Calmwater provides $44m on Chicago area building

The Los Angeles-based lender of senior and mezzanine real estate debt issued a bridge loan to improve and lease-up industrial and medical property.

Calmwater Capital has provided a $44 million bridge loan to Simborg Development on its mixed-use property near Chicago, the firm said on Monday.

The borrower will use the two-year (with one year extension), floating rate loan to refinance existing debt, improve existing tenant space, and lease up current vacancies at Lake Business Center, a mixed-use warehouse, office and medical office building located at 9100, 9120 and 9200 Calumet Avenue in Munster, Indiana, just outside of the Windy City.

After purchasing the property in 2006, Simborg had planned to demolish the existing building and replace it with an upscale retail center, the lender also said.  The financial crisis nixed those plans, and Simborg instead decided to revitalise existing improvements into a mixed-use industrial and medical office.  

“Simborg has a long history of successfully developing and operating institutional quality properties in the Chicago area, and we were impressed with the company’s ability to manage this property through the economic downturn,” Larry Grantham, a portfolio manager at Calmwater, said in a statement.

Ryan Malatesta, loan originator at Calmwater who worked on the transaction, added that the property, located 25 miles outside of Chicago, has a creditworthiness supported by long-term lease tenants, with more than 50 percent of current revenue stemming from investment-grade tenants with an average remaining lease term of seven years.

Currently, the building is 82.9 percent leased, which, according to the statement, means there is a possible substantial upside on Calmwater’s investment. The Northwest Indiana vacancy rate stood at 5.55 percent in 2015, meaning the Lake Business Center’s amount of unrented space could be above average depending on 2016 figures.

In an earlier transaction in the Chicago area, Calmwater provided a $5 million senior loan to a retail and office property in Des Plaines, Illinois, a suburb of the Second City, according to its website. The firm also did a deal in Cypress Pointe, Indiana, where it refinanced a multi-family housing property with a $7 million senior loan.

Since its founding in 2011, Calmwater has provided and managed more than $1.4 billion in commercial real estate loans, according to its website, having issued $354 million in real estate loans so far this year. Calmwater provides $5 million to $50 million senior and mezzanine bridge loans for the acquisition and refinancing on office, industrial, retail, multi-family, hospitality and land across the US. The firm currently has $1 billion in deployable capital on its balance sheet.