Starwood Splashes into MOBs with $838 Million Portfolio Grab
Starwood Property Trust, Inc. (NYSE: STWD), the largest commercial mortgage real estate investment trust (REIT) in the country, has made an $838 million play to officially enter the medical office space by early 2017.
On Sept. 30, SPT Ivey Holdings, LLC—a newly formed, indirect, wholly owned subsidiary of Greenwich, Connecticut-based Starwood—entered into a purchase and sale agreement to acquire a stabilized portfolio of 38 medical office buildings across the United States for about $837.9 million, according to a Dec. 5 filing with the U.S. Securities and Exchange Commission (SEC).
The 38 buildings comprise about 2.2 million square feet and are mainly affiliated with major hospitals, or are located on or adjacent to major hospital campuses. The portfolio is currently 95% occupied and carries a weighted average remaining lease term of seven years, the SEC filing says.
The acquisition is expected to close in one or more stages in December 2016 and/or early 2017, and it is subject to several closing conditions. Starwood funded a $40 million deposit related to this acquisition in October 2016.
Additionally, Starwood is currently in negotiations for SPT Ivey Holdings LLC and its property-owning subsidiaries to enter into a credit agreement for an up to $579 million, five-year secured term loan facility. If Starwood enters into the acquisition credit agreement, it plans to utilize the proceeds of the loans thereunder mainly to buy the medical office portfolio, to pay transaction fees incurred in connection with the medical office portfolio, and to finance tenant improvements and leasing commissions associated with the medical office portfolio, the SEC filing notes.
Written by Mary Kate Nelson