REPE vs REI

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?

Real Estate Modeling Course

  • Real-life RE Modeling Tests from actual Interviews
  • Various asset classes including multi-family, commercial and more
  • Huge discount - until more tests and cases added

Comments (26)

Most Helpful
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?
  • 19
  • 1
Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
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.).

Sep 3, 2020 - 10:00pm

redever

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.).

Really?  This isn't very accurate.  If someone says they would like to work at a REPE fund, you can safely assume they mean they want to be analyzing/investing at the LP level.  I mean, what else would you assume someone does if they tell you they work for an REPE fund and are a general Analyst/Associate?  You automatically think IR?  Really?

Array
Sep 4, 2020 - 10:08am

Yes, most people who say "I want to work in REPE" are just affirming a desire to work in institutional investment real estate and picking the shiniest category off the shelf to state as a placeholder (I assume they want to do acquisitions, because everyone does...). There is nothing wrong with this, but if someone is truly only prospecting or considering roles at firms on the top list of REPE firms they are missing out on big whole sectors of the industry which makes no sense. In reality, most people do take a wider approach to job hunting, but needlessly narrow themselves when networking. As many threads on WSO  show (and this fits with my experience of talking to students at networking events, back when those were things...), people really do not understand REPE or the general organization of the industry.

As for talking with someone already working in a real institutional job, they are likely to actually just say firm name followed by some mix of role/position and what functional team/group/strategy/property type/etc. they focus upon. Even saying "Analyst at REPE shop" is somewhat non-descriptive but junior positions have more leeway in this regard. The more senior/experienced the person, the more specific they will talk about what they do and less where they do it. My general thought is prospects would do better to talk about their desired careers along those lines rather than suggesting they would want to work for Blackstone but not PGIM (odd generalization, but one could actually come off that way).  

Sep 9, 2020 - 3:18pm

redever

Yes, most people who say "I want to work in REPE" are just affirming a desire to work in institutional investment real estate and picking the shiniest category off the shelf to state as a placeholder (I assume they want to do acquisitions, because everyone does...). There is nothing wrong with this, but if someone is truly only prospecting or considering roles at firms on the top list of REPE firms they are missing out on big whole sectors of the industry which makes no sense. In reality, most people do take a wider approach to job hunting, but needlessly narrow themselves when networking. As many threads on WSO  show (and this fits with my experience of talking to students at networking events, back when those were things...), people really do not understand REPE or the general organization of the industry.

As for talking with someone already working in a real institutional job, they are likely to actually just say firm name followed by some mix of role/position and what functional team/group/strategy/property type/etc. they focus upon. Even saying "Analyst at REPE shop" is somewhat non-descriptive but junior positions have more leeway in this regard. The more senior/experienced the person, the more specific they will talk about what they do and less where they do it. My general thought is prospects would do better to talk about their desired careers along those lines rather than suggesting they would want to work for Blackstone but not PGIM (odd generalization, but one could actually come off that way).  

I mean, if you're talking to idiots who have no clue what they're saying then they could mean anything.  But if you actually take them at their word, for example ANY junior person working at brokerage/development/owner/operator can safely say they are targetting REPE and everyone in the industry would understand this to mean they want to be on the LP side.  If they say they want to work in 'Acquisitions' that can safely assume they want to work on the GP side, or at an owner/operator.  It's not that difficult to understand the buckets when people are talking about them, and I've personally never heard someone say they want to work in REPE and actually mean owner/operator or development.  The buckets are the following:

- Owner/Operator: also known as 'real estate investment firms' which are the firms that are sourcing and seeking deals on their own and then going out and raising the LP capital on a deal-by-deal basis.

- Development: can be structured as either 'Owner/Operator' or 'Real Estate Private Equity' but most commonly the former.  Again, seeking deals and raising LP capital on a deal-by-deal basis.

- Real Estate Private Equity: raises blind pool funds from investors and deploys as LP positions (or co-GP, rarely) into any deal type.  Much more finance-focused and less "in the weeds" as the GP firms.

Array
Aug 6, 2020 - 7:25pm

REI = an American retail and outdoor recreation services corporation. They sell sporting goods, camping gear, travel equipment, and clothing

REPE = everything else real estate-related according to WSO

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"?

Array
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?
  • 2
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.

Array
  • 3
  • 1
Start Discussion

Total Avg Compensation

July 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (36) $363
  • Associates (210) $232
  • 2nd Year Analyst (121) $152
  • 3rd+ Year Analyst (28) $146
  • Intern/Summer Associate (102) $144
  • 1st Year Analyst (449) $132
  • Intern/Summer Analyst (357) $82