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Working in Real Estate Finance Presentation

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Working in Real Estate Finance Presentation

  1. 1. Working in Real Estate Finance
  2. 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. 3. “Real Estate Finance” Industry Overview
  4. 4. Industry Overview Investment 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 M&A 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. 5. Industry Overview Private 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. 6. Industry Overview Alternative 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. 7. Day in the Life….. Investment Banking Summer Associate
  8. 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. 9. Highlights of My Summer  ~$3B sell side M&A deal – Deal hopefully will be announced soon  $3.4B sell side M&A deal – Gramercy Capital Corp bought American Financial Realty Trust  Presented to CEO/CFO of St. Joe  Experienced the market’s meltdown  Other miscellaneous deal teams
  10. 10. Typical Day  Typical Day – No day was the same! – ~90-100 hours/week – Frequent interaction with deal team leader – Dinner – “Hurry up…wait” – Crackberry
  11. 11. Required Skills  Skills That I Needed – Excel (Training the Street) – PowerPoint – Organization – Communication (verbal & written) – Common sense – Balanced life – Positive attitude!
  12. 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. 13. Day in the Life….. Private Equity Summer Associate
  14. 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. 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. 16. Important Skills & Traits Functional General  Communication skills  Work ethic  PowerPoint  Positive attitude  Excel  True interest in subject matter  Financial analysis  Knowledge of subject matter  Strategic analysis  Ability to network  Common Sense  Humility  Sense of humor
  17. 17. Case Study Tishman Speyer/Lehman Brothers purchase of Archstone-Smith Trust -$13.5 billion-
  18. 18. Questions

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