Interview Questions and Prep BREP Blackstone

Anna_CaSo's picture
Rank: Chimp | 8

Hello everyone, I was part of a recruiting event this past June at Blackstone for second year university students and received an invitation for their real estate practice to interview with them. I do have some PE interview experience, however I am a bit unsure how to prep for RE related technical questions. Does anyone have a good approach to this ? Furthermore, maybe anyone who has the answer CD to David Geltner's Commercial Real Estate Analysis book? (I just have the PDF without answer key) Very happy about any info and support that someone here is willing to share.

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Best Response
Sep 2, 2017

If you have PE experience/knowledge you'll be fine.

RE pulls from all of the main valuation models in some respects. You look at precedent transactions to back out cap-rates, you look at comparable properties (think comparable company analysis) to pull rent and vacancy numbers, you create a DCF model for your hold-period (RE only uses NOI or CF to equity) as the numerator in our exit multiple.

RE's exit multiple is a cap-rate, which can be looked at as a perpetuity with NOI in the numerator, or an inverse multiple.

LBO analysis is very, very similar to RE acquisition analysis because debt is used heavily, IRR is the main valuation metric, you want stable CFs to repay debt during your hold, and underlying assets (in RE's case the property) to secure your debt obligations.

RE Operating Statement:

Potential Gross Income PGI)
- Vacancy/Credit Loss
+ Other Income (antennas, vending machines, etc.)
+ Operating Expense Reimbursements
= Effective Gross Income (EGI)
- Operating Expenses
= NOI
- Cap-X
= Before Tax CF
- Debt Service
= CF available to Equity

Blackstone is a very well respected shop, good luck w/ your interview. Also, youtube "Jonathan Grey Blackstone" and have something to say about their single-family rental business.

I come from down in the Valley, where Mr. when you're young, they bring you up to do like your daddy done.

    • 2
Sep 3, 2017

Thank you so much! Was already really helpful. Do you know by any chance if there are some good sources online to practice RE Paper LBOs? Or find some practice cases? Furthermore for the technicals I focused on David Geltners book on commercial real estate... would you recommend any further source to study technical matters? And again thank you for your help! Highly appreciate it.

Sep 3, 2017

Great info, but I believe that vacancy and credit loss should be below reimbursements - right before OpEx starts to get deducted.

    • 1
Sep 4, 2017

Vacancy/credit loss comes before EGI.

I've never seen/heard of OpEx being used in an RE operating statement.

I come from down in the Valley, where Mr. when you're young, they bring you up to do like your daddy done.

Sep 5, 2017
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