From April 5–6, a group of about 20 students from Carey’s MS Real Estate & Infrastructure (REI) and MBA REI programs traveled to New York City to meet with company representatives from three prestigious firms with expertise in real estate and infrastructure. The trip was a joint effort between the student-led Carey Real Estate Investment Association (CREIA) and the Edward St. John Real Estate Program. Without the dedicated members of CREIA who contributed a lot of their own time to plan the event, it’s easy to say that the event would not have been a success. Our group of students was impressive and very well received by everyone at the offices we visited.
The first firm that the group visited on Thursday, April 5 was an independent private equity shop known as Meridiam Infrastructure Partners that finances and manages a variety of greenfield infrastructure assets through partnerships with public agencies in many countries around the world. At Meridiam, the students met with company representatives specializing in the development and administration of what are commonly referred to as public-private partnerships (PPPs). The North American arm of the firm, based in New York City, is involved in some really exciting PPP infrastructure development projects, including the development of a new passenger terminal building at LaGuardia International Airport, the Purple Line light rail expansion project in suburban Maryland, and the Central 70 tollway near Denver, Colorado.
It was interesting to learn more about the pioneering nature of PPP development projects, especially from the U.S. perspective, where such projects are relatively new and untested. The representatives spoke about the challenges the firm faces with the complicated nature of the partnership projects and numerous stakeholders that must be satisfied. At the conclusion of the presentation, our hosts were generous with their time and took many intriguing questions from the visiting students. The students’ curiosity was piqued by the groundbreaking work of this firm and the potential career opportunities in the PPP field.
After visiting with Meridiam, we attended a networking reception that evening hosted by Carey in midtown Manhattan. There, we were able to mingle with Carey alumni living in New York City and continue the conversation with representatives from Meridiam and other real estate professionals in the city.
On April 6, CREIA had two site visits. First at Evercore ISI, a global independent investment banking advisory firm, and second at Blackstone, the largest alternative investment firm in the world. Mr. Stephen Sakwa, Senior Managing Director at Evercore ISI and Real Estate Advisory Board member at Carey Business School, hosted us at the Evercore ISI office in New York City. Stephen was joined by Trevor Hawley, Director, Institutional Equity Sales at Evercore ISI. Evercore ISI is an independent investment banking firm bought International Strategy & Investment Group (ISI), a research-focused brokerage. Steve gave an overview function of Equity Research on REITs at Evercore ISI. The research team covers a total of 65 companies and 9 different property types such as health care, industry, self-storage, office, infrastructure, multifamily, data centers, malls, and hotels.
Key takeaways from Stephen Sakwa were to be ahead of the Real Estate Cycle. As researchers are crucial in providing the information to the brokers, it is essential to learn how the economic intricacies affect real estate. For example, the interest rate hikes to 3.75% hurt the REIT prices, as a result of the Fed tightening the economy, so the research team already advocated that their clients finance the properties from domestic and international equity investors. Another critical takeaway was the first mover advantage. Sakwa hinted that the Multifamily REITs are already considering the possibility of Hyperloop construction and driverless cars causing residents to move out of the city and settle in the suburbs for a low price, thus buying more parking spaces in cities and townhouse communities in the suburbs.
Trevor Hawley’s takeaways focused more on personality building, specifically “the early bird gets the worm.” By this Trevor meant that in the Equity Sell side world, one who does his work early or before anyone else would be successful. Trevor has been waking up at 5.00 am for the last eight years, which he stated has helped him. Always be rational in your business. When you develop a relationship with a client, and he/she happens to leave your account, remember there are good days and bad days at work. Never take anything personally in business!
After a lunch break at Le Pain Quotidien, we headed to the Blackstone office on 345 Park Avenue in New York City. All students checked in with security and were led to the 32nd floor. We were seated in the conference room with a mesmerizing view of midtown. We were hosted by Tom Jack, Acquisition Associate and Eric Deraney, Asset Management Associate and given an overview of the Private Equity Real Estate arm of Blackstone. The acquisition group in New York City covers the US and Canada markets. The Blackstone portfolio consists of service hotels, multifamily housing, senior living, invitation homes, office, retails, and industrial parks. All the properties are highly leveraged with equity investors and targets at 20% owning for a minimum 5 years. Most of the equity funds are core plus and value added with 10%-15% total returns. Retail is more income focused. The primary financing is from institutions such as retirement funds and insurance companies with over $20 billion in business. Blackstone also avoids less on ground-up development for short period returns. While the firm buys large portfolios, they sell it in bits and pieces because you make money when you buy (not when you sell)! In one sentence, the Blackstone model is to buy it, fix it, and sell it.
Lastly, Eric shared a bit about the Blackstone work culture. In Blackstone, they have a flat structure rather than a hierarchical one. Eric said that he could walk in Jon Gray, COO of Blackstone’s office, to share an alternate strategy for investment. The approach has created an innovative atmosphere in the company.
In the end, all students left with great takeaways. The career trek succeeded in its purpose of providing institutional insights and bridging the academia-industry gap. We are grateful to the Real Estate Advisory Board of Carey Business School for helping us with this opportunity.