GREENWICH, Conn., Oct. 16, 2012 /PRNewswire/ -- Starwood Property Trust (NYSE: STWD) and Starwood Capital Group (on behalf of Starwood Distressed Opportunity Fund IX) today announced the co-origination of a $475 million first mortgage loan and mezzanine loan for the acquisition and redevelopment of a 10-story retail building located at 701 Seventh Avenue in Midtown Manhattan. The building is situated on the northeast corner of the famed Times Square bow tie, one of the world's busiest shopping stretches with an estimated 500,000 visitors per day. The loan will have an initial funding of $375 million with $100 million of future funding for redevelopment costs and also contains an equity participation right for the lender. The primary sponsor is The Witkoff Group, a fully integrated real estate investment firm.
"This transaction is a prime example of our unique ability to provide and structure large, highly specialized loans on an expedited timetable that meets the needs of the borrowers while also completing our disciplined underwriting requirements" said Barry Sternlicht, Chief Executive Officer of Starwood Property Trust. "Our experienced team of professionals positioned us to provide a financing solution for The Witkoff Group and its equity partners while enabling Starwood Property Trust to meet or exceed our return targets."
The Witkoff Group, together with New Valley LLC, a subsidiary of Vector Group Ltd. (NYSE:VGR) and a subsidiary of Winthrop Realty Trust (NYSE:FUR), acquired the property from a non-institutional owner who successfully reassembled the site through a series of complex and lengthy negotiations with the property's existing tenants. Witkoff will implement a comprehensive redevelopment plan over the next 30 months which includes the demolition of the building's interior and its conversion into a new retail space with the bottom three quarters of the property dedicated to retail and the top one quarter dedicated to a food and beverage establishment.
"Our team worked side by side with The Witkoff Group and its partners to provide a flexible financing solution that enabled them to quickly move forward with the transaction," said Marcos Alvarado, Senior Vice President at Starwood Capital Group. "Times Square is an iconic destination and we are excited to facilitate a transaction that will allow the redevelopment of a marquee property in the area."
With 145,000 square feet of additional air rights, the redevelopment includes plans for ideal showroom retail space that may be occupied by one or more retailers and a platform to be built on top of the retail component capable of supporting a 31 story hotel tower and a new 120 foot tall, 22,000 square foot LED sign, which will be two times the size of all comparable new signs in the area and will provide substantial income to the property.
Manhattan's Times Square submarket is recognized as one of the most popular tourist destinations in the world and is home to some of the largest and most well-known global brands. A report issued by Cushman & Wakefield in late 2011 highlighted the Times Square bow tie region, running from West 42nd up to West 47th streets between Broadway and Seventh Avenue, as having the second highest asking rents in Manhattan, with an average asking rent of $2,100 per square foot.
About Starwood Property Trust, Inc.
Starwood Property Trust, Inc. is focused on originating, investing in, financing and managing commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-backed securities ("CMBS"), and other commercial real estate-related debt investments. Starwood Property Trust, Inc. also invests in residential mortgage-backed securities ("RMBS") and residential real estate owned, and may invest in non-performing loans, commercial properties subject to net leases and residential mortgage loans. The Company is externally managed and advised by SPT Management, LLC, an affiliate of Starwood Capital Group, and has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.
About Starwood Capital Group
Starwood Capital Group is a private, U.S.-based investment firm with a core focus on global real estate. Since the group's inception in 1991, the firm has raised nearly $16 billion of equity capital and, through its various funds, has invested $13 billion representing nearly $35 billion in assets. Starwood Capital Group currently has over $21 billion of assets under management. Starwood Capital Group maintains offices in Greenwich, Atlanta, San Francisco, Washington, D.C., Los Angeles and Chicago, and affiliated offices in London, Luxembourg, Paris, Mumbai and Sao Paulo. Starwood Capital Group has invested in nearly every class of real estate on a global basis, including office, retail, residential, senior housing, golf, hotels, resorts and industrial assets. Starwood Capital Group and its affiliates have successfully executed an investment strategy that includes building enterprises around core real estate portfolios in both the private and public markets. Additional information about Starwood Capital can be found at www.starwoodcapital.com.
About the The Witkoff Group
The Witkoff Group is a fully integrated real estate investment firm that owns a diverse portfolio of real estate in select U. S. markets. The company specializes in identifying and acquiring undervalued properties in key central business district locations as well as assets with strong repositioning potential in newly emerging markets. These strategies have guided the company's acquisition and management activities.
Jason Chudoba, ICR on behalf of Starwood Property Trust
SOURCE Starwood Property Trust, Inc.