private equity in that they raise private closed-end funds to buy real estate, but don't pay in-line with the others (I call these "real estate investment managers").
If your ultimate goal is to work in acquisitions, I would work hard to try to go there directly. I don't think you're going to get much going into REIB as an associate. So far, I have not yet met a single post-MBA associate that has successfully moved to REPE.
So would you say the difference between REPE firms and RE Asset Managers is mainly their fee structure (contributing to the difference in employee pay)?
Thanks for the advice re-ib-ny. Very good stuff. In general, how is CMBS viewed? Its not investment banking and its not pure real estate either. But it is finance experience that requires asset level analysis. Does it give you the best of both worlds or not enough of either as it pertains to acquisitions?
Also can you roughly quantify the pay gaps you see between REPE and REIT/Institutional Invesor at the associate level? Thanks!
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