I work in the CRE investing group for a hedge fund. AMAA
As title suggests, I work for a hedge fund in their commercial real estate investment group. If anyone is curious about general investment style, outlook, recruiting, lifestyle, etc. feel free to ask. figured there might be some interest in this sub. Thanks!
[{"id": "d0x01p4", "text": "Where are you located?\nWhat's the funds focus? Everything?\nHow did you get in?\n", "replies": [{"id": "d0y714t", "text": "We are located in the USA, but invest in North America, Europe, and Asia. We invest across the capital stack, but primarily are doing equity and mezz right now. We get into everything - hotels, retail, office, MF - anywhere we can find stuff cheap and broken that we can turn around. \n\nAnd I was recruited out of an MBA program. I had worked in CRE investments prior to Bschool, then spent my 2 years networking for HF opportunities. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "d0x84vk", "text": "What software does your hedge fund use in the course of business, including asset management, property management, modeling/forecasting, etc? What are the greatest deficiencies in your present software solutions?", "replies": [{"id": "d0xtxt7", "text": "We don't do property management - we are heavily reliant on our operating partners for that. They provide us with monthly reporting packages generally in PDF/Excel which we use to update our models. Modeling is done using Argus Enterprise where appropriate, but just for operating cash flows - everything else capital markets related is modeled in excel. We have a proprietary CRM platform for AM/Acquisitons; that's honestly our biggest deficiency - it hasn't been update in years and is starting to get a bit long in the tooth. ", "replies": [{"id": "d11ouk6", "text": "Hey, I'm one of the head developers for a new CRE Asset Management platform being released this year (summer). Many big and small players have already purchased but if you would like to know more, send me a pm and I'll get you in touch with someone who can give a demo. \n\nDisclosure: I do not receive any commission of any sort for a reference like this. I just believe we will have the best product out there =p ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "d0xbfu5", "text": "Is it nearly impossible to get in if you don't go to a target school or do you guys recruit based on knowledge? Advice on getting recruited (could be must-read books or general stuff like networking)? Do you think you would start your own investment group/what's keeping you from doing that? Same as another person below, I would love to hear your story lol", "replies": [], "depth": 1}, {"id": "d0xtz2n", "text": "I work at a private equity re firm. We JV in the usual 90/10 LP/GP structure. Do you guys invest via JVs or direct? What typical returns (IRR) do you target? What type of assets? ", "replies": [{"id": "d0xu9tc", "text": "99% of our equity investments are through JVs; we rely on our operators for eyes and ears on ground to source deals as well as their expertise in day to day management. Typical structure is 90-95%; we shoot for 25%+ and 2.0x+ net returns", "replies": [{"id": "d0xwugc", "text": "Are you guys really finding deals at 25% ? Reasonably underwritten. We have done deals with AG, Lubert, Canyon, Fortess. AG opportunistic fund is down to 18% from 20%. We only invest in MF and hospitality - And getting 25%+ is just not found in today's market place.  It seems it would be extremely difficult to find 25% IRR especially on deals requiring more than $10m in equity which is too small check for most firms. ", "replies": [{"id": "d0y731e", "text": "It's getting really tough to find good stuff right now - we are very slow! It's starting to feel like we've hit peak pricing though so we will see how next 12-18 months play out. ", "replies": [], "depth": 4}], "depth": 3}, {"id": "d0yreo3", "text": "I assume you're looking at second generation stuff, value add, and development projects if you're getting 25+%", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "d0xy6fw", "text": "What's your take on a possible CRE bubble? Cheap debt helped cap rates trend downwards for the last few years - now that rates may be increasing is anyone getting nervous?  ", "replies": [], "depth": 1}, {"id": "d0ywpmu", "text": "Thanks for sharing. What is the criteria for acquisitions this year?", "replies": [], "depth": 1}, {"id": "d0zogct", "text": "I've noticed a lot of hedge funds like to invest in mezz debt and value add plays but are really shy when it comes to ground-up development. Why is that? ", "replies": [{"id": "d5fd3o1", "text": "It takes too long to get money back - we want to be in and out in 24-36 months. Going from start of development to stabilization takes a lot longer than that and has a lot of exit risk!\n\nThat being said we will do some pref on development as it gives us a protected basis and - so long as the world doesn't melt down - should ensure we get to a minimum 15% yield. With the equity kicker we hope we can get above a 20", "replies": [], "depth": 2}], "depth": 1}, {"id": "d18q2lc", "text": "What is your job title and how much do you make?\n", "replies": [], "depth": 1}, {"id": "d1cd4p2", "text": "What, if any, changes have you noticed, especially in European/Asian markets, as a result of negative interest rates, i.e. are you beginning to see capital flight from these areas, if so, to where?", "replies": [], "depth": 1}, {"id": "d1uczo0", "text": "Can you take a look at my commercial real estate proposition I asked on /r/entrepreneur and give me your honest opinion on the entire acquisition? I would really appreciate the insight of someone with your expertise Thanks!\nheres the link:\n\nhttps://www.reddit.com/r/Entrepreneur/comments/4dt419/is_my_investment_strategy_to_make_over_a_million/", "replies": [], "depth": 1}, {"id": "d3f1qme", "text": "When you look at multi family do you have a minimum amount of preferred units? Lately my partners and I have been finding value adds in smaller deals that are off market. \nMost of the sellers are retiring or looking to get out of real estate all together. ", "replies": [{"id": "d3fzcd6", "text": "We don't look at much multi family - there isn't that much distress and the asset class as a whole we believe to be over valued. \n\nAside from that, it's not so much a property size minimum as it is a check size minimum. We don't like cutting checks smaller than $10MM. ", "replies": [{"id": "d3hcn3o", "text": "What is the minimum investment your fund takes from investors? Do they have a minimum return that increases annually? \n\nThanks for answering my first question btw!", "replies": [{"id": "d3jdqho", "text": "I don't know what the minimum is other than a lot. It's all institutional money and we have several billion dollars in equity to spend\n\nOur return threshold on deals is 20%+ IRR to our fund on a deal (net of all partner promotes) and 2.0x+ on our dollars invested. ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]