First meetings can be awkward, but Plum Inc. brought a $100 million icebreaker into its Tuesday morning introduction to the Columbia commercial real estate community.
Around 30 community and business leaders gathered for breakfast at the Capital City Club to learn more about the San Francisco-based lending platform, specializing in $1 million to $15 million commercial real estate loans, and the $100 million in fresh capital it has earmarked for the Columbia market.
“The most important thing I could tell you about Plum is we’re not a bank,” Plum founder and CEO Bill Fisher told the crowd. “All we do at Plum’s is commercial real estate.”
Plum, founded in 2014 with the goal of simplifying commercial real estate loans, conducted a nationwide survey of 20 secondary markets to pinpoint the most promising partners. It identified Columbia, along with Boise, Idaho, and Madison, Wis., as three with great investment potential and little lending competition, along with a strong track record of attracting industry, a growing population and a low cost of living. The cities also boast the solid infrastructure of state capitals and four-year universities that help drive economic growth.
“They see Columbia as a great investment,” said Carl Blackstone, president and CEO of the Columbia Chamber of Commerce. “I take it as a great sign that they’re willing to invest that much money. That means there’s pent-up demand here.”
Plum, with funding from backers such as Capital One founder and QED Investors managing partner Nigel Morris and Deutsche Bank, wants to put its money to work with long-term, non-recourse loans focusing on multi-family housing, along with office, rental, industrial, self-storage and hotel space.
“Community banks almost always require full recourse,” said Fisher, a former executive vice president with Wells Fargo with responsibility for that bank’s $12 billion Northern California division. “So in addition to the property, and in addition to the cash flow of the property, they want you as the borrower to sign up for your personal net worth as a guarantee. We don’t necessarily require full recourse. The building itself and the cash flow of the building are more than enough collateral for us.”
Plum, which does not finance new construction, is also not subject to concentration limits restricting the amount of assets dedicated to commercial real estate, Fisher said, and is able to focus on building a long-term relationship with the borrower.
“The No. 1 thing to be a smart real estate investor is, you need access to great capital,” Fisher said. “I’ve learned quite a bit about how to use technology to transform old, stodgy markets. I’ve also learned a little bit about how to raise capital.”
Fisher’s pitch sounded promising to area business executives in attendance.
“The lending process has turned into an extremely intensive, long, tedious process, and if he’s taking that and making it more streamlined – just in the pure time it takes to get a loan, it would be very beneficial for any person looking for money,” said Jeff Prioreschi, president of Columbia-based Monarch Capital Ventures.
Tina Herbert, executive director of the city of Columbia’s Office of Business Opportunities, said Plum could help fill niches her organization sometimes can’t.
“We really want to help the little man do small deals, but we still get people who need some gap financing for big development deals, and we can’t do it based on our funding,” Herbert said. “We really don’t like telling people no if they have a really good project. I’m looking forward to it, and to sending (Plum) a lot of referrals.”
That’s what Fisher wants to hear. He said Plum began seeing loan requests the day after its appearance in Boise last month, and expects a similar response from Columbia.
“You probably have to look at maybe 50 deals to do 25, so I’d say if we did 50 quotes out of this market in the next few months, that would be a terrific thing,” Fisher said.