Starwood Acquires Distressed Real Estate Firm

Investing

Published: January 24, 2013 8:53 am

Last Updated: April 28, 2020 5:29 am

Commercial real-estate firm Starwood Property Trust Inc. (NYSE: STWD) and private equity firm Starwood Capital Group, which are both controlled by Barry Sternlicht, have agreed to pay $1.05 billion for privately held LNR Property LLC. The deal is expected to close in the second quarter of 2013.

Starwood Property Trust, a REIT, will pay $856 million for six of LNR’s business properties, including a 50% stake in Auction.com, the largest online real-estate exchange in the United States. Starwood Capital will pay $197 million of the acquisition cost in exchange for 50% of LNR’s ownership interest in Auction.com and another LNR business.

Starwood’s Sternlicht said:

We are delighted to announce this transformative and highly strategic acquisition that diversifies Starwood Property Trust’s revenue sources, adds significant scale to our operating platform and dramatically expands our proprietary origination capabilities. We expect the combination of LNR’s capabilities, Starwood Property Trust’s superior access to capital, and both firms’ underwriting expertise to result in a long-term and sustainable competitive advantage.

Through this acquisition, Starwood gains entry into the commercial mortgage backed securities (CMBS) sector, which the company notes, “are counter-cyclical investments and provide a natural hedge in a variety of economic scenarios.” Like, for example, a decline in real-estate values in Europe, where LNR currently operates a commercial real-estate debt fund.

Shares of Starwood are inactive in premarket trading this morning, having closed at $24.01 last night, in a 52-week range of $19.30 to $24.56.

The Average American Is Losing Their Savings Every Day (Sponsor)

If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today, and inflation is much higher. Checking accounts are even worse.

Every day you don’t move to a high-yield savings account that beats inflation, you lose more and more value.

But there is good news. To win qualified customers, some accounts are paying 9-10x this national average. That’s an incredible way to keep your money safe, and get paid at the same time. Our top pick for high yield savings accounts includes other one time cash bonuses, and is FDIC insured.

Click here to see how much more you could be earning on your savings today. It takes just a few minutes and your money could be working for you.