Relevant Resource: Family Office Database
I am in the final stages of negotiating a head of acquisitions position for a small newish REIT focused on industrial on the east coast. We've had a couple interviews, I've been told I'm the favorite for the position by the exclusive recruiter and I have one last "interview" coming up. The previous discussions have been relatively high level with some focus on how they underwrite and approach deals but little details on the nut and bolts. I put interview in quotations because its no longer at a candidate selection stage but more of a come in, meet everyone and make sure I have all the information I need to make a decision.
I am currently at a family office of one of the largest real estate owning families in the country. We look at acquisitions targets with a hold in perpetuity mindset. Therefore our acquisition process is more qualitative than most, starting at selecting markets we want to be in long term, then premier submarkets within that market and then buying good real estate and least concerning to us is credit, lease roll, etc. This explanation is to highlight that we are the furthest thing from an IRR driven shop, only the most complex 1% of deals we do have an IRR calculation anywhere near the proforma. The idea is to buy multi-tenant industrial, low event risk real estate at attractive stabilized cash on cash yields with a strong bent towards qualitative decisions that will be "good for the family."
They are a relatively newly REIT'd company (existing before but not as a REIT). They espoused how they liked the system I've been looking at deals through but did acknowledge decisions are more quantitative. My biggest concern is not being able to produce deals due to arbitrary IRR requirements that are related more about their stock price and dividend that can change or be a moving target due to markets. This is not a position I would normally take if the plan was to stay small but they have said they have plans to tap capital markets now that they are a REIT to grow the portfolio by orders of magnitude (which we've all heard before).
Now this is where I need advice from the board. For those of you familiar with the REIT side of the business I need some thoughts on the right questions I should be asking regarding how REIT's make investment decisions, how are they may be subject to change with changes in the equity market. How much does "the street" have influence to drive dividend (and possibly therefore target cap rates on acquisitions). Basically I'm an acquisition professional used to running with loose guidelines (of which there are positives and negatives) looking for potential pitfalls that are unique to REITs that could negatively affect my ability to win deals (and therefore harm potential personal earnings).