Working in Real Estate Finance

1
Working in Real Estate Finance
2
Introduction

• Real Estate Finance Industry Overview
• IB and PE Summer Associate Perspectives
• Bank of America Case Study
• Tishman Speyer/Lehman Brothers purchase of
  Archstone-Smith Trust for 13.5 billion

3
Real Estate Finance Industry Overview
4
Industry OverviewInvestment Banking

• Real Estate Investment Banking
• Lead equity and debt placements
• Advise on sale of real estate portfolios and
  assets
• Provide general advisory services to public
  private companies
• Typical Role of Real Estate Investment Banker
• Advise on MA transactions
• Pitch deals to clients
• Create offering memorandums
• Market portfolios to prospective buyers
• Negotiate transactions
• Perform due diligence for acquisitions
• Serve as a liaison between the capital markets
  team and clients for debt and equity transactions

5
Industry OverviewPrivate Equity Funds

• Assemble capital from institutional investors,
  pension funds, and wealthy individuals
• Structured as limited partnerships (typically)
• Invest in such things as
• Real estate and mortgage instruments
• Single assets
• Real estate portfolios
• Real estate companies
• Types of real estate private equity funds
• The Blackstone Group, Apollo, Fortress
• Wall Street Merchant Banks MSREF (Morgan
  Stanley), Whitehall Funds (Goldman Sachs)
• Colony Capital, Starwood Capital Group
• Cherokee Partners, Cypress RE Advisors, Beacon
  Capital

6
Industry OverviewAlternative Careers

• Pension funds Advise funds on real estate
  investment opportunities
• Corporate Banking Assist local developers with
  obtaining capital requirements
• Capital Markets Work in an industry-focused
  product group (high yield, derivatives, CMBS)

7
Day in the Life..Investment Banking Summer
Associate
8
Recruiting Process

• Recruiting Process
• Conducted numerous informational interviews
• Took steps to learn more about real estate
• Interviewed through the CMC in early January
• Tips
• Understand culture of each firm
• Stay knowledgeable on the industry
• Interviews - prepare, prepare, prepare

9
Highlights of My Summer

• 3B sell side MA deal
• Deal hopefully will be announced soon
• 3.4B sell side MA deal
• Gramercy Capital Corp bought American Financial
  Realty Trust
• Presented to CEO/CFO of St. Joe
• Experienced the markets meltdown
• Other miscellaneous deal teams

10
Typical Day

• Typical Day
• No day was the same!
• 90-100 hours/week
• Frequent interaction with deal team leader
• Dinner
• Hurry upwait
• Crackberry

11
Required Skills

• Skills That I Needed
• Excel (Training the Street)
• PowerPoint
• Organization
• Communication (verbal written)
• Common sense
• Balanced life
• Positive attitude!

12
What I Learned

• Investment Banker Financial Consultant
• Must be proficient in finance and accounting
• Skills I need to continue to develop
• Becoming more efficient in Excel more sleep
• Capital markets and valuation knowledge
• Real estate industry knowledge

13
Day in the Life..Private Equity Summer Associate
14
Summer Highlights

• Analyzing 1 billion-plus deals
• Visiting properties / travel
• Meeting management teams
• Drafting an OM
• Starting in a hot market witnessing the debt
  markets freeze
• Attending a major private equity conference
• Learning about the models and investment approach
• Learning from the other people in the firm

15
Summer Associate Perspective Working on a Deal
Team

• Identify the target (this happens under different
  scenarios)
• Research the target its industry (high level)
• Work with an associate in creating the initial
  model
• Prepare initial Investment Committee (IC)
  presentation
• Establish next steps with the target company
• Work through the data room and perform basic due
  diligence
• Additional IC presentation
• Meet with the management team (travel)
• Perform extensive due diligence (travel)
• Additional IC presentation
• Next steps

16
Important Skills Traits

• Functional
• Communication skills
• PowerPoint
• Excel
• Financial analysis
• Strategic analysis
• Common Sense

• General
• Work ethic
• Positive attitude
• True interest in subject matter
• Knowledge of subject matter
• Ability to network
• Humility
• Sense of humor

17
Case StudyTishman Speyer/Lehman Brothers
purchase of Archstone-Smith Trust -13.5
billion-
18
Questions