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The 30-Minute Interview

Stuart J. Boesky

Mr. Boesky, 55, is the chief executive of Pembrook Capital Management, an investment adviser and fund manager focused on debt. The company, which is based in New York, also originates first mortgages and bridge and mezzanine loans for all property types.

Mr. Boesky spent most of his career at the Related Companies, where he ran the CharterMac financial services affiliate, now called Centerline Capital, from 1997 to 2005.

Interview conducted and condensed by

VIVIAN MARINO

Q. Who do you lend to?

A. We generally lend to what I refer to as midmarket developers. They’re not big institutional REITs, but they’re not small local developers; they’re a niche in the middle. A lot of them would be names that you would know in New York City, but we don’t disclose them.

Q. They probably have less capital available to them than the larger developers.

A. We are taking advantage of the lack of flexible debt capital in the markets. So the banks are dealing with financial regulation, too much real estate on their balance sheets already. And we’re really filling a niche that developers are having a hard time with.

Q. What kinds of rates do you charge?

A. Most of the deals we do are not fully stabilized. We are targeting transactions that have construction risk or transactions that had been troubled but are turning around. So we’re taking some execution risk and we’re getting paid well for that. We’re getting exactly what would be considered value-added return in the private equity industry.

We’re taking risk that the banks will not take today and which the insurance companies will not take.

Q. A source for lending comes from your funds, right?

A. Correct.

Q. Tell me a little about them.

A. I have two funds and the investors are either pension funds, large corporations or banks. I’m really not allowed to disclose client names. Each of the funds is about $150 million apiece. The minimum investment is $5 million.

Our funds right now are doing all parts of the capital stacks except for pure equity, because we believe that right now the best risk-adjusted returns in an uncertain market are not pure equity and that we’re getting compensated better on a risk-adjusted basis from first mortgages, mezzanine and preferred equity.

Q. What kinds of returns are you getting?

A. We shoot for midteens returns, and we’ve done very nicely.

Q. You stay away from equity ownerships.

A. We generally don’t want to be the equity owner, but we’re earning equity returns.

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Credit...Marilynn K. Yee/The New York Times

Q. Yes, but sometimes you might end up being an equity owner.

A. It’s interesting: our most successful project in our first fund was a project we ended up owning — in Chelsea. It was an office deal. We fixed it up and sold it.

Q. So how is business these days?

A. Business for us is very good. Our pipeline is about $1 billion — meaning the list of active transactions we’re working on.

More recently we started to focus on multifamily construction lending. The multifamily rental fundamentals are extremely strong even on a historic basis. Vacancies are below 5 percent nationally; rents are going up over 5 percent annually.

Q. How much of your business is in the New York area?

A. About 25 percent of our portfolio of loans, preferred equity, mezzanine financing is in New York City.

New York’s the best market in the country. It has outperformed everywhere else in the United States. We’re adding jobs and people want to be here. The money that’s coming to New York internationally is probably not second to any. The only other place you see that is in Miami right now.

Q. You spent most of your career at Related. Why did you leave?

A. When I started CharterMac it was $300 million assets under management; when I left it was $19 billion. We had a stellar track of earnings mid-double digits for eight or nine years. It was a phenomenal real estate infrastructure.

Around the time I left, it was clear that the business was going in a direction that was not consistent to where I wanted to spend the rest of my career — pursuing differing opportunities that were outside of what I considered the core competency of the company.

Q. Ivan F. Boesky, famously convicted of insider stock trading in the 1980s, is your cousin. How close were the two of you?

A. He’s actually a first cousin. My father’s family is not all that close. I did meet with him once at his office when I first moved to New York, and it’s the only time that I’ve ever seen him face to face. That was almost 30 years ago.

Here’s a guy that never helped me, but the association is not all that helpful.

Q. Any idea what he’s up to these days?

A. I actually became about five years ago very friendly with his daughter, who’s wonderful. She’s a very successful art dealer, Marianne, and through Marianne I learned that he’s in La Jolla and recently had a child and is married. But that’s about all I know.

A version of this article appears in print on  , Section B, Page 7 of the New York edition with the headline: Stuart J. Boesky. Order Reprints | Today’s Paper | Subscribe

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