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!

Comments (15)

  • Investment Analyst in PE - Other
Jan 13, 2022 - 10:06pm

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.

  • Prospect in IB-M&A
Jan 13, 2022 - 10:20pm

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! 

Jan 15, 2022 - 5:04pm

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. 

  • Prospect in IB-M&A
Jan 15, 2022 - 5:09pm

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. 

  • Associate 2 in PE - Other
Jan 16, 2022 - 2:02pm

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 

  • Prospect in IB-M&A
Jan 16, 2022 - 5:14pm

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