analytical level required on brokerage vs. REPE/REIT

golden999's picture
Rank: Baboon | 146

re-ib-ny (or other ppl in the field), can you elaborate a little bit more on how different are the analytical levels required on RE Brokerage and REPE/REIT? From what I heard from people, they both require similar skillsets and job nature (ability to see lots of transactions) is quite similar too.

Comments (11)

Aug 14, 2012
Aug 14, 2012

thanks. but that even makes me more confused. if buyers dont care about cap rate or 10 year analysis, why do they make the junior people crunching numbers in ARGUS?

Aug 14, 2012
asianracist:

thanks. but that even makes me more confused. if buyers dont care about cap rate or 10 year analysis, why do they make the junior people crunching numbers in ARGUS?

I disagree, that guy's post does not answer your question. Buyers absolutely do care about 10 year analysis if you're marketing a 30-story office building to institutional investors.

Aug 14, 2012

I'm not sure I really understand the question. Are you asking how the analysis of a broker differs from the analysis of a buyer? Or whether one is more analytically intense than the other? When you start talking about job nature, it sounds like you're asking about the transferability of one to the other? Also, I'm not sure how to quantify differences in "analytical levels."

I assume you're asking what kind of analysis a junior broker does, and their job is principally to take a client's (the seller's) Argus file, clean it up, load it up on the data room, spit out cash flows, and make a presentation book called an Offering Memorandum that advertises the property. The job of a broker is to sell--to portray a property in as positive a light as possible. This has much more to do with relationships, credibility, and the art of cultivating a competitive process than it does with analysis.

As for acquisitions, analyzing a real estate property isn't rocket science, and even as investments go, I think it's probably one of the easier asset classes to figure out. It's certainly not hard to project property-level cash flows. I think there is, however, an element of intellectual rigor with which one can approach certain deals in order to understand all the pieces (property, market, financing, etc.), analyze different scenarios (portfolio breakup, renovations, expansion, tenant termination, etc.), and figure out how sources of profit and risk will impact outcomes.

Perhaps if you can clarify your question, or better yet explain how this question is relevant to your decision making or career choices, I might be able to help.

Aug 14, 2012

Sorry I was in a hurry when I was typing my post. But yes, how is the analysis of a broker differs form the analysis of a buyer and which role is more analytically intense? If the job nature of a junior broker and a junior analyst at a PE shop is similar, why junior brokers are usually look down upon? Thank you for your response!

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Aug 14, 2012

bump, hope re-ib-ny and other senior monkeys can shed some lights here

Aug 14, 2012

I feel I pretty adequately answered your question in my prior post. A broker's job is to sell, and what few numbers a broker comes up with aim to portray a property in a positive light. That doesn't necessarily involve much rigorous analysis relative to the work a buyer must do.

Aug 14, 2012

From a spreadsheet standpoint, one area you might be lacking in as far as modeling goes is JV/partnership structures. That stuff can be learned, of course, but I just don't see someone in asset sales needing to build a pro forma with a bunch of IRR hurdles very often.

Sep 5, 2012

Ok, but good brokers need to adequately address/counter the downside...

Skill set is similar.

Aug 14, 2012

Ya, the the skill set is similar but I don't know many brokers performing risk driven sensitivity analysis' on cashflows or doing indepth research on loan structures, Op-Ex ratios, reserve requirements, management fees, property tax projections, tenant default rates, etc...

Theres just more research and analysis that goes into it - other than typing a few assumptions into an argus model.

Aug 14, 2012
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