GREENWICH, CT-When the $1.05-billion deal for LNR Property LLC is finalized, it will bring a number of investment, finance and management businesses under the control of Starwood Property Trust and Starwood Capital Group, both based here. Perhaps the real prize, though, is LNR's commercial mortgage special servicing line, the world's largest.  

As noted in a Starwood Property investor presentation Thursday, LNR has been named special servicer on 129 separate CMBS trusts representing an unpaid principal balance (“UPB”) of $131 billion as of Dec. 31, 2012. That includes nearly $20 billion in special servicing or REO, and Starwood's acquisition comes at a time when more than $1 trillion of CRE debt is set to mature in the US and Europe over the next five years.

The LNR acquisition, first reported unofficially this past October, represents “a major-league transformative deal,” Joshua Barber, an analyst with Stifel Nicolaus & Co. in Baltimore, told Bloomberg on Thursday. He added that the transaction would give Starwood Property “real size, real scale, unbelievable networks and real mortgage originators.”

On a conference call Thursday, Barry Sternlicht, chairman and CEO of both Starwood Property and Starwood Capital, told analysts his companies “leaped at the chance” to acquire LNR, “because we knew LNR had an extraordinary seat at the table. They had a view of the commercial-property markets, particularly the debt markets, that few if any people have in the US.”

With that in mind, Starwood Property noted on Thursday that among other things, the LNR deal establishes “as a full service real estate finance company and immediately expands breadth of business lines to include CMBS securities and special servicing, which are counter-cyclical investments and provide a natural hedge in a variety of economic scenarios.” Further, it “adds a premier global platform of real estate underwriters and workout specialists with access to an unmatched proprietary database on the performance of over $400 billion of commercial real estate loans and underlying assets, resulting in industry-leading underwriting and risk assessment via a significant information advantage.”

Another plus, as Starwood sees it, is an expanded investment pipeline. The REIT cites a wider scope of potential capital deployment opportunities "via more than 15,000 touch points with borrowers representing more than $125 billion in loans, a proven conduit originator, a small balance commercial real estate loan platform, unmatched CMBS investing capabilities, a leading platform in Europe and an ownership interest in Auction.com which will provide incremental deal flow."

The deal is expected to be accretive to Starwood Property's 2013 earnings and cash flow. Citigroup and Credit Suisse are serving as financial advisors to Starwood Property on the transaction, with Sidley Austin LLP is acting as legal counsel. Lazard is serving as financial advisor to LNR's sellers.