What is Real Estate Investment Banking? -Urgent!
I've spent my time learning as much as possible in Real Estate Private Equity. Although, I am not exactly sure what a Real Estate Investment Bankers does?
Could one explain what a REIB does on a day to day basis?
Thanks for the help!
Most investment bankers do two things - M&A Advisory or Capital Raising. Similarly, someone working in REIB would be doing the same thing.
On the M&A side, it would more so be about REITs, and potentially other types of companies too (i.e. hotels, casinos, etc). You probably won't be doing asset level deals - that is the domain of brokers.
On the capital raising side, you similarly would be less focused on raising asset level debt (i.e. a mortgage for a new property someone bought), but working on a large scale by issuing entity-level equity or debt. For example, REITs are constantly raising equity via issuing units, and many other types of companies (i.e. REOCs) would likely need to raise lots of debt at the entity level.
On a day-to-day basis thought, REIB is similar to other types of banking. You'll be slaving away on powerpoints, excel models, getting shouted at by MDs, and will be trying to compensate for your depression by telling everyone you work in investment banking.
Thanks for that answer super helpful. Could you speak more on the M&A side. Is it about consulting REIT’s to be more companies and helping in the process of acquiring smaller portfolios and REIT’s?
Take what I say with a grain of salt, because I'm not in REIB nor have I directly talked with someone in it.
However, my understanding is that you'd be helping one REIT buy a portfolio of assets or an entire REIT, as you mentioned. A lot of the time, REITs will attempt to geographically diversify by purchasing a REIT in another country. In a scenario like that, buying an entire REIT rather than just a portfolio of assets may come in useful because you'd also get access to the management team, which understands their industry quite well. Additionally, I'm not sure how this works for non-residential assets, but purchasing another REIT outright could also be simpler than purchasing the properties directly, because then you've got to deal with a myriad of issues such as lease continuation, etc.
But then again, I'm not too sure - my only exposure to RE is single-family residential.
So, maybe you have done this... but go look at the websites of some of the big and small banks with REIB platforms, you will see descriptions of services, recent transactions etc.
Investment Banking... by today's world at least... isn't really "banking"... it is brokerage and advisory styled work... i.e. "fee" work (banks may still swing own balance sheet in security sale/issuance, but that is more window dressing.. they are selling everything and making spread + fees). Hence, why REIB has more in common with other "sellside" roles at brokerages, advisory/consulting firms, and D/E placement shops.
Thus, I should note.... all the big banks (and well some small ones) like GS, JPM, etc. have true REIB platforms (aka 'desks') as well as true asset management (i.e. legit principal investment mngt platforms) as well as traditional bank/lending platforms (ostensibly with bank's own balance sheet, but may really sell/syndicate a lot of the loans they originate even if they keep servicing/port. mngt). CMBS platforms are often stand-alone as well, and are sorta hybrid between REIB and traditional banking.
Thus, be careful not to confuse the "business" of REIB with BB IBs that are really financial supermarkets with several business lines underneath!
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