RE II & Beyond

For students considering a career in real estate, the following notes may be helpful. 

RE II (aka The Deuce)

Beyond the syllabus and the obvious statement that it’s the follow-on course to RE I, let me summarize some of the big differences between RE I and RE II: 

• Whereas RE I is largely about understanding the fundamentals of RE investing, RE II is more strategic. How might you think about pre-&-promote structures, fixed- v. floating-rate debt, joint ventures v. funds, evaluating fund-level performance, certain income-tax considerations, etc.? In my view, it’s the more interesting of the two courses.
• At some point (typically fairly early in your career), you and most all of your colleagues figure out how to underwrite a potential RE investment (whether market A is better than market B, whether property X is better than property Y, etc.). In my view, it is these strategic items that tend to distinguish the pretenders from the contenders.
• The class size of RE II tends to be smaller than RE I – with a greater cross-section of undergraduate and full- and part-time graduate students. It represents a good opportunity to get to better know your RE-focused classmates – many of whom are likely to be helpful in your careers.
• RE II counts towards the finance concentration (provided you’ve successfully completed RE I).

The RE Lab

The Lab (offered in the fall to those who’ve completed RE I and RE II) is the third course in this rotation. It continues the idea of the increasing role of strategy. However, this class turns the tables and asks the students to come up with a RE investment strategy that can be executed through the public markets. The students divide into two teams and pitch a panel of external judges on the merits of their investment strategy. 

• This past fall, one of those teams pitched Veris as a stock worth tilting towards – because it looked to them as a potential “go-private” candidate (here’s a link to their presentation). They were, of course, quite happy with Monday’s announcement that Veris is to be taken private (a $3.4 billion acquisition) by Affinius.
• This is not the first time that a RE Lab team has landed on a go-private target before the market got there. Other examples include: Tricon and Paramount.
• Of course, the Lab teams are not restricted to identifying go-private candidates. As one example, an earlier team (pre-COVID) pitched a long/short strategy involving apartment REITs with a non-coastal presence v. those apartment REITs with a coastal presence (as a variation of the non-gateway v. gateway concerns). This investment strategy would have crushed it.

Career Advice & Introductions

I’m happy to discuss privately with you certain career considerations and, where appropriate, make certain introductions to various practitioners on your behalf. However, this is a finite resource and, understandably, I want to respect the time of those practitioners.

• Part of that exercise includes my belief that you are serious about a RE career (i.e., you’re just not a “tire kicker”). This seriousness is indicated by things like taking (at a minimum) both RE I and RE II as well as involvement in one of the RE Clubs, participating in various “challenges” hosted by other schools and/or other such activities.
• Part of that exercise also includes your performing reasonably well in the classroom (for both RE I and RE II). That said, I don’t necessarily believe that there’s a near-perfect correlation between class grades and the trajectory of your RE career. (While I’m not in the camp of “the world is run by C students,” I’m not sure it’s entirely run by A+ students either.) There are lots of factors that go into a successful RE career (e.g., the Blackstone folks are often quoted as saying that they’re looking for EQ as well as IQ).
• Given the foregoing and if you’re interested in my suggestions and perspectives, let’s set up a meeting to discuss your objectives, interests, strengths/weaknesses, etc. As you know, it’s a competitive marketplace and, accordingly, everyone needs to be focused on their comparative advantage(s), what are likely fits, etc.
• Finally, let me say that recruiting and (hopefully) securing gainful employment is a process (i.e., contacting multiple people, often encountering frustrating dead ends, etc.); there are no assurances and it’s unlikely to be satisfied without considerable diligence on your part.