Starwood Property Trust issues $500M in senior notes By Investing.com

Starwood Property Trust, Inc. (NYSE:), a $6.5 billion market cap real estate investment trust currently trading near its 52-week low at $19.30, has finalized the issuance of $500 million in senior unsecured notes, according to a filing with the Securities and Exchange Commission on Friday.
According to InvestingPro data, the company maintains strong liquidity with a current ratio of 8.24. The 6.500% notes, due in 2030, were sold in a private offering to qualified institutional buyers and non-U.S. persons in offshore transactions.
The real estate investment trust plans to use the proceeds from the notes to fund green and social projects, with any remaining proceeds going towards repaying existing debt, including the $400 million of 3.750% senior notes due in 2024, and for general corporate purposes. The company’s total debt stands at $18 billion with a debt-to-equity ratio of 2.76, as reported in InvestingPro’s comprehensive financial analysis.
The notes, which will mature on July 1, 2030, will pay interest semi-annually and rank pari passu with the company’s existing and future senior unsecured debt. They are initially not guaranteed by any of the company’s subsidiaries, but certain subsidiaries may be required to guarantee the notes in the future under specific conditions.
Starwood Property Trust has the option to redeem the notes before January 1, 2030, at a “make-whole” premium or at par thereafter. Additionally, up to 40% of the notes could be redeemed prior to January 1, 2028, at 106.500% of the principal amount using proceeds from certain equity offerings.
The indenture includes covenants that limit additional indebtedness and require the maintenance of a certain level of unencumbered assets. These covenants could be terminated if the notes achieve investment grade ratings from selected rating agencies and no default or event of default is occurring.
In the event of a change of control, Starwood Property Trust must offer to repurchase the notes at 101% of their principal amount plus accrued interest. The indenture also outlines events of default that could lead to the acceleration of the debt.
This financial move, detailed in the company’s latest 8-K filing, is part of Starwood Property Trust’s broader financing strategy. The company offers an attractive dividend yield of 9.89% to shareholders and has maintained dividend payments for 16 consecutive years.
For deeper insights into STWD’s financial health and future prospects, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 US equities with expert analysis and actionable intelligence.
In other recent news, Starwood Property Trust reported noteworthy third-quarter earnings for 2024. The company announced distributable earnings of $159 million, or $0.48 per share, and GAAP net income of $76 million, or $0.23 per share. Starwood Property Trust committed $2.1 billion towards new investments, a majority of which are outside of commercial lending. The company’s commercial lending segment contributed $190 million in distributable earnings, while maintaining a $2.5 billion on-balance sheet portfolio in the residential lending segment.
Starwood Property Trust also reported improvements in liquidity, including a $392 million common stock issuance and a $400 million senior unsecured note issuance. The company plans to increase its investment pace and leverage credit capacity as market conditions improve. Starwood Property Trust foresees a strong pipeline in commercial real estate lending as transaction volumes rebound.
While the company foreclosed on two multifamily properties in Texas, it also added $23 million in distributable earnings through infrastructure lending. In terms of future expectations, Jeff DiModica indicated a potential return to a higher commercial real estate loan percentage, highlighting the firm’s conservative approach to stable and profitable returns.
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