Real estate gaming and lodging are three major sectors covered by investment banking groups. As key service lines, they provide various advisory and financing services to clients in these industries. Students who are interested in real estate, hospitality, and gaming should understand the key offerings, valuation models, career paths in these groups. This article will provide an overview of the real estate, gaming, lodging groups in investment banks, typical projects and deals, important valuation methodologies, as well as recruiting timelines and preparation tips.
Real estate investment trusts (REITs) are a major sub-sector in real estate investment banking
REITs are companies that own, operate, or finance income-producing real estate. They provide a way for individual investors to invest in portfolios of real estate assets the same way they invest in other industries through stocks. Investment banks help REITs raise capital through IPOs and follow-on offerings. They also advise on mergers, acquisitions, and divestitures between REITs. Valuation models used for REITs include net asset value (NAV) analysis, discounted cash flow (DCF), and comps based on trading multiples like P/E, P/B, and dividend yield.
Home builders and construction materials are cyclical businesses covered in real estate investment banking
Home builders and construction materials providers are another major coverage area within real estate groups. The home building sector is heavily dependent on housing market cycles. In strong economies with low unemployment, home builders do well as housing demand rises. During recessions, home sales decline significantly. Investment banks value home builders using DCF models and EV/EBITDA comps. Construction materials firms are valued using DCF and also relative comps like EV/EBITDA and P/E multiples.
Gaming and lodging are complementary sectors focused on hospitality and tourism
The gaming sector consists of casino operators and integrated resort developers, primarily focused on popular tourist destinations like Las Vegas, Atlantic City, and Macau. Lodging coverage focuses on major hotel chains, resort operators, and cruise lines. These sectors are interdependent, as casinos rely on hospitality services to attract tourists who will also utilize the gaming facilities. Investment banks use DCF models and EBITDA multiples from peer companies to value firms in gaming and lodging.
Summer analyst programs are the primary path to full-time real estate and gaming & lodging investment banking roles
The main way to get recruited for real estate or gaming/lodging investment banking is through summer internship programs. Application deadlines are very early, often in January-March for summer programs nearly a year later. Interviews take place on a rolling basis from March-June, so applying early maximizes chances. Networking is critical to getting an interview without on-campus recruiting. Preparation should focus on accounting, valuation, mergers & acquisitions, LBO models, and stock pitch ability. Real estate modeling is also essential.
Top banks for real estate and gaming & lodging include bulge brackets and specialized boutiques
For real estate investment banking, top banks include Goldman Sachs, Morgan Stanley, Bank of America, JP Morgan, Deutsche Bank, UBS, and Citi. Notable boutiques include Eastdil Secured, Houlihan Lokey, Robert A. Stanger, and RDD Capital. For gaming & lodging coverage, bulge brackets like Goldman, Morgan Stanley, and Citi are leaders along with sector specialists like Jefferies, Union Gaming, and Innovation Capital.
Real estate, gaming, and lodging investment banking provide exposure to real assets and the hospitality sector. Success requires early application to summer programs, extensive networking, accounting and valuation expertise, and strong deal experience like M&A and LBO models.