Leveraged Breakdowns

Learn with Leveraged Breakdowns Eager to learn how to build real estate private equity models? Are you preparing for an upcoming interview? Are you competing for limited REPE roles as a complete outsider, and are looking for an edge against insider candidates? Look no further than Leveraged Breakdowns! We are megafund insiders offering courses and interview guides to boost your performance in the cutthroat REPE interview process. 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 ...

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 ...

One of the most frequent questions we get at Leveraged Breakdowns deals with understanding the mindset of the hiring manager at real estate private equity firms. What are they looking for? What questions will they ask? It is very natural to obsess on these questions from your own perspective, but it may be most helpful to look at things from his or her perspective. The View From 30,000 Feet Hiring is always a balancing act. On one hand, the hiring manager needs to assess both hard skills (job related) and soft skills (people related), but on the other hand he or she needs to address both the immediate job opening as well as the future needs of the firm. All of this is happening within the context of company’s prime objective: generating positive, out sized private equity real estate returns for investors. Skills Real Estate Private Equity is a high-pressure, high-stakes business. The hours can be grueling. Your interview will likely mirror this. To assess your hard skill...

Back in June we discussed the number one skill that will help you become your fund’s favorite analyst . This month we want to talk about the number one character trait that will make you into the most trusted analyst in your real estate private equity firm . This character trait will also establish the trajectory of your real estate equity career path . What is this trait? Integrity . Can I Trust The Model? One of the greatest temptations you will face as an analyst is to force a model to create the results you really want (or the results your boss really wants). There are all sorts of ways to manipulate a model. Trim one of the expense line items a little more than is really achievable. Assume lease-up occurs faster than what the leasing team expects. Cut the capital expenditures beyond what is prudent. The list is endless, because the variables that go into the model are endless. Resist the temptation. Let the results speak for themselves. Be disciplined in understanding the ...

As you consider a career in real estate private equity, you may wonder where real estate private equity firms get the money to invest in properties. Most REPE beginners are unfamiliar with the various investor categories in private equity funds. There are six key investor types in the real estate investment space. Sovereign Wealth Funds Sovereign wealth funds are government-owned investment funds that benefit the citizens of that country. Countries that run a surplus due to exporting natural resources (think: oil) will often invest those surpluses around the globe to achieve yield, offset currency risk, and diversify earnings outside of their own economy. Endowments Many public or charitable organizations will accumulate significant donations that are invested in order to generate recurring revenue that benefits the organization. Universities, religious institutions, hospitals, and local communities frequently have endowments. The board of directors for the endowment se...