REIT Coverage - MM Shops

Based on the most helpful WSO content, here’s what you need to know:

1. Typical GMV of Pods for MMs Covering REITs:
   In a normal environment (e.g., VIX 20), an average pod at a top multi-manager (MM) hedge fund typically works with a GMV (Gross Market Value) of around $1.5 billion. However, this can vary depending on the volatility of the market and the specific strategies employed by the pod.

2. Team Size in REIT Coverage:
   While specific team sizes for REIT-focused pods aren't explicitly detailed, MM pods generally operate with lean teams. The average team size per pod is typically small, often comprising a portfolio manager (PM) and a few analysts. This structure allows for agility and focused decision-making.

3. Constraints on GMV for REITs:
   Liquidity and market capitalization are indeed significant constraints for total GMV in REIT coverage. The top ~25 REITs, given their liquidity and market cap, are more likely to qualify for trading on larger books. This limits the universe of tradable securities, which can cap the GMV that a pod can effectively deploy without impacting the market.

4. Additional Insights:

   • REIT-focused strategies often require a deep understanding of both real estate fundamentals and public equities.
   • Modeling for REITs is relatively straightforward, focusing on three-statement models, and is simpler compared to other sectors.
   • Larger institutional platforms like CBRE Clarion, LaSalle, and Brookfield are key players in the REIT space, which might influence the competitive landscape for MM pods.

Let me know if you need further clarification!

Sources: Performance of the best PM’s at MM’s?, Are we at peak pod shop?, Real Estate focused hedge funds, Real Estate Q&A, Q&A: Non-Target School to Portfolio Manager at a Top Hedge Fund – 6 Years Out of Undergrad