Calmwater On Track for $500M Goal

LOS ANGELES—Calmwater Capital is on track to reach its first-year goal of originating $500 million. The firm, which recently rebranded and spun out from its former parent company Karlin Real Estate, placed $93.4 million of debt in the second quarter, and has originated $255 million so far in 2015.

“We set pretty aggressive goals for the year,” Larry Grantham, portfolio manager of Calmwater Capital, tells GlobeSt.com. “At the end of 2014, we, like most of our competitors, saw a very frothy, competitive capital markets, so in general, we have exceeded our expectations, just given the competition that we see out there. We are half way into the year, and we have exceeded half of our annual goals. I am very optimistic that we will hit our goal of $500 million.”

All of the funds in the second quarter were deployed across six assets in California, Arizona, Michigan and Texas. The deals include $26.2 million loan to Stephens & Stephens to fund the refinance and renovation of an 181,800-square-foot class-B research and development industrial property in Milpitas, California; $14.5 million to Skymark Properties to fund the refinance Metro Centre Towers, a 565,000-square-foot office complex in, Detroit, Michigan; $6.7 million senior acquisition loan to Light Hill Partners to fund the acquisition and renovation of a 71-unit multifamily portfolio in Dallas, Texas; $4.5 million to Hooman Automotive Group for the refinancing of a 46,500-square-foot auto body shop in La Brea, California; a $3.9 million to a private partnership to fund the acquisition and subsequent lease-up of a 22,500-square-foot creative office building in San Jose, California; and a $3 million term loan to Pontus Capital to fund the acquisition of three triple-net-leased Burger King properties totaling 7,100 square feet in Tucson, Arizona. 

“We have branched out our lending footprint, and now we are truly nationwide. The success is a validation of our process and our strategy,” says Grantham. “Our value to lenders is our certainty of execution, our flexibility and our speed. Certainty of execution is the most critical because we continue to prove to borrowers that we do what we say we are going to do.”

Although still a relatively new platform, the company has been able to succeed by looking at each opportunity and business plan individually and allowing the borrower flexibility. To do so, sometimes they are not the cheapest capital; however, that flexibility has earned them plenty of business. “National lenders and commercial banks continue to become more regulated, and they are not allowed to think out of the box,” says Grantham. “We have a competitive advantage in that we are allowed to be more flexible. No one wants to pay a higher rate, but on certain deals, certainty of execution is more important than 100 or 200 basis points. That is a fair amount of our business. If you look at our borrower profile, half of them are $100 million and up investment firms, and they value that certainty of execution.”