Starwood Property Trust entered into a definitive agreement to acquire GE Capital’s Energy Financial Services’ Project Finance Debt Business and loan portfolio for $2.56 billion, including $400 million of unfunded loan commitments.
The acquired business will leverage the extensive experience of the company’s affiliate, Starwood Energy Group, which specializes in comparable energy infrastructure equity investments and has executed transactions with approximately $7 billion in asset value since its inception in 2005.
GE’s Energy Project Finance Debt Business includes a vertically integrated platform with a seasoned leadership team and 21 full-time employees across loan origination, underwriting, capital markets and asset management. The loan portfolio consists of 51 senior loans secured by energy infrastructure real assets.
“It has been our intention since we began Starwood Property Trust to build a multi-cylinder finance company, with the thought that we should never overstay our welcome in any one business line and always have opportunities to deploy capital into only those verticals where reward clearly outweighs risk,” said Barry Sternlicht, Starwood Property Trust’s chairman and chief executive officer. “From our basic and still most important business as one of the nation’s largest commercial real estate lenders, we have successfully diversified the company. We have built a world class conduit lending and CMBS trading platform, bought in excess of $3.5 billion of property assets to yield double digit current returns on equity deployed, and created, from a standing start, a very successful single family lending platform. Today we are pleased to announce we are adding a new cylinder to our company, with the return on investment profile and ability to scale to be material to our $14 billion enterprise.
“GE’s Energy Project Finance Debt Business is one of the preeminent lenders in the field and we expect the team to flourish as we expand their product line in the future. This new segment also provides additional asset duration and the majority of the portfolio is backed by contracts with investment grade companies. The safety of these investments, coupled with attractive risk adjusted return dynamics, make this investment highly complementary to our core real estate platforms and compelling for our shareholders.”
“We are delighted to welcome the team from GE Capital to the Starwood family,” said Himanshu Saxena, chief executive officer of Starwood Energy Group. “We are distinctively positioned to execute and capitalize on this opportunity given our significant in-house expertise, relationships and proven history of success at Starwood Energy Group. Through our previous experience working with this deeply experienced executive team, we have come to admire their vast industry knowledge and commitment to their customers. We are excited to be adding a leading platform with a demonstrated record of value creation, long standing relationships and a clear plan to scale the business and drive future capital deployment.”
The completion of the acquisition is subject to the satisfaction of a number of customary conditions and is expected to close in Q3/18.
Sidley Austin and Paul Hastings served as legal counsel to the company.
Starwood Property Trust, an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the U.S. The company’s core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt and equity investments. With total capital deployed since inception of over $44 billion, Starwood Property Trust continues to solidify its position as one of the premier real estate finance companies in the country.