Alternatives to REPE Acquisitions

Hey Monkeys,

I've got a few years of CRE experience. I spent some time doing fp&a stuff, spent a year in REPE acquisitions at a boutique, spent a year as a debt/equity broker at a pretty well known shop / for a well known group, got canned due to Covid and have spent the last year-ish as one of two in-house capital markets guys at a homebuilder.

I'm pretty desperate to get out of this gig for multiple reasons. The firm has had a ridiculously strong 12 months but is still overall a piss-poor performer (I'm talking corporate bonds that are rated cc) and frankly...it shows in the quality of the people I work for. I'm smarter than my boss and I have never been anything more than a middle of the road performer at previous gigs. I'm not learning anything and I don't have much of a pathway to move up either other than sit here for 10 years and wait for people to retire / die.

I've been making a pretty concentrated push to find an acquisitions job. While my ideal job is at an LP that invests across geographies and food groups, I'll basically accept anything at a shop that is even semi-institutional as long as I'm working for a guy who's smart and whom I can learn things from. I've had former bosses sending my resume around, I've hit up half the alumni base from my MSRE program, cold messages on LinkedIn, etc. I'm getting absofreakinglutely nowhere. I'm starting to worry that if I stick around much longer I'm going to become branded the "Homebuilding Guy", and its just too niche IMO.

So, after 6 months of swinging and missing, I think I need to expand my horizons, especially as I approach 4+ months from graduating the MSRE. I'm trying to understand from the perspective of the group here if an Asset Management job or a job on the debt side would serve me better if the goal is to ride it out for 1-2 years and then hopefully take another whack at the acquisitions side when the economy is a bit less volatile. I'm evenly split on this - on the one hand transactional experience is better than non-transactional experience, but on the other hand, being in the equity seat and working from that first dollar risk mindset beats putting deals on a conveyor belt and checking boxes until committee says yes.

So monkeys, what say you? What is more likely to successfully allow for an associate level pro to make the switch to acquisitions? A year or two as an AM associate / senior associate? Or a year or two at a debt fund origination role as an associate / AVP ?

Thanks in advance!

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Comments (17)

Mar 22, 2021 - 7:22am

That's a toughie. There are so many people running around this industry who ei tell you ...I can't hire you, you have too much debt experience. You're a debt guy. And others who will say the same thing about asset managers. Personally, I operate under the belief people are stupid. But maybe that's just to make me feel better. Underwriting debt is the same as underwriting equity. It's two flips of a coin. You just care about a few different aspects. 
 

I think if you do debt, look for mezz debt and bridge debt/construction loan firms. Doing riskier things. I think a transactions role is better than asset management. Albeit, knowing how to run the asset is significantly more important than being a modeling monkey. But unfortunately we live in this world where deal people care more about previous deal experience and many have never actually managed an asset. 

Also, keep your head up. It's a tough market right now. Most people aren't getting anywhere. There just aren't that many job openings. I'm currently looking for a job too and it's just slow. Real real slow. Keep your head up. It'll happen. 
 

also, could you go back to a brokerage shop and do investment sales or debt/equity placement? That should keep some doors wide open for you. 
 

In terms of the job market picking up, I'm hopefully it begins. The job market was mostly shut down last year by early March so people didn't move post bonus'. I think you have a lot of people itching to move. On top of it, as the world thaws, I think hiring will begin to open. Recruiters are also claiming its busy and I'm seeing tons of postings for 1-3 year acquisition analysts. I'm hoping that means more senior jobs to follow. 

Mar 22, 2021 - 2:53pm

Thanks for your reply Pudding.

Yeah, I understand and agree with a lot of your points. The obsession that some people have with debt vs equity at junior levels has never been something that made a lot of sense to me, but it is what it is.

I think the ship has sailed at my previous brokerage/group. Which sucks, because if I asked you to name the 5 guys who you first thought of in NYC capital brokerage, the guy I worked for would be on that list. On the strength of that I could probably go and get myself hired as a senior analyst or associate at one of the nationals for debt/equity placement, but I worry that leaves me in the same boat where I'm then trying to get someone to bite on me going from debt to equity because frankly, 85+% of the deals are debt at most of these shops short of being in one of the dedicated JV equity teams. Homebuilding is stupid in a lot of ways, but I am doing true JV equity deals here with some real/large PE shops coming in as our LP. Of course, that is still only about 1/3 of my deals with the rest being debt or some kind of structured package but I have closed one large true JV and have another one large one in the pipeline which could maybe help things when guys pick up my resume and see the transaction section.

Frankly, I've been applying to many of those analyst jobs. I mean I think I'm a senior analyst / Associate / Senior associate at most shops depending on titles and how they do them, but I'm honestly OK taking a step back in comp for a year or two if it gets me to a shop with runway to grow. Still struggling to get traction. Hence I started applying to AM jobs and definitely seeing a bit more interest already but the whole thing sounds like not what I want to be doing.

Mar 22, 2021 - 9:57am

I think you are focusing on the right things for your age - a good boss that you can learn from + better culture.

On what to target, there are a lot of ways to get where you want to go (and you may find along the way that things change and your goals change). I don't think either AM or debt origination (high yield) are bad choices and you see people in sub officer levels change back and forth pretty regularly. You will need to find a hiring manager with a little bit of vision when you are ready to move on, but that is where networking becomes so important (easier to explain your story when you have a warm lead).

When I got out of school I thought I was going to be a deal guy (originally thought I would do a stint in commercial and then focus on flipping/building a residential/multi-family rental portfolio). 15 years later I'm in debt AM, making really good money and very happy with my choices/spot.

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Mar 22, 2021 - 3:01pm

First, thank you for your reply.

Hey, totally agreed on not knowing what life is going to throw your way. I went to undergrad thinking I'd be a management consultant. I more or less randomly ended up in CRE. I still didn't know what I was doing and what I wanted to do. It took me much longer than most to figure out what my path is and I can finally see what I want to be doing now, 3 years from now, and down the line. Its tough to see that, set yourself up for that between education and nailing down a great first job in that path, and then seeing it hit the shit. So I'm just trying to keep myself as close to the track as possible so that its a path of least resistance if and when the hiring market picks up.

Mar 22, 2021 - 3:28pm

Totally feel you. I graduated in December 2006 and my path got blown out of the water by the recession. I never lost my job, but it took me until 2010 to reconfigure my plans and then another 8 months to reach the first step.

Agree with redever that If you move, it should be strategic - something that moves you along your path (skill building, network building, etc.) that you can easily explain. Don't take the first job that comes along just to get out of your current one.

Mar 22, 2021 - 10:09am

I wouldn't be so desperate to leave a paying job for just any job, make this move strategic. 

I will observe that the higher up you go in any buyside firm (including development), the more AM and Acq roles converge, and either can be the basis of promotion to senior and executive roles. So, I think getting into a good firm is most important, the Acq vs. AM thing is too much of a WSO hot potato IMHO. 

The "debt side" is harder to judge as later moves could be more "jumps" and thus sub-optimal. This isn't to say you can't get hired back on equity buyside, but you are just more likely to have to take a lateral and otherwise reset promotion/advancement clocks. Then again, debt vs. equity is too much of a WSO hot potato as well IMHO. 

TL:DR - Apply for positions widely, only take a good one, be less focused on exactly what "side" so long as it meets your basic goals and will advance your career. 

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Mar 22, 2021 - 11:24am

I love this - because it is so true. A lot of people on this forum make it like you can't go back and forth, but you totally can. The problem I find in the workforce is that you have so many people who are in charge of hiring who only understand how to look in their box. @mrcheese321 said it well when he said you need a hiring manager with vision. It is so funny to me, because it is pretty apparent that to be a strong acquisitions professional (or even debt professional), you need to understand how to asset manage. I networked with an extremely large retail developer in my region and his advice to me was forget the 'deal side of the business.' It's all about asset management. If you want to do your own deals one day, work in asset management or leasing so you actually learn what makes the asset 'tick.' Adding to this, the best investment professionals I've ever met have had strong asset management and property management backgrounds. These backgrounds helped them understand how an asset was going to operate, and than how they should therefore underwrite it. They could call BS when third property management companies' were assisting with underwriting and comp'ing assets. On the flip side of this, I've seen so many asset management professionals on the equity side trying to jump to the deal side - and people tell them "well, you've never negotiated a PSA and don't have experience closing deals, so I don't think you can do this job." I've also seen debt professionals trying to move to the equity side get this response. Again, I think it falls back to my motto that people are stupid. Negotiating a PSA isn't rocket science and closing a deal is generally about ticking boxes and making sure you've done all the steps, and just understanding how the process works. Which is funny, because many firms rely on their 25-30 year old analysts/associates to close deals so their higher up professionals can focus on sourcing - so now they told this asset manager with 15 years of experience he couldn't close a deal. Anyway, I think 95% of hiring is just about finding a team that understands and values your experience and why it'll help in the role and the firm get to its' goals. 

I'll add to this, I was told (literally the other day) I don't have enough equity experience to qualify for a job (in the middle of the interview). I've worked on the equity side of the business my entire career - with 3 years where I did a mix of equity and debt. And this debt experience, and with half of my transactional experience being debt, I was told - nope, can't do the job - I haven't worked on enough PSA's and I've done too many mortgages. And I laughed, because my interviewer had spent 25 years in structured lending (bridge and construction loans) only to make the jump to the equity side of the business a few years ago. So again, it is just luck of the draw and does your interviewer get your story. Your network helps too here. 

Mar 22, 2021 - 3:31pm

Thanks for another comment Pudding.

I don't disagree that I think AM gets shit on and is very unfairly looked down upon. I would, however, respectfully disagree with part of your premise. I don't think that anything that AM does is much more 'impressive' or ridiculous to pull off from what acquisitions pros do at the junior/mid-senior level. IMO they're all fairly replaceable and nothing in CRE is rocket science - this is not a hard business from an intellectual standpoint. The same way anyone can hire a guy to make a model, anyone can hire a guy to look at their underwriting, and frankly, if you're a strong owner/operator, you can probably get your vendors to walk the property with you on inspection and give you better estimates on opex and capex than your AM guys will be able to.

The reason I think experienced acq guys are more valuable than others and can command high salaries is because of what they're actually paid to do - source high quality and off-market deals. No one is asking an MD or whatever at this level to make models and I've met plenty of senior rainmakers who can barely turn a computer on. What they have is the network of guys who they've done deals with and this allows them to efficiently and effectively source deals, and THAT is the most value-add thing in the whole process. As far as I'm concerned, this entire business can be boiled down to buy at a reasonable basis, don't ride the leverage too hard (or at least pick your spots when you do), and you'll make a ton of money in the long run. The hardest part of that is buying at a reasonable basis, especially as CRE continues to become more and more institutional and yields compress all over the god damn place.

Definitely agree on luck and network. Real estate is a nepotistic business through and through. All those sayings about who you know rather than what you know are accurate, and well...I guess the guy you interviewed with there didn't exactly have his self-reflection hat on that day. I think a lot of this comes down to everyone in finance being overly risk-averse. Guys want to make sure they're protected in case they make a hire and it doesn't work out, so rather than hire a guy with transferable skills who SHOULD be able to do the job, they'll limit themselves to guys who HAVE done the job and have multiple years of experience in it. And when its an employer's market, they can be that choosy and still get a dozen qualified applicants throwing themselves at it. This way if shit hits the fan the hiring manager can say it wasn't his fault since they hired someone with three years experience in XYZ.

So my soliloquy is that while I definitely agree that learning and knowing AM and how to actually make the asset operate is necessary experience for someone who wants to be an operator, and could definitely be more value-add at the lower levels than acquisitions, I think there is a reason why the senior acq guys get the comp packages they do and well...we're all here to get the bag! If I'm going to be working for the next 25 years, I may as well put myself in the positions to be able to maximize my utility. That and what my future plans are (running my own deals with other peoples money) are all things that IMO would be more efficiently accomplished with more acq experience under my belt.

Mar 22, 2021 - 3:21pm

I really agree with most of what you say. Frankly, I'm making more money than I ever have and I don't have a heavy workload. I actually have turned down a acq role at a platform that had lots of money to spend but frankly sounded like some 2.0 version of wework where I would've been literally the most experienced real estate investor on the team (all people with tech backgrounds) and just didn't see how it would help things.

I guess the reason I'm focused on equity is more about where I'm trying to go. I can't exactly explain it easily, but I've got a really strong network that I can tap into for friends / family deals. My goal is to spend a few years at an acq platform learning from someone smart and making my mistakes on someone elses dime, and then branching out to do my own deals. With a few of those under my belt and a track record at an institutional platform, I don't think its ridiculous to go out and be doing institutional deals with real LPs instead of doctors a few years down the line. Also, my strong assumption is that equity experience will make fundraising easier for when I'm hitting that stage in my career.

Mar 22, 2021 - 11:19am

emceedrive

and frankly...it shows in the quality of the people I work for. I'm smarter than my boss and I have never been anything more than a middle of the road performer at previous gigs. I'm not learning anything and I don't have much of a pathway to move up either other than sit here for 10 years and wait for people to retire / die.

Man, this had me rolling. The sheer honesty.

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