Starwood to Buy $600M FL Affordable Housing Portfolio

The company plans to acquire some 6,185 units through this deal. Due to timing of regulatory approvals and the assumption of in-place financing, the transaction is expected to close in phases.

Barry Sternlicht, CEO of Starwood Property Trust
Barry Sternlicht, CEO of Starwood Property Trust

Starwood Property Trust Inc. has signed a definitive agreement to acquire a 28-property affordable housing portfolio in Florida. The 6,185 units could change hands for some $600 million. The portfolio is 99 percent leased and predominately located in Orlando, as well as the metropolitan areas of West Palm Beach, Tampa and Miami. Starwood Property Trust is acquiring the assets with a combination of units in a newly formed subsidiary, which are exchangeable into STWD common shares, cash and debt financing.

“Given the persistent supply/demand imbalance for high-quality, rent-restricted housing, coupled with its attractive financing, we believe this investment will provide stable and attractive double-digit, cash-on-cash returns over the long term,” said Starwood Property Trust Chairman & CEO Barry Sternlicht, in prepared remarks.

An off-market investment

Due to timing of regulatory approvals and the assumption of in-place financing, the transaction is expected to close in phases. The first phase, consisting of 1,740 units, closed in late December 2017. The company expects to complete the rest of the transaction by mid-2018, subject to customary closing conditions.

“This transaction is an extension of Starwood Property Trust’s previous successful investment in the affordable multifamily housing sector and, upon closing, our portfolio will consist of over 15,100 units of housing located predominately in Florida. Additionally, the REIT’s manager, Starwood Capital Group, has investments in nearly 20,000 market-rate units in complementary Florida markets,” said Sternlicht.

In 2016, the Starwood Capital Group affiliate paid $563.5 million for a 31-property LIHTC portfolio totaling 8,498 units in Florida.