The commercial real estate transaction market, like many others, operates on a foundation of balance. At its simplest, it’s a meeting ground for sellers and buyers, both of whom aim to get the best deal. But when these two entities can’t find common ground, the bid-ask spread widens and real estate transaction activity slows down...

Commercial real estate, a cornerstone of the global economy, often seems out of reach for individual investors. But there’s a tool, employed by seasoned professionals, that democratizes access to these investments: real estate syndications. In this post, we delve into the intricacies of commercial real estate syndications, touching on its primary structures and offering examples...

The world of commercial real estate is intricate and diverse, especially when comparing leasing practices between different countries. For students and early professionals considering a transatlantic adventure, understanding these differences is key. Today, we’ll journey across the Atlantic and delve into the five major distinctions between US and UK commercial leases. 1. Lease Length &...

In the dynamic landscape of commercial real estate (CRE), financial products evolve as the industry grapples with emerging challenges and opportunities. The mounting uncertainties of the market, combined with the accelerating need for quick and effective financial solutions, have put bridge/rescue financing under the spotlight. What is Bridge/Rescue Financing? Bridge financing, or interim financing, refers...

Understanding the methods used for commercial real estate valuation is fundamental for all stakeholders, including investors, brokers, asset managers and appraisers. In this blog post, we’ll explore three popular valuation methods: Cap Rate (or Gross Yield), Net Initial Yield, and Net Rental Income (NRI) Yield, with a focus on their use across the US, UK...

A Comprehensive Guide to Analyzing Commercial Real Estate Investments with this often Misunderstood Metric Download Excel Template Intro In this blog post, we’re going to explore the nuances of cash on cash returns within commercial real estate investments. We’ll cover what happens when the numerator and denominator change, and whether the metric is still valid...

1). Be a Sponge – Treat your summer internship as an 8- or 10-week opportunity to learn as much as you can. Observe everything and bring a notebook everywhere you go (a phone works too, but a notebook/pen may look better). Learn from both junior and senior professionals. Identify professionals that are respected within the organization and...

We periodically hold Ask Me Anything calls with university real estate clubs or with our community, where we answer any questions related to real estate. The discussion typically focuses on early career, interviews, networking, and real estate industry themes. For those that haven’t joined our calls, we put together a helpful summary of frequently asked...

So you’ve made it to a first-round interview for a role that you’re excited about. Congratulations! But how do you make sure that you’re prepared to go in and crush it? We put together a  list of tips to help you navigate the interview preparation process and increase your odds of moving on to the...

With internship season in full swing, it may seem like an impossible feat to stand out among the thousands of applications being sent to the top real estate firms. Instead of spamming each posting that is up on LinkedIn and hoping for the best, there are some practical job application tips that could help you...

Although real estate interview case studies can be intimidating, there are proven strategies that can help you improve your performance and overall confidence. It sounds trite, but it’s true – practice makes perfect. Whether it’s modeling, mental math, or Excel keyboard shortcuts, putting in the time at home is by far the best way to...

As global financial market volatility continues to rattle investor sentiment, and the possibility of a recession looms, commercial real estate markets have begun showing signs of a slowdown. This is a clear deviation from the commercial real estate industry’s trajectory over the last decade, which was characterized by cheap debt, steady rent growth, and increasing...

Almost all real estate transactions are financed with debt, with debt levels dependent on the borrower’s investment strategy, risk tolerance, and capital markets availability. In doing so, investors are able to reduce their upfront capital outlay and increase their return on equity. By incorporating debt, investors can enhance their returns with leverage. But, this is...

According to the latest report from the U.S. Bureau of Labor Statistics, the annual inflation rate in June 2022 was 9.1%, its highest level since 1981, as measured by the consumer price index. This persistently high inflation for several months has forced the Fed to rapidly increase benchmark interest rates. The Fed funds target rate...

Given that almost all real estate is financed with debt, interest rate risk can be a critical factor in the performance of a real estate deal. Like any other risk, the goal with interest rate risk is to mitigate the risk and limit its impact on the outcome of the deal. Performance of the deal...

This is the sixth and final  post in our ongoing real estate private equity case study on how a construction loan is underwritten by potential lenders.  This installment will provide a deal summary and a wrap up that includes a cautionary tale about construction lending.  To read the previous posts in the series, click on...

This is the fifth post in our ongoing real estate private equity case study on how a construction loan is underwritten by potential lenders.  This installment will focus on collateral analysis.  To read the previous posts in the series, click on the links below:  Post #1:  Introduction & Setup Post #2:  Borrower Analysis Post #3: ...

This is the fourth post in our ongoing real estate private equity case study on how a construction loan is underwritten by potential lenders.  This installment will focus on repayment analysis.  To read the previous posts in the series, click on the links below:   Post #1: Introduction & Setup  Post #2:  Borrower Analysis Post #3:  Guarantor...

This is the third post in our ongoing real estate private equity case study on how a construction loan is underwritten by potential lenders.  This installment will focus on guarantor analysis.  To read the previous posts in the series, click on the links below:   Post #1:  Introduction & Setup  Post #2:  Borrower Analysis The intent...

This is the second post in our ongoing REPE Case Study on how a real estate private equity construction loan is underwritten by potential lenders.  This installment will focus on borrower analysis.  If you haven’t had a chance to read the first post, you can do so by clicking here. The intent of this article...

Executive Summary / “TLDR” The U.S. self storage industry got started in the 1960s in the state of Texas, where most homes lack basements (and thus extra storage space). Self storage units back then were simple boxes with garage-like doors that locked. The industry has evolved somewhat since then, with large, multilevel structures housing indoor...

Note: If you have not already read Part 1 of the Multifamily Sector Series, you may want to start there. Part 1 provides a basic overview of multifamily real estate, including categories of multifamily, market characteristics, and historical performance. We cover the basics for those new to real estate private equity, but also dig into...

Executive Summary / “TLDR” The multifamily or apartment sector is the “core-est” of the core real estate sectors and has attracted a wide range of real estate investors. Over the long-term, the sector has proved itself with strong performance, good liquidity, and a straightforward operating model. One differentiating factor versus other sectors is that the...

Executive Summary / “TLDR” The net lease sector is defined by its lease structure as opposed to its property type, like most other sectors. The net lease sector encompasses a mix of property types, including office, industrial, and retail properties. The common feature among all of these properties is that the tenant is subject to...

Executive Summary / “TLDR” Retail is a fairly diverse sector, encompassing everything from small neighborhood shopping centers to large super-regional malls. This report applies to all types of retail, but is geared toward shopping centers, which make up around 80% of all retail space in the U.S. In the last several years, online shopping, or...

Note: If you have not already read Part 1 of the Hotel Sector Series, you may want to start there. Part 1 provides a basic overview of hotel real estate, including categories of hotels, important industry terms, and a discussion of hotel seasonality, EBITDA margins, and capex. We cover the basics for those new to...

Executive Summary / “TLDR” Hotels are a unique real estate type because of their “nightly leases”, which is different from all other sectors with longer leases. Because they have nightly leases, hotels react much more quickly to changes in the broader economy than types of real estate. Hotels are also more operationally intensive than other...

Note: If you have not already read Part 1 of Office Sector Series, you may want to start there. Part 1 provides a basic overview of office real estate, including types of office buildings, factors that determine asset quality, and a discussion of office leasing and office capex. We cover the basics for those new...

Executive Summary / “TLDR” Office is a core sector within commercial real estate and historically has been a popular area for real estate private equity firms to allocate time and capital. The iconic nature of certain office buildings has made office deals especially appealing to many high-profile investors over the years. The performance of office...

Summary/Transaction Details On June 7th, 2021, public data center REIT QTS announced that it had agreed to be acquired by Blackstone for $78 per share cash in a take-private deal. The $78 price represents a 21% premium to the stock price at the prior close and a 24% premium to the 90-day volume weighted average...

Introduction and Scenario Setup In the world of real estate equity investment, there is much attention paid to the equity that needs to be raised to get a deal closed.  While the equity piece is critically important, it doesn’t tell the whole story.  In nearly all cases, it must be paired with some amount of...

Executive Summary / “TLDR” Industrial is a core sector within commercial real estate and is a popular sector for real estate private equity firms to invest in. Industrial’s main purpose is to store goods and facilitate the distribution of goods from manufacturers to retailers and direct to consumers. The industrial sector was favorably impacted by...

Executive Summary / “TLDR” Data centers, or large buildings that house racks of servers to store data, serve an important role in the increasingly digital world. While the data center sector is not dominated by traditional real estate private equity firms, it is worthwhile to have a baseline knowledge of the sector. This overview reviews...

Executive Summary / “TLDR” The single-family rental sector is still in its early days, having emerged following the 2008-09 financial crisis and collapse in U.S. housing prices. The sector is well positioned going forward, with demand for single-family rental homes outpacing supply. Demand is supported by both demographic tailwinds (millenials entering prime family-formation years) and...

Introduction Knowing the structure of a typical interview will help you prepare when hunting for real estate private equity jobs. Each individual interviewer will bring their own style. That said, there is a general framework you can expect. This article will cover the course of a typical interview so you can better understand what you’re...

One of the more common questions I get from students is: “what questions should I ask at the end of a real estate private equity interview?” Right off the bat, that question implies there is a set list of best-to-ask real estate private equity interview questions at the end of each round. But if there...

Introduction Brain teasers are an important topic in our coverage of real estate private equity for beginners. They show up quite often during interviews, though they may not always touch upon real estate-specific concepts. Categorically, they’re not the same as the other technical questions in our comprehensive guide. In fact, I consider brain teasers to...

Behavioral interviews are a fundamental component of the real estate private equity interview process. In a way, they give you the opportunity to really sell yourself. For instance, you might be asked one of the explicit behavioral interview questions that we listed in the first post of this series. However, the behavioral component of REPE...

If you’re looking for a technical real estate private equity guide, look no further than this link. Yet if you’re looking to study behaviorals, you’re in the right place. The first installment of this series can be found here, detailing (i) the differences in preparing for technical vs. behavioral questions, and (ii) the specific questions...

Introduction To the casual observer, “real estate” may seem to be one single asset class. Perhaps your personal account is exposed to some tech, some healthcare, and maybe some REIT stocks. After all, within real estate, the gist is that landlords charge their tenants rent. How much variance can there be? But when you pry...

Behavioral vs. Technical Questions Real estate private equity interview questions can be generally categorized as technical or behavioral. Broadly, behavioral questions ask who you are (subjective/qualitative) and technical questions ask what you know (objective/quantitative). As with Liberal Arts versus STEM, the ways in which you are tested vary. Technical questions probe your mastery of a...

Your Big Bet on Last-Mile Industrial Let’s imagine a scenario where a real estate equity investment doesn’t go quite as planned. Let’s say you’re two years into an investment you made in 2020, committing fund equity into a 30-property last-mile industrial portfolio. Back then, industrial real estate was hot and cap rates were only going...

Welcome back to the real estate private equity case study series where we focus on the public REIT valuation of Aimco. Right now we’re building a net asset value (NAV) analysis, and in the last posts we knocked out gross asset value (GAV) and spoke to consolidation. This post will shift to focus on the...

Introducing Consolidation Welcome back to the Aimco public REIT valuation series. Here, we’re going to unpack consolidation, which has already reared its head in the figures we pulled for the previous post on GAV. When building public company net asset value (NAV) analyses, it’s important to handle consolidation consistently and back out minority interests as...

Introduction The last blog covered the 1:1 spin-off of AIR from AIV, and the blog before that spoke to creating a dummy NAV build. This blog will attack the first half of the NAV equation – calculating gross asset value. To begin, we’ll model AIV as the pre-spin company. Once we’ve established our pre-spin NAV...

This week, Aimco announced a plan to separate into two separate and distinct public companies. This adds a fun layer of real-life complexity to our real estate private equity case study! Here’s the quick take: Apartment Income REIT (“AIR”): Most operating apartment buildings will spin into a new self-managed REIT, valued at ~$10.4B Aimco: The...

Introduction Welcome back to the REPE career development series series focused on building a public valuation model of Aimco. If you’re lost, part one is here. If you want my exact model, scroll down and click the download button; but you’ll need a course membership subscription first. However if you aren’t yet a member, this...

Introduction Welcome to part eight of our Public REIT valuation series where we build a real estate private equity model covering Aimco. In this post, I am going to publicize my greatest, never-before-revealed trick: global and local checks. Plenty of people build checks inside their models, but I’ve never seen anyone else do it this...

Introduction This is part seven of a series focused on Public REIT valuation. The first six posts were more qualitative in nature, contextualizing the information available in Aimco’s public filings. This seventh post begins a new thread where we focus on building our Excel model. If you’re looking for the best real estate private equity...

Introduction This is part six of a series teaching real estate private equity for beginners, specifically focused on public REIT valuation. If you’re just joining us, you should probably flip back to part one. And if you’re looking for immediate prep before an upcoming real estate private equity interview process, you might find these resources...

Introduction Real estate private equity jobs are just as much about reading and learning as they are about modeling. This is part five in a series in which we will ultimately build a full-scale M&A model for a publicly traded real estate company. But first, I want to make you read the source materials the...

Introduction This is part four of our real estate private equity skill series focused on public REIT valuation, highlighting Aimco. We are beginning with a read through of the source materials because modeling is only the tip of the iceberg of a career in real estate private equity. The core of your job is to...

Introduction This is part three of our series on REPE public valuation, one of many core real estate private equity skills we teach at Leveraged Breakdowns. If you’re just now diving into this series, I urge you to begin at part one. In the previous post (part two), we discussed the purpose of the various...

Introduction This post continues our series on public REIT valuation. The first post introduced our target, AIMCO (NYSE: AIV) and emphasized that the best place to start is by reading the filings. If you haven’t yet, go back and read through that first post. You should have at least skimmed through each of the filings...

Introduction This post is the first in a series oriented as a real estate private equity guide book through my process of underwriting the value of a publicly traded company. This skill is helpful for anyone interested in pursuing an acquisitions career at a real estate private equity fund. This analysis is the type of...

Introduction This article continues our discussion on life as a real estate private equity analyst. If you’re looking to build a real estate private equity model or learn to calculate private equity real estate returns, we recommend you check out our hard-skill resources. But without further ado, onto the Q&A. How long does a typical...

How are you staffed on deals? Every real estate private equity fund has a staffer. Sometimes it’s a formal role and sometimes it’s informal. If you’re on a larger team, the staffer knows who is working on what and how much effort each project requires. Being a staffer is not an enviable job since they...

Leveraged Breakdowns helps teach real estate private equity for beginners. We have plenty of materials focused on hard skills, from our courses and interview guides to our free case studies. This series continues our focus on a softer, yet equally important, skill set: networking into real estate private equity firms. This information is hard-earned after...

Networking into real estate private equity jobs is no cake walk. I know from personal experience, having broken into one of the top Manhattan mega funds as an industry outsider. Regardless, networking is the among the most important real estate private equity skills for an outsider candidate to master early on. Fortunately, there are several...

Introduction The previous post described our calculation of the asset management fee and the preferred distributions. This post will focus on our calculation of the catch-up and the profit sharing. Then, we will tie it all together with a concise summary of the LP cash flows. Below is the overview of the waterfall we shared...

Introduction This post is part of a deep dive into catch-up waterfalls, which can show up in the more technical portions of the real estate private equity interview process. Last post, we left off with the waterfall schedule below. This post will dive into the details of the asset management fee and the preferred distributions...

Introduction The previous post answered the first question of the prompt, “what are the gross returns of this investment?” by building a simple real estate LBO model. This post will begin our journey to answer the second question of this REPE case study, “what net return should the LP expect to earn?” Of course, net...

Introduction Catch-up waterfalls are a common staple throughout a career in real estate private equity. And comprehension thereof is frequently tested in REPE interview questions. Luckily, we’re here to help! The first post in this series introduced the case prompt. Now, this post will seek to address question one in that original prompt. Namely, this...

Intro This case study will focus on building a catch-up waterfall. Catch-up waterfalls will be fairly common throughout your real estate private equity career path. The other common waterfall is promote-based, which we build live in the REPE Starter Kit. Private equity analysts and associates must often model waterfalls, so pay close attention. Keeping it...

Introduction This is the final installment of the preferred note REPE case study. You should begin at part one, otherwise this section won’t make much sense. But if you’re joining us from part five, we’re going to improve the sensitivity table that we ended with. This sensitivity table looks great, but let’s expand it. I’m...

As the old saying goes, expected returns increase as you move up in the capital stack. So why would anybody ever invest anywhere but the top of the capital stack with the highest returns? More specifically, why would the preferred investor accept a 16.3% LIRR when the common would receive 17.8%? The quick answer is...

In the prior post, we built the cash flow waterfalls for this preferred note case study. If you’re just coming to this article, I suggest you begin at part one (this is part four). This post will focus on the preferred equity and common equity schedules. These schedules drive almost all of the waterfall logic...

Real estate private equity case studies often ask you to model cash flow waterfalls. To the uninitiated, waterfalls can seem complex and obscure. But really, waterfalls just determine how investors split the pie when the money comes back around. Pay close attention here, because the skills taught in this post will apply to most every...

When we model this preferred equity structure, we first need to consider the joint venture. The joint venture is the genesis of the cash flows, after which the preferred and common will split their share accordingly. So what does this joint venture look like? Pay close attention – cash flow modeling is one of the...

Introduction This real estate investment case study will challenge your ability to model capital structure and a returns waterfall. With practice, you should be able to complete this category of case study within 30-45 minutes. This post will introduce you to the question and go over some key terminology. At the end, we’ll challenge you...

Introduction You’ve probably begun to sense a bit of rhyme and reason to my formatting. If it isn’t clear, I’m an absolute nut when it comes to consistent formatting. I am always inventing new tricks on my real estate private equity career path, but I make sure every trick slots into my preferred schema. Models...

Introduction This series follows a live case study in which we underwrite the potential acquisition of a $350M 4.0% 2029 notes issuance by Life Storage Inc. (NYSE: LSI), a self storage REIT. If you haven’t yet, I suggest you begin at part one. This post picks up where part four left off: how to figure...

Introduction This is part four in a series where we underwrite a live investment opportunity exactly as we would in our real estate private equity jobs. Part one introduced our subject: LSI’s $350M 2029 4.0% Senior Notes. Part two showed you where to find live bond pricing data and explained key terms. Part three demonstrated...

Introduction This is part three in a real estate private equity case study series in which I take you through my underwriting process. In part one, we decided to analyze a $350M 4.0% 2029 notes issuance by Life Storage Inc. (NYSE: LSI), a self storage REIT. In part two, we went on a hunt for...

Let’s take stock. The first post introduced our subject, so make sure you’ve read that before starting here. Our end goal will be to build a real estate private equity model that tells us if we should invest in these bonds. Naturally, the first question we want to answer is how much are these bonds...

I think you’re going to like this one, so bear with me. Quick heads up, I’m going to try something different here. First, in order to produce more content, I want to write more in a stream of consciousness. Sorry if this appears less edited (because it is). Yet because I want to publish this...

Introduction There are three real estate private equity skills you need to master when looking for a job: networking, developing market opinions, and technical skills. This series focuses on #2, the market knowledge. The last post in this series explained high-level that you need to conduct your market research in four steps: (1) sector-level research...

To get a job in real estate private equity, you need to master three things: You network as hard as possible and learn by speaking with professionals who make real estate equity investment decisions every day You have developed data-backed opinions on real estate markets, namely: what has happened in the past, what is happening...

Introduction to this Series on Developing Market Knowledge Leveraged Breakdowns helps you prepare for a real estate private equity career path in every way possible. On the technical side, we teach you how to build an extremely detailed asset-level model via Breaking Down REPE. We show you how to tear through a case study in...

This post is part of our interview prep series, where we teach you to answer common interview questions from a real estate equity investment mindset. The first question here focuses on the key differences between the major real estate sectors. The second two questions shift to focus on construction financing. All three concepts are critical...

Every Interview is a Learning Experience The interview game is a learning process, and you can really only gain your sixth sense through live practice. There is nothing that compares to actually practicing with real life interviews for firms you want to work at. With that said, it’s natural to stumble on your first few...

To an outsider, recruiting for a career in real estate private equity recruiting can seem opaque and confusing. I know because I’ve been there. Fast forward several years comprising tens of billions of dollars of acquisitions experience, and I’m here now to help you shortcut the initial confusion. Leveraged Breakdowns provides the head start I...

Introduction Fully diluted share count and transaction costs resulting from change in control provisions are important considerations for any M&A-related real estate private equity model. This article covers the basics you should absolutely master if you are serious about a career in REPE. As always, we recommend you deliberately practice these questions out loud and...

Introduction This series on interview prep exists to help you excel during interviews and crush any real estate investment case study. To make this the best real estate private equity course possible, respond to these questions as if you’re actually being interviewed. That means look away from your computer, don’t read or memorize the answer...

Introduction The interview process is more than just building real estate private equity models. You have to learn to think and speak like a true megafund investor. In addition to providing the best real estate private equity course on the market, we have created this series to help you practice the most common interview questions...

The following real estate private equity interview questions should be practiced deliberately as if you were answering in-person in front of a real investor. The focus of these questions is on the capital stack and how it relates to net asset value, seniority, and return expectations. These are basic concepts to master before your next...

Introduction This article follows an interview format to help you develop your real estate private equity skills. Assume you’ve been asked each question during a live interview. Practice until you can answer from memory, without referencing our pre-written responses below. We challenge you to rephrase your responses — we’re always here in the forums if...

Introduction Real estate private equity firms expect you to walk into your first interview with substantial industry knowledge. Yet how could a complete outsider ever know what to expect from such a technical ordeal? Enter Leveraged Breakdowns, the premier resource to prepare you for real estate private equity jobs. In this article, you should read...

Introduction Leveraged Breakdowns teaches real estate private equity for beginners. That’s why we provide materials such as our flagship course Breaking Down REPE and even our free real estate private equity case study. This particular series focuses on the types of questions you might face during a real estate private equity interview. Today’s lesson focuses...

This series serves as a real estate private equity guide for live interviews. The response to each question is phrased exactly how we would recommend you respond during a live interview. After reading this article, you will have a high-level understanding of two concepts that are likely to appear on any real estate private equity...

Real estate private equity firms will expect you to understand the risk profiles of each major real estate sector. Fortunately, the differences between each sector are pretty intuitive. But can you explain these differences in the investor’s vernacular? This article helps you take what you likely already understand, such as hotels being the riskiest asset...

Leases are fundamental to real estate. They drive revenue and greatly determine private equity real estate returns. Yet how much do you understand the basics of each type of contract? After reading this article, you will be able to: (i) quickly differentiate between triple-net, double-net, single-net, and full-service leases, (ii) explain the risks and benefits...

Part one of this series covered the basics of accounting: (i) the three most common financial statements, (ii) major line items on each financial statement, and (iii) how the three statements flow together. This article extends those lessons to focus on: (i) the nuances of the direct and indirect method of the cash flow statement...

Accounting is the language of finance. Though you do not need an advanced CPA skill set, you must be familiar with GAAP and IFRS accounting. Certain real estate investment case studies may require you to tease out crucial information from financial statements. If you do not understand the information below, you are not prepared to...

Intro Today, we’re going to learn about real estate private equity models focused on development. Read each of these questions as if you were being interviewed, and practice our responses as if you were responding out loud. This is baseline real estate private equity for beginners, so make sure you understand this information cold before...

This is the second part of the real estate private equity interview prep series focusing on property pro formas. The first part of this series can be found here. You must understand these questions cold before beginning any real estate private equity interview process. Walk me through an office pro-forma The revenue side of an...

Understanding real estate pro formas is critical for any real estate private equity interview case study. The revenue and expense items for each major asset class should be in your muscle memory. Even if you haven’t made it to an repe case study round, the questions below will likely arise in your screener interviews. Make...

Leveraged Breakdowns exists to prepare you for a career in real estate private equity. To that end, this series covers interview questions you’ll likely face when searching for real estate private equity jobs. Make sure you check out our courses, Breaking Down REPE and the REPE Starter Kit, to get the hard technical skills you...

This is a collection of repe interview questions to help you prepare for a career in REPE. These particular repe interview questions focus on two common questions. First, why invest in real estate? Second, what are the main real estate sectors, and how do they differ? You need to have the answers to these questions...

There are five primary tax incentives in real estate private equity that can boost returns in your real estate equity investment. Analysts should understand the mechanics of each so they can build effective real estate LBO models. Two of these incentives have been covered already: Property Tax Incentives and Sales Tax Incentives. Federal and State...

One of the greatest lessons we have learned in our REPE careers is that you never actually “arrive.” There is never a point when you can say with any confidence that there is nothing left to learn and you actually have things figured out. This points to a critical real estate private equity skill: continuous...

One of the frequent questions we hear at Leveraged Breakdowns is whether there is a real estate private equity certification that will help distinguish applicants in a crowded applicant pool.  There are a few certifications available, but they are aimed at validating the experience a person already has. Put another way, most certifications require documentation...

We’ve all seen movies that depict the frantic activity on the floor of the New York Stock Exchange. When the market is on a huge bull run for the day, or in absolute freefall, staying calm and focused is critical to success. The Real Estate Private Equity day-to-day is not nearly as intense as one...

As a real estate private equity analyst, you will build complex LBO models and be responsible for their completeness and accuracy. Depending on your employer or the specific fund, your model may take into account the effects of taxes on investment returns. If so, you may want to consider a cost segregation study for acquisitions...

Much of what you read on this site is focused on hard skills, with the intent of helping you launch your career in REPE. This post will focus on what might be considered a soft skill, but a better term is a character trait. This trait will make you into the most trusted analyst in...

One of the things you will learn as a real estate private equity beginner is that many industry terms are both simple and complicated. In speaking of cap rates, what we mean is that cap rates have an “everyday” application that is intuitive and simple. Its foundation, however, is much more complicated. As you move...

One of the most common questions we get at Leveraged Breakdowns deals with getting inside the head of the hiring manager during a real estate private equity interview. What are they looking for? What questions will they ask? It is very natural to dwell on the “what” part of the real estate private equity interview...

The key to landing your first job is to know the real estate private equity interview process and crush the interview. As an outsider to the industry, though, you run the risk of looking like an outsider if you don’t know the terminology forward and backward. No one wants to see that look on the...

If you want to break into a career with a real estate private equity firm, you have to commit to a great deal of preparation. To stand out from the host of applicants from target schools, you must demonstrate that you know more and will work harder than anyone else. Understanding what makes a REPE...

We often receive requests for real estate investment case studies. Students want to prepare for job interviews as well as practice their skills for personal growth. In either event, case studies are a fantastic way to better your skills and launch into a career in real estate private equity. This case study will simulate a...

As you pursue a career in real estate private equity, you may wonder where REPE firms get the money to invest in properties. Beginners are generally unfamiliar with the various investor categories in private equity funds. There are six key investor types in the real estate investment space. High Net Worth Individuals Wealthy individuals generally...

Real estate assets are  divided into three major types: Residential, commercial, and industrial. NAREIT (National Association of Real Estate Investment Trusts) tracks a dozen main property types in investment real estate and provides data on the returns realized in those property types (and several sub-types). Most REPE funds, however, focus on one of the five...

Serious about a career in real estate private equity? If so, there are several key accounting terms that need to become instinctive. If you even have to think about the definition of these terms, you don’t know them well enough yet. The more natural these terms become, the more prepared you are to crush an...

For a real estate private equity beginner, layering sales tax incentives into a real estate private equity model may sound intimidating. Like other incentives, however, accurate modeling comes down to understanding how the incentive is calculated and the timing of receipts. Sales tax incentives are not allowed in all states, but there are enough that...

In many real estate projects there will be incentives from the City, County, State, or Federal governments that will have a meaningful impact on a real estate equity investment. Understanding these various incentives is critical to properly modeling the projects and determining accurate project-level private equity real estate returns. Property Tax Incentives The most common...

There are lots of sources for industry information as you prepare for a real estate private equity job, or continue to build your skill set. As industry insiders, we have a number of favorites, which we share below. Keep in mind that continuous learning isn’t just a catchphrase, it should be a way of life...

How do you convey the key drivers of property performance to Investment Committee (IC)? The first major hurdle you need to clear as a real estate private equity analyst is being able to construct a reliable and accurate LBO model. That isn’t where your job ends. You also need to be able to test the...

This is a very interesting time to begin your real estate private equity career path. In the past year (2019) we have seen interest rates begin to climb up from historic lows, then suddenly turn back down to historic lows again. One of the big questions that always lingers in the REPE industry is whether...

Commercial Mortgage Backed Securities (CMBS) play a significant role in providing liquidity to the commercial real estate market. In many ways, CMBS issuance is a bellwether for the overall health and liquidity in the commercial real estate market. During the Great Recession, CMBS lending essentially stopped for several years, and the first issuers back into...

Breaking down insider lingo is one of our chief strategies at Leveraged Breakdowns. Real estate private equity for beginners can seem daunting with acronyms and phrases that sound familiar, but until you know them inside and out, you won’t be able to interview like an insider. And interviewing like an insider is the key to...

This final installment in our series on commercial leases (unless we decide to bring you Commercial Leases: Hobbs and Shaw) will focus on co-tenancy clauses and ground leases. Again, these topics are getting deep into the weeds, but if you are hunting for your first private equity real estate job, this info can really help...

Suppose you sit down for a REPE job interview and are asked this question: “If we completed a 1031 exchange into a mixed use project in an Opportunity Zone, exchanging a property with a tax basis of $32 million into a new project of $40 million, how much would my step-up in basis be in...

One of the great things to come out of the 80’s (as opposed to legwarmers and headbands) was the 1031 exchange. Like-kind tax deferred exchanges have been allowed since the 1920’s or so, but the concept wasn’t permitted in its current form until a series of court decisions and tax law changes in the 1980’s...

The original three posts under this title were extremely well-received (Part One, Part Two, Part Three), so we have decided to write two more. The goal of these articles is to explain real estate private equity for beginners in layman’s terms. If you’re fresh out of college or looking to make a career change, finding...

In an earlier post we discussed how leases describe and allocate operating expenses  between the landlord and the tenant. Today, we would like to dive deeper into the topic of expenses, focusing on how expenses should be properly captured in your model. This capex vs. opex distinction is important both for your job and when...

This third installment in our series looks at one of the key investment metrics of REITs: Net Asset Value, or NAV. For most REIT investors, the comparison of NAV to the share price is a very telling indicator of value, and the type of long term private equity real estate returns that the investment could...

If you are seeking a career in real estate private equity, you will need to have a basic understanding of REITs. Once you land your first real estate private equity jobs, you’ll gain even more understanding and experience with REITs because they make up one of the largest real estate ownership types in the world...

You’ve probably heard the term REIT, but perhaps you aren’t sure what it is. Or maybe you know what “REIT” stands for (real estate investment trust), but that’s about as far as you can take it. At Leveraged Breakdowns, we aim to set you up for your career in real estate private equity. Understanding REITs...

What exactly is a real estate investment case study? It’s basically a story problem like you had in algebra class. But instead of a train leaving Chicago going west at 45 mph, we have a building that is leased to Walgreens for 45 years. A case study is a set of facts that are used...

When you hear talk about the waterfall, understand that this simply means how the profits are divided between the parties involved in the deal. Generally this means how profits are split between the GP (General Partner, your employer) and the LPs (limited partners, or investors in the deal). But in some instances, there may be...

The third and final installment of this series covers several of the other key terms contained within commercial leases. Some of these terms may come up as part of a real estate private equity interview case study. You can rehearse these on your own or even practice them as part of the real estate private...

Commercial leases are the backbone of the REPE industry. Demonstrating a familiarity or a mastery of the terminology will help you nail a real estate private equity interview. Part one of this series focused on understanding the terminology in commercial leases related to income. Part two will zero in on the expense side of the...

The terms and conditions within a commercial lease can make or break a deal. Analysts must fully understand each of these terms if they want to build practical and effective LBO models. The lingo used can initially be confusing, but with practice you’ll get the hang of it. Private equity real estate returns for stabilized...

This series covers the top real estate private equity firms. Each post briefly describes the subject fund’s size, history, and key real estate equity investments and concludes with questions to help develop your investing mindset by critically reviewing the firm’s key transactions. For a real estate private equity beginner, these posts will broaden your industry...

Part one of this two-part series focused on the responsibilities of various real estate private equity jobs. In part two the focus will shift to specific real estate private equity skills associated with each of the five entry points. Investment Analyst As the name implies, an analyst must be good with numbers. Further, a quality...

Trying to map out a real estate private equity career path may seem daunting if you don’t know where to begin. Whether you are fresh out of college or have 15 years’ experience, there are a variety of opportunities awaiting if you know what to look for. Here are five career paths that will help...

With any real estate investment, accurately determining the value of the project at a point in time is one of the most critical pieces of information you’ll use. Real estate values change over time, and a myriad of factors influence the value. Appraisals represent an independent professional’s estimate of the market value of a property...

Rarely will a real estate project be funded solely with owner/investor cash. This may be wise in certain instances, yet not often. For properties that will generate cash flow, leverage helps to lower the cost of capital and boost investment returns. Beyond vanilla mortgages for stabilized properties, construction financing introduces additional complexities. Banks and credit...

This post examines three common mistakes that candidates make when interviewing for real estate private equity jobs. I have interviewed countless candidates for various positions at my fund. If you make any of these mistakes, you will be immediately cut from my process. Protect your candidacy by avoiding these easily avoidable pitfalls. Mistake #1: Freezing...

Introduction This is the third and final step in solving the inaugural real estate investment case study challenge. This solution teaches you how to build a typical real estate private equity model used in one-hour on-site case studies. This is a basic model that you should be able to build from scratch without referencing anything...

Introduction This post is step two in our solution to the very first real estate investment case study challenge. This case is exemplary of a one-hour, on-site, asset-level real estate private equity interview case study. If you haven’t yet, go back to the original prompt and then the solution step one before reading this post...

Introduction This post covers the solution to our inaugural real estate investment case study challenge. You may download the solution here. Submissions were due April 30, 2019. Because practice makes perfect, you should first actually try solving this simple real estate investment case study on your own. The original forum thread is a great resource...

This post kicks off our series on real estate private equity for beginners. Here, we focus on most important financial statement in real estate private equity: the trailing twelve month operating statement. You may also know this statement simply as “the TTM” or “T12.” Either way, understanding the T12 is a fundamental real estate private...

If you want a career in a real estate private equity firm, you aren't alone. Any single job opening attracts fierce competition. Thus, to get a career in real estate private equity, you need to stand out from the crowd. Generic candidates don't get hired. Unfortunately, many candidates struggle to set themselves apart...

Solution This challenge is over! Nevertheless, you should be able to knock this out pretty easily if you are interviewing for real estate private equity jobs. You may download the solution here. The solution walkthrough begins in this post. Continue reading for the prompt and judgment criteria — this post is important before starting the...

This post answers a series of frequently asked questions regarding the life of an analyst along the real estate private equity career path. Have more questions? Please, visit our forums where any question is encouraged. After all, our goal is to close the information gap keeping you from your dream real estate private equity career...

This series will cover the top real estate private equity firms. Each post will briefly describe the subject fund’s size, history, and key real estate equity investments. At the end of each post, you will develop your investing mindset by critically reviewing the firm’s key transactions. Part One: Blackstone The Facts Blackstone manages $472B of...

Introductory notes What you will learn by reading this series You’ve likely been taught that networking is a critical element to securing your dream job. Yet, what does networking actually entail? Most colleges advise students to sign up for LinkedIn, search for relevant alumni, then develop relationships over email, phone, and coffee chats until they...

I am excited to share my interview with Chris, a real estate private equity (“REPE”) acquisitions analyst who broke into his investments role from a non-target state school. Trying to break into REPE? Subscribe to our free newsletter, and check out our course that distills years of insider knowledge to teach you the REPE investments...

Students often begin their study of financial modeling by diving into the underlying financial theory. This is a sensible place to begin. For example, one may choose to pursue an economics or business degree, or perhaps self-study with resources such as Investopedia or Rosenbaum and Pearl’s Investment Banking textbook. Yet, at what point do you...

Want to Ace your REPE Interview? Have a real estate private equity interview coming up soon and don’t know where to start? The Leveraged Breakdowns Technical Interview Guide will give you that much-needed edge over your competition. Also, make sure you check out our other courses and free real estate investment case study. Introduction What...

The Question “What questions would you like to be asked at the end of an interview (if you were an interviewer)? Thanks!” -/u/pinapoliz on Reddit Thanks to /u/pinapoliz on Reddit for asking this great question. If you weren’t aware, I’m active on a few subreddits including /r/FinancialCareers, /r/CREFinance, and /r/CommercialRealEstate. Know any other subreddits or...