Starwood Property Trust,Inc. (NYSE:STWD) Files An 8-K Unregistered Sales of Equity SecuritiesItem 3.02. Unregistered Sale of Equity Securities.
As previously disclosed in Starwood Property Trust,Inc.’s (the “Company’s”) Current Report on Form8-K filed on January4, 2018, in December2017, the Company entered into a definitive agreement to acquire a portfolio of institutional-quality affordable multifamily properties located in Florida (the “DownREIT Portfolio”). The DownREIT Portfolio is comprised of an aggregate of 27 properties (excluding one property subsequently removed from the transaction) with 6,109 units, and is being acquired for approximately $595 million with a combination of the issuance of ClassA Units (as defined below) by SPT Dolphin Intermediate LLC (“SPT Dolphin”), a recently-formed subsidiary of the Company, cash and debt financing. The first, second and third phases of the transaction, representing an aggregate of 20 properties with 4,543 units, closed on December28, 2017, February15, 2018 and February27, 2018, respectively, as disclosed in the Company’s Current Reports on Form8-K filed on January4, 2018, February22, 2018 and March2, 2018.
The fourth phase of the transaction, representing six properties with 1,254 units, closed on March28, 2018. In connection with the closing of the fourth phase, on March28, 2018, among other consideration, the third-party contributors of the properties and certain direct and indirect owners thereof (the “ClassA Unitholders”) received 1,457,831 ClassA units of limited liability company interests in SPT Dolphin (the “ClassA Units”), and the right to receive an additional 333,137 ClassA Units if certain contingent events occur, with a value as of the closing date of $20.77600005 per ClassA Unit (which value was determined based on the average of the daily closing prices of the Company’s common stock over the 20 consecutive trading days ending on the fifth business day before the closing date).
Subsequent to a lock-up period, ClassA Unitholders will have the right to cause SPT Dolphin to redeem their ClassA Units for cash (based on the then-current price of a share of the Company’s common stock), or, in the sole discretion of SPT Dolphin’s managing member (which is a wholly-owned subsidiary of the Company), shares of the Company’s common stock on a one-for-one basis, subject to certain anti-dilution adjustments. In connection with the issuance of the ClassA Units, the ClassA Unitholders (and their permissible assignees and transferees) received certain registration rights with respect to the shares of the Company’s common stock, if any, issued upon the redemption of ClassA Units.
The Company expects to complete the remaining phase of the transaction, representing one property with 312 units, by the end of the second quarter of 2018; however, there can be no assurance that the remaining phase will close within the contemplated timeframe or at all.
The ClassA Units have been issued in reliance on the exemption from registration provided by Section4(a)(2)of the Securities Act of 1933.