NEW YORK—Starwood Capital Group has made a $325 million strategic investment in mortgage lender TPG RE Finance. Its non-voting investment, made in the form of preferred stock and detachable warrants to purchase the company's common stock, comes as the mortgage REIT struggles to regain its footing after issuing a going concern warning that it may not have enough liquidity to meet its obligations and keep operations afloat. The REIT was hammered in March and April when the markets plunged and forced TPG Finance to sell assets in order to meet margin calls.
A handful of bidders had reportedly been circling TPG RE Finance with offers, according to a report in Bloomberg, including Oxford Properties Group and Almanac Realty Investors.
Starwood Capital's investment will provide TPG RE with liquidity and access to additional capital at its option. Proceeds from the initial closing will be used to make voluntary deleveraging payments under some of the company's secured financing facilities, and for general corporate purposes.
"With this recapitalization and through our new position as a TRTX stakeholder, we firmly believe the company is positioned for sustained long-term success and will generate meaningful value for its shareholders and the partners of our fund moving forward," Ethan Bing, managing director of Starwood Capital, says in prepared remarks.
Houlihan Lokey served as TRTX's financial adviser and Kirkland & Ellis LLP served as TRTX's legal advisor. Credit Suisse served as Starwood Capital's financial adviser and Sidley Austin LLP served as Starwood Capital's legal advisor.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
