Real Estate Equity vs Debt
Interview for 2 REPE firms in a debt role Is the compensation significantly lower than Equity roles? Thanks!
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It depends. It can be lower it can also be higher. There are more debt transactions than equity. So if are Comp’d based upon deals done, your comp can be higher. I can name a few funds that have both equity and debt investment teams. At a few of these firms, people who want to stay try to switch to debt as there is more flow and compensation is based upon production which means compensation is higher in debt. I think people need to realize that just because a firm is targeting a 20% IRR: 1) doesn't mean they get it and 2) doesn't mean compensation is higher.
You could very well have a $100MM debt fund targeting 9% returns with promote over a 5% or 6% hurdle and than a $100MM equity fund targeting 15% returns with a promote over an 8% hurdle. Both have the ability to get into the promote and the question you need to understand is: what are the splits above the promote and what is the promote pool size? On top of that, the volatility at a debt fund is probably lower, making it more likely to get into the promote, or at least hit your target meaning you'll survive to raise another fund. On the other hand, volatility on an equity fund is much higher, which means it is harder to hit that promote.
Do you also have an interview with an equity shop?
In my experience at the junior level, all in comp on the debt side is often higher than all in equity comp.
Most likely due to deal flow and the churn and burn nature of debt. But my first year doing debt, I took home over $175k. Can't say my equity friends are at that same level yet.
What kind of firm was this? BX/Ares/KKR/Oaktree/Brookfield?
More like JLL/CBRE/Newmark but on a nationally known team
Edit: I had 2 years of principal experience before I joined said team
Did you start in a production or analyst role on the team? I swear when I talk to someone on the equity side they say the make more money and vice versa for debt side.
Joined as a senior analyst, base salary was $90k. So as you can see, it's not that hard to top $150k+ with bonuses and all that added on.
I will say though, outside the mega funds and possibly a few others, junior comp for equity guys does not compete with debt. Most equity positions I have talked to recruiters about have said comp will top out around $120k, so take what you will from that.
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