Debt Asset Management
Would going into debt asset management be a good role? I'm currently in appraisal and I really don't like it, but I appreciate what I have learned so far but I am trying to grow my career and appraisal isn't it.
Can anyone explain what the day to day might be at a JLL/CBRE/Newmark shop doing agency and life co debt asset management? I realize it isn't REPE or anything but would this be a good step above appraisal? I understand I am lucky to be in this interview process now, but want to make sure I'm making the right call.
The pay is $15k more than I currently make (2nd-tier city) and I would have more responsibilities and from what I gather, I would be working with production, underwriting, servicing, and of course the borrowers.
I would like to work for a developer or investment manager one day (fwiw) so all insight is appreciated.
Bump
Debt Asset Management is probably Servicing. I would say that it is not the right call.
If no one responds that has specific knowledge or the role, I might reach out to someone with that role...call or email first. Look linkedin or JLL/CBRE/Newmark.
I think it is servicing. Probably doing Debt Service Coverage monitoring among other things.
Don't know if this is the right move or not, but try to weigh the Pros/Cons of making this move.
Some Pros: A raise is good, and it's a change from the path that you don't like in an environment that doesn't have a lot of opportunities.
Some Cons: Weigh which is more stable in the next 12-24 months. (I can't answer this one.) A new job is a little risky. Appraisal business dryed up in last recession, but I don't know that there were layoffs, definitely no new hires though. Debt servicing will be needed and there will be workouts. It's probably a wash in terms of risk, but food for thought. It may be a little mundane.
I would definitely try to reach out to people in that role (even if it's a different market). Asking where people transition to after a year or two.
I feel validated enough to answer this. I actually worked in just that, debt asset management at one of those firms you mentioned in a 2nd/3rd tier city. I will describe your day to day.
80% of your job will be financial reporting. You will receive financial statements for the assets in your portfolio each quarter and you will have to review them and compare them to the previous year. As in you compare 1Q 2020 vs 1Q 2019 and you look for any variances in the statements. If there are large variances, you reach out to the borrower and ask why. You gather all variance information and make notes of them. Then you have to fill out OSAR's (historical proformas) and other documents for the master servicers and submit them online before the master deadline. My portfolio was around 150 properties so depending on how you operate, you can analyze your portfolio in a month or so or you can take most of the quarter. Depends when your internal deadlines are.
The other 20% of the job will be fulfilling repair and replacement draws. This means a borrower made renovations/repairs that are in-line with the loan agreement and they want a disbursement of their repair or reserve escrow. They will send you a package that includes invoices, checks, and any other supporting documents for you to disburse their escrow funds. This is the more lame part of the job as it's super admin-like since you are reviewing small line items and checking boxes. I'd also add in this 20% is random projects your AM or Chief AM may give you.
All in all, I was able to at least enhance my financial analysis skills and I got very good at finding variances and understanding the reason why. Not copying what the borrower said and forgetting about it cause some problems may run for more than a couple quarters so you kind of have to be aware of your portfolio's health. Also, since I was at a large firm, I was able to contact anyone I wanted in the US and network with producers in CA, NY, TX, etc. That was super beneficial. And you if you get/take this job, you may think you don't add value. But that's not necessarily true as the analysis you do gets reviewed by the underwriter and loan officer, and can go further up the chain if there's any issues or special circumstances with certain loans. I was able to meet some heavy hitters this way by just analyzing a deal someone in NY originated and communicating the problems.
One caveat I will mention is you will not do a ton of modeling, almost none at all except for the OSAR's you fill out. I would recommend practicing modeling on your own, thats what I did since I knew we wouldn't get it on the job.
If you want, I can PM you. For reference, I went from debt asset management to a private capital firm in NYC. It really depends on how you spin your experience and thankfully the firm I work at now really appreciated my financial analysis skills. Good luck
I am currently in the running for a debt asset management job as well. Would you be free to talk more about your experiences?
Likewise! Would appreciate your advice if you don't mind PMing me.
I worked in this same role and you said it perfectly. Quarterly reporting and draws were pretty much my day-to-day, with inspections thrown in (not sure how covid effected that).
Anonymous poster above, great write up. In terms of exit ops, appraisal and debt asset management are basically equivalent in my book assuming same firm size / brand. Maybe an edge to appraisal since you’re doing valuation. I don’t know if debt AM gets you closer to your goal of being an investor.
If you’re worried about being laid off, I think debt asset management is one of the safest areas of CRE right now. Also 15k is nothing to turn your nose up at.
In a good market, I’d say this move doesn’t make sense. But in a down market like today’s, it might be a good way to save a little extra cash and have some job security.
Keep in mind when you interview in the future you’ll have to explain why you took this job. So maybe your explanation is you wanted to be in an area of CRE that shielded you from the impending recession or you wanted to move to a bigger brand name, do more financial analysis - I don’t have enough info to answer for you but be sure you have a good reason. Just something to remember when thinking about the bigger picture
Appraisal can set you up for equity AM analyst jobs assuming you’re using Argus and doing DCF valuations. Given your aspirations of going to the equity side, I would hold out. If you wanted to be a deal junkie on the debt side, I’d say it’s a good foot in the door.
Especially on the agency side, its a lot of quarterly reporting and approving disbursements for repairs. I worked in this exact role when i started and left last year because it felt to me that the work had no real impact on transaction, which was where i wanted to be. Its a servicing gig in my experience, but we did perform site inspections which was nice to get to travel to some cool areas (depending on your territory at my firm). It was a good place to start for me, and depending on your work experience could sharpen your financial analysis skills and give you some experience in working with borrowers and getting your feet wet with the debt side of the industry. If you have a lot of experience in real estate, I would move on unless you are just looking for a solid paycheck for a pretty low-stress environment.
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