REIT vs. Private REPE
Can someone talk me through the difference between top REITS vs. Private REPE? Compensation, reputation... first year out of UG.
Can someone talk me through the difference between top REITS vs. Private REPE? Compensation, reputation... first year out of UG.
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REPEs tend to have much riskier strategies which demand much higher returns. Repe deals are more complex and structured.
in terms of Comp - repe typically much higher given returns and fund structures
REPE uses more leverage, not just via debt but also equity structure. That can drive higher success based comp. REITs tend to be stabilized property owning firms, increasingly vertically integrated and even doing development (not all).
So, REPE is more 'high finance' like PE in general. REITs are more traditional corporate entities. The comp, prestige, work-life balance, etc. all follows suit.
Keep in mind that working for a property biz owned by REPE is not the same as working for the actual REPE shop, big difference.
Curious, how do you add leverage via equity? I work in debt and have no idea.
They raise limited partner equity from institutional investors, with the REPE firm retaining only the top of the capital stack as the general partner. Thus, the may have very little of their money in any given fund or deal, less than 5% quite often. But that 5% is entitled to promoted equity that pays above and beyond pro rata if return hurdles are met. That is how they make so much money and can pay large bonuses.
REITs work with much sexier assets. Funds work with much more profitable assets
Ehh there are telephone pole ground lease reits, so that isn't always true
That is in no way a hard and fast rule
Ever heard of CLNY?
in for the replies...
I wrote this a while back on this similar topic
REITs are often very specific in their property type, so you'll have a top REIT like EQR that only does resi/multifamily assets. Firstly, they don't really hire out of UG, its quite rare, but secondly do you want to commit yourself that early to a specific asset class? Albeit you can always learn as much as you can about multifamily and lateral to another asset class but the conversation becomes more difficult the longer you stay. At least in REPE, most firms have a broader mandate so you'll get more diverse experience.
Most people specialize regardless of if they work for a REIT or not. It is far more rare to be a person who touches numerous asset classes at anything other than a surface level.
That's fair, you would know better than me.
When I was recruiting for REPE analyst roles though every firm I interviewed with bar one had a broad mandate where you would work on deals across asset classes, and even doing stuff like student housing, and assisted living/old folks homes.
When you mean that most people specialize in an asset class do you mean early on in their career or down the line? As naturally I would expect and know that people become specialized later on in their careers.
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