RE M&A vs REIB
Hi all,
I'm looking for some advice. I've landed an internship at a top RE Brokerage in London (CBRE, ES, Hines, JLL) and in the current environment I feel incredibly lucky. However, I can't help but think my exit ops may be better in an RE M&A function at a Bulge Bracket? Could someone possibly shed some light on this, and the distinction between IB at these brokerage-esque shops and at a BB? How is the modelling/ day-to-day role different?
Has this not already been answered as nauseam in other threads?
Interned in REIB at a large European bank before, so I can speak a bit on that. Working in REIB involves covering mostly REITs (focus on any specific asset and/or region depending from bank to bank), hotel chains and developers. M&A transactions are not as frequent as in other more traditional sectors. When that happens, it’s usually a strong BB taking the advisory roles (I know JPM and DB have good REIB teams) as you could imagine. Furthermore, the valuation of REITs for any M&A deal is quite distinct compared to standard M&A and to some terms more simple. It is very common to support REITs in financing activities (i.e. ECM/DCM) as they require constant capital for their operations (acquisitions, maintenance, and disposals of property/portfolio) and usually must distribute the majority of their net income as dividends to satisfy the REIT’s requirements.
If I’m not mistaken, working in RE brokerage should prepare better in property valuation (depending a bit on the firm and the specific team) which is great if you want to land a job in REPE later. Nevertheless, REIB analyst’s experience at a BB will be well regarded by REPE funds.
Thanks very much for your response! How transferable do you think REIB/Brokerage skills are to other IB divisions?
REIB is quite a specific industry similar to FIG or Oil & Gas. Key metrics and valuation are different to the more traditional industries. However, whereas FIG is known to be fairly more complicated, I’d say REIB is a bit more simple as REITs valuation is more straightforward (e.g. no corporate taxes, no
/irrelevant depreciation, NAV - Net Asset Value - used as a proxy/benchmark for eqV...). With that being said, I wouldn’t see how that can be a problem for someone looking for moving from REIB to a more traditional coverage group such as industrials, healthcare or tech. As long as you are a smart person, you can definitely catch up with the rest quick.
Thanks very much Punifer - spoke to someone from Goldman this evening who gave me exactly the same advice!
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