Starwood Property Trust Raises $508M in Stock Offering.

Starwood Property Trust has priced a $508M stock offering, selling 25.5M shares. Underwriters have an option to buy an additional 3.825M shares within 30 days. Proceeds will be used to support the company's growth and investment activities in real estate and related sectors. The offering is expected to close on February 28.

Starwood Property Trust (NYSE: STWD) has priced a significant public offering of 25.5 million shares of common stock, generating approximately $508 million in gross proceeds. The underwriters have a 30-day option to purchase an additional 3.825 million shares, which could increase total proceeds to $584 million [1].

The primary purpose of this capital raise is to fund the acquisition of Fundamental Income Properties, a transaction STWD recently announced. This strategic move signals STWD's intention to expand its real estate investment portfolio, though specific details about Fundamental Income Properties' assets aren't provided in the release [2].

For existing shareholders, this offering represents a 9.3% dilution to the current outstanding share count of approximately 274 million shares. While dilution is a near-term negative, the acquisition could potentially strengthen STWD's asset base and income generation capabilities if successfully integrated [1].

The company has included flexibility in its use of proceeds, noting it may deploy capital toward originating commercial mortgage loans or repaying existing debt under its repurchase facilities if the acquisition doesn't close. This indicates prudent contingency planning [1].

BofA Securities and Wells Fargo Securities are serving as the offering's underwriters, with settlement expected on February 28, 2025. The stock issuance is being conducted under STWD's existing shelf registration statement, suggesting the company had anticipated potential capital needs and prepared accordingly [1].

References:
[1] https://www.stocktitan.net/news/STWD/starwood-property-trust-announces-pricing-of-common-stock-gnuy7c3yhoxx.html
[2] https://seekingalpha.com/news/4468174-starwood-property-trust-prices-508m-stock-offering