Real estate debt hedge funds

This is from the TCI website:

Real Estate
TCI's real estate lending business was established in 2014. The TCI Real Estate Partners Lending Funds invest alongside The Children's Investment Fund Foundation (UK) (CIFF). These funds focus on first mortgage and senior secured lending on high quality assets in prime locations with a concentration on major cities in North America and Europe.

Can someone explain the strategy of real estate hedge funds, like TCI, how they make money and what their time horizons are? For example, do they simply buy real estate ABS products from investment banks & hold them to maturity? Do they trade them? Or do they make bespoke loans to real estate PE firms & developers?

Even in the latter case above, that means they won't make much more than 9 or 10% interest on these loans. Is that how they make money? Or does these hedge funds somehow leverage their transactions?

I'd appreciate comments from anyone who works in the industry or links to similar threads.

Thank you!

All Europe

Comments (4)

Apr 4, 2020

TCI is a lender on RE like a bank. Says it right there in that first paragraph. Nothing exotic.

Plenty of HFs invest in RE. REITs and RE-related corporates, structured products (cmbs, rmbs, clo), trade claims, illiquid investments across the stack on RE assets (equity, pref, mezz, jr/sr loans) and plenty of other wrinkles. Usually hfs are more opportunistic about it and use their 30k ft view and diverse toolkit (e.g., creative structures) as their edge. Usually not sticks and bricks guys unless investing out of separate RE pool of capital w specific RE-only team

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Apr 4, 2020

could you pls explain the 30k ft view and diverse tookit

Apr 4, 2020