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So the deal I have been working on won't close by the end of the year. This means I'm going to have a few slow weeks heading into the holidays and will need something to do. I've been getting a lot of PMs about Real Estate lately and thought it would be good to get a good Q&A going on RE.
Ask anything you want about RE or RE finance and I'll do my best to answer. International Pymp, Mr1234, VT4ever and the other RE focused monkeys can also chime in to help.
Thanks,
RE_Banker
What jobs in the finance sector would best position you to get the experience needed to start building your own real estate portfolio? (specific firms would also be useful, if any)
What would you personally consider to be 1- the best/most respected RE/RE Finance firms and 2 - the best compensated RE/RE Finance firms.
Also, what advice do you have for somebody trying to get financing for their investment properties (I know this is a really broad question but bear with me). I'm referring to both residential/commercial RE.
thanks for making this thread by the way.
The best jobs for learning how to build your own real estate portfolio will be smaller private REITs/REOCs and possibly working for one of the brokerage firms that deal smaller assets. Unless you have a few million you are going to start by buying small multi-family residential or strip malls. The skill sets you want to learn are asset and property management skills. The small REIT/REOCs will give you those skills i.e. they will teach you about finding the right tenants, setting up the leases, basic due diligence, and bank financing while the brokerage experience will give you local contacts to help you source deals. I spent a summer in my early university years working with a well know brokerage firm in the small retail team ($1-15mil assets) and basically they called their friends first to see if they wanted the assets and if not, that is when they would do wider marketing. In terms of specific firms - it depends on your location. Remember RE is very local, especially when you are dealing with smaller assets.
Best RE firms - it gets very specific on geography and sub-sector focus. In the US, the top REITs include Vornado (Diversified), Simon Property Group (Retail), Brookfield Properties (Office), ProLogis (Industrial) (this is a good list http://en.wikipedia.org/wiki/List_of_public_REITs_in_the_United_States). In Europe there are a bunch of good REITs like Unibail-Rodamco (continent) and Land Securities (UK). In terms of REPE - Blackstone Real Estate is tops. PERE puts a list of the top 30 firms http://www.perenews.com/resources/PERE%2030/PERE_30_2010.pdf. Some of the firms at the top are struggling like Whitehall and MSREF, but others are doing really well.
In terms of best compensated, again it is Blackstone, although Colony, AREA, Carlyle, Starwood, Beacon and Lone Star pay really well too. What is also starting to happen is that some of the big PE firms are starting to build an RE presence and I have heard rumours of pretty good comp packages. To give you an example, TPG wants to buy ING REIM and KKR was in that process as well. Apollo just bought Citi Property Investors.
RE_Banker's overall knowledge about the industry in general is way ahead of mine. My knowledge of real estate is very specific to 3 areas: 1) multifamily real estate, 2) investment properties and 3) single-family construction. So those are the areas I can help in.
Specifically to this question quoted: cash, cash, a thousand times cash. If you're looking to do anything investment related in this environment you will need AT LEAST 25% equity in the transaction. In addition, you will likely have to have a steady income stream (i.e. a real, actual job). If there is any type of rehab or construction (which is likely--this is the value-add proposition) then you will probably need to fund interest escrows. If the property is to hold, you may need to fund tax, insurance, and replacement escrows. You will need cash for closing costs. You will need cash in reserve. The point is, you need money. You need income.
I'd also recommend that your most likely source of "alternative finance" (that is, financing your investment properties in a 2010/2011 market place) will be at very local community banks. Bank of America, for example, will likely tell you to go f*ck yourself if you're some 22-year-old punk kid with juuuust enough cash, juuuust enough income, and basically no experience. Their volume is high enough that they don't need to waste their time on you. However, a local community bank--ideally that you've had years of family or other personal interactions with--will likely have less stringent overall credit requirements as their geographic practice area is more local and they are basically experts in the market. My in-house builder/contractor has a 25-year relationship with our community bank--as long as I can bring cash to the transaction, I can get any construction loan I want because my guy is a long-term client of theirs.
In sum, you're completely f*cked in this environment without 1) cash, 2) a steady income stream (likely from a job), and 3) contacts/relationships built at local lending institutions.
Wow, thanks for the quick response. This is way more info than I ever thought I was going to get. repped.
I am looking to getting a summer position in some type of RE/RE Finance organization. Currently, I'm an undergrad finishing up my 3rd year in May. Do you have any suggestions as to what the best way to enter the Industry would be? Ive done some casual research on the firms that you mentioned above and it would be awesome if I could work at one of them, only problem is that I dont have prior experience.
Also, whats standard entry level compensation for these types of firms?
Finally, I know WSO asks this question way way way too much, but what type of exit ops exist after ones started out in RE? My goal wouldnt be to get in and get out as quickly as possible, it would be more of an 'in case things didnt work out' type of assessment.
Again thanks a lot for your help, its been really useful.
When you say RE/RE Finance organizations, do you mean the REPE firms or REITs or brokerages? I'd go about the job search in the slightly differently for each.
It depends on where you start in RE. I hate the term pigeon-holed, but generally if you start in RE it is because you want to do RE in the future and your exit ops will be RE related. With that said, RE is pretty diverse and you could theoretically start in a development company and then move onto a REIT and do asset management before ending up working for a pension fund in their RE investment arm.
Just wanted to chime in here on pigeon holed in RE. Real Estate is a broad field and there are certainly a lot of different aspects to it. One thing that I have noticed is that the real estate community is really segregated from other investment and capital markets groups and most employees in the industry are pure "sticks and bricks" folks (ie. a lot of folks just underwrite properties). On the debt/securitization side, and unlike other parts of the structured finance markets, a lot of the folks in the industry came from a pure CRE background in the early 90s (ie they didn't have a capital market, securitzation background). IMHO, unless you love underwriting day in and out, you don't want to become an underwriter, as its really easy to get pigeon holed as an underwriter. I meet a lot of underwriters who have been in the business for 15+ years and there is always a disconnect when talking about anything over and above a specific property's valuation.
^+1 to that. starting in RE is not ideal if you want to do anything other than something RE related over the long term. That said, real estate is a huge and expansive industry. You can work at REITS, REPE firms, REIB doing advisory, Developers, Brokerage Houses (sometimes pseudo-REIB), Equity Research Coverage of RE-industry, Asset management, etc...
Question: RE_banker, do you know much about Carlyle REPE in D.C.? Anything about pay/culture/hours would be very helpful
Unfortunately I don't know too much about the DC team, but I have had dealings with the London and Paris teams. I got on pretty well with one of the associates who told me that hours are not bad (and I was never able to get a hold of him after 9pm). Pay for a fresh associate would be around 60K GBP but I'm not sure about the bonus. I suspect that they don't get as much as the PE team, but that is speculation on my part.
To tie it into my earlier post about unclear exit opps - a quick look on the Carlyle RE team in the US shows that a lot of the junior folk didn't do i-banking - they came from real estate companies (CarrAmerica, Marriot) and other RE investment and consulting/brokerage firms (JLL).
double.
I'm very familiar with the DC team. PM me if you'd like more info.
Yeah, I've taken a peak through their associates/analysts... A few impressive resumes, but also some pretty soft ones (random colleges, etc.)
thanks.
Thanks for all the info, its been extremely helpful!
I have sort of an odd ball question, hopefully you can help out. I'm currently working in a structrued finance group that focuses on CMBS and CDO structuring/issuing (not the best place to be, but slowly starting to come back). However, I'm interested in eventually trading CMBS. So I was wondering if that is a logical career switch, to go from structuring or RE IB, or RE PE to trading real estate related assets? Or is trading a completely different beast? Thanks!
I must admit I don't know a ton about CMBS trading. I've only been on one deal where our client was trying to buy back CMBS,. It sounds logical, but I should say the liquidity of CMBS is pretty questionable right now, so I don't think there are too many jobs on CMBS desks. Maybe someone from FICC division can chime in. Quickly googled CMBS analyst and found this. It's not exactly trading, but it's a step in that direction - and shows that your structuring experience is useful in that type of roll: http://www.fins.com/Finance/Jobs/53516/Real-Estate-Capital-Markets-Anal…
Wow, thanks a ton for the quick response!
This thread is really helpful. Can anyone elaborate on the distinctions between what REPE and real estate Hedge Funds do and what it is like to enter and work in both?
Also, what are some sites I might be able to find news or read up on distressed real estate?
In terms of getting in - what I've found is that breaking in is largely about networking. There are a few entry points into REPE. Below are the most common.
Analyst Level:
While some of the larger funds have formal recruiting out of undergrad, the majority don't. That does not mean it is impossible to work in REPE straight out of undergrad. You have to find a way to connect with people, starting with alumni. If you show a passion for real estate then people will generally give you a good look. I cannot stress enough how many times I've asked candidates the question "Why Real Estate?" and how many times it has been a auto-ding answer. I remember one kid knocked on the table and said "because its real." At least it made me laugh.
Associate Level:
REPE firms generally have 2 functional groups - fund and asset management and acquisitions. Generally they have separate associates for each function, but smaller shops will have associates cover both. Asset managers will usually be hired from Big 4 (Auditing), real estate consultancies (CBRE, JLL, DTZ), loan servicers or REITs whereas the acquisitions team will usually be hired from REIBs (and sometimes brokerages). The reason I say brokerages is because some REPE funds focus on single assets where brokerage contacts come in handy while others focus on large portfolio or corporate transactions which require more REIB skills. The route into associate is again through networking or through head hunters. To start as an associate you usually need 2-3 years experience. There are quite a few head hunters focusing on RE and when you start to get specialized they are good people to talk to and I have found them to be pretty helpful, particularly because senior analysts / associates in REIB are scarce right now.
Real estate hedge funds invest in instruments with real estate-linked returns. For example, listed RE securities, unlisted funds, index derivatives, REPE club deals and mezzanine debt funds. Generally, they don't physically own the bricks-and-mortar.
REPE is simply PE for real estate. The fund owns the bricks-and-mortar. The typical strategy is to find properties with asset management potential and manage them out to get the valuation uplift, or to develop properties and hold. It's a more aggressive strategy than what REITS usually undertake.
PERE News is a great source of information on the latter.
I work for a RE hedge fund and I enjoy every moment of it. Real estate is not particularly cerebral so I like the contrast between the two disciplines.
Can you name any good RE hedge funds?
I can tell you Oaktree has a real estate arm, DE Shaw has a real estate arm, Fortress has a real estate arm, and Farallon has a real estate arm. Those are some big ones that come to mind before anything else.
John Paulson (the famous hedge fund manager) has a fund called the Real Estate Recovery Fund.
Some others that I'm not too sure about, some of which I just came across by Googling out of curiosity: Cliffwood Partners is a small one in LA. GEM Realty Capital, who recruited on my college campus, has a RE-focused hedge fund. Wesley Capital Mgmt is one, I think they own a stake in Apollo's ARI reit. Angelo Gordon has a fund called AG Long Short Realty Fund. Cerberus had a real estate arm called Blackacre Institutional Capital. Treesdale Partners started a real estate arm recently. In '07 a London-based hedge fund (Absolute Capital) opened up a real estate arm. Sabre Value Fund is buying single-family. How about Pershing buying a stake in GGP, is that real estate? Or Hovde Capital? Looks like they have a senior analyst who is specifically a real estate guy ( http://www.hovde.com/AM/Team/Richard_Murray.shtml ).
As you can probably guess by now, there is a lot of variety and no standard "real estate hedge fund" model, really. And in many cases it's no different from traditional, direct RE investing. The first few that I mentioned would probably be very tough to break into - and they are probably very small teams, to begin with.
aussie82: Thanks, that cleared things up for me
Hey All,
Are you guys familiar with RE opportunity funds and RE high yield debt groups? How do the type of work, skill set developed, and exit opportunities compare?
RE_Banker,
Have you seen any associates transition from the asset brokerage side (i.e. JLL, CBRE, etc) to the investment banking side?
Specifically, I'm wondering about asset brokerage-> MBA-> IB
thanks
Yes. This is possible, particularly if you are brokering chunky assets (>$100m) or portfolios, but it is not easy. I can speak more confidently about the UK where I have seen this happen a few times. Someone I know started at a brokerage and worked for a few years before moving over to an REIB in a senior analyst role. Basically you end up working a bit longer before you reach associate. The other huge transition I've seen was a director at JLL move to Morgan Stanley REIB as an executive director. It all depends on the hiring need of the IB, but real estate guys tend to look favourably on people that are passionate about RE.
Are there any schools that are specifically targets for real estate groups?
I would say that the RE masters programs are getting more and more focus with every new recruiting season, but it still a work in progress. The MBAs that have a real estate stream are still strongest. I would say Wharton is tops for this. USC has a specific RE undergrad program that places pretty well.
I am going to Kaplan University studying finance with a specialization in real estate. Do you think this degree will be looked upon favorably by a RE IT?
What are some good REPE and REIB groups in the Chicago area? Also, does REPE follow the same typical career path at other private equity, in that usually you put in a couple years at an IB and move on after your analyst stint, or is it possible to jump into it straight from undergrad as a REPE analyst?
It is possible to go right from undergrad, but it is difficult and you will need to prove you have decent RE knowledge. If you do REIB then 1 year is usually enough to make the jump, whereas if you were working at CBRE/JLL then a few years work experience is generally preferred.
In Chicago I can think of a few shops: LaSalle Investment Management, JMB Realty, John Buck, Townsend Group, Evergreen Investment Advisors.
The one thing I would say is chose funds that you apply to very carefully. There are a lot of dogs who raised decent funds in 2006/7 that are tanking that will not be able to raise new money again. It also means the funds will be in disposition mode and you won't get any acquisitions work. A helpful trick to find out if a fund is tanking is to check large pension fund annual reports - like CalPERS to see how much they have written down their investments.
To answer a few questions:
Chicago Area: Walton Street Capital is a good one
Specific RE target schools: from what I can tell, Wharton is probably the most common for top groups (not that Harvard isn't also good, etc.)... MIT, NYU, Coloumbia also have reputable real estate schools (MBA, but also Masters of RE development, etc)... As far as not so top tier schools that still have good RE programs at the graduate level: Texas, UNC. Cornell offers a dual degree program MBA / Master's in RE which you can do in 2 years... not sure how strong that is, but the dual degree structure is compelling.... When I apply (12 months from now) I'll probably be shooting for Wharton or MIT/Columbia.
Moving to REPE from JLL and other similar firms: it's very possible. Particularly if the fund works on development and or holds a lot of plain bricks/mortar type investments (e.i. not debt strategies and investments in hotel operators - the more "fancy" stuff that you might see a lot at a Blackstone or other similar firm). My firm, for example, highly values people with experience working in RE development, etc, probably equally if not more so than prior RE finance experience... Both types of candidates can be strong. As RE_banker said, sometimes you get streamed into Asset Management or Acquisitions, but other times you're a generalist. My fund is smaller so we keep all associates involved with both areas (though us Pre-mba's work mostly on acquisitions), but once people hit director level they get put into asset management and acqs. There is a lot of cross over between the two and at my firm the pay is similar, but you "want" to be in acq. if you're more of a "finance guy" then a "real estate guy"... all this stuff really depends on the firm though. Each firm has it's own structure which is generally (and should be) optimized to fit with the fund's strategy.
Okay guys, I've finally decided to give this a try: take a look at http://CREboard.com .
It will never be as big or successful as WSO (and I will never shake my WSO addiction), but I think it could be fun to have a decent "freestanding" real estate board. Every time I come here all I find myself doing is zeroing in on the real estate-specific threads anyway. Furthermore, every now and then we get a small burst of activity that suggests to me that there is a demand for a real estate forum.
Obviously I'd love it if some of you guys could get on there and give a quick intro of yourselves - I don't expect it to thrive overnight but it could become a solid place to talk about our industry. And of course I'm open to anyone's suggestions...
^I think townsend is in cleveland, not chicago
@dagwood: interesting indeed.... But the page doesn't load for me.
well Fuck, I don't see why not. What does it do? You sure it's not the chinamen's censorship keeping you down?
it definitely could be... I've heard sometimes really new sites set up don't work yet because the government hasn't screend / approved yet. I am not on a VPN right now (because it goes slower when you are) so I am totally censored and can't get on FB / Youtube etc...
Thanks for starting this thread. I think WSO is long overdue for a real estate forum.
Can you give us a 2 minute rundown about your background? Apparently you're in REIB, but how long have you been in the game, what made RE so appealing, how did you break in, etc?
Also,
I'm currently a Senior entering a corporate banking training program next year. Before accepting the offer, I was interested in going to work at a place like JLL, CBRE, Grubb & Ellis, etc,. I spoke with a handful of people in different offices at all of these firms. They gave me some good insight, but the hiring environment didn't seem too promising for UGs.
Long term, I'd like to go into brokerage (or some type of sales role within RE) or development. What's the best path to take to move into either of these roles down the road? We have a real estate industry group at my bank, should I try to get into that group?
Thanks.
RE_Banker is more experienced than I am, but I'll take a shot: Yes, get in that group if possible, but I believe there are places that are hiring on college campuses. Just probably not the middle of the road brokerage shops - for instance, I talked to a public REIT not too long ago that is doing some on campus recruiting. If you're not graduating until May/June, you could still have a chance, because a lot of them don't interview until much later in the year.
I figured this may be the case, but I couldn't pass up the opportunity and didn't want to take the chance. How feasible is it to move into an REIT after working into real estate banking for a couple of years?
Obviously its possible with networking, but my concern is that networking with people in real estate while I'm working in banking is kind of a slippery slope. Kind of a general, non real estate question, but this bank is paying me to essentially be a student for almost a year with the hope that I'll stick around. How do you go about networking with people in other industries, looking to make a jump, once you're full time?
Without giving too much away, I did an engineering undergrad degree in North America and then a masters in the UK. I worked in REIB for 2.5 years and am now in a relatively new role (a couple months) where I see both sides of the REIB and REPE fence. This new role has a lot of exposure to asset level deals, corporate deals and debt deals, which is why I can talk somewhat intelligibly about them all.
You have to love RE to really outperform in it. As someone mentioned, there is nothing difficult about it. I always think about RE and like to walk around CBDs just looking around at buildings thinking about what they are worth, who the tenants are, what else could you do with them, who owns them, what's the angle for a deal etc. And I thought about RE like this well before I started in REIB.
I first worked at a retail brokerage for a summer and that made me sure I wanted to work in RE, but not in a brokerage house. So I decided to go the investment banking route as a way to get into an REPE role. It was tough because I got a good number of interviews, but I always said that I only wanted to work on an RE team which made it difficult to get offers at banks that were trying to hire generalists. Persistence paid off and I did find an RE team that made me an offer (networking also helped quite a bit in terms of getting my foot in the door).
Corporate banking is a great start for RE actually. My boss was at on the RE lending team at a corporate bank in his previous role. So long as you learn how to underwrite real estate well, there will always be a place for you in RE or RE development. If you want to work in RE sales there is either REIB or brokerage. REIB is a much more refined marketing process than brokerage where they are all hustlers (and I mean that in the best way possible - see the video). It will be tougher to transition into a sales role, but if you leverage the fact that you can use your lending contacts to help brokerage clients source debt then you will do well. Getting debt is half the battle.
WSO definitely needs an RE forum
Yeah, I asked but he wasn't interested, because he already has so many forums and he doesn't want to make one for every industry. So, hopefully I can get some of you guys to register at creboard and not be flushing my hosting and domain fees down the toilet (that is usually how these things turn out in the end anyway, but I want to give it a chance first).
Doesn't seem like a very valid reason not to start a RE forum??
Agreed
Second that
Great performance by Baldwin. The truth is, if anyone treated employees that way--even in sales--they wouldn't be in business. It's a small industry--you'd get a bad rep real quick with that kind of attitude. Nobody would work for you and, worse, no one would do business with you.
Any thoughts on LSE MSc Real Estate Economics and Finance?
LSE program is pretty solid i've heard. MIT Master's in development is also solid.
Thanks RE Banker, this is great. When you say you're in a relatively new role, "where I see both sides of the REIB and REPE fence," are you still in REIB or are with a REIT? Or with a Tishman Speyer or Boston Properties owner, developer, operator type firm?
Also, how helpful are the Masters Programs? Are only prestigious programs like LSE or MIT worth considering?
I'm actually in a place where I am staffed on deals that are IB for third parties and acquisition support for our PE funds. There are a few places that do this like MS Real Estate and BX and there are a few of smaller shops that do this as well.
In terms of Masters programs, the more prestigious, the better your recruiting chances. What I will say is that you really learn the fundamental drivers of real estate.
I'll say I think that the Master's programs are very cool if you can do it right after school or a year or so after school... if you're already 5 years out and want to get a top level associate spot in REPE / REIB you'd likely be better off with MBA from Wharton, etc...
I did work for a Tishman Speyer-type company before this and they had a taste for the MIT masters program (along with Harvard MBA's - of which there were about 8 in the office)... but they were focused on the development as well as the investment / fund management, and even did development fee deals for other investors, etc... and I think the MIT program has a strong focus on development as much as finance/investment
What a fantastic thread.
What are your guys thoughts on Harrison Street Real Estate Capital out of Chicago? You had made mention that many PERE shops got off the ground pre-crash but their fund-raising abilities may dwindle over time. Harrison St. currently has 2.1B AUM so I assume just based on sheer size and previously established contacts their cap raising abilities will be good to go for a bit.
My background is currently in multifamily ops, but I want so badly to get underwriting/valuation experience to move to either a REIT or PERE. Is there a specific program that would help me display (on my resume) that I have the background to tackle a move like this? I come from a non-target with a mediocre GPA but have fantastic connections throughout RE in Chicago. Also I have a great story for my interest in real estate. I've looked into an MS in RE at DePaul, getting the CCIM designation and the CFA. Is there one route that may work better?
Thanks so much, guys. This site has been incredibly helpful to me.
Harrison was formed in 2005, so, without knowing anything about their investments, I would guess they are struggling. With that said, they look like they've done a bunch of alternative asset class deals which have been doing OK. The team looks pretty strong actually.
Honestly an MS in RE or an MBA with RE focus is probably the best way to make the move. The CFA is pretty useless in RE.
Cool. Much obliged.
I don't want this thread to die, so I will continue asking questions. I've been networking my ass off within Harrison St. - good connections in there. There was an analyst role open but they put a freeze on the hire until May. Would this imply that they are scoping a recent grad? I personally graduated in Dec. 08 and am still pretty n00bish in my career. Figure this could help me. As for my story, I've worked in leasing for 1.5 years. The property I work at was recently put on the market and reading all of the marketing materials put out by the broker has kind of stoked my flame for a new career path. Having to now regularly tour investment company guys, my intrigue in real estate as investment has skyrocketed. Just need some proof of financial knowledge on the ole resume.
Any more reputable PERE firms in Chicago that you are aware of off the top of your head? I know M3 Capital is another, for starters.
Do you know anything about the MS in RE at DePaul? I'm doubtful about my chances of getting in to one of the big boys (UC, Kellogg) but I figure DePaul has a strong enough local presence to where I can pretty easily network.
Again, this is incredibly appreciated.
If we're graduating in May and have secured an IBD job in Manhattan, would it be a good idea to go ahead and buy an apartment and rent it out while we're in grad school? I've read the market prices for apartments dropped significantly and everyone is turning to renting. Do you think it would be a smart move to get a 20 yr mortgage now, have lower monthly payments than renting, and lease it out in the future?
This is a tricky question and I would generally advise against it.
The greatest thing people overlook in RE is the maintenance capex and ancillary costs. Yes, your renter may cover your mortgage payments, but there are other costs that he/she will not necessarily cover that you will have to. So unless you can charge rent that is 15-25% greater than you mortgage, you will drain your cash reserves (and you will likely be piling on school debt at the same time). You also have to be able to withstand vacant periods and to pay leasing agents to make sure its rented up. A lawyer for the leasing agreement (if you want a something that is not generic). There are also legal costs to buy the property, property taxes, etc.
Personally I don't think that house prices will rebound and waiting a few years to buy is not a bad thing.
I've been interning/working for a private real estate fund for a couple of years, so I figured this thread could be revived with a fresh response.
RE_banker hit the nail on the head, renting alone isn't a huge money making venture unless your out of debt and cash flows aren't being discounted as heavily anymore. You'd be surprised at the amount of rental maintenance costs, even though some of them wouldn't apply to renting out a single apartment. Maintenance costs that need to be considered in general:
Hopefully this offers a decent overview of types of things you'll need to consider. The name of the game is building equity - one of our multiple dwelling investments that had cost in the range of $5-10mm has built an estimated $3.5mm (we're value-added) equity over a few years and is now stabilizing at ~$400k annual cash flows.
There are a lot of things to consider in property valuation and it varies geographically and by property type. The fund I work for has a self storage business as well, and with those things get even more complicated with commercial liability insurance etc.
Unless you have $200K cash to throw down, a cosigner, and understand the quality of the type of apartment you would get in NYC in the $7-800K range, then you will be renting just like every other IBD analyst and undergrad fresh out of school.
NYC apartment prices have definitely not "dropped significantly. In fact, the improving job market has led to a significant number of sales and a higher $/psf.
My buddy interviewed with Walton Street and said it was a great shop.
I went to school with a girl who works at Harrison Street Real Estate Capital who knew her shit. Tprb, I've been trying to get my foot in the door with them too. Spoke with my contact who said they are almost done raising their third fund and their current funds have been doing well due to their non-core approach.
Other Chicago firms I've heard of include M3, LaSalle Investment Management, GEM Real Estate, Blue VIsta Capital Management.
Thanks for all contributors for an awesome thread... I have learned so much. Does anyone have any more information or experience with Blue Vista Capital Management? What type of deals do they usually work on? Any information on they are viewed in the industry and/or style/culture/pay?
Hey board, not sure if this is the best place to ask, but has anyone had experience (know ppl who worked there, dealt with them in transactions) with Madison International Realty? Interesting strategy of buying JV interests/LP interests.
Is this like being a PE secondary fund, except you're doing it at the asset level?
I've met with the team and have dealt with them on potential deals. Smart guys who know their market well and have a good strategy. They do more than just buy out LPs / JV partners. They can make up the gap in a refinancing or do other kind of investments depending on the existing structure.
I think they did a fund raise earlier in the year and have hired an MD from Tishman for the US and have opened a London office. Definitely worth looking in to. Good business model.
Huge thanks to all of the RE professionals for answering questions and sharing their experiences on this forum. It has been difficult finding RE-related information online, and this forum has been immensely helpful.
I was wondering if anyone knows of any hedge funds or investment firms that invest in China RE. China's RE market grew immensely many years back and now prices have peaked especially with the government taking measures to cool off the housing sector. What are your thoughts on the future of China's RE industry? How long do you think it will take before we see another surge in prices?
Also, how is Morgan Stanley's Real Estate Investing division viewed by people working in RE? Does it offer good experience and exposure?
Any answers and insight would be greatly appreciated. Thanks!
PM me if you still wanna here about China residential. I work in REPE here
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Does anyone know of any reputable Head Hunters in NYC? I'm about to complete my MSRE from NYU and have been working in RE Development for the past 3 years...I'd like to see what career opportunities may be available in the near future...
Appreciate any info.
Hi there mate, cheers for this, really helpful. I am applying for Blackstone's REPE internship in London. My father worked in the industry, and have been able to have experience from some REIT such as Land Sec. I also have some experience of Real Estate advisory and administration. How best can I market this to them? Most of this has been on the development side of things, is this still advantageous to my application? Thanks for any insight.
I am trying to break into REPE and have an unusual resume but one that is suited. I am worried that because i haven't gone down the vanilla route I may not be able to get a look in despite my on the job quals.
I have been working 4 years, in equity sales and derivatives earning a good return on my own books while doing a tonne of VBA nonsnese.
RE wise I develop and manage in my spare time (buying single dwellings refurb, extension etc & managing my father's block) and my most recent project has done a 22% return in six months.
I know I have experience of how to physically build the product but am worried that because I have never gone into modelling large property portfolios I wouldn't get a shoe in.
^^ the 3Ns. Network, Network, Network. You'll have trouble if you're expecting your resume to get picked out of the pile. Make connections, meet people, keep eyes peeled for REPE jobs, etc. You have a good story and if you can sell/spin it, you're in. On top of that, consider downloading the trial ARGUS and playing around and reading up/practicing modelling.
I might pitch Vanguard REIT ETF tomorrow (backup pitch) as a macro play on US real estate. How would you go about it? I'm focusing on many housing and other relevant indicators (anything from housing starts to retail sales) and how they are all far below pre-recession highs and point toward longer-term growth.. Anyway, what do you think I could add besides its MER and the lower leverage REITs have now (not sure if those are even that important)?
I'm currently trying to break in to REPE so am doing the Real Estate Econonics and Finance (REEF) hopefully next year @ the LSE
I am currently at a derivs house but develop properties as a hobby. I am worried that my professional RE career isn't good enough despite my track record in my spare time.
Is there anyway I can brush my CV up to match those guys who have done M&A for yrs or maybe solid analyst jobs?
I'm just finishing up an internship with a very large and well known retail REIT and I'm interested in making a jump to get on the banking/PE side of things for a full time job. I've learned a lot about leasing strategy and negotiation but I havent got to analyze acquistions or redevelopments. Is this still relevant experience and how can i leverage this into a full time offer from REPE and RE lending firms? I have access to contact info of the bankers we use but i'm not sure if it's okay to just cold call them.
RE_Banker,
I have been working at a boutique management consulting firm for over a year now as an Analyst and would like to make the jump to Real Estate IB. I believe my experience in consulting would be quite relevant based on conversations with my friends in IB but what do you recommend I do to break into REIB? I'm targeting Chicago firms and am going to actively pursue this in the near future.
What do you like best about REIB? What are the hours/deals/analyses like? Any information is appreciated.
Thanks.
Can you outline the different careers in real estate?
Yes. You can use this experience to your advantage. A lot of other candidates won't know a lot about lease up and leasing strategy and if you can weave that into a discussion about how you can help have a more meaningful impact on the business plan of a new acquisition then I think that is a good story. TO be honest, it also really depends on the shop. Some places value finance knowledge more that RE knowledge and vice versa. BB REIB values finance knowledge way more than RE knowledge. REPE that focus on corporate deals usually care more about finance experience. REPE groups that go single asset deals care about RE experience and those are the ones I'd say you have the greatest chance with.
There is no harm in cold calling, just have a good reason for having their contact details. Or if your internship boss knows that you want to do banking, why doesn't he help you and reach out on your behalf. That would be the best scenario.
I am not sure how easy it will be to lateral from consulting to REIB without a good story. My first question is "why RE?" RE firms almost never hire consultants (unless you did RE consulting at a place like Altus). Not to further discourage you, but many REIB teams are based in NY, not Chicago.
To your specific questions about REIB, it really depends on the firm you are with. If the group focuses on large transactions if you close 2-4 and work on 10ish that is a busy year. If your REIB is a glorified brokerage you can close a deal a month, but this is single asset stuff. I'm not in REPE, but when I was an REIB associate i'd generally leave by 9-10 and my analysts were there until anywhere from 9-12.
This is not an easy question to answer. I've done my best. People can add to it.
Real Estate Finance 1.i. Real Estate Investment Banking - usually these guys cover M&A, ECM, DCM, Fairness Opinions etc 1.ii Real Estate Corporate Banking - basically relationship lending on RE using the banks BS and also syndication partners 1.iii ABS/Structured Products - i.e. CMBS, RMBS, CDOs.
Brokerage 2.i. Property Brokerage - brokering asset deals (either single assets or portfolios) 2.ii. Leasing Brokerage - filling empty space for clients who have vacancy (or the flip side of advising companies on leasing strategy).
Property Management and Services - there are the nitty gritty property services. i.e. Tenant management, repairs and maintenance etc.
Valuation - there are the RICS valuers (while they work at same firms as brokers, there function is very different).
Development
REITs / REOCs - different roles in these companies as well, acquisitions, asset management, financial planning and reporting.
Asset / Investment Management 7.i Core / Value-add funds 7.ii REPE and Asset bank hedge funds that have an RE focus. 7.iii Family office RE investing 7.iv. Sovereign wealth funds / Pension funds
Other random 8.i. Multinational companies in their RE strategy team - think about retailers or accounting firms with large real estate requirements globally. They all have in house RE experts.
I'm sure there is more. The roles can be super focused on sector and region (i.e. NYC office leasing brokerage) or your role can be broad i.e. hedge fund with some RE allocation that will invest in anything (i.e. the D slice of a CMBS that has hotel, office and industrial assets across Europe as collateral).
@RE_Banker Thanks for the great thread and continuing to answer questions.
Other than having a good "Why RE" answer, what do you look for when talking to a student in an interview or networking session that will impress you? What kinds of questions/topics should one be able to talk about when discussing a deal?
It's awesome that RE Banker is still here giving advice, thanks. I don't have the same amount of experience as he/she does but I maybe I can help give some perspective here. I work on an acquisitions team for a West Coast REPE firm, and I think that what separates people in the interview process is who is genuinely excited to work on CRE. Show enthusiasm, people appreciate the earnestness… unless your would-be boss is a cynical prick, in which case you wouldn’t want to work there. Also understanding what/why variables affect returns on cash flows, and opining on what metrics you think are helpful (NOI Yield, COC, Return on Cost, etc.) definitely helps. I would argue, however, that at a “networking event” young people are not there to talk cap rates and the 10-year treasury nonstop. I actually treat it more like a mixer (caveat: be able to handle your liquor if you do this). It’s not rocket science, I think people just want to work and do business with people they like – obviously this is true for ANY industry, but I think it especially applies to RE where academic pedigrees are less important than other areas of finance.
Actually here, just watch this: http://www.hulu.com/watch/40972
Thanks for the great thread.
Was just curious - I know a lot of people who have gone the 2 year REIB route --> 2 year REPE -->? and am curious what happens after 2 years in REPE. Do people tend to stay for a longer term track in PE or do they switch to other alternatives / go to business school?
Would really appreciate any insight on this - thanks!
All of this is on point, especially the mixer comment
Does anyone have any insight on the recruiting process for REPE coming out of a RE coverage group at an IB? Whether there are headhunters who contact you (and if so, the timing of that and whether it is similar to regular PE), or if REPE shops have their own in-house recruiting process? I've heard it is different, and that REPE tend to hire a little later in the cycle, but I'm interested in what all of you have been hearing recently.
My understanding of REPE hiring is that it's largely ad hoc, rather than cyclical. Headhunters are still used but I would reach out to contacts and inquire about possible openings
I've never understood the concept of real estate investment banking. It seems like the absolute most expensive way to acquire capital for real estate projects. And if someone is willing to take such expensive capital what does that say about their quality from an investor's standpoint?
Why didn't NNN (your second link) just refi using secured notes from an institutional lender rather than have a public offering for (probably) more expensive capital? What benefit does NNN get from going their route offering unsecured 10 year paper at 3.4%. Unless when that article was written, that rate was unachievable via banks/life co.
Well that 3% is a convertible bond. Convertible bonds usually have low rates of return since the investor is paying for the ability to convert the bond to stock if the investment goes well. So that's not necessarily "cheap" capital--giving away ownership.
What is your opinion on foreclosure real estate?
Have you seen anyone join a RE hedge fund or REPE from transfer pricing at a Big4? Or TP -> MBA -> RE HF/PE?
I'm interviewing for TP at a Big4 and one of the Senior Managers works with a lot of RE clients, but I didn't have the balls to ask about exit ops...
Please share the details.
I'm currently interning at a small RE company outside of Boston that does brokerage, property management, and appraisal. I will be graduating with a low 3 from a non target in December. Ideally I would like to work in an acquisitions role. What would be the best way to make this happen?
Anyone have insight to how a T10 JD/MBA with finance, non-RE related work experience can break into REPE---with a focus on opportunistic/development work? Better to start off practicing law, or try to make the jump to REIB/PE right away if I'm able to? Much appreciated, thanks.
What are some good reib groups in Los Angeles?
I'd be happy to answer any questions—and perhaps free up RE_Banker's plate here. Solely for communicating my background, I'm currently at one of the more prominent re pe funds in NYC (BX, SLG, Vornado, Thor - all competitors), and previously worked at a top IB boutique for 2 years. The link provided in previous correspondence, which was intended to serve as a forum for re-related discussion, didn't work for me, so feel free to post any q's.
Interested in your perspective on making the move from non-RE banking to an acquisitions role. I'm an analyst at a top MM IB in an industry group (not RE) but am interested in eventually transitioning, hopefully, to REPE or similar role. I was hoping to get into REIB out of college (I held a couple of real estate summer internships), but the offer at my current firm came along and for a lot of reasons I felt like taking the bird in the hand was the right move. However, I've realized that the corporate side of banking / PE probably isn't for me, and I'm interested in making the jump to real estate, preferably in some kind of acquisitions role at a REIT or in REPE. Any advice on a. how to best position myself beyond the typical things like having a good reason for why RE, lots of reading, Argus certification, and b. what the path might look like. Apologies for the long-winded question but appreciate any advice you might have.
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