Starwood Property Trust Announces Full Exercise of Option to Purchase Additional Shares of Common Stock

Rhea-AI Summary

Starwood Property Trust (NYSE: STWD) announced that underwriters have fully exercised their option to purchase an additional 2,625,000 shares of common stock, following the company's recent public offering of 17,500,000 shares. The total offering now comprises 20,125,000 shares, with estimated net proceeds of $391.7 million after expenses.

Settlement for the additional shares is expected on September 6, 2024, with the initial shares settled on September 5, 2024. The company plans to use the proceeds to originate and purchase commercial mortgage loans and other target assets, as well as for general corporate purposes, including potential repayment of outstanding indebtedness under repurchase facilities.

Positive

• Successfully raised approximately $391.7 million in net proceeds
• Full exercise of underwriters' option indicates strong demand for STWD shares
• Proceeds to be used for originating and purchasing additional commercial mortgage loans
• Potential reduction of outstanding indebtedness under repurchase facilities

Negative

• Potential dilution of existing shareholders due to the issuance of 20,125,000 new shares

Insights

Financial Analyst

The full exercise of the overallotment option demonstrates strong investor demand for Starwood Property Trust's stock. This additional $391.7 million in net proceeds significantly bolsters the company's liquidity position. The expanded capital base allows STWD to pursue more commercial mortgage loans and target assets, potentially driving future revenue growth.

However, investors should note the dilutive effect of issuing 20,125,000 new shares, which may impact earnings per share in the short term. The company's intention to use part of the proceeds for debt repayment could improve its financial health by reducing interest expenses. Overall, this capital raise strengthens STWD's position in the competitive commercial mortgage REIT sector, but the true impact will depend on management's execution in deploying the new capital effectively.

Market Research Analyst

This successful offering signals robust market confidence in Starwood Property Trust's business model and growth prospects. The full exercise of the overallotment option, often seen as a bullish indicator, suggests strong institutional interest. This could potentially lead to increased liquidity and trading volume for STWD's stock.

The timing of this capital raise is noteworthy, given the current interest rate environment and real estate market dynamics. STWD's ability to secure favorable terms in this offering may indicate that investors see value in commercial mortgage REITs as a hedge against inflation and economic uncertainty. However, the market will closely watch how efficiently the company deploys this capital, especially in light of potential shifts in commercial real estate trends post-pandemic.

Legal Expert

From a legal standpoint, Starwood Property Trust's successful offering under its current shelf registration statement demonstrates effective compliance with SEC regulations. The company's transparent disclosure of the intended use of proceeds aligns with best practices in corporate governance and investor communication.

The involvement of reputable underwriters like Citigroup, Goldman Sachs & Co. and Morgan Stanley adds credibility to the offering. However, investors should note the standard legal disclaimer regarding the offer and sale of securities, which highlights the importance of proper registration and qualification under applicable state laws. This boilerplate language serves to protect the company from potential legal challenges related to the offering process.

GREENWICH, Conn., Sept. 5, 2024 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) (the "Company") today announced that the underwriters for the Company's recently completed public offering of 17,500,000 shares of its common stock have fully exercised their option to purchase an additional 2,625,000 shares. After giving effect to the full exercise of the option, the aggregate net proceeds of the offering of the 20,125,000 shares of common stock will be approximately $391.7 million after deducting the Company's estimated expenses. Settlement of the sale of the additional shares is expected to take place on September 6, 2024, subject to customary closing conditions, with settlement of the initial shares having taken place on September 5, 2024. All of the shares have been or will be issued under the Company's currently effective shelf registration statement filed with the Securities and Exchange Commission.

The Company intends to use the net proceeds received from the offering to originate and purchase additional commercial mortgage loans and other target assets and investments. The Company may also use a portion of the net proceeds for other general corporate purposes, including, but not limited to, the repayment of outstanding indebtedness under the Company's repurchase facilities.

Citigroup, Goldman Sachs & Co. LLC and Morgan Stanley served as joint book-running managers for the offering.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Starwood Property Trust, Inc.

Starwood Property Trust, Inc. (NYSE: STWD), an affiliate of global private investment firm Starwood Capital Group, is a leading diversified finance company with a core focus on the real estate and infrastructure sectors. As of June 30, 2024, the Company has successfully deployed over $98 billion of capital since inception and manages a portfolio of $26 billion across debt and equity investments. Starwood Property Trust's investment objective is to generate attractive and stable returns for shareholders, primarily through dividends, by leveraging a premiere global organization to identify and execute on the best risk adjusted returning investments across its target assets.

Forward-Looking Statements

Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, including statements with respect to the offering and the use of proceeds. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company's expectations include: (i) factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024, including those set forth under the captions "Risk Factors", "Business", and "Management's Discussion and Analysis of Financial Condition and Results of Operations"; (ii) defaults by borrowers in paying debt service on outstanding indebtedness; (iii) impairment in the value of real estate property securing the Company's loans or in which the Company invests; (iv) availability of mortgage origination and acquisition opportunities acceptable to the Company; (v) potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements; (vi) the Company's ability to achieve the benefits that it anticipates from the prior acquisition of the project finance origination, underwriting and capital markets business of GE Capital Global Holdings, LLC; (vii) national and local economic and business conditions, including as a result of the impact of public health emergencies; (viii) the occurrence of certain geo-political events (such as wars, terrorist attacks and tensions between states) that affect the normal and peaceful course of international relations; (ix) general and local commercial and residential real estate property conditions; (x) changes in federal government policies; (xi) changes in federal, state and local governmental laws and regulations; (xii) increased competition from entities engaged in mortgage lending and securities investing activities; (xiii) changes in interest rates; and 

Contact: 

Zachary Tanenbaum
Starwood Property Trust
Phone: 203-422-7788
Email: ztanenbaum@starwood.com

View original content:https://www.prnewswire.com/news-releases/starwood-property-trust-announces-full-exercise-of-option-to-purchase-additional-shares-of-common-stock-302240079.html

SOURCE Starwood Property Trust, Inc.

FAQ

How many additional shares did Starwood Property Trust (STWD) sell in the recent offering?

Starwood Property Trust (STWD) sold an additional 2,625,000 shares of common stock, following the full exercise of the underwriters' option.

What are the total net proceeds from Starwood Property Trust's (STWD) recent stock offering?

The total net proceeds from Starwood Property Trust's (STWD) stock offering, including the additional shares, are approximately $391.7 million after deducting estimated expenses.

When is the settlement date for the additional shares sold by Starwood Property Trust (STWD)?

The settlement date for the additional shares sold by Starwood Property Trust (STWD) is expected to be September 6, 2024, subject to customary closing conditions.

How does Starwood Property Trust (STWD) plan to use the proceeds from its recent stock offering?

Starwood Property Trust (STWD) plans to use the proceeds to originate and purchase additional commercial mortgage loans and other target assets, as well as for general corporate purposes, including potential repayment of outstanding indebtedness.