Acquisitions interview prep.

Sounds like an acquisitions VP who has underwritten 50+ deals across at least two property sectors, sat at the IC table, and knows where the REIT's cost of capital actually sets the bid.

What interviewers look for

  • Can the candidate actually underwrite a building, or only recite formulas? The IC wants someone who has stood on a roof and pressure-tested the rent comps.
  • Does the candidate understand WHY a cap rate is what it is, not just memorise the number? Cap rate is a residual of growth, risk, and capital cost.
  • Can the candidate defend a price under cross-examination? Acquisitions is a negotiation seat, soft assumptions get killed at IC.
  • Does the candidate know the REIT's cost of capital and how it sets the maximum bid? FFO accretion math is the gating commercial check.
  • Does the candidate have a real view on the sector, supply pipeline, tenant credit, structural demand drivers, not just 'logistics is hot'?
  • Does the candidate have sourcing instincts? Broker-led, off-market, programmatic JV, interviewers screen for who can actually win deals at the right price.
  • Does the candidate understand the REIT context vs. private real-estate funds? Public reporting, FFO guidance, balance-sheet leverage limits all bind differently.

Behavioural questions to expect

  1. Walk me through your CV.

    What it tests: Story coherence and conviction. Whether the candidate has a deliberate path into real-estate acquisitions or backed into it. Interviewers screen out candidates whose narrative sounds reactive ('I happened to end up in real estate').

  2. Walk me through your most impressive deal or underwriting.

    What it tests: Depth of ownership and willingness to take a view on a specific asset. Whether the candidate can move from reciting deal facts to articulating a contrarian or nuanced takeaway on the underwriting.

  3. Tell me about a weakness, a failure, or feedback you've received and worked on.

    What it tests: Self-awareness plus the ability to take a real critique without deflecting plus evidence of improvement over time. Cross-role canonical question. Candidates who give fake weaknesses (perfectionist / works-too-hard) downgrade immediately. Acquisitions teams are small and high-trust; the IC wants people who can absorb pushback on their underwriting without going defensive.

  4. Why real estate?

    What it tests: Authentic interest in real estate as an asset class vs. cycling through the recruiting circuit. Interviewers can tell within 30 seconds whether the candidate has actually thought about why real estate vs. corporate M&A or private equity.

  5. Why a REIT and not a private real-estate fund?

    What it tests: Whether the candidate understands the structural differences between a public REIT and a private REPE fund, different cost of capital, different hold periods, different reporting cadence, different leverage limits, different sources of accretion.

  6. Why this firm?

    What it tests: Whether the candidate has done the homework. Interviewers spot a generic 'great platform' answer instantly, they hear it ten times a week.

  7. When you're competing for an asset against a leading competitor, what's the pitch to the seller that makes this firm win?

    What it tests: Whether the candidate understands the this firm's edge from the SELLER and BROKER's perspective, not just from the this firm's marketing.

  8. How does this firm's cost of capital constrain or unlock the acquisitions pipeline today?

    What it tests: Whether the candidate has researched the this firm's capital position and connected it to underwriting reality. Interviewers want candidates who think like a CFO, not just a deal junkie.

Technical concepts to master

The NOI walk, from rental revenue to levered cash flow

Gross Potential Rent (GPR)
Total rent the property would generate if 100% leased at the higher of in-place and market rent (definition varies by shop, confirm whether the model uses in-place or market for vacant units).
Effective Gross Income (EGI)
Gross Potential Rent less vacancy and credit loss, plus expense reimbursements (in net-leased structures), parking, ancillary income.
Net Operating Income (NOI)
EGI less operating expenses (property management, repairs and maintenance, payroll, utilities, taxes, insurance) but BEFORE debt service, capex, leasing commissions, and tenant improvements.
Unlevered cash flow (NOI less capex and leasing costs)
NOI less recurring capex (replacement reserves), tenant improvements (TIs), and leasing commissions (LCs). This is the cash flow the asset actually generates before debt.

FFO vs. AFFO, the REIT-specific earnings metrics

Funds From Operations (FFO)
NAREIT-defined: Net Income + Real-Estate Depreciation and Amortisation - Gains on Property Sales + Losses on Property Sales (and similar one-time real-estate items). The standardised REIT earnings metric.
Adjusted Funds From Operations (AFFO)
FFO less recurring capex, less straight-line rent adjustments, less amortisation of above- / below-market lease intangibles. The closest proxy for REIT free cash flow.
FFO accretion / dilution math on an acquisition
Deal-year FFO impact = (Year-1 NOI of the acquired asset - cost of incremental debt - cost of incremental equity issued) divided by post-deal share count. The check on whether the bid is commercially defensible.

REIT cost of capital and acquisition debt sizing

Implied cap rate of the REIT's own stock
Implied cap rate = (Market Cap + Net Debt + Preferred + Minority Interests) / Forward NOI. The unlevered yield embedded in the REIT's current trading price, the buyer's true cost of capital for incremental acquisitions.
Debt sizing constraints. LTV, DSCR, debt yield
Lenders size loans on the minimum of three constraints: LTV (loan / value, typically 55-65% for stabilised, 65-75% for transitional with reserves), DSCR (NOI / debt service, typically minimum 1.20-1.35x), and debt yield (NOI / loan, typically minimum 8-10% for stabilised).
Joint venture and programmatic capital
REITs frequently bring in institutional LPs (pension funds, sovereign wealth, insurance capital) on a JV basis, the REIT holds a minority equity stake (typically 5-20%) and earns asset management plus promote fees. Extends the bid range on large deals beyond the REIT's on-balance-sheet capacity.

Practical drills

  • An industrial asset has Year-1 NOI of $8M. The seller wants $160M. What's the going-in cap rate? At a 6.0% target going-in cap, what would you bid? If you put 60% LTV debt at 6.5% interest-only on the $160M price, what's the unlevered and levered cash-on-cash in Year 1?
  • A the sector asset in a Sun Belt secondary market: $50M ask, $3.2M in-place NOI, 92% occupied, in-place rents are roughly 15% below market, 7-year weighted average lease term remaining, the seller is a private fund at the end of its hold period. Walk me through how you'd underwrite this and what you'd bid.
  • Pitch me a the sector asset or submarket you'd recommend this firm acquires. 5 minutes prep, 5 minutes delivery.

Smart-question anchors

  • Capital allocation framework, how the team decides between external acquisitions, dispositions, development, and stock buybacks, with one recent named example
  • Sourcing pipeline, broker-led vs. off-market vs. programmatic JV; how acquisitions associates contribute to deal flow at the analyst and associate level
  • Underwriting standards, stated minimum unlevered IRR, stabilised yield-on-cost, going-in cap floors, and how those have evolved over the last 12-24 months
  • Sector and geographic rotation, where the team is leaning in vs. exiting, what the senior team is seeing in submarket fundamentals
  • Balance sheet and cost of capital, how the team thinks about external growth when the stock trades at a discount or premium to NAV

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