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Starwood Property Trust Reports Results for the Quarter Ended June 30, 2018

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Starwood Property Trust Reports Results for the Quarter Ended June 30, 2018

- Quarterly GAAP Earnings of $0.40 and Core Earnings of $0.54 per Diluted Common Share -

- Deploys a Record $2.8 Billion of Capital, including $2.2 Billion in Lending Segment -

- Year-to-Date Capital Deployed of $4.7 Billion, Up 63% Versus 2017 -

- Declares Dividend of $0.48 per share for the Third Quarter of 2018 -

- Subsequent to Quarter End, Commits to Acquire $2.6 Billion Platform and Loan Portfolio from GE Capital -

PR Newswire

GREENWICH, Conn., Aug. 8, 2018 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE:STWD) today announced operating results for the fiscal quarter ended June 30, 2018.  The Company's second quarter 2018 GAAP net income was $109.2 million, or $0.40 per diluted share, and Core Earnings (a non-GAAP financial measure) was $148.4 million, or $0.54 per diluted share.

"I am very pleased with the performance of our Company this quarter, with every business line continuing to perform at or above our expectations. The majority of our earnings are still derived from our primary line of business, real estate lending, where the $2.0 billion of loan originations this quarter were the largest in our Company's history.  Our property investments, residential lending platform, CMBS and conduit operations continue to enhance our enterprise, along with our special servicer, where we added 13 new special servicing assignments, the highest since we acquired LNR in 2013. With the acquisition of GE Capital's Energy Project Finance platform, we have further diversified our lending opportunity set outside of traditional real estate and have never been more excited about our Company's future," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

Dividend

On August 8, 2018, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending September 30, 2018. The dividend is payable on October 15, 2018 to common stockholders of record as of September 28, 2018.

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 webcast and conference call on Wednesday, August 8, 2018, at 10:00 a.m. Eastern Time to discuss the quarter's financial results and recent events.  A webcast will be available on the Company's website at www.starwoodpropertytrust.com.  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.

To Participate in the Telephone Conference Call:

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:  13681522

The playback can be accessed through August 22, 2018.

About Starwood Property Trust, Inc.

Starwood Property Trust (NYSE:STWD), an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the United States. The Company's core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt and equity investments. With total capital deployed since inception of over $44 billion, Starwood Property Trust continues to solidify its position as one of the premier real estate finance companies in the country.

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.  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 completion of pending investments, continued ability to acquire additional investments, competition within the finance and real estate industries, economic conditions, availability of financing and other risks detailed from time to time in the Company's reports filed with the SEC.

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the three months ended June 30, 2018

(Amounts in thousands)






















Investing






Investing





Lending


Property


and Servicing






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Revenues:






















Interest income from loans


$

148,268


$


$

3,436


$


$

151,704


$


$

151,704

Interest income from investment 
    securities



8,930





30,472





39,402



(28,612)



10,790

Servicing fees



50





24,687





24,737



(7,422)



17,315

Rental income





74,401



14,490





88,891





88,891

Other revenues



224



81



516



86



907



(51)



856

Total revenues



157,472



74,482



73,601



86



305,641



(36,085)



269,556

Costs and expenses:






















Management fees



463





18



26,907



27,388



106



27,494

Interest expense



34,826



19,380



5,807



31,854



91,867



(275)



91,592

General and administrative



6,251



1,971



23,855



3,367



35,444



84



35,528

Acquisition and investment pursuit 
    costs



1,692



(52)



(79)





1,561





1,561

Costs of rental operations





25,991



6,906





32,897





32,897

Depreciation and amortization



16



31,738



5,396





37,150





37,150

Loan loss allowance, net



25,259









25,259





25,259

Other expense



77





420





497





497

Total costs and expenses



68,584



79,028



42,323



62,128



252,063



(85)



251,978

Income (loss) before other income 
    (loss), income taxes and non-
    controlling interests



88,888



(4,546)



31,278



(62,042)



53,578



(36,000)



17,578

Other income (loss):






















Change in net assets related to
     consolidated VIEs













43,946



43,946

Change in fair value of servicing rights







(3,255)





(3,255)



1,052



(2,203)

Change in fair value of investment 
    securities, net



482





15,110





15,592



(7,890)



7,702

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



184





14,649





14,833





14,833

Earnings (loss) from unconsolidated 
    entities



1,803



2,933



1,454





6,190



(720)



5,470

Gain on sale of investments and other 
    assets, net



135



2,941



10,361





13,437





13,437

Gain (loss) on derivative financial 
    instruments, net



19,467



19,920



(398)



(6,367)



32,622





32,622

Foreign currency (loss) gain, net



(13,264)



(1)



1





(13,264)





(13,264)

Loss on extinguishment of debt







(186)





(186)





(186)

Other income, net





489



9





498





498

Total other income (loss)



8,807



26,282



37,745



(6,367)



66,467



36,388



102,855

Income (loss) before income taxes



97,695



21,736



69,023



(68,409)



120,045



388



120,433

Income tax provision



(1,720)



(611)



(1,012)





(3,343)





(3,343)

Net income (loss)



95,975



21,125



68,011



(68,409)



116,702



388



117,090

Net income attributable to non-controlling interests



(361)



(4,684)



(2,427)





(7,472)



(388)



(7,860)

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


$

95,614


$

16,441


$

65,584


$

(68,409)


$

109,230


$


$

109,230

 

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 June 30, 2018

(Amounts in thousands except per share data)








Investing








Lending


Property


and Servicing








Segment


Segment


Segment


Corporate


Total

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


$

95,614


$

16,441


$

65,584


$

(68,409)


$

109,230

Add / (Deduct):
















Non-controlling interests attributable to 
    Woodstar II Class A Units





4,684







4,684

Non-cash equity compensation expense



766



87



1,317



3,667



5,837

Management incentive fee









5,687



5,687

Acquisition and investment pursuit costs



1,266



(67)



(57)





1,142

Depreciation and amortization



16



32,063



4,885





36,964

Loan loss allowance, net



25,259









25,259

Interest income adjustment for securities



(197)





2,695





2,498

Extinguishment of debt, net









(247)



(247)

Other non-cash items





(1,212)



448



895



131

Reversal of unrealized (gains) / losses on:
















Loans held-for-sale



(184)





(14,649)





(14,833)

Securities



(625)





(15,110)





(15,735)

Derivatives



(19,697)



(19,013)



58



7,151



(31,501)

Foreign currency



13,264



1



(1)





13,264

Earnings from unconsolidated entities



(1,803)



(2,933)



(1,454)





(6,190)

Recognition of realized gains / (losses) on:
















Loans held-for-sale



(1,196)





14,227





13,031

Securities



142





(1,978)





(1,836)

Derivatives



(129)



(229)



618





260

Foreign currency



(140)



(2)



(1)





(143)

Earnings from unconsolidated entities



1,558





1,218





2,776

Sales of properties





(155)



(1,681)





(1,836)

Core Earnings (Loss)


$

113,914


$

29,665


$

56,119


$

(51,256)


$

148,442

Core Earnings (Loss) per Weighted 
     Average Diluted Share


$

0.42


$

0.11


$

0.20


$

(0.19)


$

0.54

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the six months ended June 30, 2018

(Amounts in thousands)






















Investing






Investing





Lending


Property


and Servicing






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Revenues:






















Interest income from loans


$

283,240


$


$

6,084


$


$

289,324


$


$

289,324

Interest income from investment 
    securities



23,369





64,871





88,240



(62,181)



26,059

Servicing fees



215





58,121





58,336



(14,954)



43,382

Rental income





141,111



28,890





170,001





170,001

Other revenues



418



182



744



138



1,482



(105)



1,377

Total revenues



307,242



141,293



158,710



138



607,383



(77,240)



530,143

Costs and expenses:






















Management fees



943





36



56,958



57,937



199



58,136

Interest expense



66,847



35,914



10,902



65,657



179,320



(545)



178,775

General and administrative



12,946



3,830



44,875



5,849



67,500



170



67,670

Acquisition and investment pursuit costs



1,912



(46)



72





1,938





1,938

Costs of rental operations





49,479



13,111





62,590





62,590

Depreciation and amortization



33



58,207



10,654





68,894





68,894

Loan loss allowance, net



26,797









26,797





26,797

Other expense



154





447





601





601

Total costs and expenses



109,632



147,384



80,097



128,464



465,577



(176)



465,401

Income (loss) before other income 
    (loss), income taxes and non-
    controlling interests



197,610



(6,091)



78,613



(128,326)



141,806



(77,064)



64,742

Other income (loss):






















Change in net assets related to 
    consolidated VIEs













96,599



96,599

Change in fair value of servicing 
    rights







(12,423)





(12,423)



4,406



(8,017)

Change in fair value of investment 
    securities, net



(222)





29,089





28,867



(21,314)



7,553

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



(1,508)





24,141





22,633





22,633

Earnings (loss) from unconsolidated 
    entities



3,247



(582)



3,050





5,715



(1,707)



4,008

Gain on sale of investments and 
    other assets, net



414



6,883



16,800





24,097





24,097

Gain (loss) on derivative financial 
    instruments, net



8,649



21,839



4,644



(19,369)



15,763





15,763

Foreign currency gain (loss), net



286



1



(2)





285





285

Loss on extinguishment of debt







(186)





(186)





(186)

Other income, net



43



506



57





606





606

Total other income (loss)



10,909



28,647



65,170



(19,369)



85,357



77,984



163,341

Income (loss) before income taxes



208,519



22,556



143,783



(147,695)



227,163



920



228,083

Income tax provision



(2,667)



(1,872)



(1,660)





(6,199)





(6,199)

Net income (loss)



205,852



20,684



142,123



(147,695)



220,964



920



221,884

Net income attributable to non-
    controlling interests



(722)



(7,137)



(3,943)





(11,802)



(920)



(12,722)

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


$

205,130


$

13,547


$

138,180


$

(147,695)


$

209,162


$


$

209,162

 

 

Reconciliation of Net Income to Core Earnings

For the six months ended June 30, 2018

(Amounts in thousands except per share data)








Investing







Lending


Property


and Servicing







Segment


Segment


Segment


Corporate


Total

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


$

205,130


$

13,547


$

138,180


$

(147,695)


$

209,162

Add / (Deduct):
















Non-controlling interests attributable to 
    Woodstar II Class A Units





7,137







7,137

Non-cash equity compensation expense



1,329



130



2,292



6,866



10,617

Management incentive fee









15,321



15,321

Acquisition and investment pursuit costs



1,385



(160)



(86)





1,139

Depreciation and amortization



33



58,868



9,797





68,698

Loan loss allowance, net



26,797









26,797

Interest income adjustment for securities



(394)





1,633





1,239

Extinguishment of debt, net









9,508



9,508

Other non-cash items





(1,774)



572



1,776



574

Reversal of unrealized (gains) / losses on:
















Loans held-for-sale



1,508





(24,141)





(22,633)

Securities



79





(29,089)





(29,010)

Derivatives



(9,168)



(20,449)



(5,364)



21,549



(13,432)

Foreign currency



(286)



(1)



2





(285)

Earnings from unconsolidated entities



(3,247)



582



(3,050)





(5,715)

Recognition of realized gains / (losses) on:
















Loans held-for-sale



(2,071)





23,870





21,799

Securities



142





(6,092)





(5,950)

Derivatives



(5,854)



(708)



6,149





(413)

Foreign currency



7,911





(42)





7,869

Earnings from unconsolidated entities



3,405





2,262





5,667

Sales of properties





(365)



(3,446)





(3,811)

Core Earnings (Loss)


$

226,699


$

56,807


$

113,447


$

(92,675)


$

304,278

Core Earnings (Loss) per Weighted 
     Average Diluted Share


$

0.84


$

0.21


$

0.41


$

(0.34)


$

1.12

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of June 30, 2018

(Amounts in thousands)







Investing






Investing





Lending


Property


and Servicing






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Assets:






















Cash and cash equivalents


$

10,303


$

25,141


$

68,853


$

130,211


$

234,508


$

911


$

235,419

Restricted cash



51,942



15,493



9,639



12,720



89,794





89,794

Loans held-for-investment, net



6,924,600





3,576





6,928,176





6,928,176

Loans held-for-sale



792,664





300,105





1,092,769





1,092,769

Loans transferred as secured 
    borrowings



74,217









74,217





74,217

Investment securities



389,509





1,076,411





1,465,920



(1,023,985)



441,935

Properties, net





2,642,076



294,608





2,936,684





2,936,684

Intangible assets





104,425



86,101





190,526



(23,840)



166,686

Investment in unconsolidated 
    entities



33,876



110,122



44,435





188,433



(21,717)



166,716

Goodwill







140,437





140,437





140,437

Derivative assets



10,748



39,184



883





50,815





50,815

Accrued interest receivable



40,180



244



1,042



13,194



54,660





54,660

Other assets



31,146



92,785



51,794



1,878



177,603



(25)



177,578

VIE assets, at fair value













48,044,873



48,044,873

Total Assets


$

8,359,185


$

3,029,470


$

2,077,884


$

158,003


$

13,624,542


$

46,976,217


$

60,600,759

Liabilities and Equity






















Liabilities:






















Accounts payable, accrued 
    expenses and other liabilities


$

21,461


$

70,113


$

69,129


$

28,875


$

189,578


$

95


$

189,673

Related-party payable



65





39



25,220



25,324





25,324

Dividends payable









126,857



126,857





126,857

Derivative liabilities



6,321



4,736



862



24,216



36,135





36,135

Secured financing agreements, net



3,466,334



1,912,368



564,226



297,389



6,240,317



(23,700)



6,216,617

Unsecured senior notes, net









2,255,976



2,255,976





2,255,976

Secured borrowings on transferred 
    loans, net



74,058









74,058





74,058

VIE liabilities, at fair value













46,976,428



46,976,428

Total Liabilities



3,568,239



1,987,217



634,256



2,758,533



8,948,245



46,952,823



55,901,068

Equity:






















Starwood Property Trust, Inc.
    Stockholders' Equity:






















Common stock









2,675



2,675





2,675

Additional paid-in capital



1,905,265



826,782



606,583



1,400,339



4,738,969





4,738,969

Treasury stock









(104,194)



(104,194)





(104,194)

Accumulated other comprehensive 
    income (loss)



60,082



8,115



(63)





68,134





68,134

Retained earnings (accumulated 
    deficit)



2,815,109



(788)



824,267



(3,899,350)



(260,762)





(260,762)

Total Starwood Property 
    Trust, Inc. Stockholders' Equity



4,780,456



834,109



1,430,787



(2,600,530)



4,444,822





4,444,822

Non-controlling interests in 
    consolidated subsidiaries



10,490



208,144



12,841





231,475



23,394



254,869

Total Equity



4,790,946



1,042,253



1,443,628



(2,600,530)



4,676,297



23,394



4,699,691

Total Liabilities and Equity


$

8,359,185


$

3,029,470


$

2,077,884


$

158,003


$

13,624,542


$

46,976,217


$

60,600,759

 

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

Cision View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-june-30-2018-300693844.html

SOURCE Starwood Property Trust, Inc.

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