ArrowMark gears up for mid-market lending push

ArrowMark sees room for growth originating medium-sized loans across markets and asset classes nationally.

ArrowMark Partners, which earlier this month hired Matthew Michalovsky from PIMCO, is now gearing up to aggressively expand its mid-market-focused commercial real estate finance business.

At PIMCO, Michalovsky oversaw a $110 billion real estate portfolio and has experience on both the debt and equity side that made the hire an easy choice, according to Rob Brown, real estate portfolio manager at ArrowMark.

“We’ve reached a scale where we have visibility towards growth and we’re able to provide both debt as well as equity capital to the market,” Brown said. “Matt is a very seasoned professional, who throughout his career has straddled both credit as well as equity. Bringing him in will allow us to continue to build.”

ArrowMark, which manages $24.6 billion in assets across multiple platforms, sees room for growth originating medium-sized loans across markets and asset classes nationally.

Brown said the firm considers middle-market transaction sizes that are $100 million or less in terms of overall investment size. In terms of property type, it invests in “the four major food groups plus specialty asset classes.”

ArrowMark’s mortgage business had a robust 2021, originating more than $1 billion of new loans and Brown wants to double or triple that this year.

Prepared for uncertainty

ArrowMark is not especially concerned about uncertainty stemming from higher rates. 

“Interest rate increases or volatility have always been part of our underwriting model and discipline,” Brown said. “I think [rate hikes] will create more opportunities for platforms like ourselves. Any sort of change or volatility, we’re able to be very nimble and reactive.”

This confidence extends to the ongoing conflict in Ukraine.

“We remain very thoughtful and purposeful in terms of what we’re doing,” Brown noted. “We’re not relying upon the capital markets, which have been really volatile, not only during covid, but also during this geopolitical period.”