Hedge Funds With Real Estate Arms
I've been seeing more and more hedge funds open up a real estate arm. By this, I mean actually buying up real estate as equity investors, going into asset backed securities like cmbs, rmbs, mezz debt, etc., or real estate focused public equity investments. A good example would be Two Sigma, a firm known for a quant strategy going into RE (yes I know they are going multi-asset now but RE seems to be new). Same with Baupost and the likes, but they've had RE for a while.
I'm joining a MF REPE shop this year and have a few questions.
1) Do you think more funds will continue to grow into this, with interest rates being low and the fees getting lowered?
2) What would pay be like for a junior doing real estate at one of these funds? Would it be higher than MF pay? Junior as in MF Associate (think somewhere of $250-$350k)
3) All of my experience is in RE and I'm joining a MF in the RE group. From what I've been told, they will do asset, portfolio, and company acquisitions. So it seems like the three statement modelling experience would be there too.
If I'm considering going into the hedge fund space later on, would my best bet be to go into a RE group and then work into the public equities group?
Or would you suggest trying to go into the PE/ credit group at my MF if I want to go into HFs?
Or do you think a MF name is good no matter the asset class in order to get looked at by top headhunters and fund managers. Just continue to read investment books, research companies on your own time, and have a few pitches prepared?
Not sure how recruiting for HFs work, anything would be great. Thanks!
There’s a number of hedge funds with not only illiquid focused real estate arms (ie properties/portfolios/real estate platforms) but there are a number that have liquid real estate strategies focusing on the REITs and real estate related securities (hotel management companies, publicly traded brokerages, real estate services, etc). I would search around as this has been discussed in the RE forum…search around for “real estate hedge funds” or something along those lines.
Thanks for the response! Yup I found a few good threads, including this recent one. I wanted to ask on this forum since people are in the typical HF space compared to various re roles. Would love the industry perspective, comp figures and recruiting advice!
Masterton Capital is real estate focused fund founded by a former Viking PM
Bump would really appreciate any insight into questions 2 and 3!
Checkout Angelo Gordon. $40 billion across several lines of business, but about a quarter of that is in real estate and they do everything (rmbs and cmbs, but also own commercial real estates, they buy individual mortgage loans, they manage a REIT, etc). Good pay and work-life balance, too.
Appreciate the name. AG is quite strong with smart people from what I heard as well. Unless my source (not in the company) and wso threads are wrong, pay isn't up there with what I can earn at the fund I'm going to.
Not sure about the RE side, but the distressed side pays very well from what I hear from friends that work there
I used to work at Angelo Gordon. Everybody's pay situation is different, but at least in my case, I thought they paid very well. When I eventually decided I was ready to leave, my resume is good enough I got interviews easily and even offers too; but it took two years before I found someone willing to match what Angelo was paying.
Angelo Gordon's real estate debt operation blew up epically in 2020... check out MITT's stock price from Feb 2020 to today – those guys got their whole CMBS book margin called and were forced to liquidate at the bottom of the market. Real estate equity side is still well-respected tho.
Monarch has a distressed RE team thats been very active lately, they've even pushed it as a highlight of the firm. Conversant Capital is a recent Senator spin focused on RE. They've been active
Awesome, thanks for sending the names over!
which HF has the sharpest / most respected RE groups? i know baupost's is generally well regarded. and sculptor's historical returns are good. it seems like so many REHF operations are relatively small and not established (king street, farallon, two sigma, silver point come to mind).
Monarch has been active recently, think it’s their only group that’s been putting up good returns past few years so they’re really touting it these days.
Alpine Grove Partners
Top HF's doing real estate (REPE/distressed not necessarily equities): Davidson Kempner, King Street, York (closed European arm now part of Fidera), SVP, Sculptor, Varde, Carval, Elliott, Baupost (European team was sacked) & Deutsche Bank Special Sits
which groups would you say are the most well regarded? also, what happened to baupost london?
1. Davidson Kempner & King Street are both very strong in the space, SVP also making big pushes into real estate they hired a new head in the US and Europe
2. Baupost weren't making enough £/doing enough volume, Seth gutted the team
Sculptor
Anyone know what pay is at any of these funds?
Silver point
Lol everyone keeps listing all of these names like Scultpor, Baupost, King Street, etc. Their real estate investment arms are basically indistinguishable from traditional REPE platforms that do both debt and equity investments. I’ve shown them deals as an investment banker and they’ve been competitors on deals I’ve worked on in REPE where my team is… financing the development of an office building… acquiring a hotel… providing JV Equity for a multifamily development… it’s not necessarily sophisticated hedge fund stuff.
Truly, the only difference is that their parent company is a well known hedge fund.
I went to market on a few entity level investments during my days as an investment banker - the most interested parties on those deals were always Almanac Realty, KKR, Stepstone, Heitman, etc. Basically just regular REPE funds.
Groups notably not interested? Sculptor, King Street, Baupost. It doesn’t matter if your parent company is a hedge fund - all that matters is if your fund mandate allows for it.
Sure, some hedge fund groups such as Monarch Alternative capital and Davidson Kempner will do entity level deals, but it’s irrelevant that they’re housed in a hedge fund. Almanac, KKR and Stepstone are probably bidding on the same deals.
Also, I work in the real estate arm of a hedge fund not listed here. The true hedge fund-type investments into public REITs, SASBs, etc are covered by the hedge fund guys - not the real estate team. Of course they loop us in and we provide our opinion on the real estate, but the hedge fund team is still the transaction lead. And sometimes we’ll originate a mezz / pref investment and place part of it into the hedge fund. But the actual work of originating and underwriting the loan is indistinguishable from what someone at Related or PCCP is doing.
Anyways, rant over. You don’t realize how uninformed some posters on WSO are until they start posting about exactly what you do
Edit: actually I’m gonna keep going. There are real estate hedge funds out there that buy public REITs. But it will be a true public equity role and nothing like what Sculptor and Baupost do. Also, the universe of public REITs is pretty tiny compared to a space like Healthcare or Tech or something. Tough to build a big AUM, which is ultimately what you need to make money. Most of the public equity reit investors are housed at big Long Onlys.
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