Starwood Property Trust Stock Down 3.2% on Upsized Debt Offering

Starwood Property Trust (STWD) shares fell 3.2% after announcing a $550 million private offering of unsecured senior notes with a 5.750% interest rate. The increased debt load raises financial obligations and future interest expenses, impacting profitability. The funds will be used to finance or refinance green and social projects, but the market reacted negatively due to the increased debt load. The stock has only had 4 moves greater than 5% over the last year, indicating the market considers this news meaningful.

Starwood Property Trust (STWD) shares fell 3.2% in the afternoon session on September 12, 2025, following the company's announcement of a $550 million private offering of unsecured senior notes. The debt, which carries a 5.750% interest rate and is due in 2031, was increased from an initially planned $500 million. The increased debt load raises financial obligations and future interest expenses, potentially impacting the company's profitability Why Starwood Property Trust (STWD) Stock Is Down Today^[1].

Investors reacted negatively to the news, as the additional debt increases the company's financial obligations and future interest expenses. While Starwood stated that the funds would be used to finance or refinance green and social projects, the market appeared more focused on the risks associated with the increased debt load Why Starwood Property Trust (STWD) Stock Is Down Today^[1].

The stock market's overreaction to news, such as this, can present good opportunities to buy high-quality stocks. However, the market's immediate reaction might not reflect the company's long-term prospects. Starwood Property Trust's shares have only had 4 moves greater than 5% over the last year, indicating that the market considers this news meaningful Why Starwood Property Trust (STWD) Stock Is Down Today^[1].

The biggest move in the past year was a 4.5% drop three months ago when the company priced a public offering of 25.5 million shares of its common stock. The offering is expected to raise approximately $508 million in gross proceeds, which could increase to around $584 million if the underwriters exercise their option to purchase an additional 3.8 million shares. This move often leads to a temporary drop in a stock's price because the issuance of new shares can dilute the ownership stake of existing shareholders Why Starwood Property Trust (STWD) Stock Is Down Today^[1].

Starwood intends to use the net proceeds from the offering to partially fund its recently announced $2.2 billion acquisition of Fundamental Income Properties, a net lease real estate platform. The remainder of the acquisition will be funded through a combination of cash and debt. While the acquisition is expected to be accretive to distributable earnings, the immediate impact of the stock offering is shareholder dilution Why Starwood Property Trust (STWD) Stock Is Down Today^[1].

Starwood Property Trust is up 1.2% since the beginning of the year, and at $19.27 per share, it is trading close to its 52-week high of $20.97 from July 2025. Investors who bought $1,000 worth of Starwood Property Trust's shares 5 years ago would now be looking at an investment worth $1,277 Why Starwood Property Trust (STWD) Stock Is Down Today^[1].