Starwood Property Trust Inc. has agreed to purchase GE Capital’s Energy Financial Services’ Project Finance Debt Business and its loan portfolio for $2.56 bilion. The figure includes $400 million of unfunded loan commitments.
The acquisition includes a vertically integrated platform and 21 full-time employees across several departments, including loan underwriting, origination, asset management and capital markets. Denise Persau Tait, Global Head of Project Finance Debt Business, will continue to lead the team.
“We have a great team of experts with tremendous execution capabilities and a proven ability to deliver results,” said Tait in a press release. “We are confident that this agreement will ensure the continued stability of our business and offer significant growth potential. We are excited for the opportunity to grow and to continue to serve our customers and the industry as part of the team at Starwood.”
The portfolio of loans includes a 97% floating rate and 51% senior loans that are secured by energy infrastructure real assets.
The sale of its debt financing unit, which allows businesses to raise funds by creating new debt, is expected to close in the third quarter.
Starwood had been looming for ways to diversify its portfolio for more than seven years. GE will take home about $2.16 billion in proceeds from the sale of its energy-finance unit.
Starwood Property Trust is the largest commercial mortgage REIT in the United States, with $5.59 billion in market cpaitalization. Energy finance will be the company’s new “investment cylinder,” which has been focused on financing and managing commercial mortgage loans, orginating and other equity and commercial real estate debt.
Starwood has plans to expand GE’s product line.
“The sale of the Project Finance Debt Business is aligned to GE Capital’s overall balance sheet reduction efforts and reflects progress against our strategy announced in January 2018,” said Alec Burger, President of GE Capital, in the press release. “The business is highly complementary to the Starwood Property Trust platform, which has deployed over $44 billion of capital since its inception in 2009 and has vast lending experience across diversified assets and geographies.”
The firm plans to finance the acquisition through a new secured loan facility from MUFG. The company will receive an initial advance of $1.7 billion.
The move is part of GE’s plan to condense itslef into a smaller, focused business. The company has been divesting billions of dollars in assets from its GE Capital unit since 2015 in order to shift its focus to power plants, jet engines and renewable energy.
In June, GE said it would sell stake in Baker Hughes and separate its healthcare unit as part of its transformation.