Dealmaker: Calmwater Capital Lends $44M on Mixed-Use Property
Calmwater Capital, Los Angeles, issued a $44 million bridge loan to Simborg Development, Homewood, Ill., for Lake Business Center, a 993,000-square-foot mixed-use industrial office and medical office in Munster, Ind.
The bridge loan refinanced existing debt and recapitalized Lake Business Center’s existing partnership. It also provided capital to lease up the property’s remaining vacancies.
Calmwater Capital Vice President Ryan Malatesta originated the loan for the property 25 miles south of Chicago and across from Munster Community Hospital.
Malatesta noted that the asset has a strong mix of credit tenants on long-term leases. “More than half of current revenue comes from investment-grade tenants with an average remaining lease term of seven years,” he said. “The strong credit at the property provides good stability to the cash flow and enhances the ownership’s ability to lease up the remaining vacancies.”
A significant portion of the credit facility will pay off the existing loan, investor buyout and tenant improvements, with additional funds available for other obligations.
The former Simmons Bedding factory property includes four single-story buildings designed for multi-tenant industrial and medical office use. The property encompasses 898,500 square feet of industrial/warehouse space and 94,500 square feet of office and medical office space. Malatesta said Simborg acquired Lake Business Center in 2006 with plans to demolish it and build an upscale lifestyle center but put the retail development on hold and explored redeveloping the existing property into a mixed-use multi-tenant industrial and medical office due to the 2008 economic recession.
“We were impressed with the company’s ability to manage this property through the economic downturn,” said Calmwater Capital portfolio manager Larry Grantham.
Northwest Indiana’s vacancy rate averaged 5.55 percent last year, down from 6.55 percent in 2014, meaning the Lake Business Center’s 17.1 percent vacancy rate offers the ability to significantly increase revenue through lease-up.
