Boyd Fellows, president and managing director with Starwood Property Trust Inc. (NYSE: STWD), spoke with REIT.com for a video interview at REITWorld 2012: NAREIT's Annual Convention for All Things REIT at the Manchester Grand Hyatt in San Diego.
Starwood Property Trust specializes in originating, investing in, financing and managing commercial mortgage loans and other commercial and residential real estate-related debt investments. The REIT is externally managed and advised by SPT Management LLC, an affiliate of Starwood Capital Group.
Fellows said the real estate capital markets are coming back strong, particularly in regards to liquidity in the CMBS area, he said.
"Banks are coming back in their recourse base lending and in the transitional space," he said.
In looking back and into the future, Fellows compared current lending levels to the previous year and discussed his outlook for 2013 lending. He said in 2011 Starwood invested a little more than $2 billion dollars.
"At this point in [November] 2012, we are already at that number and, depending on how much closes throughout the rest of the year, we're going to be over $2 billion by a nice amount," he said. "By 2013, at the rate we are going now, our run rate will have us well north of $2 billion. Our pipeline today of transactions we consider to be 50 percent more likely to occur is roughly twice what it was six months ago."
Fellows said and its scale, in particular, has positioned Starwood to be able to complete large and complex transactions.
When it comes to trends in the lending market, Fellows said making loans on large transitional assets have given Starwood an advantage. The assets can range from office buildings that have suffered recent vacancies to ground-up developments in vibrant markets.
"Both of those areas play to our strength," he said. "A big part of our business model is that we are willing to principle the entire loan."