Debt-side v. Equity-side– Do RE professionals go back and forth?

My current role is on the equity side. I am a portfolio manager in an associate-level role at a Life Insurance Co. I deal primarily in MF assets, and my day-to-day is heavy on capital transactions.

After revamping my resume, I have been testing the waters for new opportunities. The most interesting roles I have applied to thus far have been on the debt-side – RE underwriting/origination. The interest has been reciprocated, and I am in the process of interviewing with a few firms.

Anecdotally, it seems like my more senior colleagues have been on both sides during their careers. Is that common? Also, it seems like work-life balance could be less great on the debt-side because deal flow would be higher? And the coveted carry isn't there either, but that's not something I get anyways and purely aspirational...

My underwriting skills are good, but my thinking is that going to the debt-side for a while would provide the opportunity to develop them further? Possibly get exposure to asset classes outside MF? Would transitioning back later be an issue? Is the firm progression of Life Insurance Co> Bank> REPE shop typical? Is this the right way to approach these potential moves?

Apologies for taking the scenic route on this question, but thoughts/opinions from seasoned RE folks is appreciated. Thanks.

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Comments (16)

  • Investment Analyst in PE - Other
Aug 7, 2021 - 8:04pm

It's easy to jump from equity to debt, not so much the other way around. If you're later in your career and long term want to be in equity wouldn't say it's worth it. If you're analyst/associate probably fine for a good name on the resume.

Aug 7, 2021 - 10:42pm

I disagree with the above. I know tons of people that jump back and forth. The only different in the underwriting is below NOI and actually underwriting and determining capex. I think if you jump to the debt side, it's just fine and go in with a plan on around when you want to jump back. And yes, you can go from portfolio management, to lending, to the equity side again. Are the lending roles you are looking at bridge / construction lending? It's going to be easier to jump to equity from bridge / construction lending than stabilized senior lending. 

Aug 8, 2021 - 3:27pm

There is a bit of both. One of the firms kind of does everything– bridge/construction/perm lending (subject to meeting their criteria on the latter),  I believe the second group does more stabilized lending with A and B notes, and I don't have enough information on the 3rd shop yet. Interviews with each team are going to begin in the subsequent weeks...

I appreciate the input.

Most Helpful
Aug 9, 2021 - 10:57am

So, I'm just going to drop a few thoughts, not necessarily meant to be in direct response to OP, but related:

1. In general, pigeonholing is bullshit, people go from fields like selling car insurance into CRE so of course you can go from debt to equity to debt again if you like (or swap asset classes or whatever). This happens from time to time, and is not unusual. What is real is that such moves can be personally career sub-optimal, meaning, you could do it, but it may not be wise to do once you are at the mid-to-senior level (little to no issue at analyst/associate level tbh). Why? Once you gain some true experience, sound knowledge base, track record etc... you will get the best jobs, most pay, etc, where you are most useful. Thus, being a 5+ year experienced person in one field probably will career maximize by staying in that lane and moving up, than jumping and becoming a 0+ year person in another field. Diversification of career doesn't mean max earnings at all points (if any); so the "pigeonholing" effect, if any, is due to personal constraints (not because you can't get hired).

2. Finding the place you like best, can do the best, and is well paid (market favorable, etc.) is key, and for many this means finding a smart niche to make a career out of. Trying to maximize pay for the sake of maximizing pay is often not the best strategy (go read the IB board for proof lol). Further what you do is more important than where (meaning firm) you do it. Hence the obsession of "REPE" vs. lifeco vs. bank or whatever is misplaced in my opinion, those are all business modes/strategies and what works and is in demand will shift with time. 

3. This is a broad WSO critique, but kinda applies to OPs framing.. There is a lot about moving firms and firm types (like OP saying lifeco>bank>REPE), with almost an implicit or explicit focus on lateral progression (i.e. moving up a firm hierarchy). Really, you should think about personal career progression, moving up the ranks, and gaining more responsibility and authority. I think people get fixated on their "analyst days" and learning all sorts of modeling or exposure to asset classes, etc. (i.e. what you fixate on early in career), and miss that most of that stuff is meaningless at the mid-senior level. Getting promoted, moving/jumping for better/higher jobs is the goal. From reading WSO, it seems like people are all to willing/wanting to keep hitting reset on the "analyst days" missing that this can cost years to your career and you may actually get much further had you "stayed in the lane" you started. This is not a one size fits all kinda statement, in many situations, totally worth it/optimal to jump by lateral. My point is that it is just one move on the chess board, and not one that actually advances you as much as it seems a lot of the time. 

So, overall, your career will take you a lot of places and many you cannot pre-plan as much as you think or want. Just go with it. Aim for doing more cool stuff at a higher level, that is a far better goal than fixating on getting to some destination like "REPE" just because. Being "rounded" is useful at more senior/executive roles for sure, but jumping for that an the junior level may not accomplish what you are hoping it does. Anyway, a bit off topic of OP question, but I feel worth factoring! 

Aug 10, 2021 - 3:18pm

Thanks for the input. On point. I generally agree with 'staying in your lane,' but it's case-by-case. In my instance, continuing on that route doesn't seem to hold water at this point. With respect to comp, the quotes I am getting are really favorable. I knew I was underpaid a bit, but the market–so far anyways– is telling me that delta is possibly wider than I thought...

I don't have an offer in hand yet, and I don't want to move solely for "more bread, bro." Just checking if my thought process ok. Also, I should point out that the lateral progression from shop-type is hypothetical. I can't with any certainty say that I would progress in such a manner.

*Fingers crossed... for me.•

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Aug 11, 2021 - 3:08am

I currently work in debt and am transitioning to acquisitions--both with a primary focus on underwriting. I personally feel that underwriting deals as a skill transfers regardless, but I have nevertheless had a hard time selling my skill set as a debt underwriter to various equity shops as an acquisitions associate. I think the truth is somewhere in between most of the other commenters, but I have found in my own experience that it is more difficult to go from debt to equity. Ultimately I managed to find a client of mine who were primarily looking for someone who could effectively model deals, but I had a difficult time selling my resume as someone who could make the jump.

Aug 11, 2021 - 7:15am

While I totally hear you and agree with you that people will push back. It's about finding the right fit and shop, similar to what you did. Personally, I never understood why anyone ever had push back. I experienced it when I tried to move from a Life Co because people thought I just did core deals and I had debt on my resume. In reality, I did deals up and down the risk spectrum and did equity + debt. I always sort of lived under this notion that people are too proud to admit that it's the same. Many equity people feel they are smarter for dealing with property operations, etc. (in my humble experience). I disagree with this notion, but anyway. 

Aug 11, 2021 - 6:18pm

any major differences in terms of quality of life / general flow of deals? I've only ever been on the equity side (and done some quasi-debt stuff, but we're not a debt fund). I imagine the debt side (thinking mostly a debt fund as my example) is higher volume, faster turnaround on quotes/term sheets, and less in the weeds. Does it wind up being a more predictable work-life balance?

I understand WLB is heavily firm-dependent, but ceteris paribus - mostly looking to see if there are any concrete ways debt will usually/always be different. 

Aug 12, 2021 - 11:24am

It varies by shop?

So far I have been told ~50ish hours average per week– hours can be higher depending on deal flow– or "we can't put a number on it, but it various depending on deal flow." My guess is that the second place has worse WLB, but why not be up front about it? Most people on either side are NOT under the assumption that any of these roles are pure 40hrs per week positions...

Curious to hear more from actual debt practitioners.

Aug 12, 2021 - 2:04pm

my experience with the two (caveat debt origination type exp was a long time ago) is kinda like how you describe. Debt is much higher volume, faster, etc. Equity takes longer, but more "pressure" on each transaction but you do fewer closings, but maybe just as many "bids/attempts". I don't think debt world is more predictable (or better WLB for sure), pressure to close is constant and those fucking closings will keep everyone in the office 24/7. So more closings, more fire drills I'd say. 

Aug 12, 2021 - 1:17pm

ppl switch constantly, even when senior. Probably easiest at debt fund to equity vs. lifeco / some other debt teams but nonetheless. You get much higher flow in debt (also likely more broad geographies and/or asset types vs. a potentially more niche equity shop) and also can get carry (pending the shop). Would def jump to origination/uw at a debt fund... better role imo and also could further move to investments/acq in equity thereafter (or stay). Pay higher also. 

  • Investment Analyst in RE - Comm
Aug 17, 2021 - 9:40pm

Exactly. I've come across quite a few debt fund MDs transition to being equity MDs.

Oct 4, 2021 - 11:16am

Is the distinction between RE lending at a bank versus a debt fund materially different? I noticed some people here on WSO don't view CRE lending as "Real Estate," but rather as Commercial Banking? I actually have an offer from a CIB group at a large bank to underwrite construction loans– I would get to see new deals versus re-underwriting deals already under management. The role would be interesting, but now I am concerned if its "Commercial Banking" I wouldn't be able to move back into a REPE role (like my current one). 

 I think I am overthinking this? Thoughts appreciated.

Oct 4, 2021 - 12:01pm

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