The ratings on specialty finance company Starwood Property Trust Inc. reflect its exposure to subordinated commercial real estate (CRE) loans and securities, its reliance on secured funding lines with potential margin calls, and its relatively short operating history. The company's low leverage, strong earnings, and the conservative loan-to-value ratios of its loans help mitigate these risks. Founded in 2009, Starwood is a CRE lender structured as a real estate investment trust (REIT). An affiliate of Starwood Capital Group (SCG; not rated), a privately held CRE investor, manages Starwood. The company also owns LNR Property LLC, a CRE investment and special servicer firm. Starwood's cost-sensitive approach to financing has led to a heavy dependence secured financing arrangements, decreasing its available liquidity
