CIM Group doubles down in rapidly growing Phoenix market 

The firm last month originated a $204m construction loan for a partnership that includes Medistar Corporation and CBRE Investment Management.  

CIM Group likes the fundamentals of Phoenix and last  month increased its activity there with the origination of a $204 million construction loan for the development of Central Station, a planned one million-square-foot mixed-use transportation-oriented property in the city’s downtown submarket.

The deal, known as Central Station, is being developed by a Medistar, GMH Communities, and fund sponsored by CBRE Investment Management.

“We have a large presence in Phoenix and have been a very active lender in this market,” said Garett Bjorkman, a managing director at Los Angeles-based CIM Group. “Medistar came to us with this opportunity after winning an RFP from the city to develop the site.”

In addition to an existing relationship with Medistar, there were several factors thatappealed to CIM Group about the proposed development at 300 North Central Avenue at Van Buren Street. Part of the appeal is tied to the strength of Medistar and its partners as well as the ability to expand its lending footprint in a market that CIM Group believes has long-term growth potential.

“We think the fundamentals of Phoenix continue to be incredibly appealing. There is a tremendous amount of migration to the market from other cities in the US because the lifestyle is fantastic, the cost of living is relatively low to other markets, and there is really strong employment and very business-friendly policies,” Bjorkman said. “It has always been a big market but the rate of growth here has been incredible and, over the past few years, more people have realized all of the positive attributes it has to offer.”

Deep dive

The property will comprise 362 apartments, 435 student housing units with 655 beds, more than 100,000 square feet of office and retail space, and 427 subterranean parking spaces across two 22- and 33-story towers. The sponsors broke ground in April.

Central Station, a public-private partnership with the City of Phoenix and the federal Transit Authority, is adjacent to and integrated with an existing bus and light-rail transit center. In addition to its light rail connections, Central Station is adjacent to Civic Space Park and Arizona State University’s Downtown campus.

“This development has a significant concentration of multifamily as well as student housing. We found the light rail station to be a particularly attractive attribute, and there will also be a bus depot that is to be developed with the city as part of the project,” Bjorkman said.

This is CIM Group’s second loan with Medistar, last year originating a $135.85 million construction loan for a student housing development in the Texas A&M Innovation plaza.

Lending platform

The firm is a vertically integrated owner, operator, developer and lender to real assets, primarily in North America and Latin America. The firm recently launched a European strategy to expand its real estate efforts there. CIM Group seeks to provide senior and subordinate transitional bridge and construction loans for commercial real estate projects with strong sponsors.

“This year has been very volatile in the public markets, and it’s been a time when overall we have been very thoughtful about the investments we are making in light of the overall capital markets volatility,” Bjorkman said.

The firm now manages a portfolio of more than $7 billion of credit assets spread across risk profiles and throughout major US markets. “We are seeking to grow that credit platform very quickly,” he said. “This transaction is representative of the type of deals we’re focused on.”

CIM Group is also attracted by the prospects of the Honolulu market, where it recently closed $136.7 million loan for the construction of a 42-story condominium tower. The property will be made up on 197 affordable units and 131 market-rate units, a fairly standard multifamily mix for that market.

“The Ala Moana retail district is just down the street from our project, which is a very central retail location. There is another very large development right across the street. This area is really revitalizing what used to be a warehouse, industrial district and making it a place where people want to live, work and have retail and entertainment,” Bjorkman added.