Roles Within REPE

ThatHokie's picture
Rank: Baboon | banana points 100

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?

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Comments (14)

Mar 2, 2018

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.

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Best Response
Mar 2, 2018

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.

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Mar 2, 2018

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.

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Mar 5, 2018

@RealDonaldTrump" @MonkeyWrench

Acquisitions and AM are both important. Doesn't do anyone any good to bicker over which side of the business is more important than the other because the fact is that they are both integral parts and that they're both NEEDED in order for the machine to work. Would add that in order to do Acquisitions or AM there needs to be capital so knowledge about Cap Markets is just as valuable. One can just as easily buy a diamond in the ruff as they can a ticking time bomb. And AM can be handed a polished diamond only to cover it in soot just as easily as they can turn igneous rock into a gem stone.

If you're wanting to do this on your own one day you're going to want to have a solid understanding of the following: what to buy, when to buy it, how to manage it and when to sell it. Management, tax and legal are the grease that help the different gears turn in unison. I agree with @MonkeyWrench as these are more often than not farmed out, but there's some low hanging fruit to be had if you're able to master these and have them in house.

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Mar 5, 2018

Just playing off this whole thread.....

There will be a time when the market craps itself and the tide waters will recede. Those who are still wearing swim trunks will be the ones who properly managed the properties/portfolio.

I see so many MF acquisitions deals where they are currently cash flowing and clearing their metrics. However, when the shit hits the fan, the market rent growth stops and the tenants start dropping off and collections start falling, those deals are the ones who my lending company will have to take back.

There will always be a need for the acquisition's guy to find a great deal, the capital market's guy to stack the capital in a way that ensures they aren't overleveraged or promise returns that they can't keep and the asset manager needs to be able to take care of the property.

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Mar 5, 2018

I wasn't really bickering - read the last sentence of my post. I was mainly disagreeing with the assertion that acquisitions is the 'easier' of the two.

Mar 5, 2018

Nor was I, just a discussion where I offerened my opinion. Cheers.

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Mar 7, 2018

Agreed. Guess bickering wasn't the best choice in words. Both sides are important haha

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Mar 2, 2018

I would just add fundraising/investor relations.

Mar 2, 2018

Legal and Tax as well.

Mar 2, 2018

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.

Mar 2, 2018

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.

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Mar 5, 2018

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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Mar 7, 2018

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