So you see/hear a lot of people talk about getting into REPE, but outside of the occasional person who mentions in an acquisitions role, you don't hear much about specifically what people mean when they say getting into REPE.
I was hoping someone could elaborate on the various roles at REPE shops and which are more/less desirable. As someone who eventually wants to move from IS to REPE and then one day on my own, which would be the best role within a REPE shop to give me that experience?
Acquisitions - Chasing deals
Asset Management - Stewardship of existing portfolio
Accounting - Property and firm level (AR, AP, Distributions, Budgeting)
Capital Markets? - Sometimes funds will have a specific role around capitalizing deals, monitoring equity and debt markets, etc.
In terms of what's more desirable... It probably just depends on your personality and where you fit best. If the goal is to strike out on your own one day, I'd probably start with acquisitions. The other functions don't really matter if you can't find deals that work. The fun thing about real estate is you actually need a reasonable working knowledge in each of these areas no matter what, especially if you think you're going to run the show yourself one day.
I respectfully disagree with Mr. Queban.
In regards to acquisitions, anyone can forecast a 10 year proforma with inflation+spread growth rates, and back into figures that make the investment analysis work. I think where you develop the most important skill for sole-venture prep is on the asset management side.
The other roles absolutely matter, and I would argue that the asset management side of the business is the most important part. If your acquisitions team find a solid deal, and you manage it poorly, then your fucked. You need to know how to manage properties effectively in order to ensure the asset performs in accordance to/exceeds proforma, as well as develop solid understanding of feasible underwriting assumptions.
HST, most people find AM work less sexy, because its more fun to go out and look for new capital deployment opportunities. However, AM will set you up great for acquisition roles because you actually know what works, what doesn't, how properties function, cyclacalities (is this even a word lol) in the leasing seasons, etc.
Respectfully disagree with your disagreement. I've seen asset management royally F up a deal or hit it out of the park/far outperform the pro-forma, so it is important as far as executing a strategy, but the money is made on the acquisition, i.e., if you triangulate your assumptions correctly (what is REALLY the right market rent, op ex, capital, etc to use?). If the deal is closed, that means that the portfolio management/acquisitions/IC have already vetted the opportunity and asset management is being handed 'the plan' at that point. In a lot of cases, if you mess up something like a market rent assumption, etc., or don't predict it reasonably well (i.e., protect downside) there isn't much the asset manager can do to make up for that. It's very difficult to accurately underwrite/project a cash flow, let alone walk the line of being conservative enough to leave enough upside but not so low that you lose the deal. Is there some luck involved? Sure. But you could argue the same for some of the operations side as well. Ideally, a good firm will have the AM and ACQ teams working pretty closely hand-in-hand.
I would just add fundraising/investor relations.
Legal and Tax as well.
Yeah, this, dispositions portfolio management are probably the three most critical that people left off to this point. As Duke mentioned below Legal and Tax are important but those are more common to farm out IMO.
I'd also like to mention how these roles greatly differ between firms. At our shop, acquisitions analysts are expected to their own Asset Management work. Make sure to understand the role and responsibilities prior to making any decisions.
Ultimately, what you want is to learn how to identify deals, underwrite them, execute a business plan, and exit. Having these skills will make you extremely valuable to a REPE firm or if you decide to start your own group.
By no means is this all of it.. Just to compile it for those that are interested:
Acquisitions- Responsible for sourcing new real estate investment opportunities.
Development- Oversees the design, development, and construction of properties.
Asset Management- Manage the owned real estate by improving and leasing assets. Business plans and modeling.
Capital Markets- Responsible for all aspects of debt financing for assets and originating mortgages. Also, manages hedges and interest rate swaps.
Portfolio Management- Manages the various funds and separate accounts that hold the individual investments.
Dispositions- Manage the sales of RE on behalf of funds.
Property Mgmt- Some groups wills have a dedicated in house PM team or just a team that helps work with the hired ones.
Investor Relations (Fundraising)- Responsible for the capital raising activities for all of the funds.
Data / Investor Reporting- DD requests and quarterly/annual reporting to investors.
Research- Creates investment strategies and supports various departments. Also sometimes write articles.
Accounting- Many different roles here. Most REPE shops employ an army of accountants.
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