Starwood Property Trust, a real estate investment trust, has signed a definitive agreement to acquire a $503 million portfolio of performing commercial mortgages from TIAA-CREF for approximately $510 million, plus accrued interest.
The fixed-rate portfolio consists of 18 senior first-mortgage A notes and two junior first-mortgage B-notes secured by retail and office assets totaling 4.5 million square feet across 10 states. The weighted average debt yield on the portfolio is 17.7%, with a weighted average remaining term of 1.7 years and a weighted average coupon of 7.75%, Starwood says.
The portfolio is approximately 96% occupied and has an expected tenant rollover of 5.7% and 5.2% in 2010 and 2011, respectively. All of the notes in the portfolio were originated prior to 2003, and the owners of the assets are predominantly publicly traded entities and well-known real estate private equity firms, the company says.
"Almost 20% of this portfolio will mature within one year, and as such, these assets are an extremely attractive alternative for cash," says Starwood CEO Barry Sternlicht. "They also can be modified, extended or rolled into new term debt and can be levered short term if necessary."
The acquisition is expected to close by the end of February, subject to a delayed closing on certain of the loans.
SOURCE: Starwood Property Trust