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Starwood Property Trust Completes $154.4 Million Commercial Mortgage Securitization

August 30, 2011

GREENWICH, Conn., Aug. 30, 2011 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced its participation in a recently completed commercial mortgage loan securitization led by Deutsche Bank Securities, Inc.  The Company contributed four first mortgage loans with an aggregate principal balance of $154.4 million.  The Company uses the securitization market to provide non-recourse match term funding when it retains related subordinate debt, and this securitization provided the Company with an effective cost of funds of approximately 5.1%.

Three of the loans contributed to the securitization, with an aggregate principal balance of $130.4 million, have a total of $99.8 million of subordinate notes or mezzanine loans that were retained by the Company.  The subordinate debt investments retained by the Company are secured by a portfolio of hotels, an assisted living facility and an office building and have a weighted average remaining maturity of 55 months and a weighted average last dollar exposure loan-to-value ratio of 62%.

Overall, the Company expects the retained subordinate debt investments to generate a weighted average levered return in excess of 12%. As previously communicated, the turbulent market environment notwithstanding, the aggregate price at which the Company is selling the loans into the securitization approximates its hedged basis in these loans and therefore no material gain or loss is expected to result from the transaction.

"We are pleased that the high quality of our loan portfolio enabled us to complete this important CMBS market securitization despite the extreme volatility in the capital markets," stated Barry Sternlicht, Chairman and Chief Executive Officer of Starwood Property Trust. "The successful closing of this transaction significantly reduces the size of our mortgage loans targeted for sale and further supports our strategy of focusing on finding safe, attractive returns for our shareholders over the long-term."

Upon the settlement of this securitization transaction, the Company's remaining portfolio of loans that are targeted for securitization or sale to a third party will be approximately $123 million. The Company's allocated equity in these loans represents less than 1.7% of the $1.8 billion of net equity that the Company has raised since its inception.  These loans have an unlevered weighted average interest rate of 5.88%, weighted average debt service coverage ratio of 1.69:1, weighted average debt yield of 11.7%, weighted average last dollar exposure loan-to-value ratio of 69.5% and occupancy rate of 93.9%.  These loans were previously approved as part of the collateral for the GS Mortgage Securities Trust 2011-GC4 transaction which failed to close when Standard and Poor's unexpectedly withdrew their rating from the 2011-GC4 transaction and other CMBS transactions.

About Starwood Property Trust, Inc.

Starwood Property Trust, Inc. focuses primarily on originating, investing in, financing and managing commercial mortgage loans and other commercial and residential 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 has elected 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, availability of financing and other risks detailed from time to time in the Company's reports filed with the SEC.

SOURCE Starwood Property Trust, Inc.

Contact: Investor Relations, +1-203-422-7788,
Categories: Press Releases
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