REPE questions....

What's up with all the real estate threads these days? Are people trying to lower their sights because vanilla PE is harder to break into than it was a few years ago? I have news for everyone: real estate is dead right now; not even the distressed side is very happenin.'

1. yes of course, and I know people who have made the jump.
2. who said you need IB experience to get into REPE?
3. depends, but usually yes it is more laid back than investment banking
4. i don't think acquisition guys necessarily get paid more than asset management guys

I'll let someone else answer the others, because at best I'd be offering an educated guess.

It really depends. Blackstone, Carlyle, Colony, Apollo type shops then the answers are very different from smaller REPE shops. In general these types of shops will mirror traditional PE more closely than typical RE shops. If you're asking about smaller to midsize REPE shops, the answers will vary wildly. For the big REPE shops:

1. very very difficult
2. very very difficult
3. generally speaking, slightly more chill than mega fund PE and IB, but the same attitudes, personalities and expectations
4. depends on the shop, but where it is separated acquisitions guys do get paid more generally speaking

fk,

its funny you mention carlyle....because if you check out their website, their real estate team is comprised of people with surprisingly "average" credentials, especially at the junior levels, most did not do IB or other well known feeders, most did not go to elite schools. hence why i feel there is a bit of "grey" area regarding REPE, and where it blends into general asset management.

read a few of the profiles of the associates and analysts... http://www.carlyle.com/Fund/Real%20Estate/U.S.%20Real%20Estate/item8686…

IMO....essentially all real estate investing follows the PE model, buying undervalued assets, leverage with loans, improve NOI through tenants/repositioning/renovations, thus improve value with higher cap, sell at higher price...this concept goes all the way down to people who used to do those "no money down" house flipping back in the boom years.

...hence why i opened the forum with the questions I asked, because I'm trying to gain a better understanding of where to distinguish general RE asset management from REPE. They tend to blend together, especially at smaller funds/shops.

If you're trying to understand how it is distinguished, REPE is generally structured like a more traditional PE fund. 15-20% target returns (opportunistic), 5-year target hold periods, fund managers are in the game for 20% carry. RE asset management generally speaking is more about providing steady return / yield with longer hold periods. This is a very general differentiation, as the terms REPE and RE asset management don't really mean anything. Blackstone's REPE group is a real estate asset management group as well...This is just what people generally mean when they use these terms.

Interesting on the Carlyle associate backgrounds. Definitely less pedigree than I would've expected, but if you go through them most of them still have previous IB or RE investing experience. See the Apollo guys to get a sense of what I was talking about in my previous post http://www.areapropertypartners.com/home.php

1. It could open the doors, and would at least be useful for REPE, but if you wanted to move into REPE at a top firm you'd probably need an intermediate step. Something like Big 4 RE transactions -> REIB or RE brokerage firm like an Eastdil or soemthing -> REPE. Or perhaps Big 4 RE transactions -> developer -> REPE... totally depends on which firm though. Some firms have a preference for people with finance experience in banking, others are much more interested in people with nuts and bolts real estate expertise from developers etc

2. It's possible, though I wouldn't bank on it.

3. Hours way lower than IB-ing on average, but they still expect you to stay in "as long as it takes" to finish everything and have no sympathy or desire to hear a single complaint if you've been at the office for 18 hours a day x 3 days in a row. The good news is that this only happens on very rare occasions every few months (at least in my experience).

4. Depends on shop...

5. depends on shop...

6. depends on shop...

1. Yes - there are plenty of big 4 people in REPE
2. Depends, but generally yes. Getting into REPE shops is about networking
3. International Pymp is pretty dead on. 4+5. There is different comp between Asset Management and Acquisition roles because of the risks involved. Acquisitions are higher risk and therefore higher reward if the investment turns out to be a success. The mega REPE funds that people are mentioning usually partner with local operators who take care of the day to day asset and property management anyway. REPE funds with full asset management teams usually do more single asset stable transactions. A MM REPE fund client that I had acquired a huge portfolio of distressed assets and then ended up forming a property and asset management team as a separate company (and now use that co for all acquisitions they make) and I'm pretty sure that the asset and property managers do not see any upside from the deals. Similarly - when Blackstone took private EOP, they kept the management team in place to deal with the asset management so they didn't have to have a team in place.
4. Depends.

Just a few comments - A lot of the opportunistic REPE funds like to buy non-performing loans, provide mezz finance or pref equity and do other more complex transactions which do not require asset management teams (although the NPLs do require a speacial servicer team which can be outsourced).

When looking at REPE funds you really have to look at their operating model and what type of transactions they have done in the past to understand how much they value their asset management team.

I also agree with prospie - in Europe at least - RE is dead. I wouldn't be surprised if there are more layoffs in the sector coming up.