So you want to work in CRE Debt? Here are the options...

I'm currently taking a class thru NYU (RE Capital Markets) that has both blown my mind/gotten me particularly interested in debt. While I work in agency lending, I was completely unaware of both the complexity and career paths available within this part of the the industry (our last class covered subordinated debt and mezz lending).

Below are some types of positions I'd like to eventually venture to and am curious about the outlook of each:

  • analyst at debt fund/mortgage reit
  • origination at a CMBS shop
  • debt placement analyst
  • special servicer (could be particularly interested with downturn looming...)

Appreciate any input- thanks!

Comments (17)

Nov 6, 2017

debt placement analyst here. Ask away.

Nov 6, 2017

What does your underwriting process look like? Are mortgage REITS/debt funds sending you their models to parse through?

Nov 6, 2017

Anyone want to take a challenge of what the roles and responsibilities of each of these are?

Nov 8, 2017

I'm curious to learn more about what an analyst at a debt fund/mortgage REIT does, as well as the work of a special servicer.

Nov 11, 2017

Looks like Oaktree is hiring for a debt fund analyst role. Not sure how much you know about these guys, but this is probably one of the best places to be:

https://careers-oaktreecapital.icims.com/jobs/1243...

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Nov 11, 2017

Like you said it's largely circumstantial. The below isn't REIT specific but hopefully you'll still glean something useful from it.

All the life company borrowing I've dealt with has been through agency. These are usually high quality assets and experienced borrowers. You typically get really good pricing and its non-recourse. The non-recourse is usually the main distinction between what you're able to get from your commercial bank balance sheet lender. Pricing will also vary by market classification with the agencies and pricing really falls off below standard market. But you can get 80% leverage through the agencies with a 1.20 to 1.25 dscr in top and standard markets.

CMBS with risk retention (from what I've seen) is putting constraints on leverage. I'm seeing 65% maybe 70% ltv but the asset can be ugly and so can the borrower. It depends on the asset type too. Not a lot of love for hospitality lately, or multi family. There's seems to be a lot of interest in overnight care ALF type assets.

Like I said hope this helps.

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Best Response
Nov 11, 2017
4thandDollarSigns:

(I'm excluding more mezz pieces or less traditional Prudential type money, etc.)

You do realize Pru is a life co, right?

4thandDollarSigns:

I get size, asset class, leverage, etc. are all factors but I'm looking for specifics about what characteristics differentiate the options

A big distinction in the debt sources you've listed above is unsecured versus secured financing. A dedicated REIT guy could better answer your question but to get you started, think about 1) pricing, 2) term, and 3) covenants, or to frame it another way, 1) economics, 2) your current maturity ladder, and 3) the level of flexibility you want. Look up REIT bond spreads and credit ratings. Look up some mortgage broker websites for the secured stuff and see what kind of terms they advertise. You'll choose debt based on A) what you're optimizing for, as limited by B) different debt sources' willingness/desire to finance you and your property.

Nov 8, 2017

Someone tell me if I'm wrong, but generally Wells Fargo is #1 for CRE lending, and then JP Morgan and BAML trail by a bit.

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Nov 11, 2017

just wanted to bump this... especially since rates are moving quite a bit this week

Nov 11, 2017

Not sure you're going to get much traction here. This is an extremely broad question that's better suited for Google.

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Nov 11, 2017

Haha agreed. I was going to give it a try and was like oh man this will be another 30-60 min post for me. Would rather just chime in after some of the other guys do the heavy lifting.

Nov 11, 2017
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