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Starwood Property Trust Reports Results for Quarter Ended March 31, 2022

Published: 2022-05-04 11:00:00 ET
<<<  go to STWD company page

– 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.

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:  1-844-512-2921International:  1-412-317-6671Passcode:  13728386The 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.

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

Contact:Zachary TanenbaumStarwood Property TrustPhone: 203-422-7788Email: ztanenbaum@starwood.com

 

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

Corporate

Subtotal

Securitization

VIEs

Total

Revenues:

     Interest income from loans

$            202,470

$           26,983

$              —

$           4,166

$              —

$      233,619

$                 —

$        233,619

     Interest income from investment securities

20,836

747

—

27,389

—

48,972

(34,989)

13,983

     Servicing fees

136

—

—

14,071

—

14,207

(4,215)

9,992

     Rental income

1,686

—

22,365

7,529

—

31,580

—

31,580

     Other revenues

52

68

50

4,654

—

4,824

(6)

4,818

          Total revenues

225,180

27,798

22,415

57,809

—

333,202

(39,210)

293,992

Costs and expenses:

     Management fees

277

—

—

—

55,018

55,295

—

55,295

     Interest expense

68,602

11,930

6,081

6,210

33,842

126,665

(214)

126,451

     General and administrative

11,602

3,511

1,056

23,443

4,628

44,240

81

44,321

     Acquisition and investment pursuit costs

499

1

5

(83)

—

422

—

422

     Costs of rental operations

519

—

5,001

3,770

—

9,290

—

9,290

     Depreciation and amortization

294

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 expenses

78,494

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, net

86,610

—

—

11,858

—

98,468

—

98,468

Gain (loss) on derivative financial instruments, net

118,395

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 taxes

203,770

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

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

Corporate

Total

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 expense

2,417

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 amortization

234

95

8,292

3,152

—

11,773

Interest income adjustment for securities

2,490

—

—

(1,708)

—

782

Extinguishment of debt, net

—

—

—

—

(246)

(246)

Other non-cash items

3

—

456

122

—

581

Reversal of GAAP unrealized (gains) / losses on:

     Loans

116,228

—

—

9,555

—

125,783

     Credit loss reversal, net

(3,299)

(359)

—

—

—

(3,658)

     Securities

2,105

—

—

9,291

—

11,396

     Woodstar Fund investments

—

—

(234,041)

—

—

(234,041)

     Derivatives

(121,172)

(685)

(19,170)

(29,089)

40,773

(129,343)

     Foreign currency

27,254

28

(1)

—

—

27,281

     (Earnings) loss from unconsolidated entities

1,340

(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

     Derivatives

36,893

—

(35)

24,639

—

61,497

     Foreign currency

(178)

112

1

—

—

(65)

     Earnings (loss) from unconsolidated entities

(1,239)

345

—

470

—

(424)

     Sales of properties

84,738

—

—

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

 

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

Corporate

Subtotal

Securitization

VIEs

Total

Assets:

          Cash and cash equivalents

$                58,377

$                38,762

$                20,077

$                27,836

$             118,573

$             263,625

$                     584

$             264,209

          Restricted cash

13,142

27,401

950

26,371

41,701

109,565

—

109,565

          Loans held-for-investment, net

14,107,316

2,136,118

—

9,823

—

16,253,257

—

16,253,257

          Loans held-for-sale

2,299,153

—

—

385,359

—

2,684,512

—

2,684,512

          Investment securities

1,207,667

49,198

—

1,155,469

—

2,412,334

(1,543,145)

869,189

          Properties, net

104,901

—

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 entities

43,349

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 assets

58,904

161

486

1,318

—

60,869

—

60,869

          Accrued interest receivable

114,367

6,274

—

1,745

1,556

123,942

(141)

123,801

          Other assets

135,095

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 liabilities

10,990

225

—

145

27,349

38,709

—

38,709

          Secured financing agreements, net

8,294,408

924,242

787,977

774,460

771,944

11,553,031

(21,460)

11,531,571

          Collateralized loan obligations and single asset securitization, net

2,985,637

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 Liabilities

11,393,159

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 capital

1,931,043

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 income

35,669

—

—

—

—

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' Equity

6,748,994

662,541

988,658

1,056,641

(3,177,139)

6,279,695

—

6,279,695

     Non-controlling interests in consolidated subsidiaries

118

—

208,634

159,288

—

368,040

233

368,273

     Total Permanent Equity

6,749,112

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

 

Cision View original content:https://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-quarter-ended-march-31-2022-301539289.html

SOURCE Starwood Property Trust, Inc.