New Momentum for Munster’s Lake Business Center

New Momentum for Munster’s Lake Business Center

Calmwater Capital, one of Los Angeles’ leading commercial real estate loan providers, has issued a $44 million bridge loan to Simborg Development to refinance existing debt, recapitalize the existing partnership and provide capital to lease up the remaining vacancies of Lake Business Center, a 993,017-square-foot mixed-use industrial/warehouse, office and medical office property situated at 9100, 9120 and 9200 Calumet Ave. in Munster, Indiana.

munsterA significant portion of the credit facility will finance the payoff of the existing loan, investor buyout and tenant improvements, with additional funds available for other obligations. Already 82.9 percent leased at the time of the transaction, the loan will help provide Simborg with the necessary capital to lease-up the remaining vacancies.

Located in the Chicago metropolitan area, the former Simmons Bedding Factory property comprises four separate, single-story buildings designed for multi-tenant industrial and medical office use. The property totals 993,017 square feet of rental space on 54.5 acres of land, including 898,480 square feet of industrial/warehouse space and 94,537 square feet of office and medical office space. Simborg acquired the property in 2006 with plans to demolish it and build an upscale lifestyle center.  Due to the economic recession, Simborg put the retail development on hold and explored redeveloping the existing improvements into a mixed-use multi-tenant industrial and medical office.

“This was an ideal project for the type of solutions we offer at Calmwater Capital. 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,” said Larry Grantham, Calmwater Capital portfolio manager.

Ryan Malatesta, loan originator on the transaction, added that the property, located 25 miles outside of Chicago and directly across from Munster Community Hospital, possesses a strong mix of credit tenants on long-term leases.

“More than 50 percent of current revenue comes from investment grade tenants with an average remaining lease term of seven years,” Malatesta 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. We really like the credit and ownership’s ability to attract quality tenants to the property. We believe in Simborg’s business plan and believe in them as operators.”

The average vacancy rate in Northwest Indiana stood at 5.55 percent in 2015, down from 6.55 percent in 2014, meaning the Lake Business Center’s vacancy rate of 17.1 percent offers the ability to significantly increase revenue through lease-up.

Calmwater Capital has issued and managed a total of more than $1.3 billion worth of commercial real estate loans since its inception in 2010, having issued over $400 million in loans in year 2015 alone. Backed by the $1.7-billion family office, Karlin Asset Management, Inc., Calmwater Capital has increased its capital resources through credit lines from two multinational financial enterprises, and tranches from a private real estate credit fund led by a top-20 university endowment.