Starwood Property to sell $500 million three-, five-year convertibles

By Susanna Moon and Rebecca Melvin

Chicago, Oct. 2 – Starwood Property Trust, Inc. is offering $500 million principal amount of two series of convertible senior notes, including notes maturing on Oct. 15, 2017 and notes maturing Oct. 15, 2019, according to market sources.

No size was given on a per tranche basis.

The deal includes a 30-day greenshoe for another $75 million of notes.

The 2017 notes were talked to yield 3.25% to 3.75%, and the 2019 notes were talked to yield 4% to 4.5%, both with an initial conversion premium of 10% to 15%, according to a syndicate source.

The notes are non-callable and were being sold via joint bookrunner Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Wells Fargo Securities LLC.

Proceeds will be used to originate and purchase additional commercial mortgage loans and other target assets and investments. Proceeds also may be used for other general corporate purposes, including the payment of liabilities and other working capital needs.

Starwood is a Greenwich, Conn.-based commercial real estate finance company.

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