Key Takeaways
- • Two Sigma Investments has cut senior roles at its real estate arm, paused fundraising and halted new investments, according to people with knowledge of the situation.
- • The firm targeted roughly $2 billion for the strategy but raised less than half of that amount, per people familiar with the matter.
- • Real estate partner and chief investment officer Rich Gomel is exiting, along with two of the three remaining partners and one of two data science leaders.
- • Private real estate vehicles raised just over $30 billion in the quarter ended September, the weakest quarterly total since early 2013, according to PEI Group data.
- • Existing properties will continue to be managed, and some employees will remain to oversee the current portfolio.
Summary
Two Sigma Investments has reduced senior roles in its real estate arm, paused fundraising and halted new investments, according to people with knowledge of the situation. The moves come roughly two years after the unit opened to outside capital in 2024. Real estate partner and chief investment officer Rich Gomel is exiting, and two of the three partners still in place are also leaving the leadership ranks, as is one of the two leaders overseeing data science. A spokesperson for the quantitative hedge fund, which oversees roughly $85 billion, declined to comment. Some employees will remain to oversee properties already in the portfolio, and existing assets will continue to be managed even as new deal activity and fundraising pause.
The firm targeted roughly $2 billion for the strategy but ended up with less than half, some of the people said. Higher interest rates have weighed on valuations and kept owners holding assets longer, making fresh commitments harder to secure. PEI Group data show that private real estate vehicles gathered just over $30 billion during the quarter ended September, marking the weakest quarterly sum since early 2013.
The unit began accepting external capital in 2024 through the Real Estate Opportunity Fund, which focused mainly on housing and industrial deals, with more selective investments in hospitality and offices. Plans for additional funds did not materialize. Two Sigma started building the real estate platform in 2019 and rolled it out using the firm's own money about two years later. Former Blackstone Inc. Vice Chairman Tom Hill consulted before joining full time in 2021 and served as chief executive until his departure last year, one person said. The team used the firm's data capabilities to forecast supply and demand and guide investment selection. In a 2021 interview, Hill said: "Real estate is rich in data, but nobody uses it to figure out what to buy or where to buy it."
The pullback comes amid a rocky period for the New York company, whose two founders are locked in a multiyear dispute. According to some of the people, the Teacher Retirement System of Texas committed approximately $75 million to the flagship Real Estate Opportunity Fund in the prior year and followed with about $60 million through a co-investment. The development underscores how tight capital remains in commercial real estate and how higher rates continue to shape which strategies get funded and when they deploy.
The firm targeted roughly $2 billion for the strategy but ended up with less than half, some of the people said. Higher interest rates have weighed on valuations and kept owners holding assets longer, making fresh commitments harder to secure. PEI Group data show that private real estate vehicles gathered just over $30 billion during the quarter ended September, marking the weakest quarterly sum since early 2013.
The unit began accepting external capital in 2024 through the Real Estate Opportunity Fund, which focused mainly on housing and industrial deals, with more selective investments in hospitality and offices. Plans for additional funds did not materialize. Two Sigma started building the real estate platform in 2019 and rolled it out using the firm's own money about two years later. Former Blackstone Inc. Vice Chairman Tom Hill consulted before joining full time in 2021 and served as chief executive until his departure last year, one person said. The team used the firm's data capabilities to forecast supply and demand and guide investment selection. In a 2021 interview, Hill said: "Real estate is rich in data, but nobody uses it to figure out what to buy or where to buy it."
The pullback comes amid a rocky period for the New York company, whose two founders are locked in a multiyear dispute. According to some of the people, the Teacher Retirement System of Texas committed approximately $75 million to the flagship Real Estate Opportunity Fund in the prior year and followed with about $60 million through a co-investment. The development underscores how tight capital remains in commercial real estate and how higher rates continue to shape which strategies get funded and when they deploy.
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