Barry Sternlicht’s Starwood Capital Group LLC agreed to buy LNR Property LLC, the biggest manager of troubled U.S. commercial real estate loans, for more than $1 billion, according to a person with knowledge of the deal.
The deal probably will be completed by the end of the year, said the person, who asked not to be identified because the agreement hasn’t been announced. Miami Beach, Florida-based LNR, once a unit of homebuilder Lennar Corp. (LEN:US), is one of three major U.S. special servicers, which represent the interests of holders of commercial mortgage-backed securities.
The purchase would give Greenwich, Connecticut-based Starwood insight into more than 1,100 delinquent securitized mortgages across the U.S. with a total balance of $19.6 billion, according to data compiled by Bloomberg. In addition to special servicing, LNR also offers property-investment management, asset financing and land purchasing and development services, according to its website.
A partnership that includes Vornado Realty Trust (VNO:US), Cerberus Capital Management LP, iStar Financial Inc. (SFI:US) and Oaktree Capital Group LLC (OAK:US) gained control of LNR in July 2010. Their recapitalization of LNR came at a time when the commercial real estate industry was suffering from a more than 40 percent plunge in property values that triggered a flood of delinquencies after credit markets froze in late 2008.
Tom Johnson, a Starwood spokesman, declined to comment. Tobin Cobb, LNR’s co-chief executive officer, didn’t return a telephone call.
The Wall Street Journal reported the agreement late yesterday.
The other large U.S. special servicers are CWCapital Asset Management and C-III Asset Management LLC. CWCapital is owned by affiliates of Fortress Investment Group LLC, and C-III is controlled by Andrew Farkas’s Island Capital Group LLC.
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