Just found out I will be doing a second-round interview with a retail focused REIT next week. Apart from researching the firm itself, what are some of the technical questions I might end up getting? I've been using BIWS's CRE/REIT course, but I don't have enough time to go through the entire thing by early next week. Any advice is appreciated!
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Bump, would really appreciate anything.
Hopefully that will help. I haven't worked on a retail deal in a while so hopefully other guys will chime in but this should get you started on your prep. Good luck/
Key terms: -co-tenancy -REA -percentage rent -breakpoint -health ratio ( about 10-20% is good)
Modeling and Underwriting: -NNN or net so pretty easy for reimbursements -Don't underwrite percentage rent -TI are usually much higher than other property types (i.e. office and industrial)
Things to study up on: -Read / skim the most recent 10-k and 10-q -Read / listen to most recent earnings call -do they finance with unsecured bonds or mortgages (probably bonds if established)? Bring up and discuss -Read the CBRE, JLL , Cushman national retail retail reports at least makets would be even better. Bring up and discuss -Try to find a recent trade in the city that they the REIT is located that fits their strategy someone else bought. Discuss strengths / weaknesses -How is e-commerce eating into brick and mortar retail? Research and discuss
You may not have time for all of this but if you do it you will do well in the interview. IMO studying this type of info will help you a lot more than playing around in excel modeling Retail which is actually very easy (you'll find this out after you get the job). The tough part about underwriting retail is researching and understanding the demographics, sales, co-tenancy, termination options etc of the deal.
Thanks, that helps a lot. I was already doing some of the things you listed, so it's good to get some confirmation that I'm doing the right things.
All of the points above are great.
As far as excel/modeling goes. Definitely know how to work through a cash flow for a retail property and get to NOI, IRR etc. As mentioned above, this is pretty straight forward but key...
I would also spend some time getting familiar with the company's portfolio. Especially the assets focused around the office you will be interviewing at. Understanding the current composition of their portfolio and having examples of properties for your discussion with the hiring manager will make you stand out.
Research the REIT's top tenants and understand how those retailers' operations/strengths/weaknesses affect the portfolio. I would not only do research on the REIT in question but really dig into 3-4 top competitors as well and get familiar with each firms strategy and be able to compare and contrast.
Agree with all the above. In my experience it has always been good to be knowledgeable about deals/events occurring with the firm. Knowledge of this usually results in a fluid conversation and a topic people enjoy discussing.
Given it's a second round, I'd have at least a broad view on why you think they'll still be in business in the next 10 - 15 years, or have an opinion as to how you see the retail asset class evolving over that timeframe. There's plenty of reading available online and there's no right answer but you'll look stupid if you haven't thought about it.
This is assuming you aren't interviewing at a Fortress mall owner.
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