Starwood to Acquire $503M Loan Portfolio

February 22, 2010
By Allison Landa, News Editor

Courtesy Flickr Creative Commons user paul (dex) busy @ work

Real estate finance and investment REIT Starwood Property Trust announced on Friday that it will acquire a $503 million portfolio of performing commercial loans from TIAA-CREF.

The price tag for the fixed-rate portfolio was approximately $510 million along with accrued interest. Contained in the portfolio are 18 senior first mortgage A-notes and two junior first mortgage B-notes secured by retail and office assets that total 4.5 million square feet throughout 10 states. It is about 96 percent occupied with expected tenant rollover of a respective 5.7 percent and 5.2 percent in 2010 and 2011.

“This is a very significant investment for our company,” chief executive officer Barry Sternlicht said in a statement. “With the acquisition of this high quality-loan portfolio, Starwood Property Trust will have deployed approximately $800 million of the capital we initially raised in August.”

Sternlicht added that nearly 20 percent of the portfolio is due to mature in the coming year and as such pose an attractive alternative for cash. The acquisition is slated to close at the end of this month.

The capital raised in August was for Starwood’s initial public offering, through which it priced 40,500,000 shares of common stock at $20 per share. The company is focused primarily on originating, investing in, and financing commercial mortgage loans as well as other commercial real estate-related debt investments.