Hey guys,
I wanna start by saying thank you to everyone on this site. I read it religiously with when I was in the process of interviewing this past year and the advice and information given by the posters here was incredible.
I am a rising senior in the GSE group at a large bank . Based on my recent performance review and overall feedback throughout the summer, it seems likely that I will be getting a full-time offer. I have a call with my recruiter coming up to discuss what group I would prefer to be placed in.
This is what I am hoping that you guys could help me with. I know that I want to get into real estate after graduation and want to eventually be able to work my way into a job with a REIT or REPE shop. I'm not greatly familiar with mezz funds, but on the surface it seems like an interesting career path as well. My questions are 1) would joining the full-time analyst program put me in a good position to be able to get into those types of jobs and 2) which groups within would give me the best shot?
My current group focuses mainly on GSE loans. While I enjoy it, I'm hesitant to join such a focused group directly out of college and have been thinking that I would be better off getting into a group that focuses on a number of asset classes, mainly CRE or Capital Markets. My thinking is that by getting exposure to the different asset classes and doing balance sheet lending, as opposed to agency lending, that I would build a stronger skill set and be in a better position in a few years to break into a REIT or REPE firm. FWIW I'm not expecting to break into a mega-fund or top-tier REIT, though I definitely wouldn't mind if it became a possibility.
Do any of you guys have experience with these different lending groups and the exit ops? I would love to hear about people who have taken this route and where they ended up, but any advice or insight would be greatly appreciated. Thanks!
Being in the debt side generally does not make it easier to move to the equity (REIT/REPE) side. The skill sets you learn as a debt analyst are different from those you need on the equity site. With that said, your goal is certainly doable.
I do not have experience in that Wells Fargo program other than I interviewed for it, but I think that the analyst program will probably teach you a lot of things you'd need to know about real estate finance. However, I feel that any program that requires that you specialize in a certain asset type should be looked at with extreme skepticism. Honestly, if there is a debt team that just deals with REIT's or other high profile institutional clients, I would highly recommend that group (essentially the group with Eastdil as the primary broker). Many of my analysts in this group end up going to the RE buy side world.
But plain vanilla REIB is probably your best bet for the easiest path to the RE buy side.
Thanks for the input. Is it common to move on to working for REITs or Institutional clients of banks down the road after working on deals with them?
I actually think debt experience is great to transition to the equity side. You are investing. Investment bankers / brokers are not investing. Everyone that works in RE will have a lot of respect for a debt guy from Wells Fargo.
Now on the multi vs balance sheet (all property types). I would def try to do balance sheet if you can.
You make a very fair point. A lot of places (MFs especially) are very prestige / perception oriented. If you want MF then yes REIB is the best way, agreed.
If you want acquisitions or Asset Management at smaller REPE firm / developer / REIT and aren't able to land a job on the equity side immediately, then I think BS lending is a great pivot point. As long as the Wells BS guy is ok with smaller REPE firms I think he will def be able to move to the equity side.
My worry about REIB is this, I've seen people end up in jobs that I personally would not interested in (AVP/VP/Director of Finance at a REIT for example). The title sounds good sure but what exactly are they doing (not acquisitions). This happens all of the time btw not just in RE. Energy IB guys end up in these same kind of corporate finance jobs, which sound like a snoozer to me. I think it's this disgust I have about corporate finance that pushed me to RE in the first place.
It's my personal preference I guess. I would rather be a deal guy at any cost and a BS lender is still a deal guy. And I'm not talking down to REIB guys, I sure as hell wouldn't have been able to land one of those jobs out of college.
I have definitely seen people make the transition from debt to equity - but nearly all of these guys had sub-debt experience. In other words, they were focused on lending in the lower part of the cap stack (mezz, b-notes and pref. eq).
Many shops (debt funds, REITs, etc.) will generally lend the entire debt stack, but then syndicate out the first mortgage (or repo it) and hold on to the sub-debt for higher returns. From my experience dealing with sub-debt guys as well as speaking to guys in that business, the analysis they do is very similar/pretty much the same as equity (some shops also don't have a differentiation between their equity & sub-debt groups and will also have the same committee process).
Somebody who does sub-debt can probably shed more light on this, but those are my $0.02.
On the topic of moving from debt to equity, how could one maximize their chances of doing so coming from a commercial lending group at a large bank that does CRE exclusively? I am assuming Excel modeling would be a big deal since much of what I've done thus far is in pre-created templates and does not require much coding or extra effort.
Moving from a CRE debt team at WF or the like... to an equity side role wouldn't be difficult after a few years of exp. I come from a similar role and have seen it many times... transitions to smaller/mid REPE, large REIM, mezz team or developer... and have received offers (decided to stay) and interviewed at the above myself... and probably going to look to move in the next few months. Not as ideal as REIB.. and granted obviously not moving to Blackstone, etc., but not difficult.
I would definitely not want to be on an only MF/agency team though... try to be on the commercial/bs team or preferably the institutional group if applicable. But I'm sure you'll be trained in ARGUS, you'll get experienced in market analysis/software, approval doc writing, sensitivity analysis etc.. You'll probably work with the large names in the market. Excel modeling will be less complex and focused on different metrics, but CRE modeling is easy and you could just take a class if need be (nearly all teams debt/equity use templates... but still want you to be able to construct). Be it debt or equity a lot of the analysis is pretty much the same.
How have your interviews for those jobs been, coming from a debt background? Do you feel that you are at any disadvantage or do you find yourself having to sell your experiences more?
Interviews are pretty easy, they'll ask pretty much same questions every time... see below link or use the search bar:
http://www.wallstreetoasis.com/forums/analyst-interview-common-questions
You'll most likely be given an excel test at some point... basic dcf with given assumptions... maybe given a few questions after. Also never really had a bad interview... maybe just not a personality fit sometimes. Again RE is pretty easy overall. The one large disadvantage as far as modeling would be the lack of waterfall experience, which you could take a class for.
I really don't think it was much of a disadvantage... I've seen the move many times almost to say it is a common career progression. Sure REIB is best bet, and I'm sure i lost a final round or so to a REIB analyst or maybe even an analyst from a smaller investment shop. Like i said, I've received offers, but it just wasn't the right time... I was waiting to be promoted in my current role and then switch.... one also came down to pay. And I've seen many co-workers move over to an equity role. I will say the role people move to is 60-40 or so on the asset management side compared to the acquisitions/investment side.
Also getting interviews has been a breeze... even applying on the career sites or linkedin. Multiple rounds/offer at $2-$3B REPE, massive PE firms for RE divisions, $40+B REIM, top developers or in-house REPE at similar BB. Again I obviously didn't get the job for a few... could have lost to REIB or any other debt analyst idk. But I'm from the frame of mind, that if I got the interview, I lost it myself... they were interested. But if you're from a target or semi-target, with a couple years of BB debt lending you would be in a decent/good situation to move.
In the future when looking to move, I'd mainly stress your passion and interest in RE, that's huge in the industry... and can help significantly in the interview process. Besides gaining a few years of experience on your debt team, you can join ULI/attend functions, take modeling/Argus classes/get certified, etc.. All making you a strong candidate.
How do you think about your career progression now that you have done the CRE analyst role at WF? I would be curious to understand what made you decide to stay.
Is the only reason most people look to go into REPE because of higher compensation potential?
Does the comp not stay attractive in more senior roles at WF in the CRE lending group?
Pm'd you apricots
I'm curious if the concensus of others would be the same as Apricots here. I know most on here say not to be too focused early in your career and that debt somewhat of pigeonholes you on that side of the business but also seems like people agree to disagree on the latter.
Debt does not pigeon hole you provided that you are at a respectable bank or LifeCo. I know many people who have gone from debt to equity quite easily
I was in a rotation program and I rotated through several strategies (opportunistic/value add, core equity, and core/sub/mezz debt). From my limited experience, you have to be very comfortable with modeling if you want to transition to REPE. Specifically, you have to be able to model a complex joint venture ground-up development or value-add portfolio acquisition. It is not difficult to go from conventional debt to core equity because chances are you mostly deal with stabilized assets. However, most of conventional debt underwriting is just too simplified for complex deals. Working in sub/mezz debt may help but true sub/mezz debt opportunities are quite rare for straight out of undergrad. By the way, the opportunistic/value add/REPE models are not that hard at all. But you gotta have some work experience in that space to know what you should look for.
I think that REIB is still your best bet. However, be carefully with the term REIB. CBRE and JLL have group called REIB but they mostly do vanilla capital market stuff, not truly REIB.
Thanks for the insight. Is REIB as tough to break into as traditional IB?
Traditional investment banking at a real investment bank (MS, JPM, DB, BAML, and most importantly Eastdil) is more difficult to break into. They typically go through the same analyst interview process.
To be honest with you, the issue with working on the bank side is you are working on one number in an transaction. Without a doubt, it is an extremely important figure, but it is still one number.
When I worked on the equity side, you look at everything about a deal, from developing a strategy to create more revenue to the waterfall schedule of cash payouts. You simply don't do or look at those things when you're lending as a senior or even on the mezz notes. Realistically, you are not an investor in a deal as debt guy (most of the time); you are looking out for what is the probability this transaction turns out poorly and if it does how can I perfect my interest in the property. Lenders gain none of the upside in a transaction, but all of the downside.
You can certainly move to the equity side from the debt side. Again, many of my analysts have done so.
any suggestions on how to learn to model more complex deals, JV waterfalls, etc?
I learn most of the excel modeling from BIWS RE course (if you have resources, sign up for some other courses to learn more about debt modeling. But it is not necessary). Their office development model is lighter than ours but other models are pretty comparable. Keep in mind though, every shop is different. I have seen very complex models from our partners before. But to be honest, I don't think those complex models really add much value. And if you have a modeling test for your interview, I doubt if it is too complex. So I think the BIWS RE is good enough. Besides the BIWS RE course, I have heard people talking about REFM courses and Khar Real Estate courses but I have not tried them before so can't comment on how useful they are.
Ea et ut aliquid nobis quisquam dignissimos officia. Expedita quam odio et officiis molestiae labore. Labore sapiente unde enim ea.
Similique voluptatem earum illum saepe sequi placeat nihil. Est qui aut deserunt maxime. Eveniet excepturi animi id esse rerum rerum. Ut repellat est dicta autem vitae dolorem praesentium nihil.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...