Starwood Capital Group, along with affiliate Starwood Property Trust, has agreed to acquire LNR Property for $1 billion in cash on behalf of its latest opportunistic real estate fund, Starwood Distressed Opportunity Fund IX.
Under the agreement, Starwood Property Trust, a commercial real estate debt-focused real estate investment trust, will purchase the majority of LNR’s businesses for a total of $856 million. Those include its US special servicing unit; US investment securities portfolio; Archetype Mortgage Capital, a commercial real estate conduit loan platform; Archetype Financial Institution Services, a purchaser, manager and servicer of small-balance commercial loan and real estate asset portfolios; its European operations, which include LNR European Investment Fund, a European commercial real estate debt fund; and 50 percent of LNR’s interest in Auction.com, which sells residential and commercial real estate via online auction. Meanwhile, Starwood Capital will acquire LNR’s US commercial real estate group and the other 50 percent of LNR’s stake in Auction.com for $197 million.
“We are delighted to announce this transformative and highly strategic acquisition, which diversifies Starwood Property Trust's revenue sources, adds significant scale to our operating platform and dramatically expands our proprietary origination capabilities,” said Barry Sternlicht, Starwood’s chairman and chief executive, in a statement.
The acquisition is expected to expand the REIT’s investment pipeline, increase its business lines to include CMBS securities and special servicing and enhance its risk management capabilities.
LNR, which was established in 1969, began as a unit of homebuilder Lennar Corporation. The company was spun off as separate public company in 1997, but it was taken private in 2005 by Cerberus Capital Management in 2005. LNR currently is owned by a consortium consisting of investment funds managed by Cerberus, investment funds managed by Oaktree Capital Management, Aozora Bank, iStar Financial and Vornado Realty Trust. The group recapitalized the company in 2010.