REPE to loan originations?
I’m currently an acquisitions analyst for a 8B aum in a niche sector (self storage). I don’t see great potential for growth at current firm and exploring new opportunities. Im finding it difficult to get senior analyst roles in other asset classes due to being only in self storage. I have an opportunity to join as a senior analyst with a large life co in originations across multiple property types. It seems like most prior analysts have left for acquisitions roles and not the other way around. Would I be making a mistake in making this move?
If this is prudential you will make bank
I find it odd you’re not getting looks. Sometimes it’s about finding the right fit. Be advised, while you 100% can move from debt to equity, there are unfortunately people out there who will ding you from an interview. While I don’t agree and always advise you can move, it is a reality. I would keep trying for a bit more time to move and find that fit. Underwriting is underwriting and self storage is actually very similar to multi family. If you really like the team at the Life Co., go for it, but be ready to jump in a few years so you can make the switch.
Unfortunately the stigma with "debt" is very much out there. I'm a hiring manager and the people I've hired out of a debt shop perform better than folks I've hired out of equity shops.
At the end of the day, debt and equity is the same thing when you're underwriting the property. I personally don't care, but have seen people ding people because they don't have "equity" experience which I find ridiculous. You don't even want to work for shops/people with this mentality anyway, so maybe it's for the best.
The best equity guys I know all spent a lot of their early career in transitional lending either at a bridge shop or insurance company originating 3-7 year fixed / floating rate mortgages/pref equity/mezz/construction loans. Personally, as someone in a very similar seat to the role your describing, I think there are very few opportunities like it to see such a wide breadth of the sponsors, business plans and asset profiles across top 50 MSAs. Even if you don’t win every deal, the total deals you UW will give you a really good competitive edge when you go back to the equity side because being a lender forces you to understand the downside risk element, get intimately comfortable w an asset/markets leasing environment and understand all the risks that could impact your spot in the capital stack. Personally, I have found being in bridge / higher yield lending forces you to critically understand how to identify, quantity and mitigate risk in both a quantitative and qualitative way that maybe equity would focus less on. Last point I’ll make is I think having a high reps on the debt side of the business let’s you understand the importance of capitalizing deals properly vs just finding good deals. If you are able to bring an intimate understanding of the financing side of the business by knowing what levers you can pull to de risk your capitalization strategy, that will likely be seen as a very positive thing from any acq or equity player.
Only just started this month in a debt shop (after previously interning on the equity side) and this definitely resonates - when you see everything from a worst possible case scenario (and the sponsor case as the best case) you truly start to appreciate the risks and idiosyncrasies of each deal. And likewise I have found deal underwriting volume to be so much higher. I don’t know if this is common but we also underwrite from the sponsor perspective, so I find it a bit short-sighted that debt shops are overlooked.
The reason they are overlooked is twofold.
1) people are too proud to admit what they do isn’t that complicated. And because of this, they can’t imagine someone who does something slightly different can do it too.
2) the debt investors aren’t as in the weeds on the underwriting. Sure, you are 100% underwriting from the equity perspective, but you’re not in the weeds on items such as if you need 3 leasing people in this multi family property, or 2 leasing people. Equity teams also won’t show all the capex they spend so that the lender doesn’t require them to spend it. So there are slight differences.
I work at an "equity shop" and most acquisitions folks have no clue whether you need 2 or 3 leasing folks or if you need 1 or 2 maintenance techs. Or when the roof needs a replacement or parking needs to be restriped.
Most acquisitions folks are good at the "process". I.E. knowing what's needed for investment committee, closing coordination, etc. Most don't really know how to operate a property and heavily rely on property management proformas or engineering consultants for capex.
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