Starwood Property Trust
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Starwood Property Trust (NYSE:STWD) is an externally managed mortgage Real Estate Investment Trust that invests in a wide variety of commercial real estate related debt.
Starwood Property was formed in June 2009 and began trading August 12, 2009. It was the largest blind pool investment launched to date. That means that it did not yet own anything, so investors were trusting the company to wisely invest the money raised by the IPO.
Starwood acquires, originates and structures senior and subordinate debt instruments, including: first lien mortgage loans, junior participations in first lien mortgage loans, second lien mortgage loans, and mezzanine loans.
Barry S. Sternlicht is Chief Executive Officer and Chairman of the Board of Directors. It is based in Greenwich Connecticut.
Starwood Property Trust also buys Commercial Mortage Backed Securities (CMBS), RMBS, unsecured REIT debt, and credit tenant loans. They look for deals of from $25 to $100 million.
Their external manager is Starwood Capital Group, a private real estate firm that's been in business for over eighteen years.
Starwood Property Trust is Taking Advantage of the Financial Crisis and Credit Crunch
Their target market consists of public and private property owners and investors, mortgage brokers, commercial and investment banks, and other financial institutions involved in the real estate market. They can help borrowers buy new properties and refinance existing debt, within the entire United States.
Basically, the intention was to take advantage of the financial crisis and buy up -- extremely cheaply -- real estate related debt. Companies that previously held the debt had bought it during the boom when it was relatively expensive. The idea of Starwood was to use the money raised by its IPO to buy up bargains.
Many other financial institutions -- and mortgage REITs -- had bought the debt when it was high (believing it would go even higher), and were being forced by the recession and credit crunch to sell low. This company was formed to buy debt at low prices and eventually sell it, when the economy improves and they can make a good profit.
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