Hello Monkeys,
I am a rising Junior with an internship at a BB this summer. Recently, I was assigned to the Real Estate division within Investment Banking. I haven't been able to find much information about it, though. Could anyone enlighten me on what exactly the Real Estate division does? Is it just large developers and commercial projects?
Thank you in advance!
Advises mostly companies with large RE holdings (think lodging, gaming, etc), home builders, and REITs in typical IB activities. You won't be working hands on with development or debt origination.
Agree with steamer -- the same thing as every other investment banking coverage group, just covering real estate companies instead of Consumer & Retail, Healthcare, [...fill in the blank]
As you should know, banks offer a mix of M&A advisory and capital markets services -- you'll be doing that but focused on real estate companies.
There is a Vampire Squid podcast on Real Estate Financing - Invesment Banking at Goldman. Episode 7.
Is this what kids these days do??? Listen to podcasts on banking?? Wtf
Information provided by bankers who work in that function in whatever format - whether it's here in forum, blog, or on podcast is appreciated.
Also fyi, the founder of this Wall Street Oasis also started a podcast.
Depending on the bank, a lot of real estate related IB coverage groups pursue Follow-Ons, Straight Debt Issuance, Convertibles, etc. work streams (capital raising). REITs require revolving credit facilities and new issuances to roll-over old debt and pursue acquisitions as they must dump their cash into dividends because of the tax structure.
Some real estate coverage groups at a select number of banks (Nomura being one, although it's a tiny group) pursue mostly strategic advisory roles and limit their issuance work because they may not have the relationships, balance sheet, group strategy, etc. Most REITs stick with WF, JPM, Citi, BAML, etc. for their issuances and there are only so many REITs. Strategic mandates may include portfolio sales, switching a firm (restaurant, retail, or lodging companies) from asset-heavy to asset-light operating models (locked-in real estate capital gets swapped out for rental costs and Accretive projects), M&A (Starwood/Marriott), etc.
Another segmentation is based on firms choosing to pursue private or public mandates. Some groups choose to focus on home-builders, trailer parks, casinos, while others choose to work on the public side with REITs or larger public gaming/lodging/leisure firms.
REIT work will entail a lot of NAV valuation work, so familiarize yourself with that. If a REIT is priced at a premium to NAV, they should theoretically issue equity since they're priced at a premium and will get more per share than if they're priced at a discount. If the REIT is priced at a discount, they may want to do a share buy-back.
Basically, it's very firm dependent. If you PM me your firm, I may know what kind of work they do.
Thank you for the responses, everyone!
RE IBD (Originally Posted: 11/08/2007)
What is real estate IBD? does it focus mainly on IPO/mergers and deals for real estate companies? Or does the real estate actually finance deals, such as for PE firms? Also, do they securitize asset-backed securites?
I am in REIB, and it focuses on everything you described above. They focus on IPO's, M&A transactions, equity and debt financing/bridges, etc. There is also a RE syndications group that focuses on the debt side of RE transactions, but I wouldn't exactly consider them IBD. Let me know if there are any particular groups you're interested in, and I can walk you through which firms/groups are the best in this space.
Thanks a lot CaliMonkey. RE IB that focuses on IPO's, M&A, equity, etc. is pretty self-explanatory. What are some good books/models to look at in order learn about RE valuation?
It's the RE syndication groups that you mentioned that confuse me the most. How are they related to RE IBD? Do they provide the financing for IB deals?
Lastly, which firms are dominant in both spaces?
Thanks a lot. This explanation was a big help!
CaliMonkey,
Was wondering about REIB companies in the west coast? Would Eastdil be considered as a REIB?
I know MS has a RE IBD, and PE group in SF. What other BB has a real estate IBD prescence in the west coast?
Also, are you familiar with the archon group? wholly owned subsidiary of GS, and invest on behalf of Whitehall.
When companies like Eastdil say they have an "investment banking" department, you should be skeptical. If they are doing real estate mergers and taking real estate companies public, then they are legit, but you HAVE to take a look at what kind of work they do irst.
Archon is decent, but not amazing.
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