New York-based hedge fund Two Sigma Investments is shuttering its real estate unit after struggling to raise cash over the last two years. 

Two Sigma, which managed roughly $85B, stopped fundraising and will stop making investments out of its real estate unit, where the hedge fund is also cutting staff, Bloomberg reported, citing anonymous sources. 

The private quantitative hedge fund launched fundraising for its real estate investments in 2024 with its Real Estate Opportunity Fund. The vehicle ultimately pulled in less than half its $2B target.

Two Sigma declined Bisnow’s request for comment Monday morning. 

Rich Gomel, the real estate unit’s partner and chief investment officer, is departing the company along with others on the real estate team, Bloomberg reported. Two of the team’s three partners are headed for the exit along with one of the two heads of data science. 

The Teachers Retirement System of Texas was among the fund’s investors, contributing $135M in two investments, sources familiar with the fund told Bloomberg. 

Two Sigma started investing in a real estate portfolio in 2019 before formally launching the vertical two years later with internal capital. It opened to outside cash in 2024, pledging to focus on housing and industrial assets with selective investments in other sectors. 

Private fundraising for commercial real estate is lagging in 2026. The asset class attracted $30B in the three months that ended in September, the lowest quarterly total since 2013, according to data from PEI Group. 

Several other real estate investment vehicles have been rolled up this year as the financing backdrop becomes increasingly challenged.

German asset management giant DWS Group announced the planned liquidation of RREEF Property Trust in September amid heightened redemption requests, committing to selling the 1.4M SF portfolio over the next two years. 

The announcement came a few months after Apollo Global Management said it would liquidate its publicly traded REIT focused on commercial real estate, which had already been shedding assets, after management completed a review of strategic alternatives. A pair of Apollo executives who led parts of the real estate business left the firm in September. 

JPMorgan Asset Management announced in May that it would liquidate its JP Morgan US Real Estate Income and Growth Fund.