Real EstateMBACM Interview Prep Session

December 2018

Interview Questions Overview

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The Real Estate Interview: What to Expect

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‘Mature’ ProcessHR-coordinated, (eg. FRP)Multiple rounds of interviews, first on-campus, then at companyFit, industry questions, mini-case/technical and situational questions

‘Enterprise’ ProcessCircumvent HRProactive student-to-alumni interaction; initial ‘informational’ email/telephone discussion converting to in-person meeting/interviewPrepared, thoughtful pitch required for successUnstructured – use this to your advantage

Most RE interview experiences fall between the two examples

The Real Estate Interview: What to Expect

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Quote from a real estate finance alumnus at a large investment bank (ie. mature process)

QUESTION: Describe your internship interview process? ANSWER: “We typically do 2-3 rounds for interns (on campus first round, and second round in NY). The interviews include a discussion of an applicant’s background, an industry problem to discuss, and then time for questions. A mix of technical and situational questions

Quote from a development alumnus at mid-sized commercial real estate firmQUESTION: Biggest interview pitfall?ANSWER: “Lack of deep knowledge about our firm, our properties and recent deals”. Students need to go beyond general company website research

The Real Estate Interview: How to Prepare

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Know your resume and prepare a thoughtful, clear pitch relevant to the firm, division and position to which you’re applying

Research resources: NREI, RE Alert, Globe Street, Company website, CapIQ, Preqin, RE Club news summaries

Know the background of your interviewerCompany website, LinkedIn profile, Alumni Directory, GoogleInsider information from Wharton Offer DirectoryFind 2nd year or recent grads who work(ed) there on Spike Community/LinkedInFind a picture of them to mentally prepare

Be ready to repeat your story with each new interviewerBeing repetitive is fine if being asked the same questions; consistency of message is key

Dress code: always assume business formal attire

What are Real Estate Firms looking for?

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What skills are interviewers looking for in development?Entrepreneurial/takes on initiatives; collaborative approachProject management and prioritization Negotiation, communication, and people management skills Quantitative analysis skills Cultural fitCreativity & Determination (overcoming obstacles)Familiarity with their geographic operating area and product types

What skills are interviewers looking for in private equity and finance?Quantitative, past deal and transaction experience Business development and sales skillsSound judgment and decision makingAbility to hit the ground running and contribute immediate valueInvestment judgment. Understanding of current market deal terms

Interviewing Best Practices

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Make sure you can articulate your interest in Real Estate (helpful if it synchs with your motivation to attend Wharton)

Show a strong sense of intellectual curiosity – help them see that you will continually strive to soak up Real Estate knowledge

If you have any experience in the following, make sure you convey it:Due diligence/researchFinancial analysisBuilding and presenting investment rationaleWorking with debtWearing many hats (e.g. working with different types of people, taking on multiple roles at any given time)Leading teamsProject managementNegotiating

Interviewing Best Practices

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DO RESEARCH on the company with whom you are interviewing. If possible read bios of the senior managementBe able to talk to some recent deals done by the firm in an area that interests youShows you do your homework and that you are diligent and prepared

Do not waste their time by saying you want to get into a type of real estate that they are not in

Have a different pitch for different types of Real Estate companiesShow that you’ve done your homework

Do not give the impression that you will leave in a couple of yearsReal Estate is all about relationships and they take time to build

Do not get into a topic that is over your headKnow what you know and what you don’t know, be honest about itIf you try to fake it, your efforts will be transparent and it is guaranteed to ruin your interview

Interview Etiquette & Tips

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• Email follow-up thank you after an interview: • Timing: within 24 hours, same day is best

• Only tell ONE company they are your first choice

• Do NOT no-show! If you have an offer you’d take over that job, cancel interviews at least 48hrs in advance• Companies should NOT extend offers before 5pm on Friday 1/12, and

if they do, students should NOT cancel any FRP interviews.

• If you have multiple offers (congrats!)• Please be mindful of waitlisted candidates.

• Be yourself!

Sample interview questions

Resume Walk-Through

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• As always, use structure – be sure your description of each job/school experience sets up the next story

• Be concise but tell your story (2-3 minutes max)

• Recruiters want to know• How you got to where you are today• How your skills, experiences and motivations relate to the job. Even if

you are a career switcher, it is possible to talk about your experiences in “marketing speak” and highlight relevant skills

• Talk about transition points – why did you make certain choices/ decisions?

• Be prepared to discuss everything on your resume

Interest & Experience

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Why real estate finance and not real estate development? (or the reverse of this)

Where do you see yourself in 5 years? 10 years?

What other firms are you talking to? (important to know other firms' specialty)

What sector of real estate are you interested in? Why?

For people with any experience in real estate: What was your best project and why; what was your worst project and why?

Market Knowledge

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What property sector do you find most promising? Least desirable?

What are the risks of entering a new market?

What is your opinion as to the growth/consolidation of the REIT market?

If you had $100 Million dollars, where would you invest it? Why? If you were preparing a memo for a real estate investment committee, what would you include?

Is the housing market in [ ] overvalued now?

Do you think real estate investors are justified buying at lower cap rates? Why or why not?

Real Estate Finance

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What is CMBS? What is LTV? What is NOI? How do you compute NOI?

What are the 3 methods of appraising a property?

What is FFO? Why do REIT analysts use it?

What is a DSCR and how do the allowances vary by property type?

What kind of leverage can a well leased office building carry? Would it all come from one lender? How would that leverage be priced in today's markets (spreads)?

Real Estate Development

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What is FAR? Why is it important?

What is a triple net lease?

What is an expense stop? Why is it important to the landlord?

What is the impact on rents, stock and asset prices from a 10% increase in population?

How would you decide how much to pay for land if you wanted to develop it?

What’s a good real estate market to invest in right now and why? Both inside and outside of the U.S.

What are typical condo sale prices ($/sft) in New York?

Guesstimating

How many floors are in this building?

What is the Net Rentable Area of this building?

How many light panels (fixtures) are in this building?

Private Equity / Acquisitions

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What is a cap rate? How would you choose a cap rate for a class A office building in NY?

How would you value an office building? Retail? Multifamily? Industrial? Hotel?

Two properties are across the street from each other in Midtown Manhattan. The properties look exactly the same from the outside. Why might one be worth more than another?

(Interviewer opens a large document to a wide angle picture of a commercial real estate asset from the parking lot)... What do you see? Would you want to own this? Why/why not? How would you value it? What concerns you?

Is an apartment building investment that yields a 23% expected IRR on equity more attractive than an investment of an equal amount in a supermarket anchored strip shopping center that provides a 18% expected IRR on equity?

Private Equity / Acquisitions (continued)

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You have been asked to fly to Chicago (any city will do) for a due diligence trip and site visit for a potential investment. What would you do before you leave to prepare? What would you want to achieve while you are there?

In a JV Partnership, what does each party bring to the table? Do you understand the basic equity and promote structure of a JV? If so, walk me through the rationale.

If you could invest in any real estate market where would it be and why?

What would you say your biggest weakness would be as an investor?

Would you rather buy or rent in this housing market? Why?

Why would you invest in core single-tenant office assets if you could just buy the tenant's corporate bond?

Private Equity / Acquisitions (continued)

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How much debt can the building we're in support?

Requires candidate to estimate NRA, know market rent and opex to estimate NOI, know cap rate and LTV

What's a better investment, buying a hotel in Vegas or an office property in Manhattan?

You buy a building at 8% cap rate, 50% LTV, 6% interest. Assuming no taxes or other leakage. What's the equity yield year one?

You invest $100 today and without any further inflows or outflows you sell for $100 in 5 years. What's the IRR?

You invest $1 today, $1 end of year 1, $1 end of year 2, and get $3 end of year 3. What's the IRR?

You invest $100 today and get $10 for 4 years (year end) and $110 end of year 5. What's the IRR?

Private Equity / Acquisitions (continued)

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You invest $100 today and without further inflows or outflows what do you need to sell for in year 3 to get a 10% IRR?

What's the relationship between IRR and NPV?

The project generates a 10% IRR. Sponsor contributes 5% of equity and co-investor 95%. Sponsor receives 20% promote after a 15% IRR to the investor. What's co-investor's IRR?

Your acquisition project generated a 15% IRR over 5 years. What's the multiple?

An acquisition project generated a 2.5x multiple over 5 years. What's the IRR?

What's the IRR if the multiple generated is 3.0x in 5 years?

You have an opportunity to buy an asset at an initial yield of 7%. You can obtain 65% LTV, 8% interest-only loan (without principal amortization). Assume 0% tax rate, no cap rate compression, and no NOI change over a 5 year hold. Does this deal make sense, why?

Real Estate Investment Banking

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Would you rather have $100 in inventory or $100 in accounts receivable?

If you could invest in either a mortgage security or a corporate bond, which would you choose?

Both have same coupon, same risk profile. You'd likely want the mortgage security because payments are more frequent (monthly) than the corporate bond (bi-annually). Always opt for more frequency.

Behavioral Question Examples

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• How would your co-worker / learning team member describe you?• Strengths / Weaknesses• Tell me about a time when you…

• Failed / made a decision that you later regretted• Were successful in a team as a leader/follower• Handled a difficult person / conflict on your team• Persuaded a group of people to follow/Led by influence• Worked on different projects at the same time and how you handled it• Adapted to a new environment• Dealt with pressure• Used data to make a decision / to convince someone about

something• Had to analyze a large set of data to make a decision

Behavioral

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What excites you about this industry / job?

What are three of your strengths?

Three weaknesses?

Tell me about a failure

Tell me about a time you led a team and it failed

Tell me about a time you had to manage your boss

How would your peers describe you?

Tell me about a time you had to convince your team to pursue an alternative course of action

Tell me about a time others convinced you to change your mind

Case Questions

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• What is a case / scenario question? • Recruiters want to assess your skills and abilities for the particular

position. They want to see thought processes & attention to detail

• Techniques to Answer:• Demonstrate your understanding of management concepts and

approaches to problems• Gives companies a chance to gain insight into your strategic thinking

process• Clear, concise and logical thinking is key

• Common Frameworks• 5Cs (Context, Consumer, Company, Competitors, Collaborators)• STP (Segmenting, Targeting, Positioning) • 4Ps (Product, Price, Place, Promotion)

Case Question Tips

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• Think before you speak

• Ask any clarifying questions upfront but then make assumptions as you proceed through the case

• Consider what questions you would want answered, and what resources you would tap into.

• Be clear, concise, complete

• Go beyond “textbook” answers

• Focus on impact on the business / bottom-line

Note: Case questions for corporate strategy teams will be more similar to Consulting cases.

Industry and Company Questions

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• Industry-Specific Questions• Identify macro-trends affecting the industry• What are the major challenges and opportunities within the industry?• Tip: Conduct online and in-person research• Tip: Sign up for industry resources

• Company-Specific Questions• What line of business would you divest or acquire? • What does our company do well or poorly?

Your Questions for the Interviewer

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• Have 3-4 questions prepared per interviewer• Be sure to ask about next steps in recruiting (if not already

communicated)

• Show industry / company knowledge through specific questions

• Tailor your questions to the interviewer’s title / position/ experience

• Demonstrate curiosity and enthusiasm for the position

• Don’t forget that an interview is a two-way street. So it’s your turn to assess the company and the job!

MBACM Interview Resources and Reminders

• Resources• MBACM sample interview questions and InterviewStream (MBACM website)• MBACM Resource Library• RE Club Recruiting Guide and Question Bank• RE Research Page• Campus Groups

• Mock Interviews with Career Fellows• Primary: Sign-ups open Nov. 26 and interviews run Dec. 3 – Dec. 10• Post-FRP: Sign-ups open Jan. 22 and interviews run Jan. 28 – Mar. 29

• Mock Interviews with Second Years• Reminders

• Review Wharton Recruiting Policies• Check CareerPath for on-and off campus job opportunities

Next steps

• Winter Break– Practice!

• On your own• Skype with your peers• InterviewStream

– Read, research and prepare as much as possible

– Parallel path enterprise recruiting efforts

– FRP INTERVIEWS BEGIN JAN 10TH

Timeline

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• November/ December– Finalize cover letters & resumes

• Set up reminders for yourself so you don’t miss deadlines!

• Uploading takes time – give yourself a few hours before a deadline

• Leave time for jobs that may require to also apply through the company’s own website

– MBACM & Club Interview Prep Sessions• Check SPIKE for details• All MBACM sessions are recorded and

posted on our website

– Career Fellow Mock Interviews

– InterviewStream (MBACM website)

Notification Dates

All applicants are notified of their status on the Invited Student Sign-up Start date

• Notification will be sent the morning of 12/4-12/13

Extended Interview

• Invited Student Sign-up Start

• Guaranteed a slot before Alt. Student Sign-up Start Date

Alternate

• Alternate Student Sign-up Period

• Not guaranteed a spot

Not Invited

• Walk-in Apps

Alt. Sign-up Period End = Schedule Closed

Next Steps and Post-Interview Follow-Up

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1. Thank you note

A personal hand written note is not required, but is a nice touch

2. Keep your search moving in the right direction

‒Continue to add to your target list until you have secured an offer

3. If an offer is not presented:

‒Exit the process gracefully with sincerity and appreciation

‒Retain contacts you have made for future opportunities

‒Where appropriate, delicately solicit interview feedback with the goal of improving your skills and making yourself more appealing to the firm in the future (note: this is not always possible)

4. Be patient and persistent

‒Remember many real estate internship and project work needs are later timed. Keep an open line of communication with firms of interest – keep at it until you get a ‘no thanks’

Reminders

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• We are here to help!

• Mock Interviews• Career Fellows: Sign up for Mock Interviews on the Career

Management website

• Career Advising: Students can also use advising appointments for mock interviews – just give the advisor a heads up so they can prep

• Reach out to other second years!

PANEL / Q&A