WORLD PROPERTY CHANNEL ®

(NEW YORK, NY) -- Entrepreneur Barry Sternlicht is on a roll.

His four-month-old Starwood Property Trust Inc. has raised $810 million in an initial public offering and may top Mead Johnson Nutrition Co.'s record $828M raised in February if underwriters to the Starwood REIT buy another 6.075 million shares this week.

Barry Sternlicht

That would make Sternlicht's IPO the largest this year and one of the largest in the last four years, according to Wall Street analysts.

The underwriters are led by Deutsche Bank Securities, Bank of America-Merrill Lynch and Citi.

Starwood Properties, a unit of private equity firm Starwood Capital Group, began trading Wednesday on the New York Stock Exchange under the symbol STWD.

Starwood Capital Group, controlled by Sternlicht, has previously formed companies such as Starwood Hotels & Resorts Worldwide and property finance company iStar Financial Inc.

Sternlicht launched his private equity firm in May to snap up bargains he feels will surface shortly among an avalanche of financially distressed commercial real estate assets.

He is also banking on the federal government's promise of low-rate financing to investors willing to buy existing mortgage debt held by banks. He had originally planned an IPO of $500 million.

Sternlicht is confident enough in the offering to put his firm's own money on the line. SPT Investment, LLC, an affiliate of Starwood Capital, bought one million shares of the REIT in a private placement at the IPO price of $20 a share, according to the IPO prospectus.

Sternlicht plans to invest the IPO proceeds in commercial mortgage-backed securities sold under the federal government's public-private investment program, or PPIP.

The PPIP program would create a public-private partnership to take up to $1 trillion of troubled assets off bank books and unfreeze credit markets.

Sternlicht is certain his venture will prosper.  Here is what he told the Securities and Exchange Commission in an S-1 regulatory filing in June when he registered Starwood Properties to go public:

"We believe that the next five years will be one of the most attractive real estate investment periods in the past 50 years.

"A void in the debt and equity capital available for investing in real estate has been created as many banks, insurance companies, finance companies and fund managers face insolvency or have determined to reduce or discontinue investment in debt or equity related to real estate.

"We believe that there will be a significant supply of distressed investment opportunities from sellers and equity sponsors of real estate

"We believe that well-funded managers will have the opportunity to acquire real estate debt positions and assets with limited competition and at prices deeply discounted to replacement cost."

Another big-name investor, Phillip F. Blumberg, chairman of Blumberg Capital Partners, recently estimated that between 2010 and 2013 roughly $1 trillion in commercial real estate loans will mature and need to be refinanced.

Market sources tell Real Estate Channel Starwood is among at least two dozen private-equity firms planning to form publicly traded REITs to buy or originate debt used to finance offices, retail centers and other real estate.

Other recent offerings include those by Apollo Management LP and Colony Capital LLC.

PennyMac Mortgage Investment Trust, established by former executives of Countrywide Financial Corp., has raised $335 million by selling shares, less than half of the $750 million the company hoped to get when it filed its IPO plan in May.

In initial trading Tuesday, Aug. 11, Starwood Property sold 40.5 million shares, raising $810 million. Starwood had increased the number of shares to be sold in the IPO by 35 percent to 33.75 million.

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