Has any switched from REPE to IB? Coming up on 3-years in REPE and despite promising future losing interest.

YariTacos's picture
Rank: Chimp | 14

Kind of getting bored, development seems exciting but don't want to make that move at this point in the cycle. IB seems attractive.

Comments (17)

Feb 17, 2020

You may want to post this in the IB forum. Most in IB want to go to PE, and I always thought that was generally true of REIB to REPE. What aren't you liking? What do you want to do day to day?

Generally, people on the "sell" side want to get to the "buy" side for sanity, meaning in career, and sometimes better pay (not always the case). Thus, I recommend doing full research before determining that the grass is greener.

You may still want to job and/or career switch, but there may be a better route.

Feb 17, 2020

I am not getting stimulated. 1.5 years in at my current shop and next in line for promotion. I am definitely getting exposure and doing things well beyond my level, but at the end of the day real estate is fairly simple.

I am fully aware of my earning potential at my current company and in general, but what good is money if I am going to dread going to work in 10-years?

I am thinking switch to IB so I can do PE. I want to stay in private equity, i love it, but just not REPE. I just don't know how easy switching from REPE to PE is going to be.

Feb 17, 2020

So if I understand correctly, you want to go from REPE --> IB ---> PE? Why not just go direct to PE? I mean, I see what you may be trying to do, but if you aren't stimulated in REPE I would guess you would hate IB even more, and I'm not sure if pure PE would be much better.

If you want intellectual stimulation, consider development, or economic development (like on the public side), or something that is interesting to you. Research and market analysis or even consulting may be interesting (depends what you find stimulating).

Final point, most careers (in RE, IB, or well anything) suck for first few years, sometimes as much as 5 or even 10 (although, that's extreme). The truth is that until you have at least 3 to 5 yrs exp you really cannot expect to be given the coolest assignments and roles. It's something everyone goes through. The life and job of an IB analyst is horrible (IMHO), there is a reason so many want to get out. Sell side is almost always less interesting/rewarding than buy side unless you are the "deal junkie" who likes the pressure and the sales aspect of it (then sell side can be really fun, and probably profitable).

Hope this helps!

Feb 17, 2020
Feb 17, 2020

Gotta say, I see a ton of people looking to escape IB and move into CRE (I did), but rarely do I see the reverse. Likewise with moving from buy-side to sell-side.

What is it that you're hoping to get out of IB that you're not getting in REPE?

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  • Analyst 2 in RE - Comm
Feb 17, 2020

I work in IB in the real estate group and you'd be surprised how many people from the principal side apply to interview or reach out to network. I'll try to explain why

1) Complexity and Variety of Transactions - A lot of real estate shops do not work on incredibly interesting transactions. They have their niche, maybe it's buying $15-30 million senior housing properties in secondary markets (Harbert Management). The senior guys likely do very well in their niche, but as a junior person, underwriting the same types of deal over and over again can get pretty repetitive. If I had to guess, OP is working at a place like this rather than somewhere like Oaktree, where they can work on a variety of property types and all types of REestate deals: JV Equity, development, Value-Add, Mezzanine Loans, Programmatic Joint Ventures, Entity Level Investments (Convertible Preferred, Straight Pref or Common Equity). I'd also guess OP is not working at somewhere like Jamestown, where they work on iconic real estate deals like Chelsea Market and Ponce City Market. Does working on M&A, IPOs, Entity Level Investments or $300mil+ asset level deals sounds more interesting than buying one $30 million multi family asset after another? Would you rather work on all the major property types as opposed to solely on one property type? Then IB might be more interesting to you

2) Compensation - this one is straightforward. A solid starting pay out of UG for REPE would be $95k all-in. For IB, it's closer to $150k. And during the first few years the gap widens. First year associates (2-3 years experience) will clear $250-$300k. Could take you 8 years to make that kind of money at a development shop (based on a comment I recently read in the compensation thread we have going here). Obviously, the picture is different longer term, but most people in IB aren't there to stay.

3) Recruiting / Exposure / Exit Opps - Having the IB title, and the experience working on large, complex deals gives you access to REPE firms that also work on large complex deals. One of the biggest misconceptions I've seen on this forum is that IB firms don't work with REPE firms. They do - but when you set out to raise $200mm of entity level capital for a private REIT, you don't go to Harbert Management Corp, LaSalle, or a local PE group with a $300 mil equity fund. You go to Cerberus, Apollo, Blackstone, TPG, Centerbridge, GIC, Goldman Sachs, StepStone, Oaktree and others who have the capabilities / capital available to invest in that type of deal. As a result, this opens doors to working at Cerberus type firms. You of course don't have to work in IB to get into Cerberus, but those that came from elsewhere typically already worked at a REPE fund that does complex deals (most likely not OPs firm).

4) Modeling - there are far fewer templates in IB because the deals are more unique / complex as I've said a dozen times. You'll have to build models from scratch (or start with a precedent model and modify it), which gives you a better skill set. If all you do is drop the T-12 numbers into your multi family modeling template, you're not going to have a great technical skill set

Hopefully this doesn't trigger anyone - genuinely trying help out here. I think the key is to recognize there is a wide variety of real estate deals out there. My post above only talks about the PE side of IB, and doesn't even touch on the corporate deals you can do for public REITs. To some people, corporate real estate deals are more exciting. To others, being "closer to the real estate", getting to intimately know the sub market of a single property is more exciting. It's just personal preference

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Feb 17, 2020

You're about 50% correct. I actually work at form that does transactions between $50-$200m and I've worked on a variety of complicated Equity/debt/mezz deals in office, mf, senior housing, and hotels. Also been involved in JV's and REIT entity structuring. I am also getting far more exposure than any other analyst at work.

But in reply to your comment, I want #3. The exit opportunities are greater if I shift to IB. I have realized longterm id enjoy traditional PE more or working for large Corp doing acquisitions. The individual property level does not entice me.

Feb 17, 2020

IB will help me switch over to PE, I don't find REPE intellectually stimulating. I love my company and can stay here 20+ years but the sector itself is not intellectually stimulating.

Feb 17, 2020

Real estate investment at the end of the day is fairly simple. My strongest attributes are strategic and macro level thinking, and while those traits are important in RE, it's not super useful when doing JV deals for 10 different investors per year. I can already see the rut of day to day life 10-years from now as SR VP.

Money and Success are not the issue, I'll never stop working hard. The issue is I have a very strong and genuine interest in understanding the intersections of economics, markets, and human nature. I realize it can be achieved in a roll that is involved more at the macro level of this business.

REPE > IB > PE

A shift into IB will help with a shift into PE longterm. I understand an entry level IB is a diminished roll from what I am doing now, but I see the doors it opens.

Feb 17, 2020
YariTacos:

My strongest attributes are strategic and macro level thinking

Money and Success are not the issue, I'll never stop working hard. The issue is I have a very strong and genuine interest in understanding the intersections of economics, markets, and human nature. I realize it can be achieved in a roll that is involved more at the macro level of this business.

I worked in boutique real estate I-banking a long time ago, so my direct experience is limited/dated, but I am not sure how these desires really line up with IB. I mean, perhaps on an M&A desk, sure. Have you considered management consulting or even strategic analysis in corp fin? I mean, getting to where you can actually do "strategic and macro level thinking" will take time regardless, but I'm still not sure why IB is part of the path other than the overall prestige/exit-opp thing.

Personally, I think taking jobs or career paths for "prestige/exit-opps" is a bad idea. If you don't inherently like the work, will you really be the best and beat out your peers? Going from IB to PE is far from automatic, and will you like the next PE job any better? Again, time cures all!

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Feb 17, 2020
YariTacos:

My strongest attributes are strategic and macro level thinking, and while those traits are important in RE, it's not super useful when doing JV deals for 10 different investors per year.

How do you plan to utilize strategic and macro-level thinking while reformatting a slide in PowerPoint for the 10th time at 11pm on a Friday?

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Feb 17, 2020

Have you considered an MBA instead of going to IB for PE?

Idk if that would work or not, but seems feasible and you wouldn't have to spend time in IB since PE is the end goal.

Feb 17, 2020
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