Real Estate Investment Banking Int.

Hi!

I hope you all will answer (please)

Anyway, I am having an interview for GS Investment Banking-Real Estate Financing group and I was hoping that someone on this board can help me out. I am going to the final round and I have no idea what to expect.

I am currently a real estate development major (undergrad) and I don't know much about CMBS (I just started this major people) but I am really interested in the securities side of real estate. So if some one can give me some resources that I can use to look up terms to know and concepts within the Real Estate Investment Banking realm, I would be appreciative =)

 

Congratulations on scoring the interview. Goldman is a good shop and is expanding their CMBS business tremendously.

I would say knowing how to read an asset's operating statements is important. From top line rental revenue to bottom line underwritten cash flows.

Then know your loan metrics like loan-to-value (LTV), debt service coverage ratio (DSCR), and debt yield (DY).

That should be a good start.

 

Thanks, I am really excited to interview. I'm surprised I got to the final round a lil bit without knowing all the specifics.

And Oh ok. I know how to do some of that, but do you know of resources I could use? I feel like knowing the traditional investment banking questions are helpful, but not all that related to real estate financing...

 

I know someone who took a different route--- IS Analyst/Associate (major player in major market) to GS CMBS originations/Asset Management (3 months or so ago). He had a good base for the financials behind individual real estate assets--which translated (from a terminology and conceptual basis) into underwriting portfolios/groups of assets for securitization. He had a ton of exposure to the debt market as when he created BOVs, Proposals, OM's, he'd make debt assumption that he pulled from debt brokers and BB connections (institutional clients who they have sold to before and therefore could tap for debt assumptions). He is doing well thus far but of course it is an adjustment--its pivoting from equity to debt analysis, really--lots of the same terms/concepts but not the same animal.

Anyone else see this kind of move made?

 

It's like a future investment which gives a return for the long term. Real estate investment is better than making a fixed deposit. You can improve business resources this way. Real estate investment is the best option not only in the USA but all over the world. If you want to do some investment in the USA then you can go to “Investmentbank” real-estate for more information.

 

he's probably going to ask you a lot about your current job. know your shit. i would also try to find how RE IB is different from other industry types, because I know a lot of things are different. Know potential clients, know where RE is going/outlook on RE market, industry, etc.

-- "Those who say don't know, and those who know don't say."
 

if its not a pe job, i wont expect lbo questions. and in case he does ask to about LBO, say exactly this and not more

" I have not done LBO modeling before, but I'm sure I can pick it up easily ".

this will be enough IF he knows that u know DCF (which means u know ur way around excel). Dont sweat it...u'r fine.

re: accounting...try to read some accounting 101...for example, what happens to XYZ in balance sheet is ABC in income statement goes up.

good luck

 

Maybe you should brush up on FFO and AFFO if all you have been doing is DCF. Even for a corporate RE entity you still value it based on the properties. So the LBO is just a highly levered portfolio deal with a bunch of layers of debt.

Hotels are not that difficult. They are either operated under a sale and leaseback or a management agreement. In the former it become the same as valuing the real estate like any other building. NOI usually have fixed or inflation linked uplifts. In the latter, you build up the P&L, so Room Rev + Food&Bev + anything else that you make money from. Costs are Energy, Repairs and Maintenance, Sales and Marketing, and a few other line items. Once you have your EBITDA, subtract FF&E and base and incentive fees and then apply the multiple you want to value it at. One thing I should mention is that there is always a debate on exactly how to count FF&E, but you wont get that question in an interview.

Last thing I would suggest is learning about CMBS and other RE debt because many mandates right now deal with debt restructuring. A lot of banks have been playing the extend and pretend game, but at some point that shit needs to be worked out. In CMBS you can't just extend and pretend so all those problems will be coming to a head over the next 2-3 years.

 

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