Starwood Property Trust Inc (NYSE:STWD) business units’ split likely - BX

Northern, WI 04/10/2013 (avauncer) – Starwood Property Trust, Inc (NYSE:STWD) (Closed: $27.15, Down by 3.79%) has said that it is considering splitting-up the investments that it has in non-performing residential loans business from its family home rental one. At the moment these two units operate from under a single umbrella. This information has been announced by Starwood’s Barry Sternlicht. In a regulatory filing the real estate investment trust said that as of March 31 the company’s portfolio contained 1,644 foreclosed homes spread across seven states in the United States. These properties had been acquired for an amount of $200 million. In addition to these, the company has also acquisitioned 1,318 non-performing residential whose aggregate cost works out to $173.1 million said the filing. At the end of March, the unpaid balance on these loans was $363.2 million.

Rentals demand on the rise

The Greenwich-Connecticut-based Starwood said that there has been no formal evaluation of any transaction by its board and that there is no confirmation of the assets that are expected to be included, the terms, timing completion or actual structure of any transaction. A large number of people had lost their homes to foreclosures and the demands for rentals have been on the rise. By buying-up single-family homes, real estate investors automatically capitalize on these demands. Apart from the foreclosure reasons a large number of people also just prefer to rent an apartment rather than own one while some others do not qualify for mortgages.

The largest private equity firm in the, New York-based The Blackstone Group L.P (NYSE:BX) (Current: $20.39, Up by 0.59%) has invested over $3.5 billion in buying-out single family rentals. Tom Barrack’s Colony Capital LLC which is based in Santa Monica, California has raised an amount of $2.2 million. Starwood is also involved in commercial mortgage-backed securities investments and it originates commercial-property loans as well.