GREENWICH, Conn. (AP) -- Starwood Property and Starwood Capital will spend $1.05 billion in cash to acquire LNR Property LLC, the former investment wing of the homebuilder Lennar.
LNR, which was spun off by Lennar in 1997, specializes in distressed securities, but invests and manages real estate as well. The company has more than 550 employees in 12 offices throughout the U.S. and Europe. It's currently owned by affiliates of Aozora Bank Ltd., iStar Financial and Vornado Realty Trust.
Under the terms of the deal, Starwood Property Trust Inc., a real estate investment trust, will pay $856 million for the majority of LNR's assets including its loan servicing operations in U.S. and Europe, most of its U.S. loans and investments and 50 percent of LNR's stake in the website Auction.com.
Starwood Capital Group will pay $197 million for LNR's U.S. commercial property group and the other half of LNR's stake in Auction.com.
Starwood Property Trust said the acquisition diversifies its revenue sources and adds significant scale to its operating platform. The company said it expects the deal to boost both its earnings and cash flow in 2013 and 2014.
If the acquisition receives, antitrust and other regulatory approvals, it is expected to close during the second quarter of 2013.