Starwood Property Trust Reports Results for the Quarter Ended September 30, 2019

GREENWICH, Conn., Nov. 8, 2019 /PRNewswire/ -- Starwood Property Trust, Inc. STWD today announced operating results for the fiscal quarter ended September 30, 2019.  The Company's third quarter 2019 GAAP net income was $140.4 million, or $0.49 per diluted share, and Core Earnings (a non-GAAP financial measure) was $152.6 million, or $0.52 per diluted share.

"We had another strong quarter, with over $2.5 billion of capital deployed across all our segments, including $1.2 billion in Commercial Lending.  Notably, our non-agency residential lending business continued to expand with purchases of over $600 million of loans and the completion of our fourth and largest securitization for $546 million. We also continue to experience growing, double-digit yields in our Property segment.  We expect that these yields will increase over 200 basis points as a result of the $180 million partial cash out refinance of our medical office portfolio and first multifamily portfolio, which have appreciated meaningfully since acquisition.  Our pipeline remains robust, and we expect to invest this capital accretively as we continue to utilize our global organization to find the best opportunities across our cylinders," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

Added Jeffrey DiModica, President of Starwood Property Trust, "During the quarter, we continued to reduce our reliance on warehouse financing, completing our first $1.1 billion CRE CLO.  The transaction was structurally superior, reducing balance sheet exposure, and with a higher advance rate and lower cost of funds than the repurchase facilities it replaced.  We also executed on a $400 million term loan, which allowed us to increase our unencumbered asset base, providing us with additional capacity to issue attractive corporate debt in the future.  We ended the quarter with a record high of over $8.0 billion of available capacity across our financing facilities, giving us tremendous flexibility as investment opportunities arise."

Dividend

On November 8, 2019, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending December 31, 2019. The dividend is payable on January 15, 2020 to common stockholders of record as of December 31, 2019.

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.

Conference Call and Webcast Information 

The Company will host a live webcast and conference call on Friday, November 8, 2019, 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 and download and install any necessary audio software.  The webcast is available at www.starwoodpropertytrust.com in the investor relations section of the website.

To Participate via Telephone:

Dial in at least five 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:  13695217

The playback can be accessed through November 15, 2019.

About Starwood Property Trust, Inc.

Starwood Property Trust 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 $57 billion of capital since inception and manages a portfolio of $16 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, economic conditions, 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, 2018, 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 Tanenbaum

Starwood Property Trust

Phone: 203-422-7788

Email: ztanenbaum@starwood.com

 



Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the three months ended September 30, 2019

(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



$

145,290



$

22,763



$



$

3,977



$



$

172,030



$



$

172,030

Interest income from investment securities





18,163





810









32,556









51,529





(34,853)





16,676

Servicing fees





97













18,243









18,340





(4,007)





14,333

Rental income













72,251





12,403









84,654









84,654

Other revenues





258





39





125





218









640





(3)





637

Total revenues 





163,808





23,612





72,376





67,397









327,193





(38,863)





288,330

Costs and expenses:

















































Management fees





363













18





29,829





30,210





28





30,238

Interest expense





51,844





14,422





19,020





8,891





29,142





123,319





(163)





123,156

General and administrative





7,104





4,315





2,170





22,915





3,184





39,688





78





39,766

Acquisition and investment pursuit costs





506





21









(364)









163









163

Costs of rental operations





765









24,784





6,019









31,568









31,568

Depreciation and amortization





339





15





23,106





4,809









28,269









28,269

Loan loss provision, net





(39)





















(39)









(39)

Other expense





77









46













123









123

Total costs and expenses 





60,959





18,773





69,126





42,288





62,155





253,301





(57)





253,244

Other income (loss):

















































Change in net assets related to consolidated VIEs





























61,767





61,767

Change in fair value of servicing rights

















57









57





(682)





(625)

Change in fair value of investment securities, net





(303)













22,476









22,173





(21,907)





266

Change in fair value of mortgage loans held-for-sale, net





10,088













22,433









32,521









32,521

Earnings from unconsolidated entities





2,507









223





253









2,983





(236)





2,747

Gain (loss) on sale of investments and other assets, net





482





(25)









20,700









21,157









21,157

Gain (loss) on derivative financial instruments, net





15,729





(109)





5,900





(6,376)





6,789





21,933









21,933

Foreign currency loss, net





(15,337)





(319)





(8)













(15,664)









(15,664)

Loss on extinguishment of debt





(857)





(2,101)









(194)





(1,472)





(4,624)









(4,624)

Other loss, net









(50)

















(50)









(50)

Total other income (loss)





12,309





(2,604)





6,115





59,349





5,317





80,486





38,942





119,428

Income (loss) before income taxes 





115,158





2,235





9,365





84,458





(56,838)





154,378





136





154,514

Income tax (provision) benefit





(3,194)





475









(1,794)









(4,513)









(4,513)

Net income (loss) 





111,964





2,710





9,365





82,664





(56,838)





149,865





136





150,001

Net income attributable to non-controlling interests













(5,250)





(4,219)









(9,469)





(136)





(9,605)

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



$

111,964



$

2,710



$

4,115



$

78,445



$

(56,838)



$

140,396



$



$

140,396

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 Earnings

For the three months ended September 30, 2019

(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.



$

111,964



$

2,710



$

4,115



$

78,445



$

(56,838)



$

140,396

Add / (Deduct):





































Non-controlling interests attributable to Woodstar II Class A Units













5,250













5,250

Non-cash equity compensation expense





1,140





577





83





1,765





9,411





12,976

Management incentive fee





















1,875





1,875

Acquisition and investment pursuit costs





6









(89)





(146)









(229)

Depreciation and amortization





339





15





23,440





4,444









28,238

Loan loss provision, net





(39)





















(39)

Interest income adjustment for securities





(194)













5,345









5,151

Extinguishment of debt, net





















(247)





(247)

Other non-cash items













321





191





152





664

Reversal of GAAP unrealized (gains) / losses on:





































Loans held-for-sale





(10,088)













(22,433)









(32,521)

Securities





303













(22,476)









(22,173)

Derivatives





(15,749)





109





(4,576)





6,590





(6,913)





(20,539)

Foreign currency





15,337





319





8













15,664

Earnings from unconsolidated entities





(2,507)









(223)





(253)









(2,983)

Recognition of Core realized gains / (losses) on:





































Loans held-for-sale





8,383





(230)









22,134









30,287

Securities





373













4,593









4,966

Derivatives





977





64





406





(7,875)









(6,428)

Foreign currency





(3,911)





(171)





(8)













(4,090)

Earnings from unconsolidated entities





2,298













1,324









3,622

Sales of properties

















(7,221)









(7,221)

Core Earnings (Loss)



$

108,632



$

3,393



$

28,727



$

64,427



$

(52,560)



$

152,619

Core Earnings (Loss) per Weighted Average Diluted Share



$

0.37



$

0.01



$

0.10



$

0.22



$

(0.18)



$

0.52

 



Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the nine months ended September 30, 2019

(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



$

462,956



$

74,969



$



$

8,987



$



$

546,912



$



$

546,912

Interest income from investment securities





62,438





2,563









88,012









153,013





(96,160)





56,853

Servicing fees





310













61,366









61,676





(13,902)





47,774

Rental income













215,098





40,686









255,784









255,784

Other revenues





714





732





291





929





26





2,692





(24)





2,668

Total revenues 





526,418





78,264





215,389





199,980





26





1,020,077





(110,086)





909,991

Costs and expenses:

















































Management fees





1,127













54





74,924





76,105





122





76,227

Interest expense





172,012





49,257





57,142





25,152





84,878





388,441





(487)





387,954

General and administrative





20,626





13,624





5,394





61,943





10,429





112,016





258





112,274

Acquisition and investment pursuit costs





915





51









(387)









579









579

Costs of rental operations





1,525









70,846





19,503









91,874









91,874

Depreciation and amortization





695





15





70,078





15,287









86,075









86,075

Loan loss provision, net





2,046





1,196

















3,242









3,242

Other expense





230









1,353





194









1,777









1,777

Total costs and expenses 





199,176





64,143





204,813





121,746





170,231





760,109





(107)





760,002

Other income (loss):

















































Change in net assets related to consolidated VIEs





























164,761





164,761

Change in fair value of servicing rights

















(1,617)









(1,617)





(691)





(2,308)

Change in fair value of investment securities, net





(2,945)













56,431









53,486





(52,491)





995

Change in fair value of mortgage loans held-for-sale, net





16,837













48,841









65,678









65,678

Earnings (loss) from unconsolidated entities





8,576









(42,538)





3,601









(30,361)





(1,275)





(31,636)

Gain on sale of investments and other assets, net





3,476





3,041









21,640









28,157









28,157

Gain (loss) on derivative financial instruments, net





12,024





(3,337)





(3,957)





(16,761)





31,725





19,694









19,694

Foreign currency loss, net





(17,025)





(102)





(7)













(17,134)









(17,134)

Loss on extinguishment of debt





(857)





(8,221)









(194)





(1,466)





(10,738)









(10,738)

Other loss, net









(50)













(73)





(123)









(123)

Total other income (loss)





20,086





(8,669)





(46,502)





111,941





30,186





107,042





110,304





217,346

Income (loss) before income taxes 





347,328





5,452





(35,926)





190,175





(140,019)





367,010





325





367,335

Income tax (provision) benefit





(4,778)





746





(258)





(4,090)









(8,380)









(8,380)

Net income (loss) 





342,550





6,198





(36,184)





186,085





(140,019)





358,630





325





358,955

Net income attributable to non-controlling interests





(392)









(16,322)





(4,121)









(20,835)





(325)





(21,160)

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



$

342,158



$

6,198



$

(52,506)



$

181,964



$

(140,019)



$

337,795



$



$

337,795

 

Reconciliation of Net Income to Core Earnings

For the nine months ended September 30, 2019

(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.



$

342,158



$

6,198



$

(52,506)



$

181,964



$

(140,019)



$

337,795

Add / (Deduct):





































Non-controlling interests attributable to Woodstar II Class A Units













16,322













16,322

Non-cash equity compensation expense





2,757





1,691





229





4,817





16,909





26,403

Management incentive fee





















2,048





2,048

Acquisition and investment pursuit costs





(56)





2





(266)





(451)





(356)





(1,127)

Depreciation and amortization





695





15





71,067





14,181









85,958

Loan loss provision, net





2,046





1,196

















3,242

Interest income adjustment for securities





(585)













14,698









14,113

Extinguishment of debt, net





















(1,704)





(1,704)

Other non-cash items













(565)





699





470





604

Reversal of GAAP unrealized (gains) / losses on:





































Loans held-for-sale





(16,837)













(48,841)









(65,678)

Securities





2,945













(56,431)









(53,486)

Derivatives





(11,763)





3,337





8,457





16,841





(32,915)





(16,043)

Foreign currency





17,025





102





7













17,134

(Earnings) loss from unconsolidated entities





(8,576)









42,538





(3,601)









30,361

Recognition of Core realized gains / (losses) on:





































Loans held-for-sale





7,180





(985)









49,719









55,914

Securities





970













11,702









12,672

Derivatives





1,800





(1,396)





2,257





(17,114)









(14,453)

Foreign currency





(4,725)





(998)





(7)





9









(5,721)

Earnings (loss) from unconsolidated entities





7,078









(68,905)





14,194









(47,633)

Sales of properties

















(7,297)









(7,297)

Core Earnings (Loss)



$

342,112



$

9,162



$

18,628



$

175,089



$

(155,567)



$

389,424

Core Earnings (Loss) per Weighted Average Diluted Share



$

1.17



$

0.03



$

0.06



$

0.60



$

(0.53)



$

1.33

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of September 30, 2019

(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



$

64,343



$

6,404



$

35,940



$

46,872



$

129,369



$

282,928



$

1,189



$

284,117

Restricted cash





36,771





33,366





21,186





19,218









110,541









110,541

Loans held-for-investment, net





7,636,475





1,281,815









1,363









8,919,653









8,919,653

Loans held-for-sale





809,604





163,932









468,583









1,442,119









1,442,119

Investment securities





938,300





54,048









1,009,249









2,001,597





(1,192,460)





809,137

Properties, net





26,902









2,441,480





261,156









2,729,538









2,729,538

Intangible assets













75,965





68,748









144,713





(24,766)





119,947

Investment in unconsolidated entities





42,518









71,824





33,246









147,588





(21,473)





126,115

Goodwill









119,409









140,437









259,846









259,846

Derivative assets





37,507





652





21,994





603





20,727





81,483









81,483

Accrued interest receivable





43,747





4,015





245





1,321





3,125





52,453





(676)





51,777

Other assets





98,664





5,978





72,932





64,068





9,129





250,771





2





250,773

VIE assets, at fair value





























59,249,054





59,249,054

Total Assets



$

9,734,831



$

1,669,619



$

2,741,566



$

2,114,864



$

162,350



$

16,423,230



$

58,010,870



$

74,434,100

Liabilities and Equity

















































Liabilities:

















































Accounts payable, accrued expenses and other liabilities



$

25,836



$

15,719



$

69,550



$

72,055



$

50,868



$

234,028



$

92



$

234,120

Related-party payable

















44





24,442





24,486









24,486

Dividends payable





















137,273





137,273









137,273

Derivative liabilities





2,336





904









1,541









4,781









4,781

Secured financing agreements, net





4,061,849





1,168,166





1,868,416





771,618





391,989





8,262,038





(13,950)





8,248,088

Collateralized loan obligations, net





927,436





















927,436









927,436

Unsecured senior notes, net





















1,926,693





1,926,693









1,926,693

VIE liabilities, at fair value





























58,018,209





58,018,209

Total Liabilities





5,017,457





1,184,789





1,937,966





845,258





2,531,265





11,516,735





58,004,351





69,521,086

Equity:

















































Starwood Property Trust, Inc. Stockholders' Equity:

















































Common stock





















2,871





2,871









2,871

Additional paid-in capital





1,307,064





481,206





609,241





156,094





2,568,066





5,121,671









5,121,671

Treasury stock





















(104,194)





(104,194)









(104,194)

Accumulated other comprehensive income (loss)





52,471









(30)





(64)









52,377









52,377

Retained earnings (accumulated deficit)





3,357,839





3,624





(38,936)





1,095,602





(4,835,658)





(417,529)









(417,529)

Total Starwood Property Trust, Inc. Stockholders' Equity





4,717,374





484,830





570,275





1,251,632





(2,368,915)





4,655,196









4,655,196

Non-controlling interests in consolidated subsidiaries













233,325





17,974









251,299





6,519





257,818

Total Equity





4,717,374





484,830





803,600





1,269,606





(2,368,915)





4,906,495





6,519





4,913,014

Total Liabilities and Equity



$

9,734,831



$

1,669,619



$

2,741,566



$

2,114,864



$

162,350



$

16,423,230



$

58,010,870



$

74,434,100

 

Cision View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-september-30-2019-300954626.html

SOURCE Starwood Property Trust, Inc.

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