Hi there, is there anyone who knows what I can expect with a case in the PE RE sector?
I watched some youtube tutorials and gained info about the waterfall analysis with a promote structure. My background is from a perspective of single tenant triple net leases.
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Hey Coen,
I have some experience with case studies for real estate and thought I'd pipe in.
You probably wont see a waterfall question unless it is a pretty institutional shop. I personally do not see the point of a waterfall test for an interview, because generally you will know it or you wont (from previous experience) and whether or not you can build a waterfall model from scratch will have no correlation with how good of an analyst you are IMO. Most likely, they they will give you a property (100 unit apartment in this part of NYC, 100K SF shopping center in Orange county), tell you some market rents, and then ask you to provide a valuation. Also, they might ask for things you like about the property, things you don't like, how could you add value,and ultimately would you buy it. In this they want to see how you think and also do want to get some exposure to your modeling capabilities.
It sounds like you have some general real estate experience, that will definitely be helpful. If you want, I can try and dig up an old problem or two.
This is a great response! I'd love to see anything you are able to dig up!!
Hey chad, I know you aren't the original poster, but here is a case study I have from the Related Companies from a while back. http://imgur.com/a/W1HFd
Hope this helps!
Great thank you! I can tell you that I had the case yesterday and it was indeed no waterfall! Perhaps more cases to follow so would be genuinely interested in the old problems you have.
I would assume a 3 tenant rent roll, maybe 1-2 of the leases roll after acquisition. Start with your deal timeline and easiest will be to link key milestones to month numbers. I.e. lease 1 rolls month number 14, etc
Be able to model in your acquisition closing costs (financing fees reduce loan amount to the proceeds you actually apply towards the deal), then apply your debt service.
Know how to get to unlevered cash flows, and then the line items that will get you to levered cash flows. If you can solve for LIRR, you’ll probably be fine. Project level returns can always be converted into GP LP returns via waterfall but it’s somewhat a waste of time to put someone through that in a modeling test, given if someone can get to a LIRR on a tight 1:30-2 hour modeling test, you know they can probably learn a waterfall.
Would still understand how to do a 2 tier waterfall; plan for pari paddy returns to x% to the LP, and then a promote to Alonso beyond that initial hurdle.
Anyone have any RE PE case studies / models for interview prep? Let's trade (Originally Posted: 08/03/2014)
I am starting to interview for RE PE associate positions, but I really have no idea what to expect for the modeling / case study part of the interview. I have scoured the internet, but have not found anything useful. From what headhunters have told me, it is usually just single asset, but they don't know much more than that.
If anyone has any case studies or models or anything, that would be very helpful. Office would be ideal, but I don't have any real preference on asset type.
Things I have for trade: - Several practice LBO models - An old modeling test from a PE firm - Various IB / PE interview guides / LBO primers, etc. - Barclays & BAML REIT primers - Brueggeman / Fisher - RE Finance and Investments ebook 14th ed
Anyway, if anyone can help, I would really appreciate it.
Thanks!
Recently had a case study interview at a large RE fund. Pretty much just consisted of modeling out the acquisition of an office property from scratch. The only info I was given was purchase price, leverage, annual rent and assume an exit in 10-years, the rest of the assumptions were up to me. Time was limited so my model was pretty vanilla. In my experience, these tests are more about illustrating your thought process and how you would approach an assignment, being able to articulate that is just as important as the actual model you build. Also, this goes without saying, but make sure to know how to calculate IRR, equity multiple, etc both levered and unlevered. Hope this helps, good luck.
Thanks. How long did you have? I'm assuming all you got was a blank spreadsheet?
nope
Hi! Do u have any interview resources that may be able to help me go through the process?
are these tests taken at home or at the firm? are they open book? college student seeking answers.
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