Is Real Estate "Asset Management" Considered Back Office?

Just curious as Blackstone recently came to campus to recruit for the role. I did my SA stint at a Big 3 bank and will be going the Corp PE route out of undergrad, but I was just curious how sought after Real Estate Asset Management roles are?

It sounded relatively back-office, with an emphasis on accounting/reporting and cost control. Is there something I'm missing here?

Comments (43)

Jan 13, 2019 - 6:33pm

A RE firm without an AM team will not be able to execute it's business plan. Failure to execute a plan would result in poorly run properties and poor revenue numbers.

Just because you're not going out and chasing deals and hustling does not mean it's back office.

Jan 13, 2019 - 7:03pm

What exactly does "execute it's business plan" (wrong use of apostrophe btw) actually mean though? Doesn't that mostly just entail reading through leases, comparing results to the budget and stuff

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Jan 14, 2019 - 12:27pm

What exactly does "execute it's business plan" (wrong use of apostrophe btw) actually mean though? Doesn't that mostly just entail reading through leases, comparing results to the budget and stuff

Ah, another person who think that whatever their Excel model shows is all that matters.

Just because you have a "budget" doesn't mean your expenses are magically that number. It takes a lot of attention to the details of property management to keep your actual expenses in line with your budgets. That is what asset management is all about - keeping an eye on property managers, making sure they aren't being extravagant with their expenses, looking for opportunities to use scale to get better pricing, keeping an eye on arrears and bad debt, etc. It's a massively important job that gets overlooked because being on the dealmaking side is much sexier, but at the end of the day you'll sink an investment much more quickly and much more easily because you aren't asset managing effectively than because you overpaid on your cap rate rate by a few dozen basis points.

Jan 18, 2019 - 11:00am

Damn u seem mad brutal looking at your past posts lol. Hope you're a troll. Wish you were an underclassman and not an apparent upperclassman so I could blackball u from any club. Doubt you're in one anyways.

Jan 22, 2019 - 6:30pm

My guess is that someone who "HarvardBoy" feels lesser than is going to this group within Blackstone and he is hoping to get some peer validation to try and solve his inferiority complex with his "superior" job. I'm no psychologist but erm.. your self esteem issues are showing, bud.

"Rage, rage against the dying of the light."
Jan 13, 2019 - 8:54pm

I'd consider it middle office at any large firm, with a (very) select few being closer to front office, and a good number being closer to back office. Smaller shops may have AM doing accounting and whatnot, but PERE firms will generally have dedicated property accountants.

AM can include lease negotiations, capex/expense management, cashflow modeling, recapitalizations (this can also fall under acquisitions), and dispositions. It's more akin to private equity operating partners (i.e. running the portfolio post-deal) than it is to true back office. There will almost always be a degree of reporting to some extent, but if you're lucky your group will also be part of the decision making based on the results of those reports.

Obviously your mileage may vary as with literally anything in real estate. One of my colleagues on the AM team (very large firm) spends most of his days wining and dining potential vendors (exit brokers, GCs, etc) to get the best pricing. For him it's almost more sales than anything else.

Something to consider is whether you'll ever want to hang your own shingle, which I think is the goal for 90% of people in RE... If so, you will almost certainly need AM experience (or a partner with AM experience) to operate successfully.

Jan 13, 2019 - 9:17pm

To add on, I'd probably rather be in AM during a downturn. Comp will tend to be lower than acquisitions, but it will also usually be more base-heavy, meaning if bonuses aren't going around AM may actually come out on top. You can also get into some really interesting workouts/distressed work if things go south. Acquisition teams might get cut if you aren't doing deals, but someone needs to see things through with the existing portfolio.

It's definitely not the sexiest side of the business, but there are real career opportunities for someone starting in AM (vs someone starting in, say, trading ops at a bank).

Jan 13, 2019 - 11:18pm

Just to add an additional perspective (that probably isn't applicable to BX), I met with someone at a boutique development company. They told me their Asset Management Associate role was in charge of overseeing development from entitlements/ design, through construction, and work in conjunction with the leasing team and disposition team. It sounded a lot more like a "Development Analyst/ Associate" role despite being called "Asset Management". Although the role somewhat encompassed asset management, it required a lot more.

“The three most harmful addictions are heroin, carbohydrates, and a monthly salary.” - Nassim Taleb
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Jan 14, 2019 - 12:49pm

The answer to your question generally is not necessarily. I would define back office as not being a revenue center, and not having much external exposure. I have been at companies where "asset management" consists of FP&A, reporting, budgeting, etc. with no leasing/capital strategy responsibilities. That is - in my opinion - back office. That is also not asset management as far as I am concerned. Lots of discussions elsewhere on the forum about the imperfect distinctions between property, asset, and portfolio management, but I think that true asset management is executing on the business plans for your assets. That is going to involve capital/re-positioning, financing, leasing, and disposition.

Other variables that will impact AM roles are going to be product type (MF asset managers obviously aren't going to negotiate leases) and risk profile (core product is likely to require significantly less "asset management" than a heavy value add where you have to manage capital allocation, lease-up, etc.).

To your specific question about BX - my experience is that they are very actively involved with their assets (which makes sense given the "buy it, fix it, sell it" strategy). Not sure how much sourcing they do, but they are definitely active in their markets (external facing) and executing on the "fix it" portion of the strategy (revenue generating). Not back office, by my definition.

Feb 1, 2019 - 11:03pm

I second this. A real estate firm is not successful without a sharp acquisitions and asset management team. I consider both front office, as both roles are out facing and important to the company. Both are necessary for a firm to execute.

Jan 14, 2019 - 1:49pm

AM can be pretty exciting when it comes to value-add/re-positioning of assets. The GM of a family office with $130mil AUM is getting a new AM title and a lifetime appointment to the position. I've done 7 deals with this family in 18mo so I know them well. For the family office and even midsize companies it's definitely a shoe leather game still.

It's far more than reviewing leases and comparing budgets. For mid sized companies the head of AM could be managing the leasing team. This is critical. So much goes into AM including the shopping of refinance loans. AM is very broad-based department and roles.

He just renovated 200+ apartments across a dozen buildings and now is now renovating the commercial. Pretty fun job and he's inline for a big pay raise too.

Jan 14, 2019 - 7:01pm

I think it's harder to define FO and BO in real estate. Both acquisitions and AM are front office in some ways and back office in other ways. For example, in acquisitions, you're front office in the sense that you're generating deals to acquire and talking to sales brokers. But you're back office from the standpoint that you aren't interfacing with tenants, the leasing process/leasing brokers, service providers, etc. In AM it's flipped. Really the only time you're 'back office' in real estate is when you're doing something like admin work, accounting or anything not related to the RE itself.

"Who am I? I'm the guy that does his job. You must be the other guy."
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Jan 15, 2019 - 2:24pm

I work in AM at an MREIT rather than a traditional real estate shop so your experience may be different, but my position is closer to a back office role than front. Since the deals are sourced in a different department the job is more oversight in my experience rather than front office work. Not as much modeling or research as I would like since that is typically done on the front end. Base rates are fairly high (above market in my area) and bonuses are set at 10% annually. Like everyone else has said, its not the most glamorous gig but its stable comp with a nice work/life balance.

I am looking to transition to a more front office role myself but AM isn't bad for my position (PM). Sorry if this is hard to read, page won't load correctly for me on mobile.

Jan 16, 2019 - 9:04am

by MREIT do you mean multifamily REIT?

and what do you mean by "AM isn't bad for my position (PM)"?

Jan 15, 2019 - 10:30pm

Everyone covered the bases here.

Anecdotally, as a Fund Manager, the AM guys are a lot more useful to me in actually running a Real Estate fund than are the Acquisitions guys. Acquisitions guys are essential for putting out capital, but they largely are motivated by padding their resume and building their own connection network. The AM team is who I entrust to make sure the fund performs, which I would love to do myself, if my entire day wasn't spent appeasing potential investors and/or our C-Level team. One of our AM Associates just increased the value of an asset by $30mm due to a new lease he sourced with a repeat tenant of ours. He's the guy I count on to make sure everything doesn't go to shit while I'm dealing with the high-level stuff. He's the guy that's got to be tracking all major capital events or leasing activity and deciding where we can push value, where we should cut losses (dispositions), etc. They routinely brings cases in front of IC, predominantly for redevelopment/expansion projects, dispositions or other capital investments. In addition to that they're the local experts in their markets and the point-men for developing tenant relationships, which often leads to them sourcing acquisition deals or providing underwriting support. Our AM associates don't want to work in Acquisitions - they like what they do and are fantastic at it. Now that's just my shop - I'm at a value-add owner/operator with a large development arm, so naturally our AM guys are going to be WAY more involved than the AM guys at a super-core REIT that only acquire a few buildings a year.

Jan 22, 2019 - 8:38pm

He will receive a bonus commensurate with that of the other top-bucket analysts at our firm, as well as a fat leasing commission. Acq and AM guys make the same at the associate level, assuming they were promoted internally. 100K base, ~15-30% bonus. Some of the Acq guys have a higher base if they came from other shops that pay their Acq guys a lot and we have to match their previous salary to be reasonable. All employees at our shop at VP level or above are eligible for the profit-sharing bonus pool. When we re-cap funds the AM guys do get a cut of the promote pay out too, they just don't get a cut of acquisition fees or promote for individual development projects. Most of the comp gap between transaction guys and AM guys comes at the VP level via deal-level, profit-sharing arrangements.

Jan 22, 2019 - 3:37pm

You're probably right. Any "asset management" employer/role needs to be viewed with scrutiny. Not saying they're all bad, but a large % of them use that label to slyly insinuate that it's a good role for people interested in investment analysis, which it rarely is.

What is Corp PE?

Jan 26, 2019 - 8:09am

Work in AM for an opportunistic PERE fund. My group oversees major capex projects, leasing, refinances, bolt-on acquisitions and dispositions along with the oversight/ reporting roles mentioned above. The success of any of our deals depends on buying well (Acq), fixing (AM) and selling well (AM).

Also get pulled into UW of deals where we have sector/ geographic expertise. And if I source any deals, I drive the UW of them. Currently my time is split about 75% AM / 25% new deals. Our Acq guys also stay involved in the AM of deals they originate so the lines are blurred.

Ultimately the distinction is kind of irrelevant in CRE (I never use it) but our role is miles away from what our "back office" operations/ accounting guys are doing.

Feb 8, 2019 - 3:37pm

Not trying to sound obnoxious here but of course AM isn't a "back office" job. Such an essential part of operating the real estate. If AM is considered back office, are the acquisition guys the only front office people?

Shoutout to all the AM! They need more love.

Feb 9, 2019 - 6:19am

A RE firm without an AM team will not be able to execute it's business plan. Failure to execute a plan would result in poorly run properties and poor revenue numbers.

Feb 9, 2019 - 11:43am

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