Patrick and Jordan graduated in 2014 from the same undergraduate real estate degree. This is their personal experience from university to life as recent investment professionals within mid-sized private equity real estate firms in London. This will be a regular column focused on their personal experiences in interview/dialogue form.
Patrick: To start this thing off, I believe that whilst we were at uni, the highest level of accomplishment and achievement was a career in one of the mega buyout funds that have the strongest brand/prestige within the industry, maybe naively so. What do you think?
Jordan: I think that was definitely the case at the time, as the exposure and access to smaller funds was a lot less simply by the nature of their size. I mean, a lot of us got off our second year internships at investment banks or real estate brokerages and had a taste of the investment side that was quite enticing.
P: I remember that everyone was going on and on about joining the large US PE houses. That’s not to take away from the many benefits of starting at small to mid-tier level funds that have a more flat hierarchy, flexible investment strategies and higher level of responsibility. I mean we both work for funds with AUMs in the single digits rather than tens or hundreds of billions.
J: Yes definitely and speaking for myself I think that it was a good move for my professional development. Having said all that, didn’t you have a “superday” interview session at one of the larger PERE funds?
P: Please don’t remind me of the darkest 10 hours of my life…
J: You’re just bitter because they didn’t take you.
P: Not going to lie, maybe a little bit, but I think in hindsight it was for the better.
J: Why is that?
P: I think that a large part of being a real estate graduate is to get as much exposure as possible within the industry that you want to develop in. Your specialist degree might provide you with the theoretical knowledge during your studies, but it doesn’t replace hands-on experience. We both completed extensive internships within the industry, but the lead-in time is shorter within well-oiled machines of larger firms and although they provide a certain level of training, it is expected that you will be able to add value very early on. And let’s not forget the extremely competitive nature around these positions.
J: Sounds like excuses to me, you’re either good enough or you’re not. Other people seem to manage fine, no?
P: To be honest, there is a reason why the larger funds have graduate schemes now and recruit at a much earlier stage than they did before, in order to be able to train their staff from the ground up in their specific investment strategies. My point is more that the larger firms are not the only option for an investment role within the real estate industry, albeit they are certainly a great starting point.
J: Let’s focus on the present then. Neither you nor I have a background in the field apart from our studies. We should probably shine some light into how we got here.
P: Why: information asymmetry. Real estate is one of the most asymmetrical institutional asset classes out there in terms of information flow. This industry is building on relationships to get an edge over the competition. Some people might say that this is a barrier to entry and prone for disruption, but I see opportunities. How: the elephant in the room is that you need a good headhunter/recruiter. Small to mid-sized firms don’t have the resources to recruit junior professionals, going back to the limited marketing capabilities that these places have. In the end, I was hired this way and you were hired this way.
J: Yup. I think it is important to point out that a lot of recruitment agencies now hire at junior level for these kinds of firms. And to be honest, the best advice we can give is to interview with as many firms as possible in order to find out the cultural fit. It genuinely should be a two-way process. In terms of experience and exposure they will naturally provide a lot for you, simply due to their size, but most importantly it is for you to be comfortable enough to fit in within the culture of the firm.
P: Especially when you join a firm with a headcount of c. 10-30 employees. It is quite exhilarating to be seriously involved from Day 1 in the processes. All the way from the origination, presentation, due diligence, asset management and eventually a successful realisation of the business plan at exit (fingers crossed). The flip side to it is that the learning curve will be steep and your contribution is not only expected, but crucial to the transaction.
J: Definitely agreed. You will have to really take ownership of any piece of work that you deliver, as it will be integral to the success of the transaction. There is no hiding, but this is exactly what I enjoy the most in my role as a principal: the level of autonomy, responsibility and challenge to unlock value, in order to fix and improve neglected and under-managed properties.
P: Let’s not forget the travel for site visits and the slightly more humane working hours as a junior compared to other roles in finance. To sum it up: apply for as many relevant internships and graduate schemes as you can. Don’t be afraid to use recruitment agencies to place you. Most importantly, join a firm that you can really identify with and could imagine enjoying working for. Patrick and I are really happy where we are.
P: Quite right.
DISCLAIMER: Being able to speak a European language and having a high level of alcohol tolerance is preferred but not required.
