Starwood Property Trust Announces Pricing of Common Stock Offering

Rhea-AI Summary

Starwood Property Trust (NYSE: STWD) has priced an underwritten public offering of 17,500,000 shares of its common stock, expecting to raise approximately $345.1 million in gross proceeds. The underwriters have a 30-day option to purchase up to an additional 2,625,000 shares, potentially increasing the total to $396.9 million. The offering is set to close on September 5, 2024.

The company plans to use the net proceeds to originate and purchase additional commercial mortgage loans and other target assets. It may also allocate funds for general corporate purposes, including repaying outstanding indebtedness under its repurchase facilities. Citigroup, Goldman Sachs & Co. , and Morgan Stanley are serving as joint book-running managers for the offering.

Positive

• Potential to raise up to $396.9 million in gross proceeds if additional shares option is exercised
• Funds to be used for originating and purchasing additional commercial mortgage loans and target assets
• Opportunity to repay outstanding indebtedness under repurchase facilities

Negative

• Dilution of existing shareholders' ownership due to issuance of 17,500,000 new shares
• Potential further dilution if underwriters exercise option for additional 2,625,000 shares

Insights

Financial Analyst

Starwood Property Trust's $345.1 million common stock offering signals a significant capital raise, potentially indicating growth ambitions or balance sheet strengthening. The 17,500,000 new shares represent substantial dilution for existing shareholders, approximately 7% based on current shares outstanding. While the additional capital could fuel loan originations and asset purchases, enhancing the company's earning potential, investors should consider the dilutive effect on earnings per share in the near term.

The option for underwriters to purchase an additional 2,625,000 shares could bring total proceeds to $396.9 million, further boosting the company's war chest but also increasing dilution. The stated use of proceeds for loan origination and asset purchases aligns with the company's core business model as a mortgage REIT, potentially strengthening its market position in commercial real estate finance.

Market Research Analyst

This offering comes at a time when the commercial real estate market is facing challenges, including higher interest rates and tighter lending conditions. Starwood's move to raise capital could be seen as opportunistic, positioning the company to capitalize on distressed assets or fill lending gaps left by retreating banks. However, the timing also raises questions about the company's current portfolio health and future market expectations.

The involvement of top-tier underwriters like Citigroup, Goldman Sachs and Morgan Stanley lends credibility to the offering and suggests strong institutional interest. Investors should monitor the market's reception to this offering, as it could indicate broader sentiment towards the commercial real estate sector and mortgage REITs in particular. The success of this capital raise could influence other players in the industry to follow suit.

GREENWICH, Conn., Sept. 3, 2024 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) (the "Company") today announced the pricing of an underwritten public offering of 17,500,000 shares of its common stock for total estimated gross proceeds of approximately $345.1 million (or approximately $396.9 million if the option to purchase additional shares is exercised in full). The underwriters have a 30-day option to purchase up to an additional 2,625,000 shares from the Company. Settlement of the offering is subject to customary closing conditions and is expected to occur on September 5, 2024. All of the shares 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 are serving as joint book-running managers for the offering.

The offering of these securities may be made only by means of a prospectus and a related prospectus supplement, a copy of which may be obtained by contacting: Citigroup Global Markets Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, telephone: (800) 831-9146; Goldman Sachs & Co. LLC, Prospectus Department, 200 West Street, New York, NY 10282, telephone: 1-866-471-2526, facsimile: 212-902-9316 or by emailing Prospectus-ny@ny.email.gs.com; or Morgan Stanley & Co. LLC, 180 Varick Street, 2nd Floor, New York, NY 10014, Attn: Prospectus Department.

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 anticipated 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 (xiv) the availability of, and costs associated with, sources of liquidity.

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

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SOURCE Starwood Property Trust, Inc.

FAQ

How many shares of common stock is Starwood Property Trust (STWD) offering in its public offering?

Starwood Property Trust (STWD) is offering 17,500,000 shares of its common stock in the underwritten public offering, with an option for underwriters to purchase up to an additional 2,625,000 shares.

What is the expected gross proceeds from Starwood Property Trust's (STWD) stock offering?

The expected gross proceeds from Starwood Property Trust's (STWD) stock offering are approximately $345.1 million, or $396.9 million if the option to purchase additional shares is fully exercised.

When is the expected settlement date for Starwood Property Trust's (STWD) stock offering?

The expected settlement date for Starwood Property Trust's (STWD) stock offering is September 5, 2024, subject to customary closing conditions.

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

Starwood Property Trust (STWD) plans to use the net proceeds to originate and purchase additional commercial mortgage loans and other target assets, as well as for general corporate purposes, including potentially repaying outstanding indebtedness under its repurchase facilities.