how marketable are you in a MF focused firm
The title says it all. I'm currently in a multi-family firm and given the asset class has been outshining its counterpart, how marketable are people in the mutli-family investment (acquisitions) in the RE market pool now? I always thought I've been at a disadvantage (have not been considered for roles just because i don't have an Argus working knowledge) to be only focused on multi-family when it was a predominant commercial/office asset class for most big firms. Has this changed? Or is this still the case?
Still the case - MF is still commercial real estate but its a different knowledge base. A lack of Argus knowledge would 100% put you at a disadvantage at the analyst/associate level, and above that level your understanding of issues specific to commercial leases would be a hindrance. Not to say you can't make the transition, but IMO it is better earlier than later.
I think it depends to an extent. If you're at a develop-to-core MF owner/operator or core REIT I think that makes it harder. If you're at a true PE firm putting JV and Pref Equity slugs into MF development deals (hopefully some of which you can embellish into "mixed-use" developments) or value-add acquisitions that wins you some brownie points because you still understand the structuring and value-add elements of a deal. But if all you've done is core MF acquisitions and Asset Management then that's not going to shine on a resume a whole lot.
Early in your career though, I wouldn't worried about getting pidgeon holed until you hit the Associate level. Even then, if you're willing to take a step back as a Senior Analyst or find the right firm it's still pretty doable. I've seen way crazier backgrounds matriculate into diversified REPE than dudes who started in MF Acquisitions. Given some of the backgrounds I've seen make the transition (Asset Management, Investment Banking, Construction, Civil Engineer even) you're practically on third base for finding a good REPE analyst gig if you've ever worked on an actual property level acquisition.
Thanks for your feedback. My firm has a pure multi family fund and often touched on mixed used and commercial aspect of the acquisition. My scope definitely includes a large aspect of value add acquisition. I also worked on different asset class such as medical, industrial, offices and also JV stucuturing on the equity side (also debt deals). Like I mentioned in my original post, I have not worked with Argus before.
I’m in a mid level position in my investment team, but somewhat concern what’s my exit to bigger REPE or another fund.
I wouldn't be in any particular rush to leave MF regardless. At a certain point you're going to have to develop a focus and MF is probably the largest and most durable. It's also still highly possible for you to lateral as an Associate to diversified/Office investments. You might have to suffer a lot of heartbreak (making it to final rounds and being a great cultural fit but losing out to someone with Argus experience) before you get your shot, but it's well within the realm of feasibility with enough effort/networking.
Work for a REPE focused on office/industrial, we've quickly turned down pure MF candidates for senior analyst/associate roles, but would entertain at the analyst level. Argus is a pre-requirement at the senior analyst/associate levels. If you really wanted to diversify, you may want to look at investing time in an Argus Enterprise certification. Wouldn't embellish Argus in any interviews as it's very easy to gut check beginner/intermediate/advance Argus technical knowledge, even over a call.
I made the switch from MF focus to generalist at a top 10 AUM firm, so yes you can do it.
don’t let the office / retail hardos scare you. They are salty they have not closed a deal in nearly 2 years now. Vast majority of industrial deals are single tenant NNNs (ie Argus not even required, and if you do need to make a file it is very simple). And the dirty little secret of office and retail development is that you can just make a NNN assumption in the future too (also no Argus required). Though, development in those sectors does not make sense on a risk adjusted basis so who cares.
If I were you I would focus on communicating you know how to underwrite - i.e. is there support for every item in the income statement and budget, and does our exit value make sense - and DD reps for closing on buildings / land which takes much longer to build up than Argus knowledge.
Lastly as a final fuck you to the Argus hardos, I’ve noticed generally the people more obsessed with it come from shittier academic institutions and cap out in their careers (perma analysts).
LOL. Straight on.
All facts, this is exactly what I was thinking but didn't have the balls to say hahaha. Argus is also incredibly self-intuitive and takes like three reps to get down.
Just wanted to add to this that back when I was an IS analyst covering multi, the firm needed me to branch out and cover other asset classes so they paid for me to take an ARGUS cert and threw me into deals for retail/office/industrial, and IMO it doesn't take more than like 2 weeks to become an ARGUS expert.
Yep. Argus takes 1-3 days to learn. Guess what - the key to investing and getting deals done isn't "I've done Argus before."
Keys are:
- Network for interviews
- Explain your story - why did you focus on MF, why are you focused outside of MF, what else do you think is a good investment.
- Roles and responsibilities - diligence, negotiation, understanding the process of getting a deal done, being someone who can get something across the finish line (internally and externally)
- Understanding investing at a deeper level - if you're talking about a deal and you get into the nitty-gritty of W/D hook-ups, you're on the wrong path. Versus, this submarket was in the path of growth and even though there is above average population growth, supply growth was still muted due to difficulty in obtaining entitlements. Land was owned for 5 years by developer, it was being contributed at cost and we were building to a 6.5% versus recent sales at a 4.75% cap rate. In addition, XYZ firm announced it was opening an office and moving X number of high paying jobs to the area, so not only was population improving, but so were wealth demos, etc. This is no different than on an office deal, we partnered with someone who had good relationships with the tenants in the building and a new tenant, so although we were going into a building with a 2 year WALT, we had LOIs before closing in order to extend WALT to 8 years and stabilize to a 5.5 vs. market of 4.5, etc.
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I really wouldn’t be worried. You can get the certification for argus and just sell that. With all that said, and this is just my opinion, office investing (really dealing with office leases and any commercial leases except maybe industrial and NNN retail) is a lot of head scratching and heart burn because they can get so complicated. Especially if you’re dealing with larger tenants. Everyone has their own CAM pool structure / reimbursement structure. Office, in this regard of its complicated nature, is much more confusing and, in my opinion, risky. Due to this, I’ve always preferred multi - you can get similar returns with less complicated leases and therefore, less risk.
Although you have a lot of people who love the complicated nature of office, you may want to stay focused on multifamily.
Next thought - if you ever want to be your own GP-office is the place to focus. Generally it has larger deal sizes which means larger nominal fees and profits. You can also fee the partnership in more places with office - in addition to the normal acquisition, asset management, financing, disposition fee, construction management fee, and property management fee, you can have leasing in house and get commissions plus own the companies that service the building - cleaning company and if you’re in a market with security, you can own the security company as well. Just something to think about.
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