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Leveraged Breakdowns

Developing Market Knowledge, Part 2: Data Sources

To get a job in real estate private equity, you need to master three things:

  1. You network as hard as possible and learn by speaking with professionals who make real estate equity investment decisions every day
  2. You have developed data-backed opinions on real estate markets, namely: what has happened in the past, what is happening now, and what you think will happen in the future of CRE investing. Investing requires a lot of hypothesizing, and your ability to hypothesize depends on you grasping essential market context. You only get this by reading and speaking with investors.
  3. You have developed technical skills. This means you can build a real estate investment case study model from scratch and you understand what it’s like to buy a building from beginning to end. You can screen a teaser, you can read a CIM, and you can trove through a data room for pertinent information. And you can translate all of that into an Excel model. If you don’t already know how to do this, you can’t find a better course than Leveraged Breakdowns’ own Breaking Down REPE. It shows you what it’s really like to buy a building — all the stuff mentioned above, and more. If you’re in a crunch for time, we also have a fast-track essentials course (REPE Starter Kit).

This series focuses on #2 – developing data-backed opinions on real estate markets.

How Megafund Investors Develop Data-Backed Opinions

The previous article in this series described how passion is the key ingredient. This article will focus on how you can set yourself miles apart from the competition with market knowledge. At this point, we will show you exactly how we as megafund REPE investors have learned to source market knowledge with our years of experience in our careers in repe.

Where to Find Market Knowledge

Before we dive into specific sources, I’d like to show you how I generally find my information. My methodology follows a top-down approach. First, understand the broad themes of the sector. Then, dive into the company-level and/or asset-level specifics. Generally, I source information following this pattern:

  1. Sector research: This is research compiled by institutions that focuses on sectors as a whole. Think office, retail, industrial, multifamily, hospitality, self-storage, etc. Sector-level research is helpful because it weaves together broad themes that impact the industry as a whole. This is the best place to start because it gives you the 20,000ft perspective to contextualize your more detailed research.
  2. Company research: Company research is produced by institutions with a focus on singular corporate entities, almost always those which are publicly traded. You should study single-company research only after you have grasped the major themes of the sector. Company research is the first level where you actually get actionable information because REPE funds nearly always make corporate-level investments, not sector-level bets (that is more in the hedge fund territory).
  3. Public company filings: Company filings are primarily objective reports with some subjective narrative and adjustments strewn in (think “Adjusted EBITDA” and “Management’s Discussion & Analysis”). The public company filings I most frequently reference are: 10Ks, 10Qs, 8Ks, Investor Presentations, Earnings Call Transcripts, and Financial Supplements. You could build an entire financial information off these sources alone. In fact, I’ve seen several real estate investment case studies centered just on these sources of data. With the exception of Transcripts (easily found via quick Google searches), you can find all of this data on the SEC’s EDGAR website just by searching for the ticker. However, I prefer BamSEC because it’s well formatted and you can easily pull data into Excel tables and PDFs — definitely worth the money if you’re a frequent user of public company filings. Finally, nearly every company also consolidates this information on their “investor relations” page.
  4. News: Of course, stay current with real estate news. My favorite free source is NREIOnline, which does an excellent job of consolidating the top 10 CRE industry articles every day. Real estate is inevitably a local game, so make sure you also follow local sources like bisnow, therealdeal, etc.

The next article in this series will show you exactly where I find my data, starting at the sector-level. I will use self-storage as a specific example so you can follow along as if you were making a real estate equity investment alongside me.

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