Monday February 11, 2013
by Genia Turanova, editor Leeb Income Performance
We are adding to our exposure in the mortgage REIT sector, which overall continues to hold promise of high dividends as the housing market improves.
Starwood Property Trust (
STWD), our new pick, focuses primarily on originating, investing in, financing and managing commercial mortgage loans and other commercial and residential real estate-related debt investments.
With a portfolio concentrated mostly in mortgage securities issued by federally chartered corporations and U.S. government agencies, Starwood Property Trust’s investment portfolio focuses on commercial real estate mortgages.
Also Starwood has lately beaten analysts’ estimates. Plus, while Starwood hasn’t increased its dividend (excepting a special one-time 10 cent per share payout), the company also did not have to resort to dividend cuts.
Starwood is the largest commercial mortgage REIT in the U.S. with approximately 230 employees. But its investments are not strictly limited to the U.S.
The company has eleven offices in six countries with $3.1 billion of diversified gross core target investments. Its size and investment diversification helps both reduce credit and rollover risk while facilitating share liquidity.
The company has a strong 20-year track record and, presented with a wealth of opportunities in the commercial real estate sector here in the U.S. and Europe, is expected to grow at a better than 4.5 percent rate annually.
Currency risk may be one reason for the caution on Starwood’s European positions, but that risk is counterbalanced by significant opportunity overseas. Yielding 7.3 percent, Starwood joins our High-Yield Income portfolio this issue.
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