Starwood unit ups size of issue ahead of IPO

NEW YORK (Reuters) - Starwood Property Trust Inc (STWD.N) increased the size of its planned initial public offering by 35 percent, according to a regulatory filing on Tuesday.

Starwood Property Trust, an affiliate of private equity firm Starwood Capital Group, said in a filing with the U.S. Securities and Exchange Commission that it plans to sell 33.75 million shares in its IPO, scheduled to price Tuesday evening, up from 25 million shares.

Starwood Property Trust estimates shares will price for $20, meaning the IPO could raise about $675 million.

Starwood Properties Trust Inc, which was created in May and filed for the IPO in June, plans to invest in commercial mortgage-backed securities sold under the U.S. 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.

In its prospectus, Starwood said "there will be a significant supply of distressed investment opportunities from sellers" over the next five years."

Starwood Capital Group Global, controlled by Barry Sternlicht, has previously formed companies such as Starwood Hotels & Resorts Worldwide (HOT.N) and property finance company iStar Financial Inc (SFI.N).

Starwood intends to elect and qualify to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, this year.

The IPO is to be underwritten by Deutsche Bank Securities (DBKGn.DE) and BofA Merrill Lynch (BAC.N) and Citi (C.N).

(Reporting by Phil Wahba)