RE Acquisitions - Promote/Carried Interest Comp
Hey all -
Trying to gather some intel on promote/carried interest compensation structures for sourcing roles (ex. VP/Director and up) at institutional RE shops. I've spoken to a lot of peers in the industry (generally ~$5 - 50bn AUM investment managers), and there seems to be a ton of variability, both in terms of how it's structured and how lucrative it ultimately is. Most I've spoken to have no clue what their peers are getting and what's considered "market". Detail is also super limited online - but I understand this is pretty niche, so that's less surprising. Kind of a black box - would love to hear some examples.
For background - I have about ten years of experience and lead regional sourcing efforts for a ~$20bn fund. Base/bonus is pretty strong, and bonus is somewhat tied to production, but no carried interest and limited co-investment opportunities.
Any feedback much appreciated - thanks.
bump
Bump x2. Also interested in Dev. promote/carry comp.
Bump
There’s good info on the PE forum, which is what I would assume our peers at the likes of BX, KKR, Carlyle, and I guess Starwood are getting. So like $400-500k cash and >$250k in annual carry. After applying RE to PE discount.
I got pinged by a Brookfield recruiter who messaged similar cash comp + LTIP. Not sure what LTIP standard is, and if it gets you the same as the carry guys - I’m at a giant investment manager and that’s what we get access to at VP as well.
Thanks for the intel. I’ll dig around in that forum a little more, I’m sure I missed some nuggets.
how much of a discount is there from PE to REPE?
This is entirely shop dependent. I know guys on the REPE side making significantly more than their equals in PE and vice versa. The thing about REPE is it is all about the size of the partnership. Traditionally this can be smaller on the RE side due to advantages on leverage. If your divisor is smaller, you outcome is larger on a percentage basis.
Is your firm raising closed end funds? Generally how big are they? 10 years of experience in a deal souring role has to be receiving carried interest. If I was an LP in your fund(s), that would really concern me. You've got people being 100% compensated in volume and not performance.
Thanks - open end funds primarily. Closed end makes up $5bn. Bonus is based on both production and deal performance, to some degree (not mathematically tied). To clarify, ten years total experience, little less than half in a sourcing role.
Harder to compensate people in an open-ended fund, but I do think you need to start pushing to receive some type of carry or find a firm that will give you that.
I second the recommendation to check the PE forum for reference or search far back on this forum, but question to you - what is a pretty strong base bonus for you? Thanks
$550k-ish. Not at a mega fund the likes of BX, KKR, etc.
I'm at a closed end fund shop. 75% of carry is vested over 3 years and the last 25% is earned when the fund liquidates.
My old shop vested 75% over 4 years and the last 25% when the fund liquidates.
LTIP is what you see at some of the larger investment managers/open ended funds. it it is generally tied to the company's performance vs. an individual fund.
My carry is the same size of my bonus, so I'm 1/3 base, bonus, carry. That seems to be pretty typical once you get to the higher levels.
Super helpful. Thanks for sharing.
What’s cash comp $$? Assuming bonus is then flat through fund life and your points are determined at inception of fund based on that? Also what is your fund size?
what do limited co-investment opportunities look like for you?
We can invest our own money into the fund’s capitalization for certain deals. So not a form of comp, more so a personal investment.
Are your investments in the fund promoted or do you get paid pari passu?
We can invest in our funds at 2x leverage, which is pretty awesome.
How does that work? You put in $100, your firm puts in $100? How do they fund their $100 - is it on a line of credit?
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