Starwood Property Trust Snaps Up Another Florida Affordable Housing Portfolio for $600M
Multifamily Properties in Orlando, West Palm Beach, Tampa, Miami Markets Comprise Total of Almost 6,200 Units
Starwood Property Trust Inc. (NYSE: STWD) has agreed to buy 28 properties with a combined 6,185 affordable housing units in Orlando, Tampa and other major Florida markets for $600 million.
Starwood, the nation's largest commercial mortgage REIT, announced the signing of a definitive agreement to acquire the institutional-quality portfolio in an off-market transaction. The 99% leased portfolio is predominately located in Orlando, with other properties in the West Palm Beach, Tampa and Miami markets.
Due to the timing of necessary regulatory approvals and the assumption of financing, the transaction is expected to close in phases. The first eight-property 1,740-unit phase closed Dec. 28 and Starwood expects to complete the remaining 20 properties in two phases by the end of the second quarter, according to a STWD filing.
Starwood is acquiring the portfolio with a combination of units in a newly formed subsidiary called SPT Dolphin Intermediate LLC, which are exchangeable into STWD common shares, cash and debt financing. Other terms of the deal, including the seller, were not disclosed.
"The properties are located in Florida markets with strong fundamentals," noted Starwood Property Trust Chairman and CEO Barry Sternlicht. "Given the persistent supply/demand imbalance for high-quality rent-restricted housing, coupled with its attractive financing, we believe this investment will provide stable and attractive double digit cash-on-cash returns over the long term."
Sternlicht said the transaction is an extension of Starwood's previous investment in the Florida affordable multifamily housing sector. Starwood Property Trust acquired a 31-property portfolio of Low Income Housing Tax Credit-backed assets totaling 8,498 units in mid 2016 from The Wilson Co. for $563.5 million.
When the current deal completely closes, the REIT's portfolio will total over 15,100 housing units located mostly in Florida.
Starwood Capital Group, which manages the REIT, also has investments in nearly 20,000 market-rate units in Florida markets. Starwood Property Trust, one of the largest real estate finance companies in the country with total capital deployed since inception of over $37 billion, also operates as the largest commercial mortgage special servicer in the U.S. through its subsidiary LNR Property, LLC.