Ask Leveraged Breakdowns: Retail Real Estate Asset Management Interview Process

A Student Recently Asked...

“Hey all, I have an interview with a $65B real estate company for a retail center asset management position. How should I prepare for the real estate technical interview questions? Is there any source I can use to better understand this part of the real estate private equity interview process? The BIWS 400 guide doesn't have a real estate component. Also, could anyone in Real Estate or Asset Management share interview pointers? Especially if you’ve conducted interviews. Thanks!”

Quick Intro

I work in and am thus familiar with the real estate private equity interview process, so my responses reflect that perspective. Though I refer to real estate private equity interviews below, these responses are applicable to real estate asset management interviews at any sort of asset manager, be it an REPE fund, endowment, sovereign fund, REIT, or otherwise.

How can I prepare Interview Technicals?

Asset management interview questions will focus on operations, portfolio management, and dispositions. To that end, I’d make sure you can ace each of the Leveraged Breakdowns REPE quizzes: the Industry Jargon Quiz, the Income Quiz, the Capital Formation Quiz, and the Expense Quiz.

It’s likely but not guaranteed that you’ll have to build an LBO model (or a similar variation such as a hold-sell model). If you’re worried your LBO skills are not up to par, try knocking out this free, entry-level real estate LBO case study. If you’re stumped with even that basic walkthrough, I highly suggest taking 4 hours out of your weekend to complete the REPE starter kit.

Tips and pointers?

The technical portion of the interview serves to probe your mental model of real estate. To that end, you should have entry-level mastery of LBO modeling in Excel. That means, if I give you a set of 15 inputs (entry date, exit date, entry NOI assumption, growth rate, cap rates, cost of debt and LTV, and a few other items), you should be able to give me a precise LIRR forecast. If you cannot do this on your own (no google or reference spreadsheets), I seriously recommend you crank through at least ten LBO examples you can find online. The most intense likely being the Verdant Apartments LBO model walk-through (completely from source materials).

Also, beef up your mental arithmetic. If you were asked this in a high-pressure interview, could you answer in three seconds: what valuation does a 2.0% cap imply on $45M of T1 NOI? And how would you fare with this follow-up question: at an LTV of 60% and cost of debt of 4.0% I/O, what T1 cash-on-cash does that imply? See how these questions blend jargon and quick arithmetic? Once you master both, you can fuse them together to ace your real estate private equity interview.

Finally, know their deals and active holdings. If you go to websites like RCAnalytics, or even google, you can find out what their major holdings are. Narrow that down to shopping centers, which will be your focus, and you can likely generate a short list of the ten largest assets they manage. Learn as much as you can about those ten assets -- what city are they in, what’s their size, what were they acquired for, what is Sales PSF in that area? If you do that, you’ll blow them away. That’s because these guys spend their lives managing those exact malls, so good to speak their language. Obviously don’t act like you know everything about their malls, but demonstrating your due diligence will set you apart from the pack.