Taconic Capital Advisors Leaving CRE Space

Hedge fund Taconic Capital Advisors is signaling its exit from commercial real estate.

The New York–based firm is winding down its CRE operation and is in advanced talks to sell one of its funds to another New York-based company, Axonic Capital, Bloomberg reported. The talks are ongoing and could still fall apart. Both companies declined to comment.

James Jordan, who leads Taconic’s commercial real estate unit, will depart for Axonic in the first half of next year. He will become a partner there and will likely bring some colleagues with him down the line. Jordan will keep an advisory role with Taconic.

He is expected to arrive with Taconic’s CRE Dislocation Fund IV, which counts nearly $200 million in commitments; Taconic will receive a revenue share from it. The company will sell the commercial real estate plays that it separated from its $2.9 billion flagship opportunity fund over the summer.

Taconic is hanging on to its first three CRE dislocation funds, which are in the stage of returning capital. The trio of funds have a combined $800 million in assets.

Taconic Capital Advisors, which manages about $6 billion in assets, is not related to Taconic Partners, the Manhattan-based real estate firm led by Charles Bendit and Paul Pariser.

For the hedge fund, ditching commercial real estate represents a shift toward its core investment strategies of merger arbitrage and corporate and structured credit. Taconic’s real estate bets were event-driven and relative-value, according to the firm’s website. The company has invested more than $3 billion in direct real estate deals.

Taconic has also invested upwards of $5.5 billion of CMBS market value and made more than 175 transactions in commercial real estate. In June, Taconic and Machine Investment Group landed $90.4 million in C-PACE financing for two Hyatt hotels in Hollywood, a year after acquiring them through foreclosure.

The commercial property market has been challenged in recent years by high borrowing costs and depressed values. Borrowers have struggled to reconcile the emerging valuation gap when they need to refinance, presenting difficult decisions for leaving lenders.

— Holden Walter-Warner