Real Estate PE Exit Options

c00guy's picture
Rank: Monkey | 40

Hi,

I was curious to know what are the possible exit options for an entry level / associate at a real estate private equity firm. Some of the options that I've explored are as follows:

  1. IBD: Would it be possible to move into i-banking with a focus on sectors other than real estate?
  2. Corporate Private Equity: Would it be possible to move into corporate PE or maybe PE funds focused on related sectors (infrastructure, education, retail)?
  3. Others??

Any feedback is greatly appreciated.

Comments (37)

Jan 25, 2011

Personally, I have never met anyone who has made the move from REPE -> Corp IB/PE. Of course, that doesn't mean its never happened. I have met a number of people who made the move from Corp IB/PE to REPE. Actually, a lot of REPE's like ex-IB employees because the skill set is transferable.

Also, Corp IB/PE is much more sophisticated than REPE from a financial modeling perspective, so the skill set you learn is not as applicable. Remember, you wont be looking at B/S or modeling LBO's in REPE.

Basically, your exit options will be RE related.

man made the money, money never made the man

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Jan 25, 2011

I just recently attained an offer for an internship at a private equity firm from from a real estate investment background.

To be honest, I think any sort of finance experience is good to have, but a lot of factors come into place such as educational background. Do you have a bachelor's degree? If so, what is it in? Or are you working towards one, if so what is it in?

I hate to belittle real estate, particularly since I just left it but it's a very different ballgame in comparison to analysis of a company's financial information. I would think you'd need to be very strong in accounting in order to attain a full time offer. I don't want to discourage you, but you need to think to yourself "what value could I bring?" and then accentuate those points as well as grow on them.

Jan 25, 2011

I hate belittling real estate, too. But the truth is that real estate analysis is unsophisticated.

man made the money, money never made the man

Oct 26, 2019

That's you're problem, you want it to be complicated

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Jan 25, 2011

Anything is possible... In the past 6 months, 5 analysts from my firm have left for opportunities outside of REPE. 1 went to Carlyle's corporate PE group, 1 to Goldman's M&A group, 1 to UBS's equity capital markets group, 1 to Highbridge Capital's long/short fund and another left for a competing fund's corporate REPE group.

While it's generally easier to lateral within the industry, it's not impossible to shift career paths entirely while you're still young. Augmenting your knowledge of your target industry and networking on your free time can go a long way when you decide to make the jump.

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Jan 26, 2011
NPV Positive:

Anything is possible... In the past 6 months, 5 analysts from my firm have left for opportunities outside of REPE. 1 went to Carlyle's corporate PE group, 1 to Goldman's M&A group, 1 to UBS's equity capital markets group, 1 to Highbridge Capital's long/short fund and another left for a competing fund's corporate REPE group.

That's really unusual. I am assuming those analysts did not have any prior exp. corp IB/PE, is that correct?

You wouldn't happen to work for LIM, would you?

man made the money, money never made the man

Best Response
Sep 18, 2014
NPV Positive:

Goldman's M&A group

lol

    • 4
Sep 18, 2014
wallstreet321:
NPV Positive:

Goldman's M&A group

lol

Nice eye haha

Jan 26, 2011
  1. it's possible, particularly if you got an MBA in between... but people tend to move into REIB groups.
  2. corporate PE is not a typical move from REPE... not that it's impossible, but still.

major options are:

  1. other REPE
  2. RE hedgefund (or hedgefund with RE team)
  3. RE developer
  4. RE IBD / Brokerage house
  5. Equity research coverage of RE sector
  6. RE debt investment fund (sort of covered above, but...)
Jan 28, 2011

Thanks all! Actually, I'm shortly due to join an REPE group and from the answers that I've gathered my best move would be to get an MBA and then move to corp PE. Does REPE count as good transaction exp or would IBD be preferable for corp PE jobs after MBA?

Jan 28, 2011

i've transitioned out of real estate PE. You basically need an angle (e.g. engineering degree moving over to VC, lots of distressed and restructuring experience in RE moving to a credit HF, MBA + other experiences, etc.). Even with an angle it is extremely hard, and it's nearly impossible without one. As others have said though, real estate is a big space

c00guy:

Thanks all! Actually, I'm shortly due to join an REPE group and from the answers that I've gathered my best move would be to get an MBA and then move to corp PE. Does REPE count as good transaction exp or would IBD be preferable for corp PE jobs after MBA?

This might work if you're at a more corporate-leaning REPE firm (Blackstone, Colony etc.). It'll still be an uphill battle but those experiences are probably better than pure IBD experience pre-mba for a post-mba corporate PE position. If the REPE shop you're joining though isn't that big (< $bn) and is more focused on traditional RE assets, imo IBD is a better route to make the post-MBA transition.

Jan 28, 2011
c00guy:

Thanks all! Actually, I'm shortly due to join an REPE group and from the answers that I've gathered my best move would be to get an MBA and then move to corp PE. Does REPE count as good transaction exp or would IBD be preferable for corp PE jobs after MBA?

IBD in a non RE group (in particular in Levfin or M&A, etc) would be HIGHLY preferable to REPE (even if it was at a top firm like blackstone) if you wanted to go into standard PE. I try to get everyone to understand this... when you're in REPE you area Real Estate guy more than a PE guy. At the REPE firm I work at we hire no one who hasn't worked in RE before... even if they were at goldman TMT and then BX... they'd have less of a chance than someone with 2 years experience at your run of the mill JLL or DTZ. It's the exact same thing the other way round... you could be at MS in RE and then go to Carlyle RE and you'd have 0% shot at getting a job in Carlyle corporate IB... 0%. Someone working in IBD at a random boutique would have an infinitely higher chance.

Jan 29, 2011

Not sure if I would go that far. You really think the Blackstone associate that worked on the EOP or Hilton take privates has less of a chance than someone who has only had BB IBD experience for corporate PE post-mba positions? BX/Colony associates have basically no shot at megafund corporate PE post-mba (and neither do people with only IBD experience), but IMO they would have a better shot at top middle market shops than guys with only IBD. Hard to prove either way because both are very difficult roads.

Jan 29, 2011

yes - hard to prove either way I guess... but we both agree on the main point: it would be an uphill battle in either circumstance. Working on 20 billion dollar deals (hilton, etc) at BX REPE, etc, MIGHT help one get their foot in the door of a corporate PE firm... but it's certainly not the path of least resistance.

Feb 2, 2011

What about sectors like infrastructure? Isn't it relatively easy to move into infra PE funds such as 3i? Could that possibly be an exit route to corp PE?

Feb 4, 2011

bump

Feb 4, 2011

Ya i am also curious, moving to a large PE infrastructure fund, exit ops?

Sep 17, 2014

Bumping old thread for any new updatse

Sep 17, 2014
CodeBlue:

Bumping old thread for any new updatse

Hmm ... I see infrastructure mentioned, and come to think of it, I do personally know a guy who went from buyside RE to an infrastructure fund. He came across as extremely successful, though, and he was partner/MD-level in both cases, so I don't know how to relate that to junior people.

Sep 18, 2014

My plan was to accept an REPE offer as an investment analyst at a mid size firm, learn as much as possible for 3-4 years, pursue an M7 MBA, then shoot for IBD post-MBA. Does this seem reasonable?

On this board, everyone seems to make the point that once you're in RE, it's extremely difficult to get out, but I'm hoping with an MBA to break up my experience that I can branch out to traditional banking and PE.

Sep 30, 2014

I have a question for you - What do you really want to do?

Not what do you think is the best route / magic pill providing the best money/hours, but what do you actually want to do?
I wouldn't worry too much about the salary at the MD level if the only reason you're going to try PERE is because you think you'll get as much money as the other monkeys while working less.

Sep 30, 2014

Salaries in the long-run? For MDs? That's so far away for you that it shouldn't even be a consideration today.

On BX - they really are the only game in town right now. Just look at their recent deal with PLD and the just announced Centro deal. There a lot of PE shops out there in CRE, but very few have the size to pull off BX-type deals. I think this is what the BX executive was referring to - the banks competed with BX on the megadeals (see LEH and ASN) but now BX is really the only one that can write the big check these days. That said, more and more money is being raised and the CMBS market is ramping again ... we're probably headed toward better times for the private side of CRE. REITs lead the private market and they have have had to great years in a row.

Sep 30, 2014

"- Less hours than M&A"
Yes.

"- Same pay as M&A"
I assume you're talking junior level here. Not usually. I remember hearing that the associates/analysts at Blackstone RE were making as much as the LBO guys, but that is the exception. At a typical real estate fund you are not going to make $290k all-in your first year out of b-school. Suppose you had the option to go work in the Sponsors group at Credit Suisse or the real estate investment arm of Credit Suisse, right out of school. I can guarantee you the guy int he sponsors group will take home more his 1st year.

"- An easy way to get into 2%/20% buy side without doing m&a first (more easy than normal PE or fundamental HF)" Yes, it is easier, but there are many other 2&20 "alternative asset" classes out there that are easier to break into than the LBO funds or long-short funds.

"What about salaries in the long run? Stupid Example: Can a MD from REPE make as much as one from normal PE?" Certainly possible. This is just me regurgitating another rumor, but I think Jonathan Gray is worth hundreds of millions.

"For me it just sounds as he's trying to dump is old REPE shit while fundraising." It's possible, why not? That is part of what they do. one thing that he IS right a bout, though, is the decrease in real estate investment activity coming from the BBs.

"Can you switch from REPE to other strategies such as normal PE, distressed or a fundamental HF for instance? As many distressed loans are linked to the RE sector, I guess distressed HF might be looking for someone with PERE experience." Yes for that specific example, but otherwise you are pretty much limited to real estate.

I used to think like you, so I know where you're coming from, but I'm gonna have to go with the previous poster on this. Yes, it is possible to go into real estate and make awesome money while not pulling all nighters. But like I tell everyone else here, RE is rather specific and you have to make sure your heart is in it before you make the jump, because it's easy to get pigeonholed, as I said above.

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Sep 30, 2014

I agree with most everything that prospie said although I think for the last response it should be clear that it's almost impossible to go from REPE to "normal PE". Distressed debt / HFs are very possible for exactly the reasons you mentioned though (it's RE related).

Also it should be noted that REPE is in no way dead. Blackstone just announced a 9.4 billion dollar deal for Centro (australian RE firm) today.

Sep 30, 2014

Great questions OP and great answer prospie, gave me some more perspective on the REPE world

Sep 30, 2014

Thanks guys for your frank answers!

Sep 30, 2014

depends on sector for repe --> corp pe...e.g. if you were pre-mba at BX working on EOP and hilton, huge "real estate" companies with significant opco aspects, you could definitely get a look at a fund that had any kind of big practice in logistics, transportation, infrastructure etc.

e.g. silverlake making big push into data centers, guarantee they brought on a few RE guys to help run that play

also you need to remember that after a couple years at any big pe shop you're gonna get pushed into a vertical doing deals only in one sector, so the whole "versatile" thing only applies when you're very junior.

jonathan gray is a bit of an extreme to pick as he was head of bxRE pre-ipo...but yeah he's around half a $bn.

your lateral options will also depend on how varied your experience is in repe, like if you're only working levered single-asset office deals in a defined geography, you're probably stuck except for moving down the real estate supply chain to a developer or multi-strat like TS. if you're looking at opco/propco take-privates, fund recaps, dev deals, industrial / value-add plays (logistics etc.), distressed debt, esp. if across geographies, then you'll always have potential outs to an AG, oaktree, etc. (if thats what you want / they're available)

hope that helps

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Sep 30, 2014

I would not put yourself in a corner when you are applying. Different schools of thought on this but by only focusing on a certain area, your resume will go to a smaller subset of people and you have less of a chance of someone picking something out and pulling you into the process. You are still young and teachable. Everything you learn in an internship will go out the window anyway once you get in.

Sep 30, 2014
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