Starwood Capital has launched a $500 million debt vehicle that will target distressed commercial and residential real estate opportunities using financing from the US government rescue plans, TALF and PPIP.
Starwood Property Trust (SPT), which will register as a REIT, is seeking to raise $500 million in its IPO, according to regulatory filings. “We believe that the next five years will be one of the most attractive real estate investment periods in the past 50 years,” the filings said
SPT will originate and acquire distressed debt instruments backed by commercial real estate, including whole mortgage loans, bridge loans, B notes, mezzanine loans and CMBS. SPT will predominantly invest in the US, and will also target residential real estate debt instruments. The firm would not, though, target “loan-to-own” investments.
Starwood said in the filings the current dislocation in the real estate markets had and would continue to cause an “over-correction in the repricing of real estate assets”. In the near-term that would generate “significant opportunity” to originate and acquire commercial real estate mortgage loans, as owners and sellers struggled to find adequate financing.
However, SPT said the “pillar” of its investment strategy would be the origination of “mortgage and mezzanine loans”.
SPT is hoping to be an equity investor in one or more legacy loans from the Public-Private Investment Program (PPIP) scheme, as well as secure non-recourse term borrowings from the Term Asset-Backed Securities Loan Facility (TALF). SPT added it would also look to securitise the senior tranches of its debt positions through TALF.
The REIT’s investment committee will initially be led by Starwood founder and chairman Barry Sternlicht, Jeffrey Dishner, Jerome Silvey, Barden Gale, Marc Perrin and Christopher Graham.