A Student of the Real Estate Game


Career Series – What it’s Like Working in the CMBS Group of a Major Investment Bank

Apr 8, 2013 | Career

Over the past few weeks I’ve spoken with numerous college seniors looking to break into real estate. Each of them is happy to report that the hiring market is beginning to pick up; they’re seeing more opportunities, getting more interviews, and generally have increased optimism.

One sector of the market which has seen a lot of hiring activity is CMBS. It was very timely that Kevin Flammia reached out to me noting that he had just transferred into the CMBS group of a major investment bank. I asked Kevin to share a bit about the process of breaking into CMBS and his experience thus far.

Enter Kevin:

I graduated from the University of Delaware with an Honors BS in Mathematics and Economics and an MS in Finance.  During my undergraduate tenure, I interned at a federal securities regulator the summers after my sophomore and junior year.  This experience was excellent as it provided me insight as to how regulators were viewing the fallouts of the financial crises and the main issues that needed to be addressed.  However, I wanted to round out my experience and deal with the same issues, but rather from the market’s standpoint.

Due to the large press coverage and inquiry into the secondary market for mortgages and other structured products, I was vying for a position in securitization.  In terms of the recruiting process, my experience was very non-traditional in the sense I did not intern at the bank in the prior summer and was not recruited through on campus recruiting.  There was plenty of legwork that went into networking and learning about the business as much as I could.  Eventually, I landed a phone interview with a bulge bracket bank, followed by a second round, which was six separate interviews.  The next step was a follow-up, face-to-face interview with the team I would be working with directly.  The overall interview process was not overtly technical due to the fact that the knowledge they expected me to have to structured finance was somewhat limited.  All questions were general finance questions and the concept of the waterfall cash-flow mechanism that is embedded in asset-backs and mortgage-backs.

I started off in the consumer ABS business, but was soon exposed to the CMBS market due to group consolidation.  I eventually concluded that the story of individual properties and the heavy reliance upon real estate, rather than pure stratifications was more appealing to me.  I began my path into integrating myself into the group.  In trying to secure a position in a group that did not have any available headcount at the time, I began volunteering after hours to assist the Capital Markets group.  I opted for this group due to the fact that they represent the epicenter of the real estate and bond market, as well as the need for the group members to understand both the process of how the lenders underwrites mortgages to how to create the most appealing products to meet investors demand.  Additionally, I was drawn to the opportunity to dig into real estate, which was an aspect that sparked an interest in me immediately.

The experience so far has been very educational because of the array of information I am forced to deal with on a daily basis.  Whether it is discussing the credit qualities of a tenant of a stand-alone retail property to deciding which class of bonds the market has the most appetite for and working with the rating agencies to optimize the integration of our note into the marketplace, there is always something new to be learned or a different strategy to consider.  As a junior member of the team, there is substantial grunt work to be done, including drafting the offering documents, weekly market updates, responding to rating agency, b-piece and investment grade investors, compiling data tapes, etc., but the process teaches the fundamentals of how the securitization process works and what is to be expected from all standpoints.  Eventually, the role lends itself to more client interaction and relationship management, including pitching the bonds and underlying loans to a variety of investors, to negotiating pool composition with B-piece buyers.

In the upcoming months, I am focusing on effectuate my experience in my current position and fully grasping the underlying concepts and trends of the industry before I begin business school in the fall.

If you have any questions for Kevin feel free to leave them in the comments below.