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Starwood Property Trust Reports Results for Quarter Ended March 31, 2024

Published: 2024-05-08 11:00:00 ET
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– Quarterly GAAP Earnings of $0.48 and Distributable Earnings (DE) of $0.59 per Diluted Share –

– Issued $600 Million of Senior Unsecured Sustainability Notes due 2029 –

– Sold Master Lease Portfolio for $387 Million –

– Over $1.0 Billion in Loan Repayments –

–  Liquidity Increased to a Record $1.5 Billion –

– Undepreciated Book Value Per Share of $20.69 –

– Paid Dividend of $0.48 per Share –

GREENWICH, Conn., May 8, 2024 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2024.  The Company's first quarter 2024 GAAP net income was $154.3 million, and Distributable Earnings (a non-GAAP financial measure) was $191.6 million.  These amounts include net gains of $90.8 million and $37.4 million, respectively, on the sale of our Master Lease Portfolio.

"We continue to navigate this dynamic market landscape with our low leverage multi-cylinder business. This quarter, we monetized our Master Lease Portfolio, highlighting the success we have had in creating value from our owned property assets. Along with our infrastructure lending, residential lending, special servicing, CMBS and conduit businesses, the properties have been a strong complement to our core commercial lending business. We will continue to pursue opportunities to deploy capital into the best risk-adjusted investments across all of our business lines as opportunities arise," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

"We have maintained our strong access to liquidity, as demonstrated by our $600 million five-year unsecured debt issuance this quarter. We were the first in our industry to issue unsecured debt in over two years with a transaction that was 7x oversubscribed from more than 150 institutional credit investors," 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 8, 2024, 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:  13742859The playback can be accessed through May 22, 2024.

About Starwood Property Trust, Inc.

Starwood Property Trust (NYSE: STWD), an affiliate of global private investment firm Starwood Capital Group, is a leading diversified finance company with a core focus on the real estate and infrastructure sectors.  As of March 31, 2024, the Company has successfully deployed over $97 billion of capital since inception and manages a portfolio of over $26 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, 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, 2023, 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 quarter ended March 31, 2024.

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, 2024

(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

$                       394,472

$           66,398

$           —

$           2,622

$             —

$   463,492

$                 —

$  463,492

Interest income from investment securities

31,405

138

—

21,144

—

52,687

(34,481)

18,206

Servicing fees

128

—

—

13,039

—

13,167

(3,478)

9,689

Rental income

3,565

—

20,775

4,507

—

28,847

—

28,847

Other revenues

983

392

127

748

604

2,854

—

2,854

Total revenues

430,553

66,928

20,902

42,060

604

561,047

(37,959)

523,088

Costs and expenses:

Management fees

192

—

—

—

45,822

46,014

—

46,014

Interest expense

236,149

38,973

13,298

8,317

59,429

356,166

(210)

355,956

General and administrative

16,828

5,955

1,263

23,467

3,150

50,663

—

50,663

Costs of rental operations

2,025

—

5,707

2,612

—

10,344

—

10,344

Depreciation and amortization

1,949

14

5,855

1,749

251

9,818

—

9,818

Credit loss provision, net

34,977

862

—

—

—

35,839

—

35,839

Other expense

730

—

—

(56)

—

674

—

674

Total costs and expenses

292,850

45,804

26,123

36,089

108,652

509,518

(210)

509,308

Other income (loss):

Change in net assets related to consolidated VIEs

—

—

—

—

—

—

10,086

10,086

Change in fair value of servicing rights

—

—

—

(3,381)

—

(3,381)

3,609

228

Change in fair value of investment securities, net

(6,991)

—

—

(16,458)

—

(23,449)

24,364

915

Change in fair value of mortgage loans, net

(40,677)

—

—

11,664

—

(29,013)

—

(29,013)

Income from affordable housing fund investments

—

—

9,448

—

—

9,448

—

9,448

Earnings from unconsolidated entities

7,345

327

—

313

—

7,985

(310)

7,675

(Loss) gain on sale of investments and other assets, net

(41)

—

92,003

—

—

91,962

—

91,962

Gain (loss) on derivative financial instruments, net

110,952

122

1,721

3,012

(13,868)

101,939

—

101,939

Foreign currency (loss) gain, net

(41,818)

(84)

32

—

—

(41,870)

—

(41,870)

Gain (loss) on extinguishment of debt

315

(560)

(1,209)

—

—

(1,454)

—

(1,454)

Other (loss) income, net

(2,676)

40

—

6

—

(2,630)

—

(2,630)

Total other income (loss)

26,409

(155)

101,995

(4,844)

(13,868)

109,537

37,749

147,286

Income (loss) before income taxes

164,112

20,969

96,774

1,127

(121,916)

161,066

—

161,066

Income tax (provision) benefit

(721)

128

—

(613)

—

(1,206)

—

(1,206)

Net income (loss)

163,391

21,097

96,774

514

(121,916)

159,860

—

159,860

Net (income) loss attributable to non-controlling interests

(3)

—

(6,225)

700

—

(5,528)

—

(5,528)

Net income (loss) attributable to Starwood Property Trust, Inc.

$                       163,388

$           21,097

$     90,549

$           1,214

$   (121,916)

$   154,332

$                 —

$  154,332

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 for successful acquisitions, depreciation and amortization of real estate and associated intangibles, any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period 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.  Refer to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 for additional information regarding Distributable Earnings.

 

Reconciliation of Net Income to Distributable Earnings 

For the three months ended March 31, 2024

(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.

$                           163,388

$                              21,097

$                            90,549

$                               1,214

$                        (121,916)

$                           154,332

Add / (Deduct):

Non-controlling interests attributable to Woodstar II Class A Units

—

—

4,659

—

—

4,659

Non-controlling interests attributable to unrealized gains/losses

—

—

(1,678)

(2,053)

—

(3,731)

Non-cash equity compensation expense

2,200

456

86

1,597

5,707

10,046

Management incentive fee

—

—

—

—

19,083

19,083

Depreciation and amortization

2,099

5

5,939

1,843

—

9,886

Interest income adjustment for securities

5,581

—

—

10,005

—

15,586

Consolidated income tax provision (benefit) associated with fair value adjustments

721

(128)

—

613

—

1,206

Other non-cash items

3

—

274

38

9

324

Reversal of GAAP unrealized and realized (gains) / losses on:

Loans

40,677

—

—

(11,664)

—

29,013

Credit loss provision, net

34,977

862

—

—

—

35,839

Securities

6,991

—

—

16,458

—

23,449

Woodstar Fund investments

—

—

(9,448)

—

—

(9,448)

Derivatives

(110,952)

(122)

(1,721)

(3,012)

13,868

(101,939)

Foreign currency

41,818

84

(32)

—

—

41,870

Earnings from unconsolidated entities

(7,345)

(327)

—

(313)

—

(7,985)

Sales of properties

—

—

(92,003)

—

—

(92,003)

Recognition of Distributable realized gains / (losses) on:

Loans

(2,395)

—

—

11,642

—

9,247

Realized credit loss

—

(1,546)

—

—

—

(1,546)

Securities

(8,994)

—

—

(31,982)

—

(40,976)

Woodstar Fund investments

—

—

17,610

—

—

17,610

Derivatives

40,734

95

5,817

4,353

(9,149)

41,850

Foreign currency

(5,601)

(15)

32

—

—

(5,584)

Earnings (loss) from unconsolidated entities

1,324

(16)

—

313

—

1,621

Sales of properties

—

—

39,150

—

—

39,150

Distributable Earnings (Loss)

$                           205,226

$                              20,445

$                            59,234

$                                 (948)

$                          (92,398)

$                           191,559

Distributable Earnings (Loss) per Weighted Average Diluted Share

$                                  0.63

$                                  0.06

$                                0.18

$                                     —

$                               (0.28)

$                                  0.59

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of March 31, 2024

(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

$                     9,602

$             137,049

$                29,103

$                  8,340

$             143,269

$             327,363

$                        —

$             327,363

Restricted cash

11,506

41,394

1,031

6,862

64,548

125,341

—

125,341

Loans held-for-investment, net

14,221,471

2,376,191

—

9,200

—

16,606,862

—

16,606,862

Loans held-for-sale

2,518,600

47,149

—

123,619

—

2,689,368

—

2,689,368

Investment securities

1,113,081

18,422

—

1,124,724

—

2,256,227

(1,540,154)

716,073

Properties, net

434,365

—

551,502

58,698

—

1,044,565

—

1,044,565

Investments of consolidated affordable housing fund

—

—

2,008,937

—

—

2,008,937

—

2,008,937

Investments in unconsolidated entities

25,371

53,018

—

33,154

—

111,543

(14,616)

96,927

Goodwill

—

119,409

—

140,437

—

259,846

—

259,846

Intangible assets

12,724

—

24,505

60,293

—

97,522

(34,255)

63,267

Derivative assets

73,830

216

4,280

4,590

—

82,916

—

82,916

Accrued interest receivable

179,147

11,750

1,484

1,939

178

194,498

—

194,498

Other assets

186,807

5,745

61,505

17,296

48,500

319,853

—

319,853

VIE assets, at fair value

—

—

—

—

—

—

41,633,853

41,633,853

Total Assets

$          18,786,504

$          2,810,343

$          2,682,347

$          1,589,152

$             256,495

$       26,124,841

$       40,044,828

$       66,169,669

Liabilities and Equity

Liabilities:

Accounts payable, accrued expenses and other liabilities

$                127,023

$                24,337

$                10,730

$                28,936

$                68,972

$             259,998

$                        —

$             259,998

Related-party payable

—

—

—

—

44,226

44,226

—

44,226

Dividends payable

—

—

—

—

153,174

153,174

—

153,174

Derivative liabilities

22,074

—

—

261

52,312

74,647

—

74,647

Secured financing agreements, net

9,051,746

1,069,519

598,850

521,399

1,335,623

12,577,137

(20,650)

12,556,487

Collateralized loan obligations and single asset securitization, net

2,406,928

816,939

—

—

—

3,223,867

—

3,223,867

Unsecured senior notes, net

—

—

—

—

2,751,666

2,751,666

—

2,751,666

VIE liabilities, at fair value

—

—

—

—

—

—

40,065,423

40,065,423

Total Liabilities

11,607,771

1,910,795

609,580

550,596

4,405,973

19,084,715

40,044,773

59,129,488

Temporary Equity: Redeemable non-controlling interests

—

—

415,485

—

—

415,485

—

415,485

Permanent Equity:

Starwood Property Trust, Inc. Stockholders' Equity:

Common stock

—

—

—

—

3,234

3,234

—

3,234

Additional paid-in capital

1,486,260

705,773

(615,052)

(663,588)

4,972,459

5,885,852

—

5,885,852

Treasury stock

—

—

—

—

(138,022)

(138,022)

—

(138,022)

Retained earnings (accumulated deficit)

5,678,294

193,775

2,065,089

1,557,613

(8,987,149)

507,622

—

507,622

Accumulated other comprehensive income

14,061

—

—

—

—

14,061

—

14,061

Total Starwood Property Trust, Inc. Stockholders' Equity

7,178,615

899,548

1,450,037

894,025

(4,149,478)

6,272,747

—

6,272,747

Non-controlling interests in consolidated subsidiaries

118

—

207,245

144,531

—

351,894

55

351,949

Total Permanent Equity

7,178,733

899,548

1,657,282

1,038,556

(4,149,478)

6,624,641

55

6,624,696

Total Liabilities and Equity

$          18,786,504

$          2,810,343

$          2,682,347

$          1,589,152

$             256,495

$       26,124,841

$       40,044,828

$       66,169,669

 

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SOURCE Starwood Property Trust, Inc.