Leveraged Breakdowns

Real estate equity investments are made by anybody with the money to do so. You could be a single individual investing out of a personal LLC, a family office, a multinational corporation, a specifically structured real estate investment trust, or a real estate private equity fund. At leveraged breakdowns, we focus pretty specifically on the real estate private equity funds space. But when you’re bidding on an asset, you’re competing against anybody with the capital to buy whatever you’re interested in. Thus, demand from other investors is a key driver of private equity real estate returns . Macro Influences Real estate equity investment are just as influenced by macroeconomic trends as any other sector. The trend we care most about is returns. Let’s say you have a pension fund that absolutely must hit 8.0% growth per year. If low-risk corporate bonds are yielding about that much, then you’re happy parking your capital there. But if bond yields start to drop, you need to find another...

How does a real estate private equity bid process work? When a company decides to sell itself, or a portfolio of its assets, or something else, how does the process take shape? This post will seek to provide a high-level overview of a common feature of investment-focused real estate private equity jobs : the bid process. No two bid processes are exactly the same, but they’re all quite similar. So first, let’s think of who the seller might be. Public Company Seller First option, the seller could be a public company whose board of directors has decided it is time to search for “strategic alternatives.” Whenever a public company says it is going to search for strategic alternatives, it just means it is trying to sell itself. There are a number of reasons why a company might try to sell itself. Perhaps it has backed itself into a corner with too much leverage. Perhaps it believes the public markets are not valuing it highly enough, and a bidder might take the whole thing out for a nice ...