Leveraged Breakdowns

Interview with a Real Estate Private Equity Acquisitions Analyst who Broke in from a Non-Target State School

I am excited to share my interview with Chris, a real estate private equity (“REPE”) acquisitions analyst who broke into his investments role from a non-target state school.

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Lev: Could you please introduce yourself and describe your current role in real estate private equity?

Chris: Sure thing. My name is Chris and I’m currently an acquisitions analyst for a REPE fund that focuses on industrial properties. Specifically distribution/warehouse properties ranging from Core to Distressed. The fund size is about $2.0BN AUM with annual acquisition volume of $250.0M — $300.0M. That puts us in the top 30 firm by industrial acquisition volume, and top 3 in our metro (top 5 metro in the USA). I just started three weeks ago, but my responsibilities are underwriting, due diligence, and transaction management. I also have incentive to source deals, but likely that will not be my focus for the first year. We primarily operate at the asset level, but there have been a few opportunities where we’ve placed LP equity for development deals.

I graduated from a large southern state school (non-target) with a degree in Finance. Immediately after undergraduate I went into a Master of Real Estate Development program at my university. While in graduate school I interned at a top 5 REPE in their asset management. The internship was key and really ended up being the goose that laid the golden egg. It opened up doors for me that would’ve been likely closed otherwise.

Lev: Even though the Master of Real Estate Development program opened doors for you, it is still quite exceptional that you transitioned straight into REPE. Could you please speak more to your path from your MRED to REPE? What strategies propelled you to success, and what challenges did you overcome?

Chris: So going into my Masters degree I was pretty sure I wanted to pursue development rather than REPE. I had finished an internship during the Fall/Spring of my senior year with a boutique IB in their M&A group, and really wanted to get close to the “sticks & bricks.” As I progressed through my Masters program, my previous experience just kept pushing me towards REPE. I was pleasantly surprised by the lack of “target vs. non-target” mentality in CRE. You’ll likely still find that for NYC firms or top REPEs, but for most other places as long as you can walk the walk and talk the talk they don’t really care as long as it is a somewhat reputable school. I think this comes down to how fragmented the industry is. I ultimately got a Summer internship with a top REPE with $70.0BN+ in AUM. I completely got the internship through hustling. My boss told me this Summer that the reason I got the internship was that I was the only person out of 1000+ resumes to call her. I also got my current position through a cold email. It’s pretty impressive how much of an advantage you can gain through a 5 minute email. Probably the biggest challenge I faced was trying to find the needle in the haystack. There is not a lot of personnel churn like you see in other industries, and the recruitment process is much less organized. This leads to a situation where you have no idea who is recruiting (due to a lack of need) or when they are planning on recruiting.

Lev: CRE really is great in that it lacks the worst of the “target vs. non-target” mentality. If you’re able to dig it up, would you be able to share the cold email that got your foot in the door for this position?

Chris: “My name is Chris XXXX and I am a Master of Real Estate Development Candidate at XXXX University. I am graduating in December of this year, and am quickly gearing up my job hunt so that I can immediately transition into a full-time role come January. I came across the posting online for the Investment Analyst position in the office XXXX, and wanted to reach out to see if you would be available this Friday for coffee or lunch while I am in town. It would be great to learn more about the position and [firm name] I have included my resume for your reference, as well as the job posting that I am referring to, and I look forward to hearing back.”

Lev: How did you manage to convert the informal “Friday coffee or lunch” into a formal interview process?

Chris: It progressed fairly naturally since there was already a need/job posting. Basically, the Friday coffee/lunch ended up becoming an unexpected impromptu first round interview.

Lev: What resources did you use to stay current with trends in CRE?

Chris: National resources are hard to come across since it is so market specific. The Real Estate Investment Smartbrief by Nareit is a great source for national news. I also use local business journals and Bisnow for markets we are active in, and especially the market I live in.

Also, trade groups such as ULI, NAIOP, and ICSC.

Lev: Earlier, you had mentioned that you set yourself apart from the 1,000+ competing resumes by being the only candidate to pick up the phone and call the boss. What other concrete actions do you take or have you taken to set yourself apart, either on the job or while recruiting?

Chris: Learned VBA which help set myself apart. Also, I interned every opportunity I got. While in graduate school I interned with a smaller REPE firm unpaid (got that through cold emails) and was able to use that as a launching board. This may be an unpopular opinion, but if someone offers you an unpaid internship that will give you good experience then take it. The experience is way more valuable than the $15/hr they’re gonna give you anyways.

Lev: Industry exposure is key. Could you please share any insights that your internship experiences provided that you would not have received otherwise?

Chris: The finance aspect of the business is very important to learn, but generally you can pick that up in school. In a finance class you’re likely never going to learn the difference between a roof with a 60 mil TPO membrane and a roof with ballasted EPDM membrane, or why tenants prefer T-5 lights over T-8 lights, or why some buildings are 32’ clear, some are 36’ clear, but pretty much none are 34’ clear.

I think that a lot of people lose sight of the fact that we are in the business of providing a product to an end user. The end user dictates what building characteristics are valuable and what product we provide. We provide a leasehold space to businesses or families. You’ll never learn what a tenant wants from a textbook. I found my asset management internship to be very valuable for this reason. Acquisitions is sexy, fun, and lucrative, but asset management, and the execution of the investment thesis, is where the true value is created.

Lev: Understanding execution is helpful, your asset management internship was great exposure. What eventually drew you toward Real Estate Private Equity acquisitions out of your MRED as opposed to other real estate careers such as development or, as you’d mentioned, asset management?

Chris: I think it has to do with my personality. In general, I lump people into two categories: those who thrive in project-oriented roles, and those who strive in process-oriented roles. For some people, they thrive by going into work and doing pretty much the same thing every day, punching out at 5pm, and leaving their work at the office. There’s nothing wrong with that, but it isn’t my mentality. When put in those types of roles, I get bored and no too long after I stop enjoying what I do. I consider asset management a process-oriented role because the work doesn’t have a defined goal other than “continually improve xyz building until we decide to sell”.

Development and acquisitions are project-oriented roles. In general, the work has a end goal (develop this land, buy this building, etc), and for me that keeps the carrot dangled out in front. It keeps me focused and it keeps things interesting. The reason I was drawn more towards acquisitions (at least early in my career) is that in development projects last several years, whereas at my firm projects last 60 days. I just don’t think I could stay excited about something that takes 3 years from beginning to end. I would get fatigued. There is also more money early in your career.

Lev: Your process-vs-project perspective is incredibly helpful when considering various career paths. Thank you for sharing your journey in such detail, your insight is beyond valuable.

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