Starwood Property Trust has closed on a deal to purchase a $503 million loan book comprising 20 performing commercial mortgages and B notes for approximately $512 million.
The investment, funded “by cash on hand” according to an announcement by the REIT, is the latest in a string of capital outlays made since its inception at the end of last summer. Prior investments include a $107.8 million investment in three first mortgages backed by US hospitality and retail assets, a $32 million single-borrower CMBS issuance, $23.3 million on two TALF deals from New York’s Federal Reserve and $10.7 million on a first mortgage backed by a New York hotel.
Starwood said the assets of the loan book were secured against retail and office assets totalling 4.5 million square feet across 10 US states. The assets, it said, were 96 percent occupied, had a weighted average debt yield of 17.7 percent and a weighted average coupon of 7.75 percent. The debt service ratio on the portfolio is approximately 1.8 times.
Within the portfolio, $122 million of the loans have a maturity that falls within the next 12 months. These loans will provide Starwood with an opportunity to originate new loans to the asset owners in the near term, Starwood said. The remaining assets had a weighted average remaining length of two years.
Starwood Property Trust raised more than $921 million following an IPO on 17 August last year.