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GREENWICH, Conn., May 4, 2020 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2020. The Company had a first quarter 2020 GAAP net loss of $66.8 million, or $(0.24) per diluted share, and Core Earnings of $162.1 million, or $0.55 per diluted share. GAAP net loss includes the unrealized, non-cash impacts of mark-to-market adjustments and the recently implemented CECL accounting standard, totaling $148.6 million ($0.53 per diluted share) and $48.7 million ($0.17 per diluted share), respectively, both of which reflect the market volatility and dislocation caused by the COVID-19 pandemic.
"Starwood Property Trust has one of the strongest balance sheets in the commercial mortgage REIT industry, with over $870 million in cash and approved undrawn capacity, and well over $1.0 billion of additional liquidity available to us if ever needed. Our powerful balance sheet is bolstered by our diversified platform, anchored by our real estate equity book and multiple business lines that create considerable stability in an uncertain time. We continue to benefit from our scale, relatively low leverage and $3.3 billion unencumbered asset base. STWD is well positioned to take advantage of dislocations in the market and to weather this economic storm with immense human and financial resources," commented Barry Sternlicht, Chairman and CEO 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 Monday, May 4, 2020, at 8:30 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: 13702227 The playback can be accessed through May 11, 2020.
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 $63 billion of capital since inception and manages a portfolio of over $17 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, 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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and our quarterly report on Form 10-Q for the quarter ended March 31, 2020, as well as other risks and uncertainties set forth from time to time in the Company's reports filed with the SEC.
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 Trust Phone: 203-422-7788 Email: ztanenbaum@starwood.com
Starwood Property Trust, Inc. and SubsidiariesCondensed Consolidated Statement of Operations by SegmentFor the three months ended March 31, 2020(Amounts in thousands)
| ||||||||||||||||||||||||
Commercial and | ||||||||||||||||||||||||
Residential | Infrastructure | Investing | ||||||||||||||||||||||
Lending | Lending | Property | and Servicing | Securitization | ||||||||||||||||||||
Segment | Segment | Segment | Segment | Corporate | Subtotal | VIEs | Total | |||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Interest income from loans | $ | 192,381 | $ | 22,413 | $ | — | $ | 2,633 | $ | — | $ | 217,427 | $ | — | $ | 217,427 | ||||||||
Interest income from investment securities | 18,628 | 701 | — | 24,800 | — | 44,129 | (28,889) | 15,240 | ||||||||||||||||
Servicing fees | 172 | — | — | 6,442 | — | 6,614 | (1,821) | 4,793 | ||||||||||||||||
Rental income | 78 | — | 63,961 | 10,107 | — | 74,146 | — | 74,146 | ||||||||||||||||
Other revenues | 178 | 143 | 122 | 513 | — | 956 | (2) | 954 | ||||||||||||||||
Total revenues | 211,437 | 23,257 | 64,083 | 44,495 | — | 343,272 | (30,712) | 312,560 | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||
Management fees | 351 | — | — | 239 | 40,107 | 40,697 | 31 | 40,728 | ||||||||||||||||
Interest expense | 53,950 | 13,117 | 17,121 | 7,194 | 28,805 | 120,187 | (162) | 120,025 | ||||||||||||||||
General and administrative | 8,132 | 4,423 | 1,078 | 20,684 | 4,301 | 38,618 | 84 | 38,702 | ||||||||||||||||
Acquisition and investment pursuit costs | 860 | 17 | 12 | 20 | — | 909 | — | 909 | ||||||||||||||||
Costs of rental operations | 778 | — | 22,852 | 4,584 | — | 28,214 | — | 28,214 | ||||||||||||||||
Depreciation and amortization | 415 | 70 | 19,288 | 4,207 | — | 23,980 | — | 23,980 | ||||||||||||||||
Credit loss provision, net | 40,217 | 8,452 | — | — | — | 48,669 | — | 48,669 | ||||||||||||||||
Other expense | 77 | — | 311 | — | — | 388 | — | 388 | ||||||||||||||||
Total costs and expenses | 104,780 | 26,079 | 60,662 | 36,928 | 73,213 | 301,662 | (47) | 301,615 | ||||||||||||||||
Other (loss) income: | ||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | (45,493) | (45,493) | ||||||||||||||||
Change in fair value of servicing rights | — | — | — | 318 | — | 318 | (711) | (393) | ||||||||||||||||
Change in fair value of investment securities, net | (27,879) | — | — | (47,216) | — | (75,095) | 77,599 | 2,504 | ||||||||||||||||
Change in fair value of mortgage loans, net | (35,517) | — | — | 19,383 | — | (16,134) | — | (16,134) | ||||||||||||||||
Earnings (loss) from unconsolidated entities | 51 | — | — | 620 | — | 671 | (574) | 97 | ||||||||||||||||
Gain on sale of investments and other assets, net | — | 296 | — | — | — | 296 | — | 296 | ||||||||||||||||
Gain (loss) on derivative financial instruments, net | 30,805 | (1,001) | (30,223) | (19,106) | 29,235 | 9,710 | — | 9,710 | ||||||||||||||||
Foreign currency (loss) gain, net | (34,001) | (473) | (19) | 7 | — | (34,486) | — | (34,486) | ||||||||||||||||
Loss on extinguishment of debt | — | (170) | — | — | — | (170) | — | (170) | ||||||||||||||||
Other income, net | — | — | 50 | 76 | — | 126 | — | 126 | ||||||||||||||||
Total other (loss) income | (66,541) | (1,348) | (30,192) | (45,918) | 29,235 | (114,764) | 30,821 | (83,943) | ||||||||||||||||
Income (loss) before income taxes | 40,116 | (4,170) | (26,771) | (38,351) | (43,978) | (73,154) | 156 | (72,998) | ||||||||||||||||
Income tax benefit | 4,422 | 145 | — | 2,162 | — | 6,729 | — | 6,729 | ||||||||||||||||
Net income (loss) | 44,538 | (4,025) | (26,771) | (36,189) | (43,978) | (66,425) | 156 | (66,269) | ||||||||||||||||
Net (income) loss attributable to non-controlling interests | (3) | — | (5,111) | 4,770 | — | (344) | (156) | (500) | ||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 44,535 | $ | (4,025) | $ | (31,882) | $ | (31,419) | $ | (43,978) | $ | (66,769) | $ | — | $ | (66,769) | ||||||||
Definition of Core Earnings
Core 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, Core 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 Core EarningsFor the three months ended March 31, 2020(Amounts in thousands except per share data) | ||||||||||||||||||
Commercial and | ||||||||||||||||||
Residential | Infrastructure | Investing | ||||||||||||||||
Lending | Lending | Property | and Servicing | |||||||||||||||
Segment | Segment | Segment | Segment | Corporate | Total | |||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 44,535 | $ | (4,025) | $ | (31,882) | $ | (31,419) | $ | (43,978) | $ | (66,769) | ||||||
Add / (Deduct): | ||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 5,111 | — | — | 5,111 | ||||||||||||
Non-cash equity compensation expense | 1,112 | 466 | 73 | 1,263 | 5,886 | 8,800 | ||||||||||||
Management incentive fee | — | — | — | — | 15,799 | 15,799 | ||||||||||||
Acquisition and investment pursuit costs | 358 | — | (89) | — | — | 269 | ||||||||||||
Depreciation and amortization | 355 | 51 | 19,381 | 3,807 | — | 23,594 | ||||||||||||
Credit loss provision, net | 40,217 | 8,452 | — | — | — | 48,669 | ||||||||||||
Interest income adjustment for securities | 124 | — | — | 6,315 | — | 6,439 | ||||||||||||
Extinguishment of debt, net | — | — | — | — | (246) | (246) | ||||||||||||
Income tax benefit associated with fair value adjustments | (5,821) | — | — | (1,442) | — | (7,263) | ||||||||||||
Other non-cash items | 3 | — | (491) | 248 | 156 | (84) | ||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | ||||||||||||||||||
Loans | 35,517 | — | — | (19,383) | — | 16,134 | ||||||||||||
Securities | 27,879 | — | — | 47,216 | — | 75,095 | ||||||||||||
Derivatives | (30,563) | 1,013 | 30,569 | 19,013 | (27,649) | (7,617) | ||||||||||||
Foreign currency | 34,001 | 473 | 19 | (7) | — | 34,486 | ||||||||||||
Earnings from unconsolidated entities | (51) | — | — | (620) | — | (671) | ||||||||||||
Recognition of Core realized gains / (losses) on: | ||||||||||||||||||
Loans | 2,164 | (62) | — | 16,559 | — | 18,661 | ||||||||||||
Securities | — | — | — | (4,212) | — | (4,212) | ||||||||||||
Derivatives | 3,250 | 118 | (35) | (6,087) | — | (2,754) | ||||||||||||
Foreign currency | (4,271) | (194) | (19) | 7 | — | (4,477) | ||||||||||||
(Loss) earnings from unconsolidated entities | (556) | — | — | 3,738 | — | 3,182 | ||||||||||||
Core Earnings (Loss) | $ | 148,253 | $ | 6,292 | $ | 22,637 | $ | 34,996 | $ | (50,032) | $ | 162,146 | ||||||
Core Earnings (Loss) per Weighted Average Diluted Share | $ | 0.50 | $ | 0.02 | $ | 0.08 | $ | 0.12 | $ | (0.17) | $ | 0.55 | ||||||
Starwood Property Trust, Inc. and SubsidiariesCondensed Consolidated Balance Sheet by SegmentAs of March 31, 2020(Amounts in thousands) | ||||||||||||||||||||||||
Commercial and | ||||||||||||||||||||||||
Residential | Infrastructure | Investing | ||||||||||||||||||||||
Lending | Lending | Property | and Servicing | Securitization | ||||||||||||||||||||
Segment | Segment | Segment | Segment | Corporate | Subtotal | VIEs | Total | |||||||||||||||||
Assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 22,910 | $ | 40 | $ | 28,137 | $ | 36,913 | $ | 719,222 | $ | 807,222 | $ | 4,434 | $ | 811,656 | ||||||||
Restricted cash | 50,331 | 43,679 | 7,362 | 18,365 | — | 119,737 | — | 119,737 | ||||||||||||||||
Loans held-for-investment, net | 9,106,441 | 1,381,271 | — | 1,224 | — | 10,488,936 | — | 10,488,936 | ||||||||||||||||
Loans held-for-sale | 886,076 | 101,895 | — | 186,963 | — | 1,174,934 | — | 1,174,934 | ||||||||||||||||
Investment securities | 955,614 | 44,141 | — | 1,095,990 | — | 2,095,745 | (1,317,773) | 777,972 | ||||||||||||||||
Properties, net | 26,585 | — | 2,014,007 | 212,478 | — | 2,253,070 | — | 2,253,070 | ||||||||||||||||
Intangible assets | — | — | 45,331 | 63,632 | — | 108,963 | (26,958) | 82,005 | ||||||||||||||||
Investment in unconsolidated entities | 50,017 | 25,862 | — | 31,321 | — | 107,200 | (19,866) | 87,334 | ||||||||||||||||
Goodwill | — | 119,409 | — | 140,437 | — | 259,846 | — | 259,846 | ||||||||||||||||
Derivative assets | 57,238 | 6 | 98 | 2,250 | 41,856 | 101,448 | — | 101,448 | ||||||||||||||||
Accrued interest receivable | 49,942 | 4,949 | — | 1,047 | 3,357 | 59,295 | (758) | 58,537 | ||||||||||||||||
Other assets | 61,109 | 5,108 | 76,776 | 52,119 | 8,812 | 203,924 | (15) | 203,909 | ||||||||||||||||
VIE assets, at fair value | — | — | — | — | — | — | 61,157,805 | 61,157,805 | ||||||||||||||||
Total Assets | $ | 11,266,263 | $ | 1,726,360 | $ | 2,171,711 | $ | 1,842,739 | $ | 773,247 | $ | 17,780,320 | $ | 59,796,869 | $ | 77,577,189 | ||||||||
Liabilities and Equity | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 33,645 | $ | 11,933 | $ | 48,748 | $ | 48,090 | $ | 79,178 | $ | 221,594 | $ | 75 | $ | 221,669 | ||||||||
Related-party payable | — | — | — | 5 | 39,261 | 39,266 | — | 39,266 | ||||||||||||||||
Dividends payable | — | — | — | — | 137,529 | 137,529 | — | 137,529 | ||||||||||||||||
Derivative liabilities | 3,740 | 1,292 | — | 86 | — | 5,118 | — | 5,118 | ||||||||||||||||
Secured financing agreements, net | 5,611,239 | 1,190,995 | 1,698,044 | 692,941 | 510,414 | 9,703,633 | (13,950) | 9,689,683 | ||||||||||||||||
Collateralized loan obligations, net | 928,683 | — | — | — | — | 928,683 | — | 928,683 | ||||||||||||||||
Unsecured senior notes, net | — | — | — | — | 1,930,584 | 1,930,584 | — | 1,930,584 | ||||||||||||||||
VIE liabilities, at fair value | — | — | — | — | — | — | 59,807,306 | 59,807,306 | ||||||||||||||||
Total Liabilities | 6,577,307 | 1,204,220 | 1,746,792 | 741,122 | 2,696,966 | 12,966,407 | 59,793,431 | 72,759,838 | ||||||||||||||||
Equity: | ||||||||||||||||||||||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||||||||||||||||||||
Common stock | — | — | — | — | 2,894 | 2,894 | — | 2,894 | ||||||||||||||||
Additional paid-in capital | 1,159,771 | 531,986 | 229,223 | (200,489) | 3,438,578 | 5,159,069 | — | 5,159,069 | ||||||||||||||||
Treasury stock | — | — | — | — | (133,024) | (133,024) | — | (133,024) | ||||||||||||||||
Accumulated other comprehensive income (loss) | 35,948 | — | — | (64) | — | 35,884 | — | 35,884 | ||||||||||||||||
Retained earnings (accumulated deficit) | 3,493,119 | (9,846) | (31,451) | 1,163,580 | (5,232,167) | (616,765) | — | (616,765) | ||||||||||||||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,688,838 | 522,140 | 197,772 | 963,027 | (1,923,719) | 4,448,058 | — | 4,448,058 | ||||||||||||||||
Non-controlling interests in consolidated subsidiaries | 118 | — | 227,147 | 138,590 | — | 365,855 | 3,438 | 369,293 | ||||||||||||||||
Total Equity | 4,688,956 | 522,140 | 424,919 | 1,101,617 | (1,923,719) | 4,813,913 | 3,438 | 4,817,351 | ||||||||||||||||
Total Liabilities and Equity | $ | 11,266,263 | $ | 1,726,360 | $ | 2,171,711 | $ | 1,842,739 | $ | 773,247 | $ | 17,780,320 | $ | 59,796,869 | $ | 77,577,189 | ||||||||
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SOURCE Starwood Property Trust, Inc.
