Starwood Property Trust Reports Results for the Quarter Ended March 31, 2020

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GREENWICH, Conn., May 4, 2020 /PRNewswire/ -- Starwood Property Trust, Inc. 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:  1-844-512-2921

International:  1-412-317-6671

Passcode:  13702227

The playback can be accessed through May 11, 2020.

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 $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 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 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 Earnings

For 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 Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As 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

 

Cision View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-march-31-2020-301051687.html

SOURCE Starwood Property Trust, Inc.

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