Hi all,
I'm a currentTMTIBDAnalyst that has just been headhunted today for a real estate private equity acquisitions position at one of the large cap funds (BX, Starwood, Brookfield, Lone Star, Carlyle). The role sounded amazing and I want to prepare as much as possible, however I wasn't given that much time until the first round and given my 80 hour+ work weeks and the short time frame I don't have the time to sit through a full REPE financial modelling course therefore I am coming toWSOfor advice.
I was told the first round would include technicals specific to REPE however I've never touched the sector and so have zero technical knowledge regarding REPE. I was wondering if someone would be kind enough to offer an overview for what key REPE technicals you would advise learning ahead of the interview and any key / common technical interview questions it's worth knowing ahead.
I understand there might be similar threads in the past but I would appreciate everyone's thoughts - thank you!
Comments (6)
A few off the top of my head that I would imagine would come up on an acquisitions interview.
Understand a cap rate: How it relates to ever part of a transaction( acquisition, sale and levered yield/ positive vs negative leverage)
Understand how timing effects IRR: This is an important part of how these funds make acquisitions on a Credit line for years then call capital sometimes after the purchase to payback the credit line to boostIRRto the maximum.
Understand how a Competitive Set or Compareable Sales is used to determine pricing/Sales data.
On the debt side be prepared to talk about LIBOR curves and loan spreads; Know how as these change how that would relate to acquisition cap rates
I'm sure others will chime in, but that should get you started. If you have answers to these off the top of your head you probably aren't in as bad a spot as you think you are.
Everything Sham Wow and Gerry_Garner said, plus general industry trends. If itsNYC, big ticket items are rent reform, minimum wage, class A multifamily inventory vs B and C, opportunity zones, last mile distribution, Amazon, etc.
I'm sure you can slam through a waterfall model with ease, but I'd spend a few minutes reading up on your macro economics. I think they'll be more interested in why you're going intoCRE, your story and what you know about the industry. I dont think they're going to question your excel skills. Argus can be learned quickly.
I'd look at BisNow, The Commercial Observer, and The Real Deal to see what topics are being widely discussed.
In terms of boostingIRRthrough credit, they would have say a $500mm line of credit to buy deals. So you have a $100mm deal 70% LTV so $30mm is equity. After the deal closes you'd place a capital call to pay down the $70mm so you own it all cash? - I'm assuming this would boostIRRbecause it's a capital event? Don't these funds usually sell in say up to 10 years depends on their mandate, but wouldn't that be the capital event? Or you're saying here after closing they own it debt free then have another capital event in 5-7 years when it appreciates?
https://www.adventuresincre.com/watch-model-real-estate-technical-interview-test/
^Watch this.
https://www.adventuresincre.com/glossary/
^Lookup any terms you don't know in this.
Also, know what Argus is and how it's used (office/industrial/retail). Hopefully that get's you through the first round. After that, try to work through as many case studies as possible.
The techinal aspects of re modelling are pretty easy to learn, so they probably won't grill you on this too much. I'd focus on your story / whecre/ general knowledge.
Yeah, agree with what above posters have said. Know about all the financial metrics/time value of money (which should be easy for you since you're in banking; EQM,IRR/LIRR, cash-on-cash, cap rates, difference between market cap and in-place, debt metrics, etc.) and I'd have a base understanding of how to model a cash flow in real estate (i.e., gross vs. net leases, rollover schedules, retention ratios, etc.)
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