WSO has provided me tons of valuable information over the years and helped me break into real estate a few years ago. Now it's time to pay it forward. I am going to be 100% full disclosure on everything (except compensation). I work as an acquisitions associate for a small publicly traded REIT (Gladstone Commercial, NASDAQ: GOOD) in Washington, DC. Prior to joining Gladstone, I worked as an acquisitions analyst at The RMR Group (formerly known as Reit Management & Research). The RMR Group is a manager of 4 publicly traded REITs with approximately $17B in assets. Before that, I was in EY's audit practice where I focused on commercial banks and asset management firms. I went to BYU-Idaho (yes, there is a campus there) for my undergrad, Boston College for my MSF, and will be attending Duke Fuqua this fall for my MBA. Please ask away! Check out these other relevant Q&As: Real Estate Q&A Q&A With a Buy Side Analyst at Real Estate Investment & Development Firm
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Thanks for doing the AMA. Couple questions: - Could you describe you day-to-day tasks, hours, and responsibilities? - What are the bonus %'s like at your level? - Given that you work for a public REIT (although on the smaller side) is there a lot of bureaucracy to get through? - What are the pros/cons of working at a REIT in your opinion? - Do you work as a part of a team or are you pretty much on your own to source your deals?
1) Typical Day: Due to the smaller nature of my firm, my job consists of a mix of acquisitions (80%) and Asset Management (20%).
From an acquisitions standpoint, my job is to underwrite and model deals, analyze the credit of a potential tenant, run the due diligence process if we win a deal, prepare all investment committee materials, visit sites, and perform market research. Each day will be filled with a mix of those items. My firm gives junior employees a lot of responsibility and relies on their analyses to make key decisions.
From an asset management standpoint, I only help when there are new leases or dispositions. We have an Asset Management team that runs the typical asset management duties.
2) Hours: Hours are fairly good. If I am working on multiple live deals, I might stay till 6 or 630. Besides that, I am out by 530 each day.
3) Bonus: Bonus at my level can vary significantly by firm. Some firms give higher base and lower bonus while others are flipped. I'd say the typical Associate at a REIT is in the 30%-50% range.
4) Bureaucracy: Luckily my firm is fairly small so there is no real bureaucracy. However, being public does require a lot more administrative tasks.
5) Pros/Cons of REIT:
Pro: Invest in more stabilized assets which means in a downturn the portfolio will not be hit as bad as a value-add or opportunistic portfolio = slightly better job stability; due to the public nature of the firm, you have full access to the firms performance; if you believe in the firm, you can easily buy and sell shares;
Cons: Investing in more stabilized assets which means you see less diverse/exciting properties; cannot "co-invest" so your upside is limited; red tape and administrative work associated w/ being public;
6) Team: Our teams typically consist of a Managing Director or Director and one Associate or Analyst. The teams are small which means you get a lot more responsibility and get to see all aspects of the deal.
However, beyond that I cannot give much more advice since I am still in the lower-end of experience. Check out a speech Stephen Schwarzman gave to Harvard MBAs last February. He had great advice about starting to venture out too young in the finance industry (I'd include real estate in that). He said:
"If you look at something like my industry, which is finance, which is very much an apprentice business, it takes a while to develop the skills and perspective to know what you should be doing when. The biggest mistakes that I’ve seen is when someone has some technical ability and, after a few years, decides to go off to build their own business when they’ve never really been responsible for anything, not managerially or any other way. They get confronted by the real world that doesn’t want to back people like that or [face a] market situation or change that they’ve never seen before and [are] unfamiliar or [have] an overestimation of a group success compared to their success."
"Typically, when you embark on that endeavor and fail, you very seldom get back on the track in the institution that provides you with the shelter or the continual learning. You’ve gone out, you’ve failed. And failing isn’t like getting a D on a paper. Failing is losing other people’s money. And most people are quite unforgiving about you losing their money when you told them you were highly capable and competent and it turns out you’re not."
Yes, I agree with this. the brokers that give obscene guidance quickly get a bad reputation and are not trusted. In my experience, brokers at the big shops give more practical guidance and will sometime quote a price that is a bit lower than what it actually goes for. My thinking behind this is they want to entice more firms to UW the deal and get the ones who fall in love with the asset into a bidding war thereby exceeding their mark. Sellers will love them for this.