ArrowMark Partners
Differentiated Financing Solutions in the CRE Middle-Market

ArrowMark Partners is an employee-owned investment management firm specializing in public equity, private credit, leveraged loans, and commercial real estate (CRE) finance, seeking to deliver differentiated outcomes for its investors. The company has established itself in the CRE financing space with its flexible debt and equity capital solutions for operators and sponsors across various property types.

Positioned in the middle-market structured finance space, ArrowMark’s CRE platform focuses on properties valued at $100 million or less. The Firm’s CRE structured finance strategy generates both income and asset appreciation by designing bespoke financing solutions across all asset types.

The nature of ArrowMark’s CRE platform provides greater flexibility to borrowers and downside risk mitigation to investors. Anchored by its commercial mortgage lending programs – which are capitalized primarily through partnerships with insurance companies and other financial institutions - ArrowMark’s real estate platform offers a suite of solutions that addresses investors’ various risk/ return needs. The platform is differentiated by its ability to raise capital via non-traditional lenders, invest throughout the capital structure, and manage all functions in a fully vertically integrated manner, from originations to servicing to risk management.

“As a balance sheet lender, we have capital where we can provide both first mortgage financings as well as preferred equity solutions. Being a liquidity provider in this time of illiquidity and volatility has allowed business and deal flow to remain robust as sponsors look to us for creative, reliable capital solutions,” says Rob Brown, Portfolio Manager and Head of CRE Finance at ArrowMark Partners.

Strategic partnerships with investors allow ArrowMark to better understand their needs, whether it be risk, duration, return, or yield. The robust deal flow ensures consistent interactions with relevant industry players, enabling the team to keep a finger on the market pulse and identify niche, diverse investment opportunities.

For instance, self-storage facilities present a lucrative investment opportunity in the CRE market, offering many advantages and attractive returns. Unlike other CRE sectors, self-storage remains a fragmented industry, with numerous institutional investors in the private equity and public real estate investment trust (REIT) space. However, the middle market is primarily controlled by entrepreneurial owner-operators. ArrowMark capitalized on this opportunity by establishing a joint venture with a large public REIT, Life Storage Inc. (LSI), to offer senior financing solutions for operators and sponsors to invest in these properties.

For example, ArrowMark provided a $28.5 million senior bridge loan secured by a newly built Class A self-storage facility located in Scottsdale, Arizona. The sponsor used the loan to refinance their existing construction lender and will focus on leasing up the asset until stabilization. The loan benefits from flexible prepayment that allows the borrower to repay the loan after stabilization is achieved.

The CRE market has long been a preferred investment option for investors seeking higher returns, greater tax benefits, and instant portfolio diversification. With a fundamental, research-driven philosophy and integrated investment platform, ArrowMark allows investors to gain broader exposure to this niche middle-market CRE segment.