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

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