Hi All,
I work in CRE and was speaking to a friend of mine who told me he recently obtained a position in the real estate restructuring team of Duff & Phelps. Firstly, how big is restructuring within the real estate space? I obviously know it has a large place in the banking world, though this is the first I have heard of it with a real estate specific focus.
Secondly, do you guys see this as a promising area for the future? Given the effect COVID-19 is having on the economy, I can't help to think of the workload in addition to the good bonuses that will be being paid to those in restructuring, seeing as I imagine lots of firms will be defaulting on secured loans backed by property.
PropertyMonkey202, hey, look at the bright side, at least you didn't get a ton of monkey shit thrown at you...here is my best guess on threads that might be helpful:
If those topics were completely useless, don't blame me, blame my programmers...
I would say so.
One of the first MD's I worked for in banking (and now a mentor) really earned his chops doing distressed/workout-type situations in the late 80's/early 90's on real estate deals gone sour, and allowed him to move up the ranks quickly as these types of deals tended to have a lot of complexity. And in recent times when things seemed to be going well, it allowed him to have an objective lens on risk, which can be tough to have when rents/values seem to just be going higher and higher.
In my own experience, I work in REPE focusing on value-add/distressed opportunities. I've probably learned more in the past year than I have in all my years combined working on "blue-chip", stabilized assets in gateway cities, but just one man's opinion.
The next few years are going to be great for the restructuring business. If you are halving collections at some properties thanks to COVID-19 for months at a time, then by definition you are going to have a ton of defaults. Even conservative operators don't have years of cash on hand, and most people who have been buying in recent years are doing so at high leverage and low spreads. That is a recipe for disaster. And lenders won't want to be taking billions of dollars of devalued real estate onto their books.
Thatd be ground zero for the foreseeable future. Not sure what market share D&P has, compared to the big shops to be honest, but would be a fantastic learning experience right now
Who are some of the bigger shops in this space? I'd imagine Trimont is one of them.
As far as asset level RX goes..... Iron Hound Management has the best restructuring business in US real estate - hands down no question asked. It's largely CMBS stuff. The desk is run by fomer Wachovica the former head of their large loan desk Rob Verrone (AKA large loan Verrone).
Entity level restructurings will be the likes of Houhilan Lokey, Moelis, Evercore, etc. will depends on region (USA vs LatAM vs EMEA). Brookland Partners and Evercore have a solid RX/NPL advisory presence in the UK and pan european region for instance.
Every now and then a random boutique advisor here in the states (like Algon Group) will come out of nowhere and restructure a homebuilder or a lodging/gaming operator.
No one has an overwhelming noticable market presence here in the US from what I've seen. It's a great niche opportunity.
Featured prominently in the Kushner episode of this season's Dirty Money (Netflix). He (helped) restructure the debt at 666 Fifth Ave.
Large Loan Verrone made me chuckle. Great post
Thanks for the replies all. The area sounds interesting and certainly seems like it will be doing well in coming times!
Also, what would exit opportunities look like for those in these roles?
Also interested
If this shit gets as bad as these comments allude to, this will be the best area to be in. Shit I may look for opportunities there too.
RX is the most interesting area IMO of finance. You take all the pretty deals that made no sense (Wework, Bear Sterns, a ton of oil and gas companies in Texas who have all kinds of credit lines and real assets with no cash, Toys R Us, RE funds who lost their shirts, etc) and fix them. They are all dirty, you get paid fees, and you learn how to fix things and avoid problems.
First job was at a RX shop in a team focused on RE, but it was like 2013, so all the big deals had been done. I took the training and exp though, it was invaluable.. Just the environment and mentorship of how to look at financial assets is invaluable and interesting.
Duff and Phelps is likely a good place to be IF IT IS AS BAD as the previous posts make it sound... if not, it will still be fine
Alix Partners is hiring right now.
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