Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2020

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GREENWICH, Conn., February 25, 2021 /PRNewswire/ -- Starwood Property Trust, Inc. STWD today announced operating results for the fiscal quarter and year ended December 31, 2020.  The Company's fourth quarter 2020 GAAP net income was $107.0 million, or $0.37 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $148.4 million, or $0.50 per diluted share.  The Company's full year 2020 GAAP net income was $331.7 million, or $1.16 per diluted share, and Distributable Earnings was $585.3 million, or $1.98 per diluted share.

"At no time other than 2020 was the power and strength of the company we built from a blind pool of capital over a decade ago more evident. We have proven that we are more than a portfolio of real estate mortgage loans, as good as our book has proven to be.  The pandemic presented us with one of the most challenging market cycles and opportunities we have seen since our inception.  Given our superior liquidity position, we never contemplated distressed asset sales or capital raises that would have been dilutive to our fair value in order to navigate the immense challenges of 2020. Our multiple business cylinders allowed us to generate excess liquidity, while unlocking accretive avenues to deploy that capital. Once we felt the worst had passed, we among our peers uniquely deployed $3.0 billion of capital in multiple business lines after the first quarter, including $2.3 billion in commercial and residential lending.

We enter 2021 in a position of significant strength, with access to multiple sources of liquidity, a robust commercial lending pipeline and an increasingly large array of investment opportunities across business lines," 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 Thursday, February 25, 2021, 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:  1-844-512-2921

International:  1-412-317-6671

Passcode:  13715683

The playback can be accessed through March 4, 2021.

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 $66 billion of capital since inception and manages a portfolio of over $18 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, 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 December 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



$

173,014



$

18,477



$



$

2,518



$



$

194,009



$



$

194,009

Interest income from investment securities





21,132





618









20,512









42,262





(29,920)





12,342

Servicing fees





125













13,024









13,149





(4,514)





8,635

Rental income





1,924









64,000





9,070









74,994









74,994

Other revenues





114





155





65





248









582









582

Total revenues 





196,309





19,250





64,065





45,372









324,996





(34,434)





290,562

Costs and expenses:

















































Management fees





(191)













221





40,115





40,145





12





40,157

Interest expense





41,987





9,204





16,147





5,507





29,643





102,488





(224)





102,264

General and administrative





12,742





3,345





1,089





25,549





4,207





46,932





85





47,017

Acquisition and investment pursuit costs





211





4









(26)









189









189

Costs of rental operations





777









25,279





4,252









30,308









30,308

Depreciation and amortization





433





96





18,675





4,219









23,423









23,423

Credit loss reversal, net





(5,037)





(7,094)

















(12,131)









(12,131)

Other expense





77









99













176









176

Total costs and expenses 





50,999





5,555





61,289





39,722





73,965





231,530





(127)





231,403

Other income (loss):

















































Change in net assets related to consolidated VIEs





























13,905





13,905

Change in fair value of servicing rights

















1,809









1,809





(3,196)





(1,387)

Change in fair value of investment securities, net





(6,294)













(15,377)









(21,671)





23,932





2,261

Change in fair value of mortgage loans, net





20,002













33,422









53,424









53,424

Earnings (loss) from unconsolidated entities





4,804





431









341









5,576





(324)





5,252

Gain on sale of investments and other assets, net









10









532









542









542

(Loss) gain on derivative financial instruments, net





(49,156)





(171)





758





1,627





(751)





(47,693)









(47,693)

Foreign currency gain (loss), net





43,962





260





39





(5)









44,256









44,256

Loss on extinguishment of debt









(789)













(488)





(1,277)









(1,277)

Other (loss) income, net













(406)













(406)









(406)

Total other income (loss)





13,318





(259)





391





22,349





(1,239)





34,560





34,317





68,877

Income (loss) before income taxes 





158,628





13,436





3,167





27,999





(75,204)





128,026





10





128,036

Income tax provision





(5,556)





(120)









(7,705)









(13,381)









(13,381)

Net income (loss) 





153,072





13,316





3,167





20,294





(75,204)





114,645





10





114,655

Net income attributable to non-controlling interests





(4)









(5,100)





(2,573)









(7,677)





(10)





(7,687)

Net income (loss) attributable to Starwood

   Property Trust, Inc
.



$

153,068



$

13,316



$

(1,933)



$

17,721



$

(75,204)



$

106,968



$



$

106,968

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 December 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.



$

153,068



$

13,316



$

(1,933)



$

17,721



$

(75,204)



$

106,968

Add / (Deduct):





































Non-controlling interests attributable to Woodstar II Class A Units













5,100













5,100

Non-cash equity compensation expense





891





299





34





869





6,707





8,800

Management incentive fee





















14,974





14,974

Acquisition and investment pursuit costs





(278)









(89)













(367)

Depreciation and amortization





372





86





18,736





3,832









23,026

Credit loss reversal, net





(5,037)





(7,094)

















(12,131)

Interest income adjustment for securities





(1,102)













5,245









4,143

Extinguishment of debt, net





















(247)





(247)

Income tax provision associated with fair value adjustments





4,883













550









5,433

Other non-cash items





4









(374)





239





161





30

Reversal of GAAP unrealized (gains) / losses on:





































Loans





(20,002)













(33,422)









(53,424)

Securities





6,294













15,377









21,671

Derivatives





48,046





105





(2,480)





(2,218)





3,945





47,398

Foreign currency





(43,962)





(260)





(39)





5









(44,256)

Earnings from unconsolidated entities





(4,804)





(431)









(341)









(5,576)

Recognition of Distributable realized gains / (losses) on:





































Loans





2,461













32,528









34,989

Securities





398













(9,389)









(8,991)

Derivatives





(3,858)









(34)





20









(3,872)

Foreign currency





631





14





39





(5)









679

Earnings from unconsolidated entities





2,914





431









745









4,090

Distributable Earnings (Loss)



$

140,919



$

6,466



$

18,960



$

31,756



$

(49,664)



$

148,437

Distributable Earnings (Loss) per Weighted Average Diluted

   Share



$

0.47



$

0.02



$

0.07



$

0.11



$

(0.17)



$

0.50

 

Starwood Property Trust, Inc. and Subsidiaries



Condensed Consolidated Statement of Operations by Segment



For the year ended December 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



$

665,503



$

77,851



$



$

8,589



$



$

751,943



$



$

751,943

Interest income from investment securities





78,490





2,637









93,823









174,950





(120,538)





54,412

Servicing fees





549













41,806









42,355





(12,721)





29,634

Rental income





4,706









255,452





37,670









297,828









297,828

Other revenues





412





499





293





1,139









2,343





(5)





2,338

Total revenues 





749,660





80,987





255,745





183,027









1,269,419





(133,264)





1,136,155

Costs and expenses:

















































Management fees





796













901





125,372





127,069





58





127,127

Interest expense





176,230





40,913





65,390





24,303





113,313





420,149





(386)





419,763

General and administrative





41,972





15,673





4,542





80,039





15,312





157,538





336





157,874

Acquisition and investment pursuit costs





2,406





1,183





12





(29)









3,572









3,572

Costs of rental operations





3,186









97,136





17,354









117,676









117,676

Depreciation and amortization





1,708





342





76,246





16,109









94,405









94,405

Credit loss provision (reversal), net





47,256





(4,103)

















43,153









43,153

Other expense





307









531













838









838

Total costs and expenses 





273,861





54,008





243,857





138,677





253,997





964,400





8





964,408

Other income (loss):

















































Change in net assets related to consolidated VIEs





























78,258





78,258

Change in fair value of servicing rights

















11,415









11,415





(15,130)





(3,715)

Change in fair value of investment securities, net





(15,108)













(51,403)









(66,511)





71,904





5,393

Change in fair value of mortgage loans, net





76,897













56,227









133,124









133,124

Earnings (loss) from unconsolidated entities





8,779





(767)









30,845









38,857





(1,540)





37,317

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





(961)





306









7,965









7,310









7,310

(Loss) gain on derivative financial instruments, net





(58,664)





(1,499)





(34,392)





(21,269)





33,646





(82,178)









(82,178)

Foreign currency gain (loss), net





42,205





207





(14)





(3)









42,395









42,395

Loss on extinguishment of debt





(22)





(959)





(2,185)









(488)





(3,654)









(3,654)

Other (loss) income, net













(166)





447









281









281

Total other income (loss)





53,126





(2,712)





(36,757)





34,224





33,158





81,039





133,492





214,531

Income (loss) before income taxes 





528,925





24,267





(24,869)





78,574





(220,839)





386,058





220





386,278

Income tax (provision) benefit





(21,091)





(117)









1,011









(20,197)









(20,197)

Net income (loss) 





507,834





24,150





(24,869)





79,585





(220,839)





365,861





220





366,081

Net income attributable to non-controlling interests





(14)









(20,394)





(13,764)









(34,172)





(220)





(34,392)

Net income (loss) attributable to Starwood Property

   Trust, Inc
.



$

507,820



$

24,150



$

(45,263)



$

65,821



$

(220,839)



$

331,689



$



$

331,689

 

Reconciliation of Net Income to Distributable Earnings



For the year ended December 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
.



$

507,820



$

24,150



$

(45,263)



$

65,821



$

(220,839)



$

331,689

Add / (Deduct):





































Non-controlling interests attributable to Woodstar II Class A 

   Units













20,394













20,394

Non-cash equity compensation expense





4,454





1,120





219





4,594





20,854





31,241

Management incentive fee





















30,773





30,773

Acquisition and investment pursuit costs





123









(355)





(72)









(304)

Depreciation and amortization





1,467





294





76,544





14,501









92,806

Credit loss provision (reversal), net





46,215





(4,103)

















42,112

Interest income adjustment for securities





(864)













15,101









14,237

Extinguishment of debt, net





















(986)





(986)

Income tax provision (benefit) associated with fair value

   adjustments





6,495













(405)









6,090

Other non-cash items





14









(2,063)





942





631





(476)

Reversal of GAAP unrealized (gains) / losses on:





































Loans





(76,897)













(56,227)









(133,124)

Securities





15,108













51,403









66,511

Derivatives





56,862





1,365





30,113





19,768





(19,564)





88,544

Foreign currency





(42,205)





(207)





14





3









(42,395)

(Earnings) loss from unconsolidated entities





(8,779)





767









(30,845)









(38,857)

Recognition of Distributable realized gains / (losses) on:





































Loans





48,203





(62)









55,287









103,428

Securities





398













(18,100)









(17,702)

Derivatives





(7,711)





118





(473)





(13,418)









(21,484)

Foreign currency





(4,810)





(133)





(14)





(3)









(4,960)

Earnings (loss) from unconsolidated entities





5,686





(382)









18,247









23,551

Sales of properties

















(5,789)









(5,789)

Distributable Earnings (Loss)



$

551,579



$

22,927



$

79,116



$

120,808



$

(189,131)



$

585,299

Distributable Earnings (Loss) per Weighted Average

   Diluted Share



$

1.86



$

0.08



$

0.27



$

0.41



$

(0.64)



$

1.98

 

Starwood Property Trust, Inc. and Subsidiaries



Condensed Consolidated Balance Sheet by Segment



As of December 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



$

160,007



$

4,440



$

32,080



$

19,546



$

346,372



$

562,445



$

772



$

563,217

Restricted cash





93,445





45,113





7,192





13,195









158,945









158,945

Loans held-for-investment, net





9,673,625





1,412,440









1,008









11,087,073









11,087,073

Loans held-for-sale





841,963





120,540









90,332









1,052,835









1,052,835

Investment securities





1,014,402





35,681









1,112,145









2,162,228





(1,425,570)





736,658

Properties, net





103,896









1,969,414





197,843









2,271,153









2,271,153

Intangible assets













40,370





71,123









111,493





(41,376)





70,117

Investment in unconsolidated entities





54,407





25,095









44,664









124,166





(16,112)





108,054

Goodwill









119,409









140,437









259,846









259,846

Derivative assets





6,595









41





147





33,772





40,555









40,555

Accrued interest receivable





87,922





2,091









123





5,978





96,114





(134)





95,980

Other assets





61,638





4,531





69,859





44,579





10,148





190,755





(7)





190,748

VIE assets, at fair value





























64,238,328





64,238,328

Total Assets



$

12,097,900



$

1,769,340



$

2,118,956



$

1,735,142



$

396,270



$

18,117,608



$

62,755,901



$

80,873,509

Liabilities and Equity

















































Liabilities:

















































Accounts payable, accrued expenses and other 

  liabilities



$

41,104



$

12,144



$

43,630



$

45,309



$

64,583



$

206,770



$

75



$

206,845

Related-party payable

















5





39,165





39,170









39,170

Dividends payable





















137,959





137,959









137,959

Derivative liabilities





39,082





1,718









524









41,324









41,324

Secured financing agreements, net





5,893,999





1,240,763





1,794,609





606,100





632,719





10,168,190





(22,000)





10,146,190

Collateralized loan obligations, net





930,554





















930,554









930,554

Unsecured senior notes, net





















1,732,520





1,732,520









1,732,520

VIE liabilities, at fair value





























62,776,371





62,776,371

Total Liabilities





6,904,739





1,254,625





1,838,239





651,938





2,606,946





13,256,487





62,754,446





76,010,933

Equity:

















































Starwood Property Trust, Inc. Stockholders' Equity:

















































Common stock





















2,921





2,921









2,921

Additional paid-in capital





1,192,584





496,387





98,882





(322,992)





3,744,878





5,209,739









5,209,739

Treasury stock





















(138,022)





(138,022)









(138,022)

Accumulated other comprehensive income (loss)





44,057













(64)









43,993









43,993

Retained earnings (accumulated deficit)





3,956,405





18,328





(44,832)





1,260,819





(5,820,453)





(629,733)









(629,733)

Total Starwood Property Trust, Inc. Stockholders' Equity





5,193,046





514,715





54,050





937,763





(2,210,676)





4,488,898









4,488,898

Non-controlling interests in consolidated subsidiaries





115









226,667





145,441









372,223





1,455





373,678

Total Equity





5,193,161





514,715





280,717





1,083,204





(2,210,676)





4,861,121





1,455





4,862,576

Total Liabilities and Equity



$

12,097,900



$

1,769,340



$

2,118,956



$

1,735,142



$

396,270



$

18,117,608



$

62,755,901



$

80,873,509

 

Cision View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-and-year-ended-december-31-2020-301235370.html

SOURCE Starwood Property Trust, Inc.

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