REIT Development vs PE Development
For those with experience in either or both, what would you say the differences between major MF REITS vs major PE development shops when it comes to comp, hours, teams, strategy etc.? I'm assuming there's a level of shop to shop differences, using balance sheet to invest vs. straight LP/Debt, but are there significant operational differences between the roles?
Hoping to get some insight from some of the larger, institutional REITS (Prologis, Equity Residential, etc.) vs the larger private development shops.
I'm sorta confused by what you mean, PE Development.... Do you mean firms like Related/Tishman or do you mean private equity funds that co-invest into development? There is a major difference there.
Wasn't 100% sure how to describe it, but yeah like a Related/Tishman vs an Equity Residential/AVB. Same GP Roles, just different capital/tax structures.
I wouldn't try too hard to generalize between major firms, and I really don't think REIT/publicly traded structure is going to matter much (development is often a TRS anyway).
Size of deals, type of assets, market, etc. all of that will set more of the work and culture, etc.
I will say that if you work for a traded REIT, your incentive comp is more likely to include stock grants/options or even just favored employee stock purchase plans (as opposed to parts of promotes or deal interests in a private firm, but even that I am not sure is universal).
These structures can dictate business mode/strategy but they are not universal. Take Prologis which you mention, I think more than 50% of its AUM is now from its private equity fund business. Not sure if the private funds are the ones driving the development or just the balance sheet capital, but the more Prologis goes that way, the more it looks like BX/KKR (i.e. those are both publicly traded private equity firms).
EQR and AVB are night and day in how they grow their business. Going back to my earlier comment, there's really not much rhyme or reason to REIT vs. private developer. It really needs to be looked at on an individual basis.
EQR primarily grows through acquisitions. They're more similar to an acquirer/operator, whereas AVB has a much larger emphasis on development and redevelopment. AVB is an offshoot of TCC, so by nature it has a much more entrepreneurial and development focused business. EQR does develop, just not on the same scale as AVB.
Depending on the private developer you're looking at, there might be more creativity or differentiation in each of their deals. Most REITs are looking at institutional product that is largely similar to the rest of their portfolio. They aren't going to swing for the fences or even swing at a pitch that's outside of their wheelhouse. Most are also focused on a single product type, although both EQR and AVB are beginning to get into more mixed use deals (larger industry trend more than anything).
If you have 2 particular companies you are looking to compare, that would be more helpful.
It’s really dependent on a company by company basis. Not sure there are many clear distinctions between REIT vs private developer (besides maybe size of deal, but even that’s not always the case). I work at a REIT and even among our closest competitors there are pretty big differences in how we develop.
The experience is going to be regarded highly either way, but long-term a more aggressive guy is probably going to want to get out of the REIT framework unless they are just paying absolute bank (which can happen but is less likely at a mid-tier REIT).
my 2 cents, unless you are in a solid leadership role at the PE shop (regional head acquisitions or something), then its probably not that great of a gig. More likely to have crazy /unpredictable ownership and your comp year to year is not guaranteed as much as a REIT. REIT's are somewhat more professionally ran perhaps, need to do things by the book and bonus is more consistent. That's been my experience anyway.
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