Barry Sternlicht, a former hotelier, is planning to check in to the distressed-mortgage market.
Starwood Property Trust Inc., a Greenwich, Conn., real estate investment trust Sternlicht created, filed a prospectus Friday for an initial public offering. The filing said Starwood would acquire commercial and residential loans and mortgage-backed securities from a variety of sources, including national and regional banks and the Federal Deposit Insurance Corp.
The REIT would finance some of its purchases using the Treasury Department's Public-Private Investment Program and the Federal Reserve Board's Term Asset-Backed Securities Loan Facility.
"Due to the dramatic repricing of real estate assets thus far and the continuing uncertainty in the direction of the real estate markets, a void in the debt and equity capital available for investing in real estate has been created," the prospectus says. "The dislocations in the real estate market have already caused and we believe will continue to cause an 'overcorrection' in the repricing of real estate assets."
The REIT would be externally managed by SPT Management LLC, which is controlled by Sternlicht and is advised by Starwood Capital Group, his private-equity firm.
Sternlicht is the REIT's chairman, chief executive officer and president. He is best known as the founder and former chairman and CEO of Starwood Hotels and Resorts Worldwide Inc., which runs the Sheraton, Westin, W and St. Regis chains.
Though most of the investment opportunities identified in the prospectus are in commercial real estate debt, it also said, "Given the favorable long-term demographics trends and the recent significant U.S. government initiatives … we expect the housing market to be the first of all major real estate asset classes to recover."
In the near term, the REIT said, it can buy distressed home loans at "significant discounts to their unpaid principal balances."
Another company hoping to clean up from the housing mess, Private National Mortgage Acceptance Co. LLC, filed an IPO prospectus last month for a REIT it runs.
The Starwood REIT listed $500 million as the targeted proceeds of its offer but said the figure was just for the purpose of calculating the registration fee.
In the 1990s Starwood Capital created iStar Financial Inc., a REIT that provides financing for commercial properties.