Starwood Property Trust Inc (NYSE:STWD) has finalized a definitive agreement to buy an institutional-quality multifamily reasonably priced housing portfolio in Florida constituted of 28 properties and 6,185 units for around $600 million.
As per the update, the portfolio is 99% leased and mainly based in Orlando with smaller focus in the West Palm Beach. The company is buying the portfolio with an amalgamation of units in a newly-established subsidiary which can be exchanged into STWD common shares, debt and cash financing. Barry Sternlicht, the CEO and Chairman of Starwood Property, expressed that this differently structured, off-market investment done in a best quality multifamily housing portfolio marks a great way to start 2018.
The properties are based in Florida markets with remarkable fundamentals. Given the supply/demand imbalance for premium quality rent restricted housing together with its attractive financing, they consider this investment will offer attractive and stable double digit cash-on-cash returns in the long term.
Mr. Sternlicht added that this deal marks as an extension of Starwood Property’s previous successful investment in the alike affordable multifamily housing segment and upon closing their portfolio will consist of more than 15,100 units of housing based predominately in Florida. In addition, the REIT’s manager has investments in almost 20,000 market rate units in additional Florida markets, which offers them considerable significant confidence in this investment.
The CEO of Starwood Property added that they will continue to utilize their scale and deep industry associations to identify large, unique deals with interesting in-place cash flows, robust underlying fundamentals and properly moderate risk profiles to lead sector-leading total returns for their shareholders.
As per the update, the deal is projected to close in phases following timing of regulatory nods and the supposition of in-place financing. The initial phase, covering 1,740 units, closed in December 2017. The firm projects to complete the remaining stages of the transaction by the close of the second quarter 2018.