Career Series – Real Estate Investment Banking

I talk to a lot of undergrads who say they want to get into real estate investment banking, but have no idea what it consists of. I tracked down a fellow NYU Schack grad working in real estate investment banking and asked him to share some insight into his day-to-day.

Enter Chase:

Joe once wrote that a real estate career is not linear and I couldn’t agree more.

Why I got into Real Estate

While pursuing my undergraduate degree in banking and finance, I took a real estate class simply because it happened to fit my schedule. I’ve been hooked ever since. Unlike most things in finance, I found it to be tangible, essential and enduring.  I knew I liked real estate and finance, but I didn’t understand the possible career trajectories and specializations of real estate (where was this blog when I was in college) so I jumped right in.

How I got here

I started my career 8 years ago in Florida as an originator for a wholesale mortgage lender which pooled thousands of loans and sold them as mortgage backed securities on the secondary market. After building a stable book of business I jumped ship between the origination platforms of a few of the wall street RMBS groups. I also personally invested in a few multifamily rental properties along the way.  After the economy collapsed and the conduit market dried up, I moved to New York and got my Masters in Construction Management from NYU’s Schack Institute of Real Estate. I chose Construction Management over Real Estate Finance and Development because I wanted to go beyond the numbers on a spreadsheet and really understand the brick and mortar element of it all. While at NYU, I interned as an analyst for a firm that acquired and developed industrial properties and later interned as an assistant project manager for a developer. After graduating, I took a job as an analyst for a real estate investment bank where I prepared models and wrote pitch books.  At this point I realized that, whether it was debt or equity, buy side or sell side, investment banking or investment management, a real estate finance career really boiled down to 2 types of people: the deal makers and the underwriters. And I was a deal maker. My next foray was as M&A Manager in an infrastructure fund of a private equity group where I valued companies and negotiated their purchase. After a year and several profitable acquisitions, I found myself really missing real estate so I went back to real estate investment banking where you find me now as Vice President in charge of deal placement.

What is Real Estate Investment Banking?

Real Estate Investment Banking essentially connects capital seekers with capital providers. Whether it’s an acquisition, ground-up development or recapitalization, investment bankers dissect the capital stack (JV equity, preferred equity, senior debt, mezzanine debt, etc.) and identify the potential capital sources for each piece based on factors like asset type, risk profile, investment horizon, location and integrity of the cashflow stream.  Additionally, they provide advisory services to clients such as creating budgets and proformas, proposing waterfall distributions and performing market and feasibility analyses.

My firm, The Greenwich Group International, specializes in sourcing capital for ground up development projects in excess of $100 million in primary markets. We’re currently in various stages of a few projects; the largest of which is a $1.5 billion, 3 million square foot waterfront redevelopment project that will redefine the nation’s capital and is easily the most exciting transaction happening anywhere in the country in 2013.

In terms of responsibilities, I would say 25% of my time is spent overseeing the analyst team’s creation of the underwriting models and offering memorandums. Another 25% of my time is spent networking, attending round tables and scouring through periodicals in an effort to remain abreast of the latest market trends, nurture relationships and identify new potential capital sources. The remaining 50% of my time is spent actually placing transactions. This involves reaching out to contacts, pitching deals to the origination teams, leading site visits, attending workgroup sessions with the underwriting teams, and negotiating deal terms. Eventually, as I gain more experience and connections, I will also be expected to originate my own deal flow.

Where do I go from here?

Ultimately I want to become a developer of destination hospitality projects. Investment banking has many parallels to development in that it requires past exposure to a wide range of disciplines and demands a strong insight into market fundamentals. I get a huge sense of satisfaction from walking around New York and pointing to a grand new structure where a parking lot once stood and explaining that I helped, in a very small way, to make that a reality. The connections you make and the knowledge you acquire working in investment banking are unparalleled and I would tell any fresh real estate graduates to give it a hard look no matter what their long term goals are.

If you have any questions for Chase, please leave them in the comments below.

  • Allison

    Thanks for walking through your background, Chase. Your description of a “non-linear” path seems like a great guide for people looking to get started from zero. You mentioned being proud of grand structures in New York that you had a hand in – would you mind providing an example or two? Thanks!

  • http://www.astudentoftherealestategame.com/ Joe Stampone

    Thanks for reading Allison! The best piece of advice I can give young people breaking into the business is that it doesn’t matter where you start. Start somewhere, learn the business and build a network. You can go anywhere from there.

    I’ll see if I can get Chase to address that question for you.

  • ponte vedra real estate

    This post has came up with good information a bout real estate investment banking…Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development.

  • Urban_Worker

    Thanks for posting this. Very informative. I was in an MS Construction Management program but switched to MBA which is proving to be more valuable in terms of connections and seems to be in more demand. However, I feel similarly though about the value of understanding the bricks and mortar of real estate, building systems etc.

    If you’re going to go into real estate development, you really need to understand the full spectrum of disciplines. It seems like you have an optimal skill set to reach your goal, and I wish you good luck, I’m currently an asset manager (office properties) and work for the government, but looking to get into RE investment banking, private equity, or development.

    I am concentrating on honing my finance skills now and am going to be taking an excel modeling for real estate course through business school in addition to the regular finance curriculum.

    Do you have any advice how to crack into those industries at a mid-career level without going through the analyst track? I have over five years of experience, so not looking to take the pay cut. I’m in Philly and looking to make somewhere in the range of $90k plus. Thanks!

  • http://www.astudentoftherealestategame.com/ Joe Stampone

    Hey Eric,

    Thanks for the comment. There’s not better job search technique than networking. You can also try to reach out to a few executive search firms. You can find a list here – http://astudentoftherealestategame.com/executive-search-firms/

  • skyeearth.in

    Your post about real estate investment banking is very knowledgeable and will surely help many people to know about the same. Amazing post!

  • http://www.homes-costadelsol.com/ homes-costadelsol

    Thanks for the most useful information, Since buying an apartment in a proper manner is an important
    thing to do. This is especially the case when it comes to having to
    deal with the risk of being repossessed.

    luxury villas costa del sol

  • Brad

    I am thinking about getting into investment banking real estate and was wondering where I should go to begin familiarizing myself with general knowledge of the industry. Are there specific websites out there that I can look at to give me a better understanding of what is currently happening in the sector?

  • http://www.astudentoftherealestategame.com/ Joe Stampone

    Hey Brad, unfortunately there is a dearth of information out there on real estate investment banking. Is there anything specific that you’re looking for? If so, I can try to tee up a post to that covers it.

  • Ben S

    Chase- How would you describe the difference between RE Investment Banks and smaller investment sales and mortgage brokerage houses that for the most part perform the same basic services as the RE-IB’s?

    Thanks,
    Ben S