Difference between PE and Real Estate Pe? (2024)

8y

8y

GBS

8y

Best Response

Harder to generalise as there are more varied types of firms than in investment banking or large corporate private equity.

There should be a few old posts that are relevant on this website... Generally speaking its less structured than investment banking and corporate private equity in terms of compensation and roles, but to generalise:

• Entry level (acquisitions analyst or asset management analyst):Generally funds hire recent graduates or people with 1-2 years finance or investment banking experience. RE financial modelling is key. At this level you're an analyst and tend to do the financial modelling, due diligence and might have some post-acquisition monitoring duties (in many firms the post acquisition is handled by a separate team of asset management professionals).

• Some of the larger funds hire post-MBA folks for acquisitions roles, but they tend to look for people with previous RE experience (in particular REPE experience). At this level you tend to have more execution responsibilities (i.e. take ownership of deals) and some sourcing as well.

Pay:Tends to be lower than corporate PE and BB investment banking unless the fund is large. Hours tend to be better (relatively), unless you are at a mega fund where they work you to the bone but pay you very well. A good indicator is how much AUM they have and what the background is of the people who run the fund. Obviously, at the higher levels carried interest and such becomes more of a factor in terms of total compensation. RE is a cyclical industry, so the good times are great, but the bad times are brutal.

Career-wise you become a sector specialist and become a real estate guy.

8y

8y

There are a lot of different types of real estate investment firms, many of whom you could call real estate private equity just by virtue of the fact that they buy properties (equity) and the funds are private (unlike publicly traded REITs). Within the private real estate investment world you have specialty or regional funds (I'm thinking groups like JMB, Divco, etc.), integrated real estate firms / asset managers (Hines, Lasalle, Prudential, RREEF etc.), multistrategy megafund arms (Blackstone, TPG, Carlyle, Apollo), and pure real estate opportunity fund sponsors (Starwood, Walton Street, Westbrook, Rockpoint, etc.).

The compensation for the latter two categories (multistrategy funds and opportunity funds) I think tends to be better than the regional firms or integrated real estate firms. They tend to hire real estate investment banking analysts, and pay is generally inline with middle market corporate private equity ($90-110K base with similar bonus) and better than investment banking. In my experience, you don't tend to see too many MBAs (relative to other asset classes), though some firms have a greater willingness or preference to hire MBAs than others. Some firms split up the acquisition and asset management duties, in which case the comp tends to be much better on the acquisition side. At least in my observation, the lifestyle is definitely a lot better than banking, and better than most corporate private equity shops.

In terms of the work, an analyst/associate will be responsible for running the model, performing the financial analysis, gathering market data from brokers and operators, and preparing memos and other presentation materials for investment committee. You may also get involved in reviewing and structuring some of the legal docs (I happen to enjoy this part) like confidentiality agreements, letters of intent, purchase and sale agreements, and JV agreements. Depending on whether or not you have some asset management responsibilities, you may get involved evaluating prospective tenants, reviewing leases, construction plans, etc. Also depending on whom you work for, as an associate you may get involved in attending broker events, meeting with operators, etc., which is one of the fun parts of the job.

To get an acquisitions associate job at a one of the big opportunity funds or multistrategy funds, you should go into investment banking in the real estate group at one of the big banks. On the asset management side, or if you are looking to work at a smaller/regional, one of the diversified real estate asset managers, or a local operator, I think backgrounds are more diverse, and you can consider starting out working for a commercial real estate brokerage doing leasing or asset sales.

8y

8y

Quick update - I know I have not received any responses here but:

I went into the interview and the interviewer communicated a great interest in me, however he stated that he would have a hard time presenting a business case for bringing me on board since I do not have any relevant experience in RMBS, CMBS, warehousing, or securitization when he could bring someone else on who had the the experience. The interviewer stated that if they were opening up their third fund at this time he would not hesitate in bringing me on board as an FT. I followed this up by asking about whether an internship would be available and he extended an "unofficial" invitation to become an intern during the summer with the possibility of a full time position; most likely it would be an application for the internship but I would be viewed favorably as he had already interviewed me and felt positively about the meeting.

The internship would be within their operations, however all of the individuals that have left their operations unit have either gone on to the asset management side of the firm with one exception - and the exception actually left the country to start their own fund in Singapore (yes it's crazy.. straight out of an ops role to starting his own real estate fund). I have strictly an operations back ground with about 2 years experience at big brokerages (monkey processing and some client service) and a short stint at a HF ops role so it's not like i get chances to be graced by the presence of PE types on a regular basis.

My question is this: is this an opportunity of a lifetime as it is a possible entry way into a PE unit? Of course it is dependent upon performance during an internship that would hopefully lead to a full time position and THEN dependent upon performance at the full time position to be able to move into the AM side of the fund 3-5 years down the line... lots of IF's.. but...

I'm just debating whether I should leave a full-time job (which I hate) to take this chance at a paid internship and if it is really the one-in-a-million chance that I think it is.

The interviewer is a managing director at the fund.

Any thoughts? Or am I putting this possible career path on too high of a pedastal?

8y

so you want to end up in PE or real estate PE? those are 2 different animals.

if you are trying to leverage this job for a career in vanilla PE, it probably wont happen. regular PE is more complicated and requires a different skill set.

BUT if you are trying to leverage this job for a better career in re pe, this would be a good opportunity to test out the industry and maybe get a full time job.

and this def wont be a sexy job either. expect some more monkey work, nothing complex or exciting. wont be too different than what youre used to know.

and on a side note, i am a little surprised at how demanding your interviewer is about hiring a guy with mbs exp. , especially from the job description you provided. that's stuff i could do at lower salary than what your interviewer would pay for an mba with structured finance exp. i am just trying to put myself in your interviewer's shoes to figure out what he/she wants...why would they interview you if you have no relevant experience when they say they strongly prefer someone who has complex re experience for a job that is obviously entry-level, and why would they pay more for experienced talent? i dont mean to sound like a dick, but i think your interviewer doesnt want to hire you, and just said that to be nice.

---man made the money, money never made the man

8y

Thanks for the feedback -

The MBS experience that I was referring to was related to MBS operations experience and having at least worked with the product on one level or another but not necessarily being part of the origination/securitization process.

I'd expect the work to be processing related since my background is in operations and the role was within their operations department - the way that the interviewer talked about the company and his long term goals for the individual in the position sounded like there was a lot of room for growth and a lot of encouragement for growth as well.

A combination of the interviewer's curiosity and my education led to his wanting to meet with me. It sounded like he wanted someone he could mentor. You are definitely right about his not wanting to hire me because it was apparent that the competition had relevant experience and if he wanted to hire me, he would have. Hopefully the internship will be structured in a way that can lead to a full time position dependent upon performance only and not just an over and done with stint -

Thanks again for the feedback

8y

The op mentioned transitioning from REPE ops to AM, and imo that is definitely possible, probablly won't take that long if there are vacancies. The way I see it, ops here is like google street view and AM here is like looking at a zip code, very similar but AM is the bigger picture and you tell other people to do the monkey processing but in many areas you need to understand the exact same concepts. It's a much easier transition than trading ops to S&T. Also recently I have seen AM positions that sought people with property management experience.

Like MR said, the ops work is relatively simple. So if you master your work, understand how the firm works, and become valuable to running whatever assets you work on, you have a good chance of being promtoted up, and they will fill the ops position with new hires. I think the reason your interviewer mentioned the hard sell compared to people with structured finance is because there are just so many people out there who were laid off when the RE market froze.

8y