Starwood Property Trust Announces $175 Million of Additional Capital Commitments

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Jul 15, 2010, 08:00 ET

GREENWICH, Conn., July 15 /PRNewswire-FirstCall/ -- Starwood Property Trust (NYSE: STWD) (the "Company") announced today that the Company has recently committed to invest approximately $175 million of capital in three separate transactions. In July, the Company sourced and was the lead lender in the origination of a $138.0 million renovation loan (the "Hotel Loan") for the Hyatt Regency New Orleans (the "Hotel") and was the purchaser of an $85.0 million subordinate first mortgage loan (the "Mall Loan") secured by a regional mall located in suburban Columbus, Ohio (the "Mall") for a discounted purchase price of $68.6 million. In addition, the Company has committed to purchase an additional $45.5 million participation in a B-note secured by four resorts in the United Kingdom (the "Corporate Loan") for a discounted purchase price of $37.4 million.

The Hotel Loan, which the Company expects will be fully funded over a 12-month period, is a first mortgage which matures in July 2016, bears an annual interest rate of 11.0% and has an expected unlevered return of approximately 12%. The Company's fully funded basis in the Hotel will be $115,675 per room which represents a 48% discount to replacement cost. The Hotel was closed in 2005 after Hurricane Katrina but was previously one of the best performing hotels in Hyatt's portfolio. As part of this transaction, Hyatt invested $60 million of new capital subordinate to the Hotel Loan. Two international financial institutions will participate in the remaining 50% of the loan on a pari passu basis.

The Mall Loan matures in August 2017 and, at the Company's discounted purchase price, has a basis of $302 per square foot, cash yield of approximately 9% and an expected unlevered return of approximately 12%. The Mall is one of the top regional malls in the Midwest with average sales of approximately $500 per square foot. Additionally, the Mall has experienced sponsorship, a strong roster of national retail tenant and is approximately 96% leased.

The Corporate Loan, which matures in October 2013, is an incremental investment in the same corporate loan previously purchased by the Company in May 2010. At the Company's discounted purchase price, the Corporate Loan has an expected unlevered return of approximately 13% (in US Dollars). In addition, since the Corporate Loan is denominated in British Pounds the Company intends to enter into a currency hedge at closing.

"These investments offer attractive returns on high quality assets that reflect the Company's expertise in originating and buying loans, as well as its ability to transact in scale," said Leo Huang, Head of Real Estate Fixed Income for Starwood Capital Group, the Company's external manager. "We remain focused on safety and yield and are pleased with the high quality diversified portfolio constructed by the Company since its formation in August 2009."

About Starwood Property Trust, Inc.

Starwood Property Trust, Inc. focuses primarily on originating, investing in, financing and managing commercial mortgage loans and other commercial real estate-related debt investments. Starwood Property Trust, Inc. is externally managed and advised by SPT Management, LLC, an affiliate of Starwood Capital Group, and intends to elect to be taxed as a real estate investment trust for U.S. federal income tax purposes.

Forward Looking Statements

Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although Starwood Property Trust, Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company's expectations include completion of pending investments, continued ability to acquire additional investments, competition within the finance and real estate industries, economic conditions, and other risks detailed from time to time in the Company's SEC reports.

SOURCE Starwood Property Trust, Inc.