Everything about CRE Lending

bca

Orangutan

I'd suggest narrowing this down to 5 questions, and you may have a better response rate.

Authored by: Certified Equity Research Professional - NACertified Equity Research Pro

TheDiplomats

Mentor

Almost Human

Yeah you basically just listed exam-type questions related to your role. I'd say you follow what the above commented and narrow down the questions to those that you are most curious about

Authored by: Certified Real Estate Professional - 3rd+ Year AnalystCertified Real Estate Pro

JSmithRE2010

Human

Also search the forum - many of these questions will answer themself if you just search for “lending” in the RE forum. Put in a little effort and I’d be happy to fill in the gaps

Array

umioryi60

Senior Baboon

CODking:
Long time lurker here finally making a post under a throw away account to learn more about this role. I recently received and accepted a full time offer as credit banking analyst in the commercial real estate banking group at a bulge bracket (Wells/JP Morgan/BofA/Goldman) this is the only group I'll be in so im not sure if im shooting myself in the foot by being too niche. A couple of friends have said the role is similar to Wells Fargo FAP program and I am just trying to find out what the basics to this role are. Basically just want to learn everything about this and get ready for it as much as possible so i can excel and do well. Pros and Cons:
How do deals usually get to you at a big bank? 3rd Party Brokers, Origination Team at the Bank, etc.

Is there a lot of bureaucracy? Depends on a company-by-company basis. But working at a BB you're you're going to have a lot of committees you'll have to get approvals through all the time. Investment Committee, Credit Committee, etc.

What will I learn? Not gunna respond to this one.

Learn Argus before? Always helps. Watch a couple youtube videos to get a sense of how it works. It's a glorified "point-and-click drop-down menu" model. Really easy to pick up after some practice.

Exit opportunities: That's up to you. Do you want to stay in Banking? Do you want to move to brokerage? Do you want to be an owner/operator?

Whats the most exciting part of this role? Go talk to someone at the BB you're about to work with over a coffee chat.

Whats the least exciting part of this role? See above.

Hours: Most BBs are ~60+ hours/week, but YMMV.

Main responsibilities: Credit Analysts, especially a1 analysts out of UG, are mostly paper boys. Maybe you'll be working on some excel models once you get more experience, but from my perspective working at a large debt fund in a very analyst role, a lot of it is going to be organizing Due Diligence paperwork, working on IC (Investment committee) memos, and going through the Associate's model.

Day to day tasks: YMMV, see above.

Quarterly tasks: Possible quarterly reporting, but there's entire departments at Bank's that do internal reporting.

Skills to brush up on: Learn your Excel shortcuts. Learn how to build an amortization table from scratch. Learn how the commercial real estate business model works from the role of a Bank ie. Balance sheet Loans, commercial banking, CMBS, etc.

How easy was it to transition to PERE/REPE? Transferred from a debt fund to a boutique d/e brokerage. I continue to get headhunter emails to interview for Asset Management/REPE/debt fund positions.

How easy would it be to switch to a debt fund? and how do these work exactly and what would be my main role? YMMV. Do some personal research on your career goals and Google every question you have. If you're asking how a Debt Fund works you should brush up on how the commercial real estate business model works. You're not going to find someone here that's gunna hold your hand. But I'll give you some buzzwords to google: "real estate debt fund", "CMBS primer", "Oaktree Insights", "Investopedia - real estate investing".

Skills transferable? Not even gunna answer this.

How and why would I work in debt funds? Nor this.

How would you make connections if you're not on the field meeting people? What kind of connections are you expecting to make outside of your co-workers for the first couple years? No BB is going to put an a1 analyst in a client-facing position right of UG. YMMV.

Whats the usual dress code? **At a BB? Most likely a suit. I would invest in some nice dress shirts and slacks, but this honestly a given. Maybe think back to what your future co-workers were wearing at your interview. **

Salary and Bonus: YMMV. Depends on where you're located, what kind of BB, etc. Best guess from how novice these questions are is a $55k base + 20% bonus.

Any other suggestions and or tips would be extremely appreciated. Go buy some real estate books on investing and banking. Do your reading. You're not going to get a step-by-step guidebook from a internet forum of strangers who work in a dog-eat-dog industry.

Also happy to chat with anyone that wants some tips Good luck.

Thanks

I work at a D/E brokerage and have worked at Debt Funds, so I can help answer some of these. TBH, you can search through the forums and find a lot of these answers, but I have some time and will help you out. Please excuse any snarky comments, I may make -- they're not personal.

Authored by: Certified Real Estate Professional - 1st Year AssociateCertified Real Estate Pro

onetouchpass

Baboon

Most Helpful

First off, congrats on the new role! CRE is an incredibly interesting space to be in, and you'll learn a lot, especially if you have a chance to be exposed to a variety of deal structures/product types/asset classes/markets, as I imagine you will have at a large bank.

Out of curiosity, what's your background? Recent undergrad graduate? Finance major? Overall, you'll find that the majority of your peers did some sort of business school, but CRE as a business isn't that technical.

My experience summed up is solely in CRE lending with a large international bank (i.e. Barclays, ING, HSBC etc.). I started several years ago coming out of undergrad (business degree, but no finance or any sort of experience in finance/CRE) in the bank's graduate analyst program as part of the CRE team. Did mostly deal support in underwriting, credit write-ups, and portfolio management, with no originations expectations, but directly supported the relationship managers in active deals. Moved markets, now in NYC as a relationship manager focused on originations.

Everything I learned, I learned on the job, so don't worry too much about 'preparing' for this ahead of time, you're already hired!

I'll try to address each of your questions:

How do deals usually get to you at a big bank? As an analyst, the relationship managers (RMs) and the teal leader usually originate the deals through repeat business w/ existing relationships/clients, participating in new deals that other banks have originated as part of a syndicate, or through brokers.

Is there a lot of bureaucracy? Yes; it's just a fact of life. I would imagine I deal with a touch more than a US BB, but because it's what I 'grew up with' and all I've ever known, it doesn't really bother me. Annoying for sure, but you learn to deal with it.

What will I learn? Initially, what makes a good credit? How to underwrite a property's cash flows, tenancy, market risk, borrower/sponsor risk etc. How to mitigate those risks. You are helping present a case on whether or not a given deal is a strong credit that's worth the risk, or one that isn't worth pursuing on the flip side.

Learn Argus before? I didn't have any knowledge of it and learned on the job. The bank sponsored a 2 day training course with it as well. Towards the end of my analyst/associate days (recently), I was training new analysts in Argus. Argus is definitely valuable in modelling cash flowing properties, particularly office/retail/industrial properties with multiple leases.

Exit opportunities: The natural progression upwards is as an RM with your own portfolio on the originations side. Also syndications. Debt funds and credit unions. Some move onto the borrower side in development. Not really sure on the big PE funds, but can't imagine the skill set on an analyst level is too different; just have to learn the equity side vs debt.

Whats the most exciting part of this role? You'll find the #1 reply in threads here about "Why CRE?" is the tangibility of it. It's real property where people live and work, and all sorts of macro and micro factors play a role. You get to walk downtown and point to things that you've helped build and develop!

Whats the least exciting part of this role? The bureaucracy lol, all the forms you have to fill and boxes you have to tick for someone else in the bank that have to tick different boxes too.

Hours: Very good; I was typically 9-530 on most days, occasionally past 630 and very rarely on weekends as an analyst/associate. My organization is very open to working from home.

**Main responsibilities: Day to day tasks: Quarterly tasks: ** Supporting relationship managers in underwriting new deals (market analysis, borrower financial statement analysis, property cash flow analysis, analysis of comparable properties etc.) is the best part for sure. You will also have to manage the portfolio as well, meaning annual reviews for existing deals already on the books, dealing with any changes to existing deal terms, and miscellaneous requests from Borrowers/bank admin staff/credit department.

Skills to brush up on: Excel modelling skills are necessary, as well as articulate, concise business writing and being able to effectively summarize a lot of information for your target audience, usually your credit department. I would also suggest good presentation skills to, to 'pitch' deals as well!

How would you make connections if you're not on the field meeting people? Attend industry events and conferences, join young professional groups. Whats the usual dress code? Eh, depends on the group. Mine's not too strict so I usually do dress shirt (no tie, but keep one in drawer for client meetings), dress pants and shoes. In summer, if not seeing clients, i'll keep it looser.

I'll be happy to elaborate on any of my points

cwchicity

Senior Monkey

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