CapitalSource's security lending plan takes off

Tuesday, February 1, 2005

CHEVY CHASE, Md. - Eight months after buying security industry finance firm SLP Capital, CapitalSource is making inroads in the market by closing on 13 pieces of funding within the last four months of 2004 and buying small alarm lender Milestone Security Partners.

These two items are but a small portion of the financing that the security industry can expect from CapitalSource, as it plans to become more heavily involved in this market in the coming year.

According to Bill Polk, director at CapitalSource, the company will consider investing more in the security industry and consider segments such as the electronic article surveillance market, the armored car industry and homeland security.

“As we look at 2005 and beyond, the idea is to continue (what we’ve done) and not only look at the core security alarm business, but also the broader market,” said Tom Pagnani, investment officer for CapitalSource.

So far CapitalSource has added $155 million in commitments and $110 million in funding on its books related to the alarm industry. Those numbers represent 13 deals ranging from $1 million up to $45 million in financing, according to Polk.

Much of its lending efforts came during the fourth quarter of 2004, after CapitalSource completed integrating with SLP Capital’s business into its own. CapitalSource bought SLP Capital in April of 2004 for $75.2 million.

Today, CapitalSource has 30 employees dedicated to financing in the security market. A recent addition to that team is Diane Rooney, who formerly worked for Citizens Bank.

The Milestone Security Partner transaction, which closed in late December, included 17 discrete loans from eight individual borrowers, said Pagnani. No employees were part of the transaction. Milestone was a specialty financing arm for Provident Bank.

“That portfolio is a collection of very high quality dealers, who represent good credit risks,” said Pagnani.