Working at a sponsor/GP equity partner
Most of the firms discussed on here are traditional JV Equity providers. What’s it like being on the other side of that equation being the sponsor?
What’s life like as an analyst associate at a well capitalized sponsor that invests across geographies and property types (and I’m not thinking the massive guys like related, hines, etc).
What’s pay like at these places? Can you invest with the fund on a deal by deal basis, are you getting carry?
Thanks for any insights.
It’s all firm dependent and changes with each sponsor. Some sponsors have dedicated acquisition teams and asset management teams, so you are silo’d. Others sponsors don’t, so you do everything cradle to grave. Regarding co-invest - it’ll also depend on the sponsor. Some may allow it, some may not. It’s similar to large institutions, every firm is different. Some you’ll do everything, some you’ll only do one thing.
Similar to the rest of real estate, pay is all over the map. I know some sponsors which pay above market and some which pay below or at market.
I work for one based in a Tier I market. Very entrepreneurial culture / ton of responsibility and I'm paid above market but it is sweaty let me tell you....
You work across asset types/geographies or or focus on one or two?
Any ability for you to coinvest?
You get GP (promote) economics/points at the VP level. Mainly regional deals but strong focus on HQ. All the major food groups.
Related?
Both of my gigs have been on the GP/sponsor side, both have involved work ranging from acquisitions to portfolio management to asset management (anything really). Both have US-wide portfolios. The biggest difference between the two shops have been the specific asset class their involved in. From that standpoint, you learn a ton about the operations and the assets, but you get a little bit less of the investment side than you'd like sometimes, and you're responsibilities can pile up from all across the company. We promise the absolute world to our LP partners when were on a deal, so hours are generally shitty, averaging 70+.
In terms of pay, from looking at various forums on here, I'd say I'm somewhat average to low end on salary, and very low on bonus. This was a similar case at my last job too. However, I'm expecting to get a VP title soon, where I will likely get some deal-by-deal equity/promote. Pretty much all of our deals are direct JV investments.
Funny that you say above that all you see are LP side positions, I feel like it's the opposite. However, I'm not going to make a jump at this point unless it's director or VP level, so maybe there are more at the analyst/associate level. LP side is eventually where I want to end up as it seems the pay is better, but maybe I've just picked the wrong shops!
I’m just looking for those juicy promotes you guys get on the GP side
Same question as above how’d you find this role? HH, word of mouth, job board?
Analyst at a GP, and we run lean, so we cover both acquisitions and asset management in three major markets. We can co-invest on deals if we've been there for a certain number of years, and this is open to all employees. My base is market, but bonuses are pretty light (10-15%), at least at the analyst level. We get carry, paid out every few years. We're always pretty busy: chasing deals, DD, managing existing ones. We don't have funds, so MD has to shop around every deal to potential partners. I imagine this gets exhausting for him.
Same question as above how’d you find this role? HH, word of mouth, job board?
I cold called/cold emailed everyone in my submarket, because I was relocating there for personal reasons. I connected with someone at my company at the same time that they were quietly looking for an analyst. The job wasn't advertised; I think they were interviewing people through word of mouth before they met me.
I have both Co-GP and LP money that would be interested in speaking with your boss, let me know if you think its worthwhile, thanks.
Can anyone explain the difference between:
- Owner/Operator
- REPE fund that assumes the GP position
- Developer (not what they do, I already know that how they differ as GPs to the other 2 firms)
I appreciate this is a total noob question but I honest to god am having a difficult time finding info about this.
Owner/operator is what the name implies. They own some portion of the equity and have an in-house property management team that then operates the property. They earn a management fee on top of any distributions/promotes from their coinvestment.
A firm that invests in a GP position is not always an operator. They might hire a third party property manager to run the day-to-day operations (tenant relations, R&M, accounting), and pay a fee. Same fee mentioned above.
A developer could invest at just the GP level and bring in LP capital. It would be the same concept except with a new building instead of an existing one.
Someone smarter than me can fill in the blanks, I’m sure.
I'm not sure if you mean or think these terms are mutually exclusive or not (as in firms could be classified this way), but those are a mix of business lines you list. A firm could do all three (like Related, Hines, RXR, Silverstein, and well tons more).
- Owner/Operator - The name on the door (easy way to explain) - the firm that well "owns" the property, i.e. has decision making power on buying, leasing, managing, financing, and selling it. This could be REITs, private firms (family or closely held), or really just "people". They can finance with their own capital, mortgage loans, as well as joint venture equity (in both LP and GP positions, these are just contractual features, not really meaningful by itself).
- REPE fund that assumes the GP position - Not sure what you mean here? A private equity fund that buys directly? That would make them the owner operator in that deal. They could co-invest with an owner/operator on the LP or GP level. I think you mean joint venture equity investments, Equity Fund + Owner/Developer.
- Developer - In context of your question, an owner/operator that builds the building. Development is a process/business line, and you generally own and operate as you go (fee developers being a noted exclusion). Some "Developers" sell or exit soon after or even before completion, but that is just a holding strategy question.
I hope this helps. I've commented on questions like this before, I think a lot people confuse firms, business strategies/mode/lines, and structures/entities. So people come up with this idea of a "firm type" that totally mixes the complexity of the industry (or really that a firm could do multiple types of deals business). Examples of common confusions..
- Prologis - A publicly traded company (claiming REIT tax status) that owns a core portfolio, develops properties, and runs a very large private equity fund business. Are they a REIT? A Developer? A "REPE" Firm? The answer is YES
- Hines - A privately held real estate company - What do they do? Better question, what don't they do!! Develop? Yes. Private fund business? Yes. Sponsor of public REITs? Yes. Third party property management (i.e. for other owners)? Yes.
- PGIM - Large real estate investment management firm - People seem to think they are just a "LifeCos" that is wrong, they were started and still mostly owned by a LifeCo, but they manage third party money big time (plus the "house account" of the LifeCo). Do they do open-end core funds? Yes. Do they do private equity style high-yield funds? Yes (they literally rank #14 on the PERE 100). Do they have a huge debt platform? Yes. Do they have a public securities platform (REITs)? Yes.
Anyway, you get the point. Trying to rank and categorize firms by what they are most "known" for, will only get you so far.
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