Career Series – What it’s Like Working for the Redevelopment Group of a Public REIT

Joe Stampone Start a Career 1 Comment

For the next installment of the ASotREG Career Series,my good buddy Justin Chu discusses his unique role within the redevelopment group of a large apartment REIT. What stands out to me about Justin’s career is the unique path he’s taken; from lending, to investment, now a project manager, and one day an entrepreneur. It goes to show you, there really is no typical career path in real estate.

Enter Justin:

Happy New Year’s to all the ASotREG readers.  I’m happy to be back in the ASotREG universe helping Joe with his latest initiative.  We were recently catching up and he mentioned the new career series he was launching to help readers understand the many different jobs in real estate.  He wanted me to share what I do now because I’ve been fortunate enough to make a career change within the industry.  Coming out of college, I had a finance background and started my real estate career as a commercial real estate lender, in origination and underwriting. I worked for 2 different banks over 5 years. After getting my Masters at NYU I switched over to the equity side, which is where I ultimately wanted to build my career.  I worked for an affordable housing developer and then an entrepreneurial owner/operator.  Both of those experiences helped me get the hands on experience I needed in order to obtain my current position with a well-known west coast Apartment REIT.  In 2012, I started working for Essex Property Trust, as a Project Manager in their Redevelopment group:

What does Redevelopment handle at an Apartment REIT?

The Redevelopment department is under the Asset Management arm of Essex Property Trust.  We are responsible for executing the business plans for the B and C type assets that Essex acquires.  Generally, these properties are bought as value-add plays.  Redevelopment is involved from the beginning, helping with all due diligence of any B or C properties bought by Essex.  We’ll devise a plan to renovate both the interior and amenity spaces.  Essex has a capital maintenance team that takes care of building systems and exterior facade work.  Redevelopment concentrates on upgrading apartment interiors ranging from a light renovation of the kitchen and bath to a full unit renovation that could include adding a washer and dryer. As far as the apartment communities’ amenities that Redevelopment will touch, that can include renovating leasing offices, gyms, laundry rooms, rentable storage rooms, dog parks, and clubhouses.

Where does the Project Manager fit into all this?

When you hear project manager, most people think about being on-site and coordinating all the different contractors and sub-contractors.  While that is part of the everyday job, I’ve found that at other REIT’s, not just Essex, project manager means more than that.  Executives expect each project manager to take ownership of their particular property/project which includes managing the budget, interfacing with operations on design matters, acquiring materials, negotiating bulk pricing from contractors and manufacturers, and reporting to executives about their projects.  I know it’s a cliché, but there is no typical day to day.  The days are usually spent going from project to project to walk the property, handle any problems, and make sure deadlines are being met.  Meanwhile, somewhere in there, most project managers stop by corporate offices to take care of the responsibilities mentioned above.  All in all, it’s a fairly flexible schedule and keeps you on the move.  As you can imagine, by far, the most important skill you can have as a Project Manager is people skills.  You have to deal with so many different personalities and job functions all while keeping everyone on a singular path to get a job done in a timely manner.  It takes incredible feel for when and what buttons to push.

Did you have a construction background before this job?

I didn’t   I was in working on the finance side of Real Estate as a commercial real estate lender before going back to school at NYU.  At NYU, I switched disciplines and concentrated in Development.  The internships I had in New York at an affordable housing developer and a multi-family owner/operator helped me land my current position. Interestingly enough, I was told after I got hired that Essex’s goal as a company was to move to a more sophisticated department that had a combination of construction people and finance/operations people.  They wanted people who were able to understand the nuts and bolts as well as the numbers of real estate.  If anything, I think this way of thinking shows how institutional real estate is becoming.  Traditionally hands on real estate jobs being required to worry about budgets and IRR’s for investors sake.

Where have you seen the Project Manager position lead to within your organization?

I’ve been with Essex for just over a year, but looking into past members of the Redevelopment team, I’ve found that many have moved up to First or Senior VP positions within Asset Management and a handful have moved over to management roles on the Development side.  People who have left the company have acquired similar roles with other apartment REIT’s such as Avalon Bay, BRE, and Equity Residential.

Can you discuss a recent deal you worked on?

There is a well-known high rise, mixed use property in San Francisco that has residential, office, and retail space along with unused development rights that Essex was in contract to buy in early December 2012.  Redevelopment was called in on the initial due diligence walks to evaluate the conditions of the currently vacant apartments and devise a plan to expand the common area laundry room and add a gym.  On these walks, I went in with a general contractor and analyzed the condition of the apartment interiors including, but not limited to cabinets, countertops, flooring, paint, lighting, plumbing, and appliances.  When possible, we also look into adding a washer/dryer appliance in every unit.  After we were done with the apartments, we explored the option of expanding the common area laundry room.  We went through plumbing and electrical engineering plans and found a way to move the room to a room on the same floor currently operating as the gym.  There were enough plumbing lines to tie into and sources of electricity to handle the load of electrical dryers.   This led to the next task of finding and updating the gym.  We found a space off the ground floor lobby where we can update all the machines, have space for weights, bring in cable/internet, and place ADA compliant bathrooms and water fountains.  Within days, I devised these plans and put together budget numbers for the executive committee to consider in acquiring the property.

Everything seemed like a go for a Dec. 29th closing date but at the 11th hour, a seismic report came back identifying that there was an approximately $10 million seismic problem with the building that needed to be corrected.  This forced Essex to go back to the seller and renegotiate the price.  Shortly after this, news came out that Archstone was being sold to Equity Residential and Avalon Bay.  The seller on this building was Archstone, hence, the deal was further complicated because we were now dealing with a new deal breaking type issue and a new seller.  As it stands when I talk to you all, negotiations are still ongoing.  The property has plenty of potential and would be a great acquisition to keep us in Redevelopment busy with all the work mentioned above, but it goes to show all those investors out there that the proper due diligence is so critical at any level of real estate investing.

Being a Project Manager isn’t always glamorous work.  There are times when you have to put up with a lot of nonsense and a lot of excuses on why something can’t be done, but what the position of a Project Manager does give you is some real world, “in the trenches”, practical experience.  As you might imagine from my background, I’ve learned a great deal by being more involved in some of the construction aspects of job.  Add to this the fact that my company allows us to take more ownership over our projects and the job begins to get somewhat entrepreneurial in nature.  Ultimately, I believe this job will really help if/when I decide to become an entrepreneur myself, which I’m sure is the goal of just about everyone reading this, and ultimately, what it’s all about in real estate.  Can’t beat the “in the trenches” experience combined with the financial acuity demands of an Apartment REIT.

Feel free to bug Justin with any questions you have by leaving a comment below.

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  • Mamta Soni

    I really appreciate your post as much of information and sensible..i really like to come across here and knowing about the redevelopment authority function.