Starwood Property Trust: High Yield, Growing Commercial REIT Player

July 6, 2011

A Boston Portfolio Manager recommended Starwood Property Trust (NYSE: STWD, $20.73) as a Buy.  STWD is the largest commercial mortgage REIT in the US, quickly gaining from the void in CRE financing with many traditional sources exiting the space.  The company was spun off from Starwood Capital in 2009 and is led by a management team with a great track record of reading the real estate market.  STWD has a well-diversified portfolio of loans with very limited exposure to the residential market, conservative LTV and yielding 12.5% on average.  The company has raised the dividend every quarter and looks set to keep increasing it.  The name is a play on the recovery in CRE, but investors are compensated to wait with an 8.5% yield.

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