Recruiting into Real Estate Private Equity from Investment Banking

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Introduction

One of my students recently asked me the four questions below. These center on the recruiting process into real estate private equity firms as it compares to general private equity. The student asking the questions currently works in Investment Banking at a decent shop. If you’re a college student trying to get straight into REPE, this Q&A may be a bit less relevant.

Does the recruiting for REPE funds (ex. Brookfield, Starwood, AEW) or RE investing arms of megafunds / institutional investors (ex. Caryle, PGIM RE) follow the same timeline as traditional PE shops?

A growing number of the real estate private equity firms (TPG, Blackstone, Centerbridge, etc.) host “on-cycle” private equity recruiting “superdays” similar to the traditional PE shops. Basically when you’re in an IB group, you’ll meet with a number of headhunters who will keep your name in their books. Then one random night, around November (maybe even earlier now), they’ll call you and say that all the funds are recruiting that exact night. I mean you have to figure out an excuse to leave work pretty quickly. Personally, I had two megafunds on the same night, back-to-back and ended up interviewing all night at one of them and came back inside the next day before work with just a handful of hours of sleep.

Then after this initial rush, even more REPE funds will start trickling in “off-cycle.” In fact, I had even more off-cycle recruiting opportunities come through at reputable shops than I did on-cycle. So if you don’t nail the on-cycle process for REPE, the great news is that it doesn’t really matter that much. The thing to worry about is you generally get one shot per firm.

When these firms recruit, are they recruiting for positions 1.5-2 years out (as corporate LBO funds do), or are they looking for their hires to start immediately?

On-cycle, yes. Off-cycle, no, those are more immediate.

Are the positions circulated through headhunters? If so, are there ones that most REPE megafunds use?

Yes. The ones I’m most familiar with are: Henkel, SP Partners, Ratio Advisors, Carter Pierce, Amity Search Partners, and Bell Cast Partners.

Do you know how the recruiting process has been affected by COVID?

My megafund continues to hire at the same clip. My friends are still getting jobs. Probably fund-specific, but there is still a ton of dry powder & fundraising seems to be continuing healthily.

I am also considering applying to an commercial investments analyst position with a firm that just raised a $700+ MM fund with a seemingly good reputation for investments. My thought process in applying is I could get some great experience with the potential to move vertically in the firm or exit after some time there. I'm curious what your thoughts are when considering whether to pursue this position or hold out for potential positions with larger funds.

I think this sounds like a great opportunity. The skills (such as the real estate private equity models you’ll be building) are quite similar between megafund & smaller acquisitions teams. That said, $700M AUM is nothing to laugh at. Though dry powder would be a more helpful metric to understand (see this forum discussion on megafunds etc.)

Finally, I would also appreciate any advice you may have regarding how I can make myself stand out and be successful in the recruiting process being from outside the RE industry. I know this is a lengthy email so I appreciate your time and thoughts in advance. I look forward to your response.

If you’re in IB, then I think you’re actually pretty fine. You just need to speak specifically to why you’re drawn to RE. I have a lot of colleagues from TMT, general M&A, and various other teams at investment banks that made the transition into acquisitions at my megafund. So, I think you won’t be looked down upon for not being in real estate banking specifically, so long as you can convince the interviewers that you are passionate about the sector.