Legacy Capital Partners, a small private equity firm based in Lyndhurst, Ohio, is happy to stand out from the financial crowd. While many real estate funds routinely raise $500 million or more of equity to acquire properties, Legacy Capital Partners’ first fund launched in November 2004 paled by comparison, raising $44 million from high-net-worth individuals. Based on its financial success, a second fund of some $50 million has been introduced.

“We want to be small. We have no objective to be a $500 million to $1 billion fund,” David Pierre, president of Legacy Capital Partners, told NREI during the annual International Council of Shopping Centers convention on Tuesday. The bigger the fund, the greater the threat for investors to enter into deals with hair on them.

To guard against that pitfall, Pierre says, “We look for geographic diversification, property type diversification, and developer diversification.”

Rather than acquire existing assets at today’s exceptionally high prices, Legacy Capital Partners’ provides developers with the capital needed to build projects and create value. “We’re longer-term investors, seven to 10-year holders,” says Pierre. Once projects within the fund are completed and refinanced, Pierre estimates the fund generates cash-on-returns of 18%.

Some 20% of the capital placed in Legacy Capital Partners’ first fund was devoted almost exclusively to retail lifestyle centers. The remaining 80% was earmarked for developing student housing at colleges and universities and building age-restricted seniors housing.