Calmwater Asset Management has closed its third fund, U.S. Real Estate Credit Fund III, with $636 million in commitments. The firm secured investments from pension funds and family offices around the globe, including North America, Asia, Europe and South America. The fund will focus on originating senior loans valued at $5 million to $50 million. To find out more, we sat down with David Traversi, president of Calmwater Capital, to find out more about the fund and the fundraising.

GlobeSt.com: Did the fundraising for your third fund meet your expectations?

David Traversi: Yes, we are thrilled with the fund raise. We initially put a target out there of $750 million, but with the understanding that that was very much a stretch goal for a manager that was raising its first broadly marketed fund. We recognize that our $636 million raise is highly successful against all measures of institutional fund raising.

GlobeSt.com: Tell me about the fundraising process.

Traversi: We launched our formal fundraising in Q1 of 2016, simultaneous with a $150 million first close with three institutional investors that had either invested with us previously or to which we had done some significant pre-marketing. Upon that close, we began outreach to the top institutional investors in the standard investor classes – pension funds, endowments, foundations, family offices, life companies, as well as pension consultants, which are often the gatekeeper to the pension funds themselves – across the globe. These outreaches were followed by in-person meetings, sometimes several of them. Once a prospective investor engaged, rigorous due diligence followed. That was generally followed by the commitment committee process with each of the investors. Over the course of the next seven quarters, we held a number of closings and concluded with our final close in Q4 of 2017, bringing our total Fund III raise to $636 million.

GlobeSt.com: What will the fund focus on and why? Tell me about your strategy?

Traversi: We originate and manage commercial real estate loans across the U.S., with a focus on financing transitional – or bridge – situations characterized by a borrower's need for a lender that can act with urgency, understand and address complexity and provide certainty of execution. Our loans average two years in duration, which is generally sufficient to bridge our borrowers through their transition and to a point where they can take us out with lower cost financing. We typically match our equity with 1-to-1 debt from a couple of the top global commercial real estate lenders, which allows us to significantly increase returns to our investors, with only a modest increase in risk. We invest in most asset types, but with a focus on office, retail, industrial, multifamily and an occasional investment in land and hospitality. Of course, given the situations we lend into, we are very active asset managers, staying very engaged through the loan's life cycle.

GlobeSt.com: What are your goals in the first 12-months?

Traversi: We don't disclose exact goals, but we generally look to originate at least $500 million annually, maintaining the highly attractive risk-return profile, relative to market, that we have achieved since inception in 2010.

Instant Insights /

Calmwater Raises $636M for Third Fund

Related Stories

Recommended For You