Starwood Capital Recapitalizing TPG REIT in $325M Deal

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Starwood Capital Group will provide up to $325 million to recapitalize TPG Real Estate Finance Trust (TRTX), it was announced this morning. 

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“The new capital will provide TRTX with additional liquidity and flexibility to navigate the current economic environment,” Greta Guggenheim, CEO of TRTX, said in prepared remarks. “Starwood’s investment is a testament to the strength and quality of TRTX’s business and portfolio. Today’s announcement marks an important step in positioning TRTX for the future as we continue to grow the platform, serve our clients, and execute on our objective to deliver long-term value to shareholders.” 

The non-voting investment takes the form of preferred stock and detachable warrants to purchase TRTX stock, according to the announcement. Initial proceeds will be used to deleverage the REIT’s secured financing facilities, and for general corporate purposes.

TRTX has hit the headlines since the onset of COVID-19, with extreme market volatility forcing the nonbank lender to sell off roughly $1 billion in assets in order to meet intensifying margin calls. During its first quarter earnings call, Guggenheim described its liquidity issues as an ongoing concern that cast doubt as to whether the firm could continue to operate. The firm was also hit with a lawsuit last month, as reported by CO.

Bloomberg first reported earlier this month that Starwood was in advanced talks to provide financing to the TPG-managed REIT, and that its proposal was favored over competing bids presented by other firms, such as Almanac Realty Investors, Mack Real Estate and Oxford Properties Group.

“We are pleased to partner with TPG RE Finance Trust to provide the company with liquidity to navigate this unprecedented period,” Ethan Bing, managing director of Starwood Capital, said.  “With this recapitalization and through our new position as a TRTX stakeholder, we firmly believe the company is positioned for sustained long-term success and will generate meaningful value for its shareholders and the partners of our fund moving forward.”