It has been a busy couple of years for Maurice Malfatti and the team that he and partner Ron Strom have been assembling at Blue Heron Asset Management, a real estate management group that flipped its focus in 2011 to investing capital through pooled investment funds.

In addition to moving their corporate office from Chapel Hill to a hip new space at Pilot Mill in downtown Raleigh, they’ve cashed out of nearly all the investments made with their first fund initiated in 2011, the $26 million Blue Heron Real Estate Opportunity Fund I.

Malfatti now confirms that the firm has closed out fundraising efforts for its second fund, Blue Heron Real Estate Opportunity Fund II, with a total commitment of $39 million from 35 institutional investor groups and high-net worth individuals and families.

“We’re taking an opportunistic strategy,” Malfatti says.

In Fund I, Blue Heron had five real estate investments – all in the Triangle – highlighted by the $30 million mixed-use Village at Marquee Station in Fuquay-Varina that Blue Heron helped finance and develop. The fund in March 2016 exited that project with the $41.5 million sale of the 265-unit apartment community.

For Fund II, Blue Heron is spreading its wings with acquisitions so far already in Charlotte; Nashville, Tennessee; and Frederick, Maryland; as well as Raleigh and Durham. “Our big focus in 2016 was achieving our goals for Fund I and identifying good investments for Fund II,” he says.

In Raleigh, Fund II’s portfolio includes the 55-unit Historic Boylan Apartments near downtown, having paid $6.3 million for the property in 2015. The plan is to renovate the apartments.

Blue Heron is also reworking development plans for its property at 539 Foster St. in downtown Durham, its last remaining investment from Fund I. Malfatti says the group plans to deploy some of the capital from Fund II toward future development of the site. Blue Heron had earlier envisioned building a five-story residential condominium building, but it pulled the plug on those plans in September. Malfatti says they are working on a new idea to redevelop the site for a multifamily building with street-level retail.

Malfatti says he and Strom have also promoted Michael Eubanks, who has been with the firm that has grown to eight employees since 2012, as a third partner. “Ron and I couldn’t be more thrilled for Michael to be taking an ownership stake alongside us in Blue Heron,” Malfatti says.

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Source: Triangle Business Journal