The Real Deal Miami

Starwood expands outside real estate with GE energy finance acquisition

The $2.6B buy shows the firm is eager to diversify its holdings
August 08, 2018 12:30PM

Starwood Property Trust, led by Barry Sternlicht, buys an an energy finance unit of GE (Credit: GE.com)

Starwood Property Trust plans to buy a GE energy-finance business for $2.56 billion, part of the firm’s plan to diversify outside its massive real estate holdings that include hotels, resorts and apartments.

The Miami-based real estate investment trust is an affiliate of Starwood Capital. The latest purchase includes a portfolio of $400 million in unfunded loan commitments and 51 senior loans secured by energy infrastructure assets, according to a press release.

Barry Sternlicht, chairman and CEO of Starwood Capital Group, told Bloomberg he wants to make sure the company’s performance isn’t tied too closely to the real estate cycle, where he saw some mortgage REITs fail during the financial crisis.

Sternlicht said the majority of the new business segment’s portfolio is backed by contracts with investment grade companies.

In 2013, Starwood Property acquired LNR, the largest commercial special servicer in the U.S., in a $1 billion deal. More than a year ago, Starwood Capital moved its corporate headquarters to 1601 Washington Avenue in Miami Beach, where LNR had long maintained offices. In May, it said it would move headquarters again, but remain in the area. [Bloomberg] — Keith Larsen