Real Estate & REITs
By SuperdayReps · Wharton MBA · ex-Greenhill · investment banking interview coaching
16 min read · updated October 10, 2026
A real estate interview is mostly the standard first round. The three statements, a DCF, terminal value, WACC, enterprise value against equity value, and the valuation methods all still come up, and they are covered in the range of technicals and the lessons under it.
A real estate group advises property owners of every kind: real estate investment trusts, or REITs, plus homebuilders, hotel and casino owners, and private property companies. Most of those value like normal companies. REITs do not, and they are where the group does many of its deals, so they are where most of the sector questions come from. Underneath every REIT question, though, sits a question about a single building, so that is where to start.
Two ideas carry most of this sector. A property is worth its income divided by a cap rate, so value moves with both the rent and the rate. And a REIT avoids corporate tax only by paying out most of its taxable income, so it keeps little of its earnings and funds most growth with new capital. Most REIT answers come back to one of those two.
The property types
Interviewers often start here, because the types behave very differently and the answer shows whether you understand who pays the rent and for how long.
| Type | Who the tenant is | Typical lease | What to watch |
|---|---|---|---|
| Office | Businesses | Long, often 5 to 15 years | Fit-out costs, leasing commissions, vacancy since remote work |
| Retail | Shops and restaurants | Long, sometimes with a share of sales | Tenant health, anchor tenants, foot traffic |
| Industrial | Warehouse and logistics users | Long, few tenants, cheap to build | Rent growth from e-commerce, new supply |
| Multifamily | Individuals | About a year | Rent per unit, occupancy, turnover |
| Hotels | Guests | A few nights | Average daily rate, occupancy, revenue per room |
| Specialty | Data centres, self storage, cell towers, healthcare | Varies | Each has its own demand story |
The pattern worth saying out loud: the longer the lease, the more predictable the income and the slower it reacts to the market, in both directions. A hotel reprices every night, so it booms and busts with the economy. An office tower on fifteen-year leases barely notices a recession until the leases come up for renewal or a tenant fails.
Self storage is a common follow-up as the resilient one. The units are cheap to run, monthly leases let rents adjust quickly, demand comes from life events like moving, downsizing and divorce that happen in any economy, and customers rarely bother to move their things once stored.
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Frequently asked
- What questions do real estate investment banking interviews ask?
- The standard first round plus a sector layer. The sector layer is the main property types and how they differ, what net operating income is, what a cap rate is and how it values a property, why property deals use more debt than normal buyouts, how a REIT qualifies for its tax status, why REITs report FFO and AFFO instead of relying on net income, how a net asset value model works, and why REIT mergers are mostly paid in stock.
- What is a cap rate?
- A property's expected net operating income for the next year divided by its value or price. It works like an inverted multiple: a 6 percent cap rate is the same as paying about 16.7 times NOI. A lower cap rate means a higher price for the same income, and cap rates tend to rise when interest rates rise, which pushes property values down.
- Why do REITs use FFO instead of net income?
- Because US accounting depreciates buildings as if they wear out, when land and well-located buildings often hold their value, and because REITs sell properties regularly, which puts large gains and losses through net income. Funds from operations adds back real estate depreciation and strips out gains and losses on sales and impairments, so it shows the recurring earnings from owning and running the properties.
- How do you value a REIT?
- With comparables and a DCF, as for any company, plus a net asset value model. Comparable REITs on price to FFO and price to AFFO, alongside EV / EBITDA. A net asset value model, which values every property at a market cap rate, subtracts debt and divides by the share count, then compares that with the share price. And a dividend discount model or a DCF, which suits REITs because they pay out most of their income.
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