With hedge fund managers’ lucrative performance fees having taking a hit along with the rest of the economy, one town’s real estate market is paying the price.
The number of homes priced at $8 million or more has spiked by a third, according to a report by Prudential Connecticut Realty, as suburban masters of the universe cope with pay cuts or lose their jobs altogether. John Cooke, Prudential’s “Greenwich Specialist,” told the Post that 10 percent of those homes for sale were built on spec.
Hedge Fund Research reported in July that, for the first half of 2011, hedge funds had lost 2.1 percent of their value on average, according to StreetInsider.com. Prior to the financial crisis, many managers oversaw funds that posted gains well above 10 percent. On top of management fees, managers are typically paid 20 percent of the profits they generate. Back in the glory days, that meant big, big bucks, especially since the performance fees were treated as capital gains and therefore only subject to a 15 percent tax rate.
But now many managers, due to their funds’ poor performances, only receive a staid management fee — typically 2 percent of a fund’s total worth. Some of the bed-of-roses mansions in town are even facing foreclosure.
See our gallery below of Greenwich, Conn., mega-homes for sale.
Gallery: See Luxury Estates In Greenwich, Conn.
Gallery: Buyer’s Market: Million-Dollar Foreclosures