The portfolio is comprised of 18 senior first mortgage A-notes and 2 junior first mortgage B-notes, secured by 4.5 million square feet of retail and office assets across 10 states. The property is currently 96% occupied and anticipates 5.7% and 5.2% tenant turnover in 2010 and 2011, respectively. The weighted average debt yield on the portfolio is 17.7% for 1.7 years and a weighted average coupon of 7.75%.
"With the acquisition of this high quality loan portfolio, Starwood Property Trust will have deployed approximately $800 million of the capital we initially raised in August," explains Barry Sternlict, CEO of Starwood, in a statement. "That focus of our investments is safety and yield, and this investment's high debt yield and relatively short duration should allow us to reinvest capital as the loans mature or provide a built-in pipeline of originations. Almost 20% of this portfolio will mature within a year and as such these assets are an extremely attractive alternative for cash. They also can be modified, extended or rolled into new term debt and can be levered short term, if necessary."
All the notes originated before 2003 and, according to Starwood, the assets are "predominantly publicly traded entities and well-known real estate private equity firms. The deal is expected to officially close by 2010.
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