In general, just curious about CMBS as I've recently taken up interest in the space and am trying to learn specifically more about it.
Seen a few Production Analyst/Associate roles. All who have worked in this space (current or past) what are your thoughts on it? Seen some older posts but wanted to get a fresh thread on day-to-day and what the exits are. From CMBS Production, where does one go and how would a role like this be integrated into the greater CMBS team/real estate world upon exit? More specifically, if anyone has insight into CMBS and the current market landscape, that'd be cool too.
There is no exit because production already makes the most money, more than underwriter, structuring, and securitization
Interesting, Tell me more if you can? Not that I'm only interested in the money aspect but is production "limited" in the sense that it can be viewed as a dead end job (i.e. not able to move into other areas of CRE financing)? It's one thing to make a boatload of money but if there's no movement I imagine things could get stale.
Keep in mind that kid above you only talks in reference to what he knows at Freddie Mac. Not at banks, debt funds, etc
Movement to where? Most banks don’t even have CMBS, but every bank can do origination, you can stuck doing structuring at citi or you can do production at every single commercial bank
Okay let's remove all doubt and assume I'm talking about production departments at a bank. Regional - middle market start, not at BB. I think these are all part of my initial post and trying to learn more about it.
I worked in CMBS for three years.
The bad: Extremely long hours, very monotonous, little room for personal scheduling (depending on team) because the hit rate is very low (maybe 2-5%) so when you actually sign up a deal you have to move very fast and drop everything going on in your personal life, very rigid box and won't lead to learning all that can be learned about real estate
The good: funny money pay if you get on the right shop/team, a lot and I mean a lot, of deal flow, so you'll be underwriting a shit ton of properties and get really good exposure to all property types and markets (albeit you'll probably just do a year 1 underwriting), you learn a lot about debt, if you're at a shop that leans on analysts for more than just underwriting you get a great exposure to a network of brokers and lawyers, feels more finance than RE (which I like), once you sell a deal you never have to think about it again, big expense account (I probably expensed $15K my last year on meals and 'client entertainment' which was just me hanging out with my friends that were also in RE, that's like a $25K raise if you adjust for taxes.
Most people that worked with me when I was in CMBS have since left the company, out of about 15 people, I'm the only one that switched to the principal side, most stayed in debt and a couple went to brokerage. I don't blame them, you can make much more money in debt / brokerage than REPE but it's not what I wanted to do.
Why do you say you can make more in debt and brokerage over REPE?
I took a pay cut to go on the principal side and I work at a top 10 shop. My shop is definitely below market but you just don't get the same pay as a top producing lending/brokerage team. I have friends that don't know what IRR is at brokerage and debt shops making $200k+ per year in their mid-late 20's.
How would you describe CMBS origination pay at different levels?
This is interesting stuff. It is a bit surprising that debt brokers don't know what IRR is. Although it doesn't really affect them, it's still a little boggling. So, to that end, are you really only modeling out the debt portion of the capital stack and the downside risk on the loan? I imagine you're also modeling out defeasance and yield maintenance depending on the loan type?
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