Asset Management vs acquisitions

Great stuff

Not true, acquisition guys have clear downside. If a deal blows up, they will get the blame too. Asset managers have the more stable job, so if the market turns to shit you will see the acq guys go first no the asset managers.

From a fundamental standpoint it should be necessary to understand the firm's strategy and implementation (though AM) in order to be successful in Acquisitions. To me, it seems that just because a deal may look good (pricing wise) does not mean it will work out. You need to be able to understand how that deal will be followed through over the life of the hold and whether it fits with the fund's/firm's objectives. At the the same time I think if you are a good fit and have the right skills you can land a good gig at a top shop.

Can you explain what you mean by an "eat what you kill" style shop? That sounds like fun to me, but all I have ever found on the buyside is that it feels very institutional and boring all of the time.

And yes, many people at the top of acquisitions teams at the institutions are former acquisitions only people or even former investment bankers/brokers. Most funds will have it integrated enough so that the acquisitions team needs sign off and approval from the AM side, so you learn to know what they will be agreeable to. Acquisitions people are deal guys, not asset management. It is a very different mindset and there needs to be a little bit of a chinese wall in my mind, especially if the AM team is using discretionary money.

Also, you get them to sign off on all of the leasing, inflation, accounting and tenants assumptions.

Eat what you kill is sourcing, underwriting, and asset managing assets.

I am currently on a pure acqusitions team but it seems most of the institutional people I talk to do both.

I have never delt with on-site asset managers, leasing brokers, tenants, capex and reserves, or actually implementing the value-add proposition of a deal. At some point, if you want to run your own shop these skills seem vital.

Also, when you talk to someone about a deal, it seems hard to explain that you foresaw this huge tenant lease-up scenario...but you never actually saw that one through, and have never personally actually seen any of your scenarios through.

I would say that's a great amount of % time to spend on Acq versus AM. As others have said you're handing deal of to the asset manager so management (Portfolio Managers, Committees, etc. ) will want buy in from AM pre acquisition.

As to some of the other comments. I know Greystar is operating completely "cradle to grave" so they buy, asset manage and dispose. That's a lean run institutional operation and they rely on their property management for most of the property level decisions. There are also owner/operator shops that just , as some have said above, look around and are like "sh*t" ahhh someone needs to "asset manage" this. If you are a regional office buyer you might work on a Houston acquisition for 3 months and then the next month be working with the property management company/team on leasing updates/ ideas/ redevelopment , etc. for another building that the company owns. Just how it is.

To another comment about AM never moving to Acquisitions. I know one top 10 ODCE Fund that takes the best junior asset managers they have and moves them into Acquisitions. I also know one top 10 Fund that never mixes so it really depends and sometimes it depends on the people in place at the shop.

Our acquisitions platform has a similar model to Greystar in the respect that the acquisition manager stays moderately involved with the deal for the first year and there is a annual actual vs. proforma discussion that plays a large impact on that persons bonus. The asset manager handles all of the more granular operations/re positioning efforts, but the acquisitions manager must understand this process b/c he needs the asset manager to theoretically sign off on the underwriting. This is a common sense incentivization technique that ensures the acquisition team is compensated based on yields, not purely capital deployment.

If you want to own your company one day, working in Asset Management for a period of time would be wise. If your looking to get out on your own and have no interest in being an asset manager, then at least educating/staying involved on asset management/corporate management side of the business would seem logical

At our firm, it is definitely two separate and independent groups that work together. As it happens, I worked in acquisitions for four years and then moved into Asset Management for the past three. None of the acquisitions guys that we currently or previously employed ever had asset management experience. The more junior acquisitions guys never have any interaction with Asset Management. They are hitting the phones, sniffing out deals, and doing due diligence. Once we are near inking a deal, however, and when it is under contract and in the due diligence period, the lead acquisitions guy for that deal will work closely with us. Mostly, it is breaking down expense and revenue analysis to see how much hot air is baked in to sellers' numbers, and to see what kind of upside can actually be realized through cost cutting, leasing, etc. An experienced/great acquisitions guy will know a good amount up revenue, expenses, and leasing but not quite enough to make a buy/pass decision. Sure, he may know that there are some below market rents in a retail deal. But he probably does not know exactly how much TI needs to be put in to combine three spaces and get a good tenant. Or that our firm could cut the security expense by 30% by adding the property to an existing portfolio wide contract, etc etc.

If you eventually want to run your own investment business, having experience in both would be extremely valuable.

Personally the order for me is below. Basically when I was starting out I looked for jobs in this order and have worked in a couple of these groups. I'm not looking to give info away so don't ask. Also, I'm not saying my list is the ranking for everyone just that it was / is for me.

acquisitions > debt broker > lender > AM (office) > investment sales > AM (other property types)

On the smaller firms I actually think that yes it is harder. Even if you have a stellar resume the top guys are going to pick whoever the hell they want. If you have a stellar resume and aren't a complete weirdo you'll get a job a big shop eventually (more HR restrictions and they can't always say no if you're super qualified).

And to clarify debt broker means HFF/Eastdil/CBRE etc the big guys not I.P. Freely Mortgage Finance LLC

IRRelevant dude don't be so quick to knock IP Freely. Those guys are origination savages and have been absolutely crushing it (major east coast market prefer not to disclose)

Lol +1

Bump

is Development easier to get into? Seems though less firms and positions as these firms work on a project by project basis so they hire basically contractors. Don't see many Development Analyst type positions.