Inside a Real Estate Private Equity VP’s Day: Sourcing, Underwriting, Asset Management

Real Estate Private Equity VP Playbook

Real estate private equity, or REPE, is pooled capital buying and improving income-producing properties for a return. A REPE vice president is the deal lead and operating owner from first look to final distribution. In practice, the VP prices risk, sets terms, and turns plans into cash through disciplined sourcing, underwriting, documentation, and operating execution.

Because results are measured on realized returns, not pitch decks, the VP optimizes for speed without losing underwriting discipline. They make choices under capital and time limits, trade elegance for certainty when necessary, and design contracts that make the downside survivable.

What the VP Owns: From Sourcing to Distributions

The VP is the deal captain on acquisitions and recapitalizations. They own sourcing, underwriting, lender selection, JV negotiations, closing, and post-close execution. Investment committees, counsel, and third-party experts are partners, not substitutes. The VP compiles workstreams into one underwriting and an operating plan that can survive friction in cost, timing, and counterparty behavior. In most fund org charts, that means accountable ownership from LOI to exit.

To align incentives, the VP is measured on realized results. They balance deployment pace with discipline, and model detail with execution certainty. This is applied risk pricing and contract design, not a theoretical exercise. If you are new to the asset class, start with the foundations of real estate private equity.

Price Today’s Market Into Your Plan

Rates and values set the playing field. As of November 2024, the federal funds rate target was 5.25-5.50%. Floating debt costs more, and many cap rates are wider. Green Street estimated U.S. commercial property values were about 21% below the March 2022 peak as of July 2024. U.S. office vacancy reached 20.1% in Q1 2024, a structural headwind that lengthens downtime and raises concession budgets. A VP prices that reality into debt sizing, exit cap rates, leasing assumptions, capex cadence, and covenants to protect risk and close certainty.

Source With Rules, Not Volume

Sourcing is disciplined intake tied to the fund’s mandate, the firm’s operating edge, and debt market depth. The calendar blends coverage of brokers and owners, reverse inquiry from lenders and servicers, and targeted off-market outreach. The VP focuses on micro-markets where tenant demand is knowable and winnable, then protects time with coverage rules.

Coverage rules that protect time

Mandate fit: Check geography, asset type, minimum size, ESG constraints, and co-invest mechanics.
Basis discipline: Compare to replacement cost and recent trades; haircut heavy capex or non-stabilized NOI.
Debtability: Map DSCR, LTC/LTV, debt yield, and rate cap cost to in-place cash flow.
Control: Require fee-simple or JV control with consents on budget, leasing, financings, and sale.
Information: Decline if rent rolls, abstracts, trailing financials, and vendor contracts miss milestones.

Kill screens that contain risk

Yield vs. debt: If stabilized yield is below forward debt cost by 150 bps or more, pass.
Concentration risk: If top-5 tenants exceed 40% of income with near-term expirations and no renewal dialogue or TI/LC support, pass.
Zoning/insurability: Nonconformity without protections or punitive flood/seismic pricing is a stop sign.
Environmental: Conditions without credible escrow or indemnity are not financeable on time.

Standardize intake with a CA, a one-page screen covering thesis, risks, basis, and next steps, an internal sponsor assignment, and a pre-built model shell and checklist to cut cycle time.

Underwrite the Spine, Shift the Downside

The VP builds the core model and stress tests what actually moves value. The goal is not a perfect base case. It is a decision-ready range and structures that push tails to seller or lender where possible.

Revenue and absorption

Income assets: Model lease-by-lease with free rent, percentage rent, CPI bumps, and expense stops coded from actual language.
Development: Underwrite unit-by-unit or lot-by-lot absorption and pricing with realistic pace.
Market rents: Anchor to executed deals and reconciled comps, not asking rents or opinions.

Vacancy, downtime, and concessions

Office realism: Assume longer downtime and richer concessions given elevated vacancy.
Retail/industrial: Calibrate to local demand and competing supply pipelines.

Expenses, reserves, and capex

TTM rebase: Re-base controllables from trailing results and flag one-offs.
Taxes: Forecast property taxes from market value and jurisdiction caps.
TI/LC: Tie leasing reserves to rollover cadence and tenant quality.
Capital plan: Use PCA findings to schedule roofs, systems, and code items; convert concept into preconstruction budget with a GMP preference, shared savings, and clear change-order governance.

Debt, covenants, and cash controls

Sizing by constraint: Size to DSCR, LTV, LTC, and debt yield; do not overfit to one metric.
Floating rate: Cap the rate and model strike, term, provider credit, and escrow profile. See a practical DSCR primer here.
Cash management: Code triggers for springing lockboxes and sweeps tied to DSCR and occupancy.

Exit timing and valuation

Exit cap cushion: Build in cap expansion for rate and liquidity risk.
Sale windows: Align business plan completion with marketable windows and buyer depth.
Sensitivities: Focus on drivers that move IRR and multiple; ignore noise.

Legal Diligence Feeds the Model

Legal work is not a check-the-box exercise. It can rewrite your assumptions. A tight PSA with reps, survival, caps and baskets, and indemnities protects time and price. Title and survey exceptions and endorsements on access, contiguity, and zoning can change site plans or lender proceeds. Lease audits and estoppels confirm cash flow conveyance. Zoning diligence covers use, density, parking, and grandfathering. Environmental work moves money: Phase I, Phase II if a recognized environmental condition is found, and escrow or seller remediation with clear timelines.

Map Your JV and Document Stack Early

Front-load the document map. It clarifies economics, timing, and control.

CA/NDA: Data use and non-solicitation.
Bid letter/LOI: Economics, exclusivity, diligence scope, funding conditions, and timeline.
PSA: Price, covenants, prorations, deliverables, walk rights, and remedies.
JV/LLC: Governance, major decisions, capital calls, defaults, transfers, promote waterfall, and reporting. For fee and promote mechanics, see this overview of structures, fees, and returns.
Debt docs: Covenants, reporting, cash controls, reserves, defaults, and intercreditor terms if mezz or preferred are present.
Third-party reports: Appraisal, PCA, Phase I, zoning, ALTA/NSPS survey, flood, and seismic PML where relevant.
Management/Construction: Fees, performance, termination provisions, AIA forms, schedules, and LDs.

Prioritize exclusivity, data access, and lender alignment. Signing price without debt terms is a common own goal.

Capital Markets: Pick Lenders and Lock Controls

Choose between banks, life companies, CMBS, and debt funds based on leverage, structure, and certainty. Debt funds trade price for speed and structure. Banks trade relationship and cross-sell. Life companies offer term and stability. CMBS can maximize proceeds and nonrecourse but tightens cash controls and servicer oversight. For CMBS context, scan a primer on securitization risks.

Cash management: Define lockboxes and waterfalls in writing.
Reserves: TI/LC, capex, and T&I; FF&E for hotels.
Performance tests: Leasing, construction, and anchor milestones.
Recourse: Carve-outs and completion; underwrite guarantor net worth and liquidity like credit.
Rate caps: Align term and strike with risk periods; address provider downgrade rights and collateral posting.

Fees and Promote: Put It All in the Model

Model all fees and tie them to the JV. Typical ranges include acquisition fees of 0.5-1.0% at close, asset management fees of 1-1.5% of EGI or 1-2% of equity, construction management fees of 3-5% of hard costs if sponsor-managed, disposition fees of 0.5-1.0%, and finance fees where allowed and capped by LPs. Promote should align risk and reward with clear day-count, fee reinvestment, and clawback mechanics. For background on carried interest design, this carried interest explainer is useful.

IC Gates and a Clear Retrade Policy

Define capital gates to keep teams aligned and cycle times tight.

Gate 1: Mandate fit and data sufficiency with a one-page screen.
Gate 2: Underwriting scope and pre-IOI authority.
Gate 3: Post-IOI to PSA, updated underwriting, retrade conditions.
Gate 4: Pre-sign confirm debt terms, JV governance, diligence budget, and timeline.
Gate 5: Pre-close near-final third-party reports and loan docs; confirm business plan and cash controls.

Document retrade policy. Show evidence, quantify impacts, and request price or credits that match the delta. Frame the ask as value protection to maintain relationship equity.

Operate With Weekly Rhythm and Transparency

After closing, operating leverage drives returns. Track the metrics that compound value and watch the covenants that can erode it.

Leasing engine: Monitor tour-to-lease conversion, rent spreads, WALT, rollover cliffs, credit, and delinquencies.
TI/LC and capex: Enforce procurement standards, long-lead planning, and change-order discipline; measure yield on cost and tie draws to inspector reports and lien waivers.
Expense control: Benchmark controllables, rebid persistent variances, and manage utilities and demand; execute energy projects with clear paybacks.
Debt covenants: Track DSCR and debt yield weekly; request waivers early and mitigate cash sweeps with leasing wins or targeted reserve top-ups.
Fair value: Report quarterly with variance analysis, KPIs, and valuations calibrated to entry. Use third-party data as inputs, not verdicts, to maintain LP confidence.

Accounting, Tax, and Compliance: Keep It Tight

Build audit-ready financials and tax reporting from day one. For consolidation, perform ASC 810 VIE analysis, while investment companies under ASC 946 carry at fair value. IFRS reporters follow IFRS 10 and 13. Use Delaware fund structures with property-level SPEs. For non-U.S. and tax-exempt investors, consider REIT blockers or domestically controlled REITs to manage ECI and UBTI. Address FIRPTA withholding, the Section 1061 three-year holding period on carry, and operational tax items like K-1s and state filings. On compliance, prepare for LP expectations around fees and quarterly statements, updated Form PF triggers, Corporate Transparency Act filings for new entities, KYC/AML screening, and AIFMD requirements for EU distribution as applicable.

Risks and Edge Cases to Watch

Sponsor and guarantor: Completion and carry guarantees only matter with real liquidity and net worth; underwrite ongoing covenant friction.
Rate and cap counterparties: Replacement and extension costs plus downgrades can force collateral posting; budget it.
Construction risk: Supply chain and permitting extend schedules; enforce allowances and lien waivers.
Legal and title: Easements or covenants can block plans; secure cure paths and endorsements before close.
Lease clauses: Retail co-tenancy and office termination rights can cascade and cut cash.
Environmental: Vapor intrusion, PFAS, and wetlands require indemnities and escrow tied to agency closure.
Cash control: Unapproved transfers or aged payables erode lender trust; use dual approvals and lockbox verification.
Dispute mechanics: Forum selection and jury waivers set leverage in workouts.

Pass or Pivot When Facts Change

When conditions deteriorate, pivot to structures with more certainty.

Core-plus vs. value-add: If the plan needs flawless leasing in soft markets, pivot to durable credit tenants and fixed-rate debt.
Preferred equity: Weak control or sponsor quality favors preferred with hard pays and step-in rights.
Loan buys: Note-on-note or loan purchases create control at a discount but demand workout muscle.
Public-to-private or PIPE: Scale where public valuations lag, but expect governance and disclosure work.

Timeline, Critical Paths, and Kill Tests

A practical current timeline runs 14 weeks to close, plus 3-4 months to early stabilization. Weeks 0-2 cover sourcing, CA, quick screen, and IOI. Weeks 3-6 drive PSA negotiation, lender soft-circulation, and diligence scopes. Weeks 7-10 complete third-party reports, near-final JV, and a hard-circled debt term sheet. Weeks 11-14 culminate in IC approval, final loan docs, rate cap purchase, and closing. Then begin stabilization, leasing ramp, capex start, covenant tracking, and first quarterly report. The critical path is debt commitment, third-party reports, and title cure.

Set kill tests that save quarters of wasted effort.

Capital gap: If debt plus equity cannot fund a realistic plan with contingency, stop.
Governance gap: If JV rights do not cover budget, leasing, financings, litigation, and sale, stop.
Data gap: If seller cannot deliver trailing financials, leases, or essential ops data on time, stop.
Lender mismatch: If covenants or cadence conflict with the plan, stop.
Regulatory blocker: If BOI, sanctions, or licensing issues cannot clear on the timeline, stop.

Operating System: Dashboards, Controls, and Vendors

Run the VP seat on a dashboard and a calendar. The dashboard tracks KPIs, covenant headroom, leasing pipeline, capital spend, and returns. The calendar protects deep work for underwriting, with set blocks for leasing, construction, lenders, and IC prep. Every assumption has an owner and a last-validated date to create accountability.

Keep systems practical: a pipeline CRM tied to models and checklists, data rooms with permissioning and page-level logs, and cash controls with dual approvals and lockbox verification. Choose vendors with local, product-type experience and enforce service levels and escalation paths. Communicate with LPs early and often; quarterly reports should present wins and misses with equal clarity. If you are preparing for senior jumps, see the skill map for VP to principal transitions.

Habits That Compound

Price uncertainty: Model ranges and negotiate structures that keep the tail survivable.
Write it down: Memo every material assumption with sources and risks; decisions speed up.
Negotiate controls first: Strong covenants beat five basis points of rate.
Make the lender a partner: Sharing plans and variances early earns faster waivers.
Close the loop: Compare post-close performance to underwriting and update playbooks. Process improvements are durable alpha.

Close the Books Like an Asset

Treat documentation like a balance sheet asset. Archive everything with an index, versions, Q&A, user logs, and full audit trails. Then hash, set retention, and require vendor deletion with destruction certificates. Legal holds override deletion. That discipline shortens diligence on the next deal and settles disputes before they become distractions.

Key Takeaway

The REPE VP role is end-to-end ownership: price risk with today’s market in mind, source with rules, underwrite the drivers, negotiate controls into every document, and operate to the metrics that compound. Those habits speed decisions, protect downside, and convert plans into realized returns. For broader context on team roles and recruiting, browse the REPE career path and the interview guide.