Starwood Capital Group, led by billionaire Barry Sternlicht, secured a $930M CMBS loan to refinance 8.2M SF worth of industrial space across four states.
The floating-rate, interest-only loan to Starwood REIT has a two-year term with three one-year extension options. It will cover a 54-property portfolio, with the debt co-originated by Goldman Sachs, Barclays, Morgan Stanley, Natixis and UBS, and has an expected closing date around Sept. 26, according to a presale ratings analysis from KBRA.
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The loan’s initial term carries an interest rate set at the Secured Overnight Financing Rate plus 200 basis points. It was underwritten at a 4.8% capitalization rate with a 57.1% loan-to-value ratio. KBRA assigned ratings ranging from AAA on the Class A tranche to BB on the Class E tranche.
More than 95% of the portfolio is split between five markets, with 29% of its industrial space in Reno, Nevada, 28% in Phoenix, 21% in Denver, 12% in Baltimore and 5% in Las Vegas. Half of the portfolio is classified as light industrial, 33% as warehouse space and 16% as advanced manufacturing.
The single-borrower deal covers 230 tenants, with no occupier taking up more than 4% of the portfolio’s space. Sierra Nevada Corp. occupies 175K SF and is the portfolio’s largest tenant in terms of rent exposure.
Other notable tenants in the portfolio include Amazon, which is taking up 275K SF of space; UPS, which occupies 265K SF; and FedEx, which is in 109K SF of the portfolio.
The portfolio was 88% leased at the start of September, with rents weighted nearly 20% below the appraiser’s weighted average market rent for the portfolio.
“The below market rents may better position the properties to retain tenants as leases roll and/or provide the potential for increased revenue as scheduled lease expirations occur,” the KBRA analysts wrote in their report.
The new CMBS loan is expected to be used to refinance $1B in existing debt, fund a $1.6M reserve for outstanding landlord obligations, pay closing costs and return $5.2M to Starwood REIT.
CMBS loan issuance in the first half of 2025 was at a post-Global Financial Crisis high of $59B, fueled by single-asset, single-borrower deals like Starwood’s portfolio refinancing.
