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Working in Real Estate Finance

Working in Real Estate Finance. 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. “Real Estate Finance” Industry Overview.

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Working in Real Estate Finance

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  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 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. 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 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. 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. 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

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