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As Nicole said, most likely buy-side at some type of smaller RE investment firm. A: Sure… I’ll start with the intrinsic side: Dividend Analysis (AKA Dividend Discount Model): This approach considers a 5-year projection with discount rates as well as a terminal value calculated either by a multiple or a perpetuity growth approach. Yes a target MBA can potentially increase your chances. Dividend yields and dividend payout ratios are also important to analyze for REITs because of the requirement to issue 90% of taxable income as dividends to avoid corporate-level income taxes. be used for real estate. h�b```�Y,��D@(� I know some real estate development companies have land acquisition analyst roles and I have seen some people with these roles transition into real estate IB. When I found myself on a real estate-related team, I thought about getting a real estate license but that sort of background is not necessary from an entry-level standpoint. I would also take a look at these Fairness Opinions to see good examples of how banks value real estate firms in real life: Note how the Gaming valuation uses very standard multiples and methodologies: EV/EBITDA, P/E, and a DCF based on Unlevered Free Cash Flow. I know some have like Global real assets which is much different (and pays much less) and probably some groups in between. Would I have an opportunity to break into RE IB after 1-2 years? Just wonderful. If you want to stay in RE-related roles for the long term, there aren’t really any downsides to joining this RE IB team. And you value individual properties differently from both of those. Also, REPE funds tend to acquire/sell fewer properties and may focus more on turnarounds and other improvements since they’re not managing an entire portfolio of hundreds/thousands of properties. Networking aside, how can I best spin the experience in order to earn a full time offer with a BB REIB group or a top REPE firm like BX? Would a strong background in residential real estate help a person who wants to do real estate investment banking, regardless of whether they apply as an analyst or a managing director? That’s a tough call but I’d say the top brokerage firm is better for the brand-name recognition. Discounted Cash Flow: Stream of Funds Available for Distribution = FFO – normalized recurring capital expenditures. Accounting framework 2. UBS Asset Management's Real Estate & Private Markets business (REPM), created by the consolidation of real estate and infrastructure, acknowledges that real … Invest in real estate mutual funds. position? You value a REIT differently from a home building company. Thank you so much. position and the fund acct. PA�2���6051t� We provide complementary services to KeyBank Real Estate … And by BB RE group you mean REIB? Thanks for your time. Tim, thanks for your interest in the courses. Real Estate 101. I’d say networking, knowing how to pitch your story & knowing your strength/weaknesses are more important than taking courses. �
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Others are more like miniature cases based on real situations in real estate. Thanks again. Thanks! in economics from Stanford University where he was a member of the varsity fencing team. Will working full-time junior fall semester be a death sentence in terms of finding the time to network for an banking SA position next summer? h�bbd```b``��k@$�jɬ
D Then you add in other assets, exclude Accumulated Depreciation, and subtract Liabilities to determine the NAV. I ultimately want to land on a job at REIB upon graduation – BB or not, it doesn’t matter – and was wondering if I am doing the right thing by pursuing the CFA. In terms of exit opportunities within real estate, REITs are a common destination for analysts; some people also move onto real estate private equity firms or hedge funds. A company such as KB Home (NYSE: KBH) might have a particularly strong presence in the Southwestern and Southeastern US. Q: You discussed REITs above, but how often do you work with individual properties in a real estate IB group? A decline in the price of real estate will decrease bank capital directly by reducing the value of the bank’s own real estate assets. Maybe an asset management firm focused on REITs, or maybe even a RE PE firm that focuses on smaller properties instead (not sure how many of those small ones there are, though). We provide full-service … Cash flow statements Accounting and analysis for mergers and acquisitions 1. Proximity to other major cities is a driver in the Asia market, as is transportation infrastructure (See here for an example of a lodging company’s overview). The conflict I’m having is that going into a large firm I won’t get the knowledge necessary to do small personal deals, but would give a higher salary and connections if I wanted to start my own fund later on. We’re going to fix that with an interview from an analyst who networked his way into real estate IB, coming from a non-target state school. Brian, Thanks for all the good stuff. straight-lining of rent). Post-financial crisis, I’ve also seen real estate investment banking teams adopt a more principal-oriented approach to the real estate sector. You must confirm the statement above and enter a valid email address to receive this free content. I have worked and gained a very strong understanding of the construction of a property, the costs and the risks associated with a real estate project. Climate change, energy needs and water scarcity are counted among the biggest challenges of our century. Are any banks particularly strong in the sector? But any-hoo, what’s a girl gotta do? The investment banker analyses the capital stock such as preferred equity and JV equity and identifies potential capital sources in terms of investment … Long term I would like to work my way to the top of a large REIT or development company, or perhaps even manage a REPE fund. With REITs, DCFs and Dividend Discount Models can often give you similar values because FFO – Recurring CapEx tends to be close to the actual dividends issued. One is an associate position for Asset Management at a BB. Should’ve been more attentive. Just not sure which option I would learn the most, get the most deal exposure, get the biggest resume boost, etc. Do you think it’s a bad idea to apply for both the AM Assc. What about the popular deal types in the sector? Thanks for the guidance. Q: Once again, lots of information there – but it sounds like the different multiples are the main point to keep in mind? What exactly would be a good step upwards (in investment banking etc)? Is it common for people to move over to REIB/REPE from a background in commercial real estate valuation from a top brokerage house? Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews. Real estate development is not ideal for IB. What about relative valuation and multiples? An Investment Bank raises capital (money, in the form of debt and equity) for companies and advises them on financing and merger alternatives. Yes, there is a great package for Excel & Fundamentals – https://breakingintowallstreet.com/biws/excel-financial-modeling-fundamentals/, Of course, you have lifetime access to the courses and can access them whenever you have time and wherever you are. Q: Finally, some people claim that going into real estate makes your skill set much more specific and limits you to ONLY real estate-related opportunities. Hey, sorry, not sure how we missed this question. REPE at a normal MM/megafund PE shop would be very hard as they mostly look at people who were in the REIB groups at BBs. Your email address will not be published. I’m currently in a BB on the technology side. It appears that increasingly on the private side, M&A experience is considered good but it also helps to have coverage experience and relationships. He earned his B.A. Would BAML or HFF be near the top of that list? The only real downside is that you won’t be able to join generalist PE firms/banks/other funds as easily in the future, especially if you stay in RE for several years. Investment … 1127 0 obj
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Play up the valuation / modeling side as much as possible and point out how there are similarities in the deal types between CRE and REPE/REIB. Many of these questions are like a verbal quiz about real estate. Luis Miguel Ochoa has facilitated a variety of strategic initiatives from corporate acquisitions to new market development. I became highly interested in real estate as an undergraduate, where I had a business degree (finance and real estate concentrations) from a top-10 program. It looks like your real estate modeling course would be a major competitive advantage as well. Some firms also use Prospective Buyer Analysis to see if other buyers could execute the transaction without having EPS decline immediately afterward; you’ll see it referred to as Affordability Analysis as well. They are similar. We guarantee 100% privacy. Thanks, I think moving to the buy-side at a small RE firm would be a better bet. You’ve heard those words plenty of times when it comes to real estate – whether you’re just casually interested or you fully intend to become the next real estate guru. Hello, I’m a rising senior at a non-target school, double-majoring in subjects unrelated to finance. Going to a larger bank’s RE group would also be an option, though it’s heavily dependent on the economy and the hiring climate. The first investment in unlisted real estate, Regent Street in London, is announced on 4 November. REAL ESTATE INTERVIEW QUESTIONS INTERVIEWING > QUESTION BANK Technical interviews test your knowledge of real estate. REITs might be diversified, or they might focus on a specific sector like commercial, residential, retail, industrial (ex: warehouses), healthcare, and so on; some firms might have a geographic concentration as well. Acquisition accounting 2. Maybe move to buy-side at a small RE investment (although you can do this from UG) firm in AM or acquisitions and try to climb up the ladder? I guess I’m just looking for advice/guidance here. Financial sponsors are quite involved and firms like Blackstone / KKR have actually been buying up individual properties lately. A: Sure. My long term goal is to work for a middle market investment banking firm in my Southwestern city. Thx a million. Our KeyBanc Capital Markets ® platform provides full-service financing for all types of Real Estate Investment Trusts (REITs) and private owners of real estate, from both the public and private equity markets, and includes joint venture funding and both buy-side and sell-side advisory services. When M&A does happen, geographic presence tends to be a key driver: one firm is strong in the Northeastern US but wants to expand to the Midwest or Southwest, for example. It’s the inverse of valuation multiples: a 20x multiple corresponds to a 5% Cap Rate, and a 10x multiple corresponds to a 10% Cap Rate. The idea is that you take the REIT’s projected NOI and divide it by the appropriate Cap Rate (you can go granular and divide this into different regions or property types) to figure out the value of their gross real estate assets. The object of this start-up company is to purchase one to two residential properties per year, over the next 10-15 years. Please let us know if you have other questions regarding the course! Easy! If you’ve already seen people in those roles transition into real estate IB, why are you asking this question? I am not 100% sure but you may want to refer to Dealogic for recent deals in the sector. I have worked at a leading RE brokerage (think of RE/MAX, Coldwell Banker or Century 21) as an intern. Afterwards, if I want to spend the extra money/time I will purchase the Excel & Fundamentals course. Demand for houses is the strongest indicator of where this sector is going – in a poor economy with high unemployment, home building is not a great place to be. And I am assuming people in the group will not be doing LBO as well? You have to value it using the methodologies described above and see how your estimates compare to its current share price. Q: And what other tips do you have on getting in if you can’t use on-campus recruiting? Quick question about exit opportunity of working at a small~mid-sized REIT? BIWS Real Estate & REIT Modeling gives you a crash course with case studies on real estate developments, acquisitions, pre-sold condos, REIT valuation and M&A/LBO modeling, and more. 0
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