Just came across a position in a RE money management firm. The title of the position is acquisition analyst. The job responsibilities include deal evaluation, financial modeling, due diligence, presentation to the investment committee, etc. Has anyone ever had similar roles in the past? If so, I’d appreciate it if you can talk about your experience with this type of work. (day-to-day, life style, uppers and downers, exit options, etc)
This kind of a job is likely at a small, private firm. Your work load will ebb and flow, sometimes to a maddening degree. While the real estate market at large is improving, commercial real estate is in the beginning stages of collapse, so I would expect more ebbing than flowing, which is just the worst–trust me. Financial modeling in real estate is absurdly easy (and in fairness, it is much more accurate than the garbage that comes out of PE firms or investment banks when evaluating business transactions). I really have no idea what a real estate “money management” firm is, but I’m going to assume it’s a REIT or a private equity fund where you’re investing money for targeted returns. However, it’s not clear whether you will be working in real estate SECURITIES or in real property, but I think it’s probably real property given the “due diligence”. Exit options are good within the commercial real estate market–you can exit into underwriting, real estate asset management, private equity, investment banking, etc. Depending on where you are (let’s say an average large suburban area) I’d say the pay is around $55-70k, all-in. Looks like a job that might prefer 1-2 years prior experience. In this market, you will become a pro at clandestinely browsing the internet and looking like you’re working hard even when there is absolutely nothing to do.
Thanks. The company invests in both securities and properties and has about $40 B AUM. Form what I heard there has been some layoffs and the firm is still unprofitable. I know first hand how bad things are in commercial real estate (currently work in workout in a commercial bank), but i am still somewhat intrigued by this opportunity. Am I shooting myself in the foot rushing into a burning building? Also, I don’t have exntensive modeling experience. Is there a quick way learn the basics?
^wow, kkent you’ve got me pegged. I’m an acquisitions analyst and i couldn’t agree more with the ebb and flow comment and level of sophistication in financial modeling comment. PE real estate is all about access good deals, more art than science. more who you know than what you know when you’re doing plain vanilla deals. If it’s a small shop and you have some technical skills you can sell that as a way to contribute in slower times. Smaller companies generally have less developed processes; I’ve been doing a lot of process improvement/adding to research platform in our downtime. If you have Excel/Access, some econometric analysis ability you can add a lot of value elsewhere in the firm while you get underwriting experience. Pay depends on experience. If you stick with acquisitions once you’re sourcing/negotiating your own deals pay is good. Head of acquisitions on a portfolio will have a base around $400 - $500k, 10+ years experience. Bonuses can be very good if the fund performs well, I know some shops that pay 4 - 5x target bonus, usually 25% target. I’ve been in this position for 2 years and really like it when there are deals coming in. Out of curiosity, what city is this job in?
I am somewhat new, started 2 years ago as an analyst in the financing side. I will give you my take. Things are very slow, and we are not doing alot of deals right now. Which sucks. You do not need extensive modeling experience, kkent was right on about the difficulty of real estate modeling. What is more important is learning the markets that you are working in well. Whether it be geographic, asset type or both. Jumping in right now is a bit of a gamble, unless your company is well capitalized and has alot of cash on hand to purchase properties (ex: I would be interested in know what the average LTV is of their current portfolio). They are hiring, which is a good sign. I jumped in at a terrible time, but fortunately my company is relatively stable. But still, my job security is about the same as most others…iffy. On the upside, if you stick it out and make it through the coming real estate disaster, everyone tells me you learn more on the way down. I would probably take the job because if you do keep this job through the recession, I think (am hoping) there will be decent interesting opportunities in the future. kkent, what do you do in real estate?
^Chicago. Thanks for the insight. I am thinking about doing a PT MBA, which, given my workload at my current 9to5, is feasible. What are the hours like for an acquisition analyst? My understanding is that this type of position is more like 2~3 year track and people leave to go to B-school afterwards. Is that so?
There are a few larger real estate-focused managers/advisors in Chicago, and I think I know which one you are referring to (and they have a strong reputation and offer good exit opportunities, according to the few I’ve seen leave there over the past three years, if I’m right). Most large commercial real estate owners let their entire development teams and some of their acqusitions teams go about 18 months ago, and are now likely looking to add to their acquisitions team, given the dislocation in the markets and the potential available deals that will eventually have to be done. There are enough property owners who are not sitting pretty, balance sheet-wise, and are waiting to (or already have taken) take a hit on their cash flows as their tenants falter. These are where the opportunities are: those firms who overpaid and over-levered their property purchases and are staring at a large nut coming due are going to have to sell, since there will be little room for refinancing and renegotiations as their cash flow and underlying property values have fallen. I’d say take the opportunity, as this is, in my opinion, one of the rare times in our generation when great wealth will be created in real estate due to such dislocation. Just look back at the wealth creation that came from the early 1990s with the RTC selling property for pennies on the dollar, and how many REITs held IPOs stemming from those bottom-dollar purchases in the following years. Learn as much as you can, and try to get as much diversified experience as you can, as this firm holds both real property and real estate securities. Good luck!
Thanks for the insight, everyone. So the consensus seems to be “go for it”
I agree with “go for it”. Especially if it’s a smaller firm, you’ll get exposed to a few different things, hopefully. Real estate is much easier to value than, equities, for example, because the cash flows are very hard to mess up and cap rates are more agreed upon than WACC and CAPM.
mcthorp Wrote: ------------------------------------------------------- > I’d say take the opportunity, as this is, in my > opinion, one of the rare times in our generation > when great wealth will be created in real estate > due to such dislocation. Just look back at the > wealth creation that came from the early 1990s > with the RTC selling property for pennies on the > dollar, and how many REITs held IPOs stemming from > those bottom-dollar purchases in the following > years. Learn as much as you can, and try to get as > much diversified experience as you can, as this > firm holds both real property and real estate > securities. Good luck! I agree, the next Sam Zell will come out of this mess. The question my company has been trying to answer is: what’s the best way to access these deals? The overleveraged properties likely have no equity left in them so the owners are just going to hand over the keys. If it was in a CMBS pool then the master servicer has to auction the property within 90 days I believe. Or if it’s a REO, it’ll go to auction. But I’m thinking many holders of mortgages may want to just sell the note at a discount before the wave comes. Could be a good way for a buyer to step into an ownership position at a good price by purchasing the note and foreclosing after a default. Thoughts?