Smartest RE Debt Funds
Everyone sees the top 50 debt fund / lender rankings by AUM / funds raised / etc. Among those top funds, are there any that stick out as being especially smart / impressive? Asking as an experienced professional looking to work with / learn from the smartest / most thoughtful. I understand that as a college student, there is no functional difference between BREDS / KKR / Goldman / PIMCO / Square Mile / etc - however, asking for a more nuanced view based on current leadership / strategy / portfolio composition / etc.
You will learn/see the most interesting stuff from the high yield shops. They are monsters at structuring, stay involved in deals for the life of a loan, and ultimately are all prepared to enforce remedies if necessary.
The life cos have their bread and butter in core debt. They dabble in light value add, but most stay away from pure construction which is where things usually get hairy.
But above all, liking the team is the most important. A good job with shitty people is still a bad situation.
Similarly to above, I would encourage you to focus on the firm that you have the best cultural fit. Doesn’t matter how ‘smart’ people are - if you don’t fit with them - you won’t excel. The smartest shop for anyone is the shop they have good cultural fit. In the end, people excel because they fit in somewhere and are smart. If you don’t fit in, you won’t move up. Unfortunately people help those they like (or fortunately depending on how you look at it).
Couldn’t agree more with the above. I have worked for great firms but the culture was not a fit and I hated everyday.
I am now with an amazing team and boss and couldn’t be happier. There’s some daily items and deliverables I need to get done that I would probably lose it if I was somewhere with a bad culture but being here, it makes it easy.
Always say, culture and team you work with is more than 50% of you liking a job.
No one said culture wasn't important, but that's not what the OP was asking. Culture doesn't matter if your debt fund series has negative returns and can't fundraise and has to let you go or not give you a raise - that is, assuming you want to grow your earnings and progress in your career. Maybe i'll flip the question on its head - the debt funds that through the grapevine i've heard of struggling are oaktree and mack - lots of class B office exposure in markets you don't want to be a lender in.
I'll flip it again. If you're a junior or mid level person at any of these firms just doing the work on executing on a strategy, the success or failure of the book isn't your fault and won't be laid at your feet. Getting good experience and learning is what is important (assuming you're being paid well, of course) and a lot of that comes down to culture - do the senior folks interface with you, do you get the opportunity to make mistakes, to be mentored. Your next firm isn't going to give a shit that the Class B asset you underwrote and pitched to the credit committee is a dog of a deal. They're going to care that you know how to analyze deal docs, that you understand markets, that you think like an owner. All of that is knowledge/experience that is more easily gained at some shops than others, and the short term performance of said fund shouldn't be a huge consideration. You really think Oaktree is about to fold?
Oak is renown as dogshjt re debt… across the street.
none of what you say is wrong. however, a couple thoughts:
- a good culture and working with a "smart/impressive" group aren't mutually exclusive
- IMO saying "go to a place with good culture" is like saying "go to a place where ppl aren't going to sexually harass you or bully you"...i.e. it's obvious. what's less obvious is who's going to make it out of this cycle unscathed and able to fundraise going forward. good luck trying to get promoted up the ladder when your firm's unable to raise new funds and generate mgmt fees.
- point blank, OP wasn't asking about culture
- if the fund performance at oaktree is as bad as ppl are making it out to be (and i have no insight)...no, they're not "going to fold," but yes, i'd have strong reservations about joining them. wall street is littered with groups that were once top of their field but either shuttered or are a shell of their former self (a bunch of groups at CS, KKR special sits, GS whitehall funds, a bunch of HFs, etc). why take that risk? obviously, if oaktree or mack is the only offer you get, they're still strong brand names in RE debt and you should def take it. but if you're senior in your career (which it sounds like OP is) and have options, why go that route?
Eh. There are places that midlevel person takes the lead on asset managing, and when things don't go right (whether they originated or they joined recently and took over), it can be on them. And the response of "I had no idea because I didn't have the context, history, etc." is not accepted. Just a bad situation to be in
I would go as far as to say you learn way more from the losing deals than the homeruns
See if you can get access to Preqin and see historical returns. Agree with above that funds with class B office are potentially fucked.
That said, PIMCO, Fortress, Square Mile, MSD, Related, PCCP, Sculptor etc will often be seen bidding on the same HY debt deal. Lending is somewhat of a commodity so it’s a bit harder to differentiate between teams.
Also “smarter” is not necessarily better. If you have a reputation for being a ruthless negotiator, you’re not going to win much business as a lender. People talk and it will hurt you if you get too cute when negotiating loan docs.
But if you get in at any of the above you should be in a great spot
Having worked at 2 of the companies on your list + co-lent with the remaining, I can safely say these are sophisticated lenders and yes, landing a job at any of these would be great.
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