In its first quarterly report as public entity, Starwood Property Trust posted a net loss of $1.9 million. The results were affected by the recognition of $800,000 of non-cash, stock-based compensation in the period.
"We are generally pleased with our pace, pipeline and the quality of our investments to date," said Barry Sternlicht, CEO of the REIT. "We are choosing to be patient, highly selective and to use our extensive real estate expertise to find investments where returns solidly outweigh risk. We are focused on building an asset base diversified by product type, geographic location and by tenant."
"In three months, we have closed $144 million of investments, have $66 million under contract to close, another $250 million we list as highly probable and a further pipeline exceeding $1 billion," Sternlicht added. "Taken together, we feel comfortable we can meet our targeted returns for our shareholders."
On Aug. 17, the REIT completed its initial public offering, in which it raised $921.1 million.
Net investment during the period ended Sept. 30 totaled $23.3 million. Through a 75/25 co-investment partnership between Starwood Property Trust and Starwood Global Opportunity Fund VIII, a private real estate investment vehicle managed by an affiliate of Starwood Capital Group, the company invested in AAA rated CMBS securities with a weighted average coupon of 5.6% totaling $202.7 million. The partnership obtained $171.6 million of financing via the Term Asset-Backed Securities Loan Facility (TALF) at an average rate of 3.82% for an expected average yield to maturity in excess of 16%.
Subsequent to the quarter-end, the company invested $10.9 million in bonds secured by a first mortgage on a New York City hotel. The bonds have a current par value of $12.9 million with an expected unlevered yield to maturity of 11%.
In addition, Starwood Property Trust completed a $110 million acquisition of a portfolio of loans on seven properties leased to a single tenant. The expected unlevered yield to maturity on this investment is 13%.
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