NEW YORK—Starwood Property Trust is on track to potentially deal slightly more than $2 billion in loans in 2012, according to Boyd Fellows, the mortgage REIT’s president.
The REIT loaned $500 million in each of the first two quarters of 2012, Fellows said earlier this month during the Keefe, Bruyette & Woods Mortgage Finance Conference, which was webcast. He said it is possible that Starwood Property could go a little higher than the $2 billion in loans originated a year ago.
Starwood Property, the bulk of the portfolio of which is in the hospitality sector, focuses most of its lending activity in larger deals. The average transaction amount a year ago for Starwood Property was $62 million, and the company does not consider any potential loans of less than $50 million.
Fellows said the company does not anticipate any corporate level debt in 2012. The REIT’s use of asset-based financing allows it to put inexpensive debt in place.
Approximately $700 million of hospitality loans on the company’s books is at a LTV of less than 40%, he said. Fellows said one of the things that has most surprised him during his time at Starwood Property is how rare it is that a borrower would ask for a loan at a LTV of less than 75%.
And doing bigger loans suits Fellows and the rest of the team at Starwood Property just fine.
“The bigger loans generally involve better collateral because big assets tend to be better in big, urban markets, and the sponsors tend to be institutional or near institutional,” Fellows said.
The other advantage of chasing down large transactions, Fellows said, is that the competition for such deals is less intense. As it is, the company’s primary competition is in mezzanine funds and other lenders such as Deutsche Bank and Wells Fargo.
“Our biggest strategic advantage, or one of them, is our scale,” Fellows said.
Contact:
Starwood Property Trust
Boyd Fellows, president
Phone: 415-633-4207
Email: bfellows@starwood.com