Ceres Realty Fund

New York Firm Touts Real Estate Private Equity Fund

BlakelyStern Investment Advisors in New York is marketing the Ceres Realty Fund II, a commercial real estate private equity fund that it hopes to close at $100 million by year-end. The firm is targeting foundations and endowments as a way to grow its business beyond the high-net-worth individuals and family offices it has courted in the past. The fund focuses on value-added deals in the middle-market space - worth $10-25 million - in the office, warehouse and retail sectors in the Boston-Washington, D.C., corridor. The firm is targeting a 16-18% return. "We are a value-oriented operation that is very hands-on about imporoving the commercial real estate that we invest in," said Randolph Stern, principal.

"Our geographic focus, product type and proven ability to add value in both rising and declining markets have been well received," Stern said. "We are being told [by endowments] that they really like our product but that they don't want to be the first foundation to [invest]," he continued. "The big question is where do emerging managers such as ourselves fit [in their portfolio] at this point in the real estate cycle?" He believes that a lot depends on how long a foundation or endowments has been invested in the asset class. "An endowment that has increased its real estate allocation might be more willing to invest in a smaller growth oriented fund," he said.

Real Estate "provides current income from cash flow and growth capital and does not correlate directly with other equity markets," David Godbout, principal, added.