Several notable names are in the midst of raising money for new real estate-focused hedge funds. Two weeks ago, Jay Leupp, managing director of equity research at RBC Capital Markets, became the latest to jump into the space. Leupp, who has covered real estate investment trusts for more than 14 years, has taken his sell-side REIT team with him to launch a new long-short hedge fund called Alesco, sources say. The San Francisco-based fund is said to be in the process of raising money. Leupp couldn't be reached for comment. Colony Capital, a firm headed by legendary real estate investor Tom Barrack, has been raising funds since last year for its hedge fund, according to people familiar with the situation. Colony is partnering with Saudi billionaire Prince Alwaleed bin Talal on the $3.9 billion buyout of Fairmont Hotels & Resorts ( FHR). Most of the real estate-focused hedge funds that have started in recent years stemmed from long-only REIT investors deciding to add a long-short product, or from direct real estate investors in the private market, such as Colony Capital, opting to make trades with public real estate stocks. Transwestern Investment Co., a Chicago-based direct real estate investor that already offers a long-only real estate-securities product, says it is planning to offer a hedge fund vehicle later this year. "There are many high-quality real estate investors moving into the real estate hedge fund space. We welcome their arrival, as it further validates the business model," says Michael Elrad, senior managing partner of GEM Realty Capital in Chicago, which has run a long-short real estate hedge fund for seven years. GEM also is a direct investor in properties. While there is no definitive number on how many real estate hedge funds exist, Carl Tash, founder and CEO of Los Angeles-based Cliffwood Partners, says he's heard estimates that 30 to 40 are out there. Cliffwood is one of the oldest in the arena, having offered a long-short real estate hedge fund since 1994. The hedge fund has $100 million under management. Another $500 million is managed by Cliffwood under a long-only fund.