COMMERCIAL CAPITAL HOLDINGS: A NEW FINANCING SOURCE FOR THE COMMERCIAL SECTOR

There is a new, imaginative source of capital whose only business is lending to developers or owners of commercial real estate properties. Its investment objective is to uncover real estate projects in need of short-term, first-lien financing, in the range of $1 million to $5 million, for the purpose of refinancing, renovating or re-tenanting undervalued properties.

What’s more, the new enterprise brings together top expertise in two areas: first: corporate and mortgage finance, through Wall Street veteran Richard Steinberg, and second, specialized expertise in development, acquisitions, and operations of residential, commercial office, light industrial and retail properties, through one of the tri-state area’s leading real estate organizations, the Cali family. Together, this partnership forms the nucleus of Commercial Capital Holdings LLC, or “CCH.” Another essential component of the business model is rigid underwriting and expert analysis. Leading this effort is seasoned Chief Underwriter, Steven Luciano, who performs this vitally important role effectively, timely, and prudently.

“How can we lend money when it’s not that plentiful?” asks Steinberg. “Through Commercial Capital Holdings, LLC, CCH, we have private investors in our Fund. We also have a credit line, which expands our lending capability. We deposit our Fund’s money with the bank, establish the credit line, and in turn, lend money to commercial real estate owners and operators who need capital on a short-term basis. The end result is a consistent positive return for our Fund and our investors.”

The quality of the real estate properties is a crucial element in CCH’s investment decisions. “This is where the Calis contribute immeasurably to our work,” notes Steinberg. “For over half a century, they have anticipated trends and opportunities in real estate, and have gone on to build first-class homes and offices for residents and businesses.” They have directly developed projects, principally in New Jersey, totaling more than 10 million square feet comprised of commercial, industrial, and residential properties.

The company was founded in the 1940s by brothers John J. Cali and Angelo R. Cali and their partner Ed Leshowitz, who together focused on long-term tenant relationships with their customers and consistently put their customers first. In 1994, recognizing the need to grow through capital markets, the company went public as Cali Realty Corporation, transforming itself  from a family-owned development and management company to New Jersey’s first office real estate investment trust (REIT). The company subsequently merged with the Mack Corporation, creating a REIT powerhouse now known as Mack-Cali Realty Corporation, which today encompasses over 32 million square feet of office space, plus limited industrial and retail properties.

“Obviously, there are risks in investing in commercial real estate,” Steinberg points out.  “Someone could default, in which case we might have to take over the property. In such a scenario, we want a team with tremendous real estate experience to shepherd the project and protect our investors in the Fund. We have that expertise in the Calis.”

Before lending its capital, CCH executes a thorough study of each property and its potential for success or failure. “We create an exit strategy on Day One prior to making a loan,” Steinberg notes. “What if a developer needed capital for essential work to renovate their project, and we lent the capital for that purpose? In the unfortunate event of a default, we might choose to both foreclose and take over the project, or we may work with the borrower to cure the problem.  With our investors interests always the priority, we analyze and explore all possible scenarios. And while we have significant development and management experience, it is not our goal to foreclose and take over a property. We, CCH, are lenders. Our business plan is to make profitable and successful loans. We truly hope our borrowers are successful in their endeavors. We want to be in the business of repeat lending to a growing customer base.”  

CCH’s investment team is made up of experienced leaders in both finance and commercial real estate.

• Richard Steinberg is the Managing Member of CCH and a Board Member of the Investment Committee. His background includes success as Managing Director in the Mortgage Backed Securities Department at Merrill Lynch; as a founder of Lucerne Partners, a hedge fund specializing in distressed and high-yield debt and equity; and as the founder of BAJA Advisors LLC, a financial advisory firm.
  
  
• John R. Cali and Brant Cali both serve as Board Members of the Investment Committee. They are sons of Angelo R. Cali and John J. Cali, the brothers who founded the Cali organization. John and Brant joined their family business over 30 years ago and together expanded their family enterprise. During the 90’s, both served as executive officers in Cali Reality Corp. and Mack-Cali Realty Corporation.
  
  
• Steven Luciano is the Chief Underwriter and a member of the Investment Committee. He is an Executive Vice President of Commercial Capital Holdings.
  
  
• Jeff Logel is an Executive Vice President and Chief Financial Officer of Commercial Capital Holdings.

 “We offer more than funding; we offer credibility,” says Steinberg. “With our team, developers who need money can understand that if we take on their deal, and it comes time to close, they will get their money. One of our sourcing providers, CFA Capital Partners, typically produces approximately 100 to 200 potential term sheets each week. It is our job to winnow them down to the best opportunities for our investors. We then issue term sheets to begin the process of underwriting a project.  Yet even at that point, we are far from finished.  For every loan we make, at least one member of our underwriting team – one of the Calis, myself, or Steve Luciano – visits that site, to look at the property and interview the borrower. We believe that direct contact with the borrower, their property, and the marketplace is essential to our long term success.”

“We have made over a dozen successful, performing loans during the first seven months since the Fund’s inception,” Steinberg proudly notes. “We prefer to minimize risk by diversifying our loans geographically. We have borrowers not only in the Tri-State area, but also in Colorado, Wyoming, and Indiana. We are also diversified by property type – mixed use, multi-family and industrial – so that we can be insulated against problems in one region or any one sector.

“With respect to our Fund,” Steinberg states, “while the growth of our business depends on investor capital, we want our investors to feel they are strategic partners. Our goal is to find the right kind of investor who might bring more than just capital to our Fund. For example, we have investors who have access to deal flow and others who have a passion for real estate, either professionally or as a part time interest. We hope to see our business platform function as a partnership rather than a corporation. Our desire is to have investors with us who want to be part of something exciting.”

“Now is the time to do business with developers with impeccable backgrounds, and property owners who have reached certain stages of success in their careers,” explains Steinberg. “Even though we are a new Fund and our investor base was created less than a year ago, we do not have any lingering issues or legacy problems. Given the current state of the economy, it is gratifying that we can proudly convey our story. And it is a great story!”


Peter Haas, The Mann Report