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Published: 2022-05-04 06:51:57 ET
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EX-99.1 2 stwd_pressrelease-q12022.htm EX-99.1 Document
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Exhibit 99.1
For Immediate Release
Starwood Property Trust Reports Results for
Quarter Ended March 31, 2022
– Quarterly GAAP Earnings of $1.02 and Distributable Earnings (DE) of $0.76 per Diluted Share –
– $4.4 Billion of Investment Activity, Including $1.9 Billion in Commercial Lending –
– Multifamily Becomes the Largest Property Type at 32% of CRE Loan Portfolio –
– Generated Gain of $87 Million GAAP and $85 Million DE on Sale of Industrial Asset –
– S&P Corporate Credit Rating Upgraded to BB/Outlook Stable –
– Paid Dividend of $0.48 per Share –
GREENWICH, Conn., May 4, 2022 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2022. The Company’s first quarter 2022 GAAP net income was $324.6 million, or $1.02 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $240.0 million, or $0.76 per diluted share. GAAP net income reflects $173.5 million, or $0.55 per diluted share, of unrealized increases in fair value of the Woodstar Fund's affordable housing investments, net of non-controlling interests, and an $86.6 million, or $0.27 per diluted share, gain on sale of a distribution facility ($84.7 million, or $0.27 per share, in Distributable Earnings). The fair value of the Woodstar Fund’s investments is an estimate that is subject to future increases or decreases as property values are affected by, among other things, the availability of capital, occupancy rates, rental rates and interest and inflation rates.
“This quarter once again highlighted the strength of the Starwood platform and our ability to create value for our shareholders well beyond our core lending business, differentiating us from our peers. We experienced another increase in book value driven by a fair market value increase of $218 million in our affordable housing fund. Rising median income levels in Florida, which govern rents for this portfolio, are expected to drive further increases in net operating income in the future. In addition, we monetized a second industrial asset that we foreclosed on less than three years ago, taking back an $18 million loan, repositioning and re-leasing the property, and then selling it for $115 million,” stated Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

“We have taken advantage of market opportunities across cylinders, deploying over $18 billion of capital during the last 12 months. Following our two most productive quarters in our 13-year history, in which 47% of our commercial lending was on multifamily assets, our multifamily loan portfolio increased to $4.7 billion, more than 4x the balance entering COVID. Our low leverage, fortress balance sheet combined with our strong access to capital positions us to drive continued growth across our platform,” added Jeffrey DiModica, President of Starwood Property Trust.

Supplemental Schedules
The Company has published supplemental earnings schedules on its website in order to provide additional disclosure and financial information for the benefit of the Company’s stakeholders. Specifically, these materials can be found on the Company’s website in the Investor Relations section under “Quarterly Results” at www.starwoodpropertytrust.com.
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Webcast and Conference Call Information
The Company will host a live webcast and conference call on Wednesday, May 4, 2022, at 10:00 a.m. Eastern Time.  To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. The webcast is available at www.starwoodpropertytrust.com in the Investor Relations section of the website. The Company encourages use of the webcast due to potential extended wait times to access the conference call via dial-in. 
To Participate via Telephone Conference Call:
Dial in at least 15 minutes prior to start time.
Domestic: 1-877-407-9039
International: 1-201-689-8470

Conference Call Playback:
Domestic: 1-844-512-2921
International: 1-412-317-6671
Passcode: 13728386
The playback can be accessed through May 11, 2022.
About Starwood Property Trust, Inc.
Starwood Property Trust (NYSE: STWD) is a leading diversified finance company with a core focus on the real estate and infrastructure sectors. An affiliate of global private investment firm Starwood Capital Group, the Company has successfully deployed over $87 billion of capital since inception and manages a portfolio of over $25 billion across debt and equity investments. Starwood Property Trust’s investment objective is to generate attractive and stable returns for shareholders, primarily through dividends, by leveraging a premiere global organization to identify and execute on the best risk adjusted returning investments across its target assets. Additional information can be found at www.starwoodpropertytrust.com.
Forward-Looking Statements
Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements are developed by combining currently available information with our beliefs and assumptions and are generally identified by the words “believe,” “expect,” “anticipate” and other similar expressions.  Although Starwood Property Trust, Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained.  Factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, the severity and duration of economic disruption caused by the COVID-19 global pandemic (including the emergence of new strains of the virus), completion of pending investments and financings, continued ability to acquire additional investments, competition within the finance and real estate industries, availability of financing and other risks detailed under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as well as other risks and uncertainties set forth from time to time in the Company’s reports filed with the SEC, including its Quarterly Report on Form 10-Q for the three months ended March 31, 2022.
In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained herein will in fact occur. Except to the extent required by applicable law or regulation, we undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, changes to future results over time or otherwise.

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Additional information can be found on the Company’s website at www.starwoodpropertytrust.com.

Contact:
Zachary Tanenbaum
Starwood Property Trust
Phone: 203-422-7788
Email: ztanenbaum@starwood.com
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the three months ended March 31, 2022
(Amounts in thousands)
Commercial and
Residential
Lending
Segment		Infrastructure
Lending
Segment		Property
Segment		Investing
and Servicing
Segment		CorporateSubtotalSecuritization
VIEs		Total
Revenues:
Interest income from loans$202,470 $26,983 $— $4,166 $— $233,619 $— $233,619 
Interest income from investment securities20,836 747 — 27,389 — 48,972 (34,989)13,983 
Servicing fees136 — — 14,071 — 14,207 (4,215)9,992 
Rental income1,686 — 22,365 7,529 — 31,580 — 31,580 
Other revenues52 68 50 4,654 — 4,824 (6)4,818 
Total revenues225,180 27,798 22,415 57,809 — 333,202 (39,210)293,992 
Costs and expenses:
Management fees277 — — — 55,018 55,295 — 55,295 
Interest expense68,602 11,930 6,081 6,210 33,842 126,665 (214)126,451 
General and administrative11,602 3,511 1,056 23,443 4,628 44,240 81 44,321 
Acquisition and investment pursuit costs499 1 5 (83)— 422 — 422 
Costs of rental operations519 — 5,001 3,770 — 9,290 — 9,290 
Depreciation and amortization294 105 8,219 3,029 — 11,647 — 11,647 
Credit loss reversal, net(3,299)(359)— — — (3,658)— (3,658)
Other expense— — 55 — — 55 — 55 
Total costs and expenses78,494 15,188 20,417 36,369 93,488 243,956 (133)243,823 
Other income (loss):
Change in net assets related to consolidated VIEs— — — — — — 26,749 26,749 
Change in fair value of servicing rights— — — (217)— (217)1,301 1,084 
Change in fair value of investment securities, net(2,105)— — (9,291)— (11,396)11,041 (355)
Change in fair value of mortgage loans, net(116,228)— — (9,555)— (125,783)— (125,783)
Income from affordable housing fund investments— — 234,041 — — 234,041 — 234,041 
(Loss) earnings from unconsolidated entities(1,340)345 — 151 — (844)(66)(910)
Gain on sale of investments and other assets, net86,610 — — 11,858 — 98,468 — 98,468 
Gain (loss) on derivative financial instruments, net118,395 632 17,546 27,863 (37,168)127,268 — 127,268 
Foreign currency (loss) gain, net(27,254)(28)1 — — (27,281)— (27,281)
Loss on extinguishment of debt(206)(469)— (148)— (823)— (823)
Other (loss) income, net(788)— — — — (788)25 (763)
Total other income (loss)57,084 480 251,588 20,661 (37,168)292,645 39,050 331,695 
Income (loss) before income taxes203,770 13,090 253,586 42,101 (130,656)381,891 (27)381,864 
Income tax benefit (provision)5,140 4 — (2,694)— 2,450 — 2,450 
Net income (loss)208,910 13,094 253,586 39,407 (130,656)384,341 (27)384,314 
Net income attributable to non-controlling interests(3)— (52,411)(7,328)— (59,742)27 (59,715)
Net income (loss) attributable to Starwood Property Trust, Inc.$208,907 $13,094 $201,175 $32,079 $(130,656)$324,599 $— $324,599 
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Definition of Distributable Earnings
Distributable Earnings, a non-GAAP financial measure, is used to compute the Company’s incentive fees to its external manager and is an appropriate supplemental disclosure for a mortgage REIT. For the Company’s purposes, Distributable Earnings is defined as GAAP net income (loss) excluding non-cash equity compensation expense, the incentive fee due to the Company’s external manager, acquisition costs from successful acquisitions, depreciation and amortization of real estate and associated intangibles and any unrealized gains, losses or other non-cash items recorded in net income for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income and, to the extent deducted from net income (loss), distributions payable with respect to equity securities of subsidiaries issued in exchange for properties or interests therein. The amount is adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash adjustments as determined by the Company’s external manager and approved by a majority of the Company’s independent directors.
Reconciliation of Net Income to Distributable Earnings
For the three months ended March 31, 2022
(Amounts in thousands except per share data)
Commercial and
Residential
Lending
Segment		Infrastructure
Lending
Segment		Property
Segment		Investing
and Servicing
Segment		CorporateTotal
Net income (loss) attributable to Starwood Property Trust, Inc.$208,907 $13,094 $201,175 $32,079 $(130,656)$324,599 
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units— — 4,691 — — 4,691 
Non-controlling interests attributable to unrealized gains/losses— — 44,902 2,556 — 47,458 
Non-cash equity compensation expense2,417 297 58 1,275 6,046 10,093 
Management incentive fee— — — — 28,955 28,955 
Acquisition and investment pursuit costs(298)— (78)(169)— (545)
Depreciation and amortization234 95 8,292 3,152 — 11,773 
Interest income adjustment for securities2,490 — — (1,708)— 782 
Extinguishment of debt, net— — — — (246)(246)
Other non-cash items3 — 456 122 — 581 
Reversal of GAAP unrealized (gains) / losses on:
Loans116,228 — — 9,555 — 125,783 
Credit loss reversal, net(3,299)(359)— — — (3,658)
Securities2,105 — — 9,291 — 11,396 
Woodstar Fund investments— — (234,041)— — (234,041)
Derivatives(121,172)(685)(19,170)(29,089)40,773 (129,343)
Foreign currency27,254 28 (1)— — 27,281 
(Earnings) loss from unconsolidated entities1,340 (345)— (151)— 844 
Sales of properties(86,610)— — (11,858)— (98,468)
Recognition of Distributable realized gains /
(losses) on:
Loans(36,208)— — (10,561)— (46,769)
Securities(2,768)— — 26 — (2,742)
Woodstar Fund investments— — 15,659 — — 15,659 
Derivatives36,893 — (35)24,639 — 61,497 
Foreign currency(178)112 1 — — (65)
Earnings (loss) from unconsolidated entities(1,239)345 — 470 — (424)
Sales of properties84,738 — — 177 — 84,915 
Distributable Earnings (Loss)$230,837 $12,582 $21,909 $29,806 $(55,128)$240,006 
Distributable Earnings (Loss) per Weighted Average Diluted Share$0.73 $0.04 $0.07 $0.09 $(0.17)$0.76 
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet by Segment
As of March 31, 2022
(Amounts in thousands)
Commercial and
Residential
Lending
Segment		Infrastructure
Lending
Segment		Property
Segment		Investing
and Servicing
Segment		CorporateSubtotalSecuritization
VIEs		Total
Assets:
Cash and cash equivalents$58,377 $38,762 $20,077 $27,836 $118,573 $263,625 $584 $264,209 
Restricted cash13,142 27,401 950 26,371 41,701 109,565 — 109,565 
Loans held-for-investment, net14,107,316 2,136,118 — 9,823 — 16,253,257 — 16,253,257 
Loans held-for-sale2,299,153 — — 385,359 — 2,684,512 — 2,684,512 
Investment securities1,207,667 49,198 — 1,155,469 — 2,412,334 (1,543,145)869,189 
Properties, net104,901 — 880,392 137,064 — 1,122,357 — 1,122,357 
Investments of consolidated affordable housing fund— — 1,264,160 — — 1,264,160 — 1,264,160 
Investments in unconsolidated entities43,349 27,061 — 33,878 — 104,288 (15,038)89,250 
Goodwill— 119,409 — 140,437 — 259,846 — 259,846 
Intangible assets— — 33,292 69,674 — 102,966 (40,818)62,148 
Derivative assets58,904 161 486 1,318 — 60,869 — 60,869 
Accrued interest receivable114,367 6,274 — 1,745 1,556 123,942 (141)123,801 
Other assets135,095 10,229 59,100 33,857 23,146 261,427 (235)261,192 
VIE assets, at fair value— — — — — — 57,763,543 57,763,543 
Total Assets$18,142,271 $2,414,613 $2,258,457 $2,022,831 $184,976 $25,023,148 $56,164,750 $81,187,898 
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities$102,124 $15,347 $11,503 $32,297 $34,834 $196,105 $40 $196,145 
Related-party payable— — — — 56,615 56,615 — 56,615 
Dividends payable— — — — 148,743 148,743 — 148,743 
Derivative liabilities10,990 225 — 145 27,349 38,709 — 38,709 
Secured financing agreements, net8,294,408 924,242 787,977 774,460 771,944 11,553,031 (21,460)11,531,571 
Collateralized loan obligations and single asset securitization, net2,985,637 812,258 — — — 3,797,895 — 3,797,895 
Unsecured senior notes, net— — — — 2,322,630 2,322,630 — 2,322,630 
VIE liabilities, at fair value— — — — — — 56,185,937 56,185,937 
Total Liabilities11,393,159 1,752,072 799,480 806,902 3,362,115 18,113,728 56,164,517 74,278,245 
Temporary Equity: Redeemable non-controlling interests
— — 261,685 — — 261,685 — 261,685 
Permanent Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock— — — — 3,144 3,144 — 3,144 
Additional paid-in capital1,931,043 606,871 (373,851)(388,580)3,933,544 5,709,027 — 5,709,027 
Treasury stock— — — — (138,022)(138,022)— (138,022)
Accumulated other comprehensive income35,669 — — — — 35,669 — 35,669 
Retained earnings (accumulated deficit)4,782,282 55,670 1,362,509 1,445,221 (6,975,805)669,877 — 669,877 
Total Starwood Property Trust, Inc. Stockholders’ Equity6,748,994 662,541 988,658 1,056,641 (3,177,139)6,279,695 — 6,279,695 
Non-controlling interests in consolidated subsidiaries118 — 208,634 159,288 — 368,040 233 368,273 
Total Permanent Equity6,749,112 662,541 1,197,292 1,215,929 (3,177,139)6,647,735 233 6,647,968 
Total Liabilities and Equity$18,142,271 $2,414,613 $2,258,457 $2,022,831 $184,976 $25,023,148 $56,164,750 $81,187,898 
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