I was recently on a call with a Vice President from a NYC based development firm. I casually stated that I'd be fine ending up in REPE/Development. The VP basically distinguised that REPE is not the same as working at a real estate investment/development firm. REPE firms are more focused on raising capital, doing extensive financial analysis, and have a plethora of deals come across their desks. Typically, if a REPE firm gets 100 deals, they'll probably go through with only 3-5 and they just provide capital. Whereas at a real estate investment/development firm, you are actually focused on a specific deal. You deal with the day to day realities of a property or investment opportunity. You get more hands-on experience about what goes on in real estate and you are more of the expert than someone at a REPE firm. With that info, I now see that Blackstone and Related are completely different firms. Can anyone validate the claim that REPE is less about real estate and more about raising and deploying capital whereas REI/Dev. is more about actually focusing on the details of one specific deal at a time?

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Comments (26)

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Aug 6, 2020 - 1:12pm

Thank you.

OP and/or that VP are confusing individual roles with company financial structures. It is true that REPE firms focus on raising capital, underwrite deals, and may or may not have a ton come across their desk. But once they raise the fund...they have to deploy it, no? They don't hand the money to a separate "REI" company (Not REPE...but also, not really a thing since every principal level firm, regardless of structure, invests in real estate at some point). Once they raise the fund, that same REPE firm is investing in development deals, buying existing deals, etc.

What really happens is that capital markets personnel raise the funds. Acquisitions personnel deploy the capital to existing assets or some sort of investment personnel deploy the capital to new development opportunities as a LP. Maybe these are the same people, maybe not. Asset management personnel optimize and manage the assets. Development personnel create assets.

All of these roles - capital markets, acquisitions, asset management, development, etc. - exist at firms that are both REPE and not REPE. Whether or not you work at the fund level or the asset level doesn't have anything to do with whether the firm you work for is "REPE." That distinction is entirely up to me. People on WSO get completely wrapped around the axle on the financial structure of the firm they work for without focusing anywhere near enough on what their actual job is.

...but is it REPE?
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Aug 6, 2020 - 2:07pm

How does comp compare, generally speaking, between acquisitions roles and capital markets roles?

Aug 6, 2020 - 2:12pm

I've spoken to a lot of executives in both acquisitions and capital markets. Generally, acquisitions pays more with nice bonuses. However, if the market isn't so great like right now then acquisitions slow down. Capital markets roles tend to pay less than acquisitions but tend to be safer because usually capital markets teams do more deals than acquisitions teams.

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Aug 6, 2020 - 4:00pm

Honestly, this sounds like a person who is thinking of REPE as making an entity level/limited partner type investment. Which is what most REPE funds do as their primary means of investing in real estate. So this is really more of "LP" vs. "GP" role question, in that way, he is right. Firms like BX just happen to do both. I'm guessing his development firm gets LP capital from PE shops, that is how he interacts with them.

Aug 6, 2020 - 6:54pm

That is what I would assume.... this is why saying I want to work in "REPE" essentially saying nothing. Like saying "I want to work in a bank", I mean doing what??? what division?? what role???

Truthfully, if someone says I want to work in "REPE" I have no real idea what they want to do. I just assume they mean "institutional real estate investments" but don't really under stand functional roles (like acq/am/cap mrks/etc.) or asset classes (office/retail/apt/etc.).

Aug 7, 2020 - 9:02am

Out of curiosity did you actually say the acronym "REPE" over the phone? Or did you say a "real estate PE firm" or "real estate private equity firm"?

Aug 7, 2020 - 10:07am

Oh god. Please say "ReePee" over the phone.

Please please please

If you went to an Ivy you can say "RehPeh"

...but is it REPE?
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Aug 7, 2020 - 7:21pm

It sounds like he was describing the general partner vs limited partner roles. GP is responsible for the performance and execution of the business plan for a real estate deal. Typically the developer/operator handling the actual asset. The LP is basically a major equity partner in the deal, making sure the deal performs. The GP still contributes equity in many cases but usually a small amount by comparison to the LP. The LP could be a PE firm that does investments in RE exclusively, and you could say by definition they are an "REPE firm". Its not wrong, but they would not be considered an operator if they were partnering with another RE firm responsible for the asset.

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