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 two years after the unit opened to outside capital, and the business began taking outside cash in 2024.
Real estate partner and chief investment officer Rich Gomel is exiting. Also leaving the leadership ranks are a pair of the three partners still in place, as well as one of the two leaders overseeing data science. A spokesperson for the quantitative hedge fund, which oversees roughly $85 billion, refused to comment. Some employees will remain to oversee properties already in the portfolio.
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 via the Real Estate Opportunity Fund. That vehicle focused mainly on housing and industrial deals, with more selective investments in hospitality and offices. Plans for additional funds did not materialize.
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Two Sigma started building the real estate platform in 2019 and rolled it out using the firm's own money roughly two years afterward. Former Blackstone Inc. Vice Chairman Tom Hill consulted before joining full time in 2021 and served as chief executive of the business until his departure last year, one person said.
The team leaned on the firm's data capabilities to forecast supply and demand and guide investment selection. As Hill said in a 2021 interview: "Real estate is rich in data, but nobody uses it to figure out what to buy or where to buy it." He added that the approach can help avoid having "your talented investment professionals bark up the wrong tree, go down dead-end alleys and waste their time on non-deals."
The pullback comes amid a rocky period for the New York company, with its two founders locked in a multiyear dispute. Existing assets will still be managed even as new deal activity and fundraising pause.
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 that with about $60 million through a co-investment. The bottom line: a data-centric entrant is stepping back while capital remains tight in commercial real estate, a reminder that higher rates continue to shape which strategies get funded and when they deploy.
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