Facing a cash crunch, TPG Real Estate Finance Trust has secured a major infusion a little over two weeks after it sold off nearly $1 billion of its commercial real estate debt.
The real estate investment trust announced that Starwood Capital is taking a stake in the company, providing it with up to $325 million in new capital.
Greta Guggenheim, TPG RE Finance CEO, said the investment will provide the firm with “with additional liquidity and flexibility to navigate the current economic environment.” Under the agreement, Starwood will hold preferred stock and warrants.
Earlier this month, TPG RE Finance announced it was selling off a billion dollars in CRE debt to fight off margin calls, amid the coronavirus crisis. That disclosure came at its first quarter earnings in which the company said liquidity constraints raised substantial doubt about its ability to continue “as a going concern.”
Real estate investment trusts like TPG RE Finance, hedge funds and private equity firms that have issued billions in construction loans, mortgages and bonds backed by property debt are now under increasing pressure. Businesses that had been shuttered by the pandemic are beginning to open, but mortgage payments are coming in late or being skipped altogether.
Starwood and its boss, Barry Sternlicht, have been on the lookout for investment opportunities, including the decimated hotel sector.
“We love distress markets from a buyer’s standpoint,” Sternlicht told The Real Deal in a recent interview. “I like markets like this where you have to hustle. Hopefully, we’re big enough now to help people survive, too. They can come to us, and we can give them capital.”
Contact Sasha Jones at Sasha.Jones@therealdeal.com