(Bloomberg)—A Starwood Capital Group affiliate is in advanced talks to provide fresh financing to TPG RE Finance Trust Inc., the mortgage real estate investment trust that’s warned it may not have sufficient liquidity to meet obligations and sustain operations.
Starwood’s proposal, details of which couldn’t immediately be learned, is currently favored by the TPG-managed REIT ahead of alternatives presented by firms including Oxford Properties Group Inc. and Neuberger Berman’s Almanac Realty Investors LLC, said people with knowledge of the matter. If a financing agreement is reached, it may be announced as soon as this month, said the people, who asked not to be identified because the talks are private.
Representatives for Starwood and TPG declined to comment.
In TPG RE’s going-concern warning, the Greta Guggenheim-led company said that, as a result of extreme short-term volatility and negative pressure in the financial markets, it was “forced to sell certain of our assets at an inopportune time” to meet margin calls. The REIT also signaled that the shutdown caused by the coronavirus pandemic could, for example, drive at least nine hotel loans into default.
As of March 31, TPG RE’s loan investment portfolio was made up of 65 first mortgages and one mezzanine loan with total commitments of $5.8 billion, filings show.
TPG RE’s stock has sunk roughly 70% this year to less than $6 a share, leaving the company with a market value of about $460 million. Analysts have reduced their 12-month price targets on the stock, with JPMorgan Chase & Co. recently slicing its projection to $7.50 from $20.50, data compiled by Bloomberg show.
To contact the reporter on this story: Gillian Tan in New York at [email protected].
To contact the editors responsible for this story: Alan Goldstein at [email protected]
Daniel Taub, Steve Dickson
© 2020 Bloomberg L.P.