Starwood Wraps Up $154.4M Mortgage Securitization

Starwood Property Trust has closed the first four loans of a securitization featuring a principal balance totaling $154.4 million.

September 1, 2011
By Barbra Murray, Contributing Editor

Starwood Property Trust has revealed its participation in a commercial mortgage loan securitization that recently closed. Deutsche Bank Securities Inc. led the deal, to which Starwood contributed four first mortgage loans featuring a principal balance totaling $154.4 million.

“We are pleased that the high quality of our loan portfolio enabled us to complete this important CMBS market securitization despite the extreme volatility in the capital markets,” Barry Sternlicht, chairman and CEO of Starwood, said. “The successful closing of this transaction significantly reduces the size of our mortgage loans targeted for sale and further supports our strategy of focusing on finding safe, attractive returns for our shareholders over the long term.”

A group of properties encompassing hotels, an assisted-living facility and an office building secure the subordinate debt investments retained by the company, which allow for an effective cost of funds of roughly 5.1 percent. The weighted average remaining maturity for the debt investments is 55 months.

As part of its risk management pursuits, Starwood is using securitization to, as the commercial real estate finance concern notes in its second-quarter earnings report, “better match the maturity of our financing with the duration of our assets.” In the first quarter of this year, the company contributed three loans with a carrying value of about $54 million to a securitization trust, which resulted in proceeds of $56 million. And in the second quarter, the sale of a loan to an independent third party yielded $78.4 million in gross proceeds.