Going through recruiting for the Summer of 2022. Looking at comp threats on WSO and seems like everyone exaggerates the amount of $ to be made in REPE.
Supposedly PGIM, one of the biggest REPE investors, pays $85,000 to a first year Analyst. Yet the average analyst salary is $100,000? How does that make sense?
What firms are paying big out of college besides the top 10-15?
I am talking about the NYC Area
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Comes down to interpretation of ‘repe’ (btw nobody in the industry refers to what they do as repe). The big, traditional private equity groups like blackstone, kkr etc probably skew the numbers upwards.
PGIM paid 95k all-in for first years (in Atlanta) back in 2016 when I was recruiting there.
You have to remember that junior staff are cost centers. The people who take home the big pay checks get paid based on promote + management fees - expenses. That expense line item includes you (the analysts and associates).
If you’re worried about how much analysts / associates make, then you’re a little short sighted.
By all means, go into corporate PE because it pays more when you’re 22-29. We don’t need any more bright young people entering the RE world.
Keep in mind that on WSO, "REPE" (a term that really is not used in the industry, not in the way it is used here), means large traditional PE firms (Blackstone, KKR, Carlyle, Starwood, etc.) who operate closed-end, high-yield, multi-strategy real estate focused funds. When you skew analysis to this set of firms, you are left with a false impression of the real estate industry
Real estate equity investment, or just real estate investment management, if far broader and varied. PGIM is one of the world's largest asset managers with a huge real estate platform that does pretty much everything. Some people will make a lot more than others at that firm, just reality.
The "top 10-15" doesn't really give away much info for pay, a firm ranked outside of 100 in AUM could out-pay, out-bonus a top-ten. As it is profits, leverage, structure, etc. that determines ability to pay. If you are trying to use the frame of mind that works in traditional IB and PE and apply to RE, you will get confused.
In NYC, first year at a firm like PGIM (who btw is actually located in Madison NJ) will probably pay you 90k-100k all in (figure 60k-70k base). However, you could go to a smaller operator who might only pay you 50k-60k all in. The 'market' is really all over the place. If you speak with recruiters, you'll learn that some people with 5 years of experience make $200k-$300K all in while others are making $100-$130 all in. There is no 'market rate.' Real estate doesn't pay as well as 'traditional pe.' If you're driving career decisions off of pay, that is totally okay, but I wouldn't base career decisions on early career pay. As you progress through your career, you'll learn certain things matter that make you happy in your career. You may begin your 20s saying pay is all that matters, but by 30 be burnt out and say you want a true 9-5 job. You just don't know where it'll take you. For instance, for me, I used to prioritize pay until it took me to a soul crushing job where I made a ton of money, but couldn't quite get a day off and worked crazy hours. I've since learned that I prioritize my life and will happily take a pay cut if it means I get to be home for dinner most nights and have weekends minus the few times a year I'm on a live deal.
If you're looking to maximize pay as soon as you graduate, go into debt/equity brokerage or IS
I don't think this is great advice, if you go into debt/equity placement or cap markets at a place like Cushman or CBRE, you will NOT be making a lot of money. Depending on where you are, you'd be getting 65-75 with a maybe 10-20% bonus (big maybe). If you go into a boutique that gives you a draw, you may be making negative money for a year or three.
If you go to the institutional teams in NY where it’s salary and bonus, the IS/Capital Markets analysts and associates make significantly more than the buy side. If you don’t go the institutional route, it’s all over the map.
There are likely three years of analyst salary averaged into the 100k figure you saw. 85k is likely accurate for a first year. Also, PGIM has multiple teams within the RE division. You could work for their DUS lending arm (no fun), you could work for a debt fund (medium fun), or an equity fund (quite fun). Pay will differ widely based on which silo and which role you get. If you're an asset manager at a core fund, your job won't be as fun as the investment analyst at the Value-Add (opportunistic) fund. fun=more pay/more leverage/
People are not always exaggerating REPE salaries on this site. Those people here who say "no one in RE calls it REPE" sort of have a point, but all the ex IBankers running the top REPE shops and funds will likely disagree. REPE is different than being a developer who has equity partners and different than a large RE fund run by one of the big names. REPE employ high-leverage, shorter term, closed end funds, use a GP/LP structure with promote, and almost always require control.
It's not an apples to apples comparison. You have to compare it off investment focus rather than AUM. Real estate is different from traditional PE in that a lot of larger real estate firms are targeting core returns (7-10% IRR). PGIM is an insurance affiliate and thus a large portion of their investment focus will be skewed towards safer core returns. From my understanding there is no corporate PE equivalent to this. If you compare opportunistic REPE firm salary you will get much closer.
Also quite frankly a lot of people on this forum don't know what they're talking about and are on the outside looking in. Case and point above. The large brokerage shops pay base and bonus on their institutional IS/DS teams. It is much closer to IB salary than you would expect. Caveat being there are fewer of these seats.
I know from first hand experience first year comp at an opportunistic REPE shop in NYC is at least 80-85k base with >50% bonus. There are just so few seats and is much harder to break in down the line.
For the big name groups, there also seems to be a decent bump between analyst and associate and then VP. Hard to really tranche it out but a VP at a decent fund can earn like 400-600 cash plus carry. I’m aware of some groups like PGIM that pay that range too (I.e., big core shops, not even necessarily opportunity funds)
Main thing you’re getting at PGIM analyst program isn’t money, it’s training from a group people know. Sure it’s not BX but it should help facilitate future career moves
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