Two Sigma Investments has halted fundraising and new investments at its real estate division, while cutting several senior executives after the business fell short of its $2bn fundraising target, according to a report by Bloomberg.

The New York-based firm, which manages approximately $85bn in assets, launched its real estate strategy to external investors in 2024 but raised less than half its target amid challenging conditions for private property investment.

Rich Gomel, partner and chief investment officer of the real estate unit, is leaving alongside several senior colleagues, including two of the division's three remaining partners and one of its two heads of data science, according to people familiar with the matter.

A reduced team will remain in place to manage the unit's existing portfolio, while the firm has suspended plans for further capital raising and new acquisitions.

The decision comes amid a prolonged slowdown in commercial real estate fundraising, with elevated interest rates weighing on property valuations and extending holding periods for existing investments. Private real estate fundraising totalled just over $30bn in the third quarter, its lowest quarterly level since early 2013, according to PEI Group data.

Two Sigma began developing its real estate operation in 2019, initially deploying internal capital before opening its Real Estate Opportunity Fund to external investors in 2024.

The strategy focused primarily on residential and industrial properties, with selective exposure to hospitality and office assets. It sought to apply Two Sigma's quantitative investment expertise and proprietary data analytics to property markets, using predictive models to assess supply, demand and potential investment opportunities.

Among its investors was the Teacher Retirement System of Texas, which committed approximately $75m to the main Real Estate Opportunity Fund and a further $60m through a co-investment strategy last year.

Former Blackstone vice chairman Tom Hill, who joined Two Sigma full-time in 2021 to lead its private investment business, previously served as chief executive of the real estate operation before departing in 2025.

The retrenchment adds to a period of organisational challenges for Two Sigma, which has also faced tensions between its co-founders in recent years.