Real estate private equity is the most sough-after role in the real estate business. A good friend of mine recently went through the process of preparing for and interviewing with a top tier real estate private equity firm. While preparing for the interview, he quickly realized that there was a severe lack of credible information out there. He approached me with a desire to share his story and help others navigate the rigorous interview process with real estate private equity firms. Part I of his story covers the first two interviews. He was nice enough to walk through his experience in detail. What were your expectations going into the interview? There was not a lot of information on the internet with insights into private equity interviews. I found a few sites which described the more common aspects of PE such as M&A, and LBOs, but not a lot of advice for the interview process for real estate private equity. I really didn't know what to expect. Since I was interviewing with one of the top tier real estate PE firms, I was able to research a lot of information on their existing portfolio and deals they've done in the past. I spent a few days studying valuation and current investment trends with the goal of demonstrating my understanding of the real estate business. How did you prepare for the interview? First, I reviewed all the transactions I've worked on. I did not come from a private equity/investment banking background. My background has been in real estate and consulting. During my interview preparation, I wanted to highlight the valuation work I've done for various assets in markets throughout the United States. I studied the company’s portfolio and highlighted my due diligence experience and valuation work to demonstrate my familiarity with the asset types they invest in. Since this particular firm invests in all types of assets, studying was not an easy task. In addition to knowing my resume and highlighting the work that I’ve done for well known clients in the industry, I also went over basic questions which I expected the interviewer to ask:

• “Why private equity?”
• “Why do you want to leave your company?”
• “Where do you see yourself in five years?”

I wanted to convey to the interviewer that I had the experience they were looking for and that the opportunity was the right career move for me. The 1^st Round Interview Based on my experience and that of others I  spoke with, getting the initial interview is the most difficult part. Since private equity firms run a lean operation, they outsource a lot of their recruiting to headhunters. When I applied for the position, all the description said was “real estate associate with blue chip firm”. After the recruiter contacted me and asked me a few questions about my background, he then informed me that it was with a top tier real estate private equity firm. I’ve spoken to friends who’ve had the same experience. The recruiters will not state who the company is until they speak with you. Don’t be afraid to apply to job postings with confidential names because more times than not, you’ll be surprised by which company it is. I was told by the recruiter that I would only be meeting with one of the managing directors of the group. Fortunately, the firm’s website had bios of the senior management so I was able to study the MD’s background which I could use to ask questions or as a conversation starter. I spoke to the recruiter who had experience placing people at this particular firm and his words of advice were:

• Know the transactions that you’ve worked on
• Be able to explain why you want to leave your current position for the one they’re offering
• Be able to tie in your experience to their expectations and description of the position, so that it’s in line with what they’re looking for

I show up to the firm on the day of the interview and they sat me down in a conference room. As I waited for the MD, two people enter the room and introduced themselves as two VP's at the firm. This threw me off a bit, but luckily I studied enough to feel prepared. The initial question was to walk them through my resume. As I was walking them through my experience, they would ask questions on particular transactions and valuations that I've done. Questions included:

• “How do you value a [insert asset class]?’
• “How do you get market information?”
• “What is the most complicated asset class to value and why?”
• “Do you know ARGUS?”
• “How well do you know excel?”
• “Do you know waterfalls?” (Be able to explain this, it’s a common question)

After I walked them through my resume, they explained to me the structure of the group and how it operates. For the most part, the questions weren't as tough as I anticipated. It felt more like a conversation than an interview. Real estate PE firms like the one I interviewed with have a small team. Fit is very important for a group of that size. Since you’ll be working closely with members of the group, even if you know real estate, if the interviewers don’t get the sense that you can fit in well with the group, your chances of moving onto the next round is in jeopardy. After my interview with the two VP's, I then met with the MD. The MD was more technical. He described the role and asked questions about my resume. The MD asked about my valuation experience and tied it back to valuation questions of assets they've acquired in the past. The MD asked about my excel skills, including debt schedules, macros and waterfalls. He was a bit more straightforward with his questions; What is your experience like and how do you think you’ll fit into this role? The interview with the MD was shorter than I anticipated, I was done in about 20 minutes. At the conclusion of the interview, the MD said that I should meet the rest of the team and they’d be in touch to schedule the second round. What were you thoughts on the 1st round and how’d you prepare for the 2^nd round interview? I get a call from the recruiter a few hours after my interview and he asked for my overall thoughts on the company and the role. I told him that the interview went well and his advice was correct; Know your transactions and why you think you are a good fit for the role. I was a bit nervous going into the interview because I didn't know what to expect, but it’s better to over prepare. He informed me that the company had positive feedback and wanted to invite me back for a second interview. He mentioned they wanted me to meet with a few more members of the team including members of senior management. My 2^nd interview occurred roughly a week after my initial interview. In preparation for the 2^nd interview, I followed the preparation that I utilized for my first round. I was told by the recruiter that I would be meeting with another MD and possibly 1-2 others. The first person I interviewed with was a Director in the group. First question was walking the director through my resume, and at times the director would interject and ask questions about my experience. I was describing a recent transaction that I was working on which was a buy side due diligence on a portfolio of assets. As I was describing the underwriting for this project, the director asked me questions about my underwriting assumptions. How did I determine the market rent assumptions? How did I determine the market growth rates? How did I account for fluctuations in the market? What they want to see here is your thought process and how you determine your assumptions. Be able to explain it because it’s the type of questions where the interviewer will ask one question, which leads to another question and so on. The key here, again, is to know your transactions. I met with the Director for about an hour, our conversation focused around my experience and the Director’s experience at the firm. Next up, was another MD in the group. He wasn't too technical and he explained that from what he’s heard, I have the technical skills for the group, but he wanted to get a sense of my expectations for the job and how I will fit into the role. A few technical questions that the MD asked were:

• “How are your excel skills?”
• “Do you know macros?”
• “Are you familiar with waterfalls? If so, explain what it is?”

I did some prior research on the MD’s background so when the MD asked if I had any questions, I asked about his transition from his previous position at Company ABC to his current position. The MD acknowledged that I did my research and proceeded to answer the question. After meeting with the MD, I met with another MD of the group as well as another Director. Again, this meeting was more about how I’d fit in with the team. They explained to me what the company was looking for and the key attributes that the successful candidate must demonstrate to succeed at the firm; Must be proficient in excel and ARGUS, must be able to work independently, be able to complete tasks and assignments in a timely matter. No real technical questions except a question about loan sizing and creating a loan schedule. I had a few questions regarding their experience at the firm and a few of the firm’s transaction which I researched through the company’s website. This portion of the interview lasted about 20 minutes, in which time the MD I initially met with earlier in the day, came back into the room and said “you have the background and technical skills for this role, we’d like you to come back for an excel and ARGUS test” While he’s decided to remain anonymous, I'm happy to pass along any questions you may have. See Part II of this series here.