Market Overview

Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2019

Share:

GREENWICH, Conn., Feb. 25, 2020 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE:STWD) today announced operating results for the fiscal quarter and year ended December 31, 2019.  The Company's fourth quarter 2019 GAAP net income was $171.9 million, or $0.60 per diluted share, and Core Earnings (a non-GAAP financial measure) was $139.5 million, or $0.47 per diluted share.  These amounts include a gain on sale of the Company's Ireland property portfolio of $119.7 million and $60.1 million for GAAP and Core Earnings, respectively, or $0.41 and $0.20 per diluted share, respectively, and a GAAP and Core loss of $71.9 million and $70.6 million, respectively, resulting from the impairment of the Company's interest in a regional mall portfolio, or $0.25 and $0.24 per diluted share, respectively.

The Company's full year 2019 GAAP net income was $509.7 million, or $1.79 per diluted share, and Core Earnings was $528.9 million, or $1.80 per diluted share.  These amounts include the fourth quarter gain on sale of the Company's Ireland property portfolio discussed above and a full year GAAP and Core write down of $116.8 million and $139.5 million, respectively, relating to the Company's interest in the regional mall portfolio, or $0.40 and $0.48 per diluted share, respectively.

"Our fourth quarter results were highlighted by contributions throughout our multi-cylinder platform, which brought our investment portfolio to a record size of over $17 billion. In our primary business line, commercial lending, we originated $2.2 billion this quarter, bringing our on balance sheet portfolio to a record $9.1 billion. We also added over $600 million of new loans to our infrastructure portfolio. Our residential lending platform continues to perform well, with over $1.4 billion of assets and the completion of our fifth securitization.  We continue to execute strategic joint ventures in our CMBS portfolio, the largest of which closed in the fourth quarter. This has allowed us to expand our named special servicing footprint.

We successfully completed the sale of our Ireland portfolio this quarter, realizing a Core gain of $83 million before a tax withholding adjustment.  We believe we still have over $800 million in unrealized gains remaining in our book, over $700 million of which relates to the four portfolios remaining in our property segment.  Following the successful refinancings of our medical office and first multifamily portfolios, we expect the yields on our stabilized property portfolio to be approximately 15%," commented Jeffrey DiModica, President of Starwood Property Trust.

"Our balance sheet activity continues to create a very strong liquidity position headed into 2020," added Barry Sternlicht, Chairman and CEO of Starwood Property Trust.  "We have a strong pipeline of investment opportunities across our business cylinders and will remain highly selective as to where we deploy capital. We intend to stay disciplined with the right side of our balance sheet but are in a prime position to take advantage of any future dislocations across our target asset classes."

Dividend

On February 25, 2020, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending March 31, 2020. The dividend is payable on April 15, 2020 to common stockholders of record as of March 31, 2020.

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 Tuesday, February 25, 2020, 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:  13698502
The playback can be accessed through March 3, 2020.

About Starwood Property Trust, Inc.

Starwood Property Trust (NYSE: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 $61 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, 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, 2019, 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, 2019
(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


$

147,360


$

24,611


$


$

5,130


$


$

177,101


$


$

177,101

Interest income from investment securities



18,817



3,755





29,651





52,223



(32,447)



19,776

Servicing fees



113







8,596





8,709



(2,187)



6,522

Rental income







71,996



10,186





82,182





82,182

Other revenues



324



19



118



388





849



(2)



847

Total revenues 



166,614



28,385



72,114



53,951





321,064



(34,636)



286,428

Costs and expenses:

























Management fees



368







18



42,480



42,866



39



42,905

Interest expense



50,106



13,579



19,696



8,469



29,086



120,936



(161)



120,775

General and administrative



8,855



4,636



838



25,172



3,252



42,753



85



42,838

Acquisition and investment pursuit costs



436



24



217



(200)





477





477

Costs of rental operations



1,166





24,524



5,418





31,108





31,108

Depreciation and amortization



396



68



22,483



4,300





27,247





27,247

Loan loss provision, net



570



3,314









3,884





3,884

Other expense



77





340



171





588





588

Total costs and expenses 



61,974



21,621



68,098



43,348



74,818



269,859



(37)



269,822

Other income (loss):

























Change in net assets related to consolidated VIEs















71,548



71,548

Change in fair value of servicing rights









149





149



(1,481)



(1,332)

Change in fair value of investment securities, net



1,861







32,775





34,636



(34,798)



(162)

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



(6,375)







12,298





5,923





5,923

Earnings (loss) from unconsolidated entities



2,073





(71,824)



565





(69,186)



(532)



(69,718)

Gain on sale of investments and other assets, net



1,143





119,746



38,982





159,871





159,871

(Loss) gain on derivative financial instruments, net



(32,349)



(12)



2,673



9,347



(5,663)



(26,004)





(26,004)

Foreign currency gain (loss), net



34,367



307



44



(2)





34,716





34,716

Loss on extinguishment of debt





(3,136)



(4,745)



(651)





(8,532)





(8,532)

Other (loss) income, net







(100)



16





(84)





(84)

Total other income (loss)



720



(2,841)



45,794



93,479



(5,663)



131,489



34,737



166,226

Income (loss) before income taxes 



105,360



3,923



49,810



104,082



(80,481)



182,694



138



182,832

Income tax provision



(40)



(657)



(135)



(4,020)





(4,852)





(4,852)

Net income (loss) 



105,320



3,266



49,675



100,062



(80,481)



177,842



138



177,980

Net income attributable to non-controlling interests







(5,308)



(665)





(5,973)



(138)



(6,111)

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


$

105,320


$

3,266


$

44,367


$

99,397


$

(80,481)


$

171,869


$


$

171,869

 

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 December 31, 2019
(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.


$

105,320



3,266



44,367



99,397



(80,481)



171,869

Add / (Deduct):



















Non-controlling interests attributable to Woodstar II Class A Units







5,308







5,308

Non-cash equity compensation expense



1,161



992



83



1,765



5,788



9,789

Management incentive fee











18,117



18,117

Acquisition and investment pursuit costs



(826)





(89)



(329)





(1,244)

Depreciation and amortization



396



68



22,797



3,975





27,236

Loan loss provision, net



570



3,314









3,884

Interest income adjustment for securities



(32)







1,235





1,203

Extinguishment of debt, net











(246)



(246)

Other non-cash items







(1,233)



(1,766)



153



(2,846)

Reversal of GAAP unrealized (gains) / losses on:



















Loans held-for-sale



6,375







(12,298)





(5,923)

Securities



(1,861)







(32,775)





(34,636)

Derivatives



32,443



16



(2,189)



(9,305)



6,519



27,484

Foreign currency



(34,367)



(307)



(44)



2





(34,716)

(Earnings) loss from unconsolidated entities



(2,073)





71,824



(565)





69,186

Recognition of Core realized gains / (losses) on:



















Loans held-for-sale



1,848



1





14,189





16,038

Securities









2,906





2,906

Derivatives



(7,300)



210



14,981



6,961





14,852

Foreign currency



5,347



(83)



44



(2)





5,306

Earnings (loss) from unconsolidated entities



1,773





(70,557)



1,618





(67,166)

Sales of properties







(74,878)



(12,062)





(86,940)

Core Earnings (Loss)


$

108,774


$

7,477


$

10,414


$

62,946


$

(50,150)


$

139,461

Core Earnings (Loss) per Weighted Average Diluted Share


$

0.37


$

0.02


$

0.04


$

0.21


$

(0.17)


$

0.47

 

 

Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the year ended December 31, 2019
(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


$

610,316


$

99,580


$


$

14,117


$


$

724,013


$


$

724,013

Interest income from investment securities



81,255



6,318





117,663





205,236



(128,607)



76,629

Servicing fees



423







69,962





70,385



(16,089)



54,296

Rental income







287,094



50,872





337,966





337,966

Other revenues



1,038



751



409



1,317



26



3,541



(26)



3,515

Total revenues 



693,032



106,649



287,503



253,931



26



1,341,141



(144,722)



1,196,419

Costs and expenses:

























Management fees



1,495







72



117,404



118,971



161



119,132

Interest expense



222,118



62,836



76,838



33,621



113,964



509,377



(648)



508,729

General and administrative



29,481



18,260



6,232



87,115



13,681



154,769



343



155,112

Acquisition and investment pursuit costs



1,351



75



217



(587)





1,056





1,056

Costs of rental operations



2,691





95,370



24,921





122,982





122,982

Depreciation and amortization



1,091



83



92,561



19,587





113,322





113,322

Loan loss provision, net



2,616



4,510









7,126





7,126

Other expense



307





1,693



365





2,365





2,365

Total costs and expenses 



261,150



85,764



272,911



165,094



245,049



1,029,968



(144)



1,029,824

Other income (loss):

























Change in net assets related to consolidated VIEs















236,309



236,309

Change in fair value of servicing rights









(1,468)





(1,468)



(2,172)



(3,640)

Change in fair value of investment securities, net



(1,084)







89,206





88,122



(87,289)



833

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



10,462







61,139





71,601





71,601

Earnings (loss) from unconsolidated entities



10,649





(114,362)



4,166





(99,547)



(1,807)



(101,354)

Gain on sale of investments and other assets, net



4,619



3,041



119,746



60,622





188,028





188,028

(Loss) gain on derivative financial instruments, net



(20,325)



(3,349)



(1,284)



(7,414)



26,062



(6,310)





(6,310)

Foreign currency gain (loss), net



17,342



205



37



(2)





17,582





17,582

Loss on extinguishment of debt



(857)



(11,357)



(4,745)



(845)



(1,466)



(19,270)





(19,270)

Other (loss) income, net





(50)



(100)



16



(73)



(207)





(207)

Total other income (loss)



20,806



(11,510)



(708)



205,420



24,523



238,531



145,041



383,572

Income (loss) before income taxes 



452,688



9,375



13,884



294,257



(220,500)



549,704



463



550,167

Income tax (provision) benefit



(4,818)



89



(393)



(8,110)





(13,232)





(13,232)

Net income (loss) 



447,870



9,464



13,491



286,147



(220,500)



536,472



463



536,935

Net income attributable to non-controlling interests



(392)





(21,630)



(4,786)





(26,808)



(463)



(27,271)

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


$

447,478


$

9,464


$

(8,139)


$

281,361


$

(220,500)


$

509,664


$


$

509,664

 

 

Reconciliation of Net Income to Core Earnings
For the year ended December 31, 2019
(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.


$

447,478



9,464



(8,139)



281,361



(220,500)



509,664

Add / (Deduct):



















Non-controlling interests attributable to Woodstar II Class A Units







21,630







21,630

Non-cash equity compensation expense



3,918



2,683



312



6,582



22,697



36,192

Management incentive fee











20,165



20,165

Acquisition and investment pursuit costs



(882)



2



(355)



(780)



(356)



(2,371)

Depreciation and amortization



1,091



83



93,864



18,156





113,194

Loan loss provision, net



2,616



4,510









7,126

Interest income adjustment for securities



(617)







15,933





15,316

Extinguishment of debt, net











(1,950)



(1,950)

Other non-cash items







(1,798)



(1,067)



623



(2,242)

Reversal of GAAP unrealized (gains) / losses on:



















Loans held-for-sale



(10,462)







(61,139)





(71,601)

Securities



1,084







(89,206)





(88,122)

Derivatives



20,680



3,353



6,268



7,536



(26,396)



11,441

Foreign currency



(17,342)



(205)



(37)



2





(17,582)

(Earnings) loss from unconsolidated entities



(10,649)





114,362



(4,166)





99,547

Recognition of Core realized gains / (losses) on:



















Loans held-for-sale



9,028



(984)





63,908





71,952

Securities



970







14,608





15,578

Derivatives



(5,500)



(1,186)



17,238



(10,153)





399

Foreign currency



622



(1,081)



37



7





(415)

Earnings (loss) from unconsolidated entities



8,851





(139,462)



15,812





(114,799)

Sales of properties







(74,878)



(19,359)





(94,237)

Core Earnings (Loss)


$

450,886


$

16,639


$

29,042


$

238,035


$

(205,717)


$

528,885

Core Earnings (Loss) per Weighted Average Diluted Share


$

1.54


$

0.05


$

0.10


$

0.81


$

(0.70)


$

1.80

 

 

Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet by Segment
As of December 31, 2019
(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


$

26,278


$

2,209


$

30,123


$

61,693


$

356,864


$

477,167


$

1,221


$

478,388

Restricted cash



36,135



41,967



7,171



10,370





95,643





95,643

Loans held-for-investment, net



9,187,332



1,397,448





1,294





10,586,074





10,586,074

Loans held-for-sale



605,384



119,528





159,238





884,150





884,150

Investment securities



992,974



45,153





1,177,148





2,215,275



(1,405,037)



810,238

Properties, net



26,834





2,029,024



210,582





2,266,440





2,266,440

Intangible assets







47,303



64,644





111,947



(26,247)



85,700

Investment in unconsolidated entities



46,921



25,862





32,183





104,966



(20,637)



84,329

Goodwill





119,409





140,437





259,846





259,846

Derivative assets



14,718



7



3



7



14,208



28,943





28,943

Accrued interest receivable



45,996



3,134



133



2,388



13,242



64,893



(806)



64,087

Other assets



59,170



6,101



82,910



54,238



8,911



211,330



(7)



211,323

VIE assets, at fair value















62,187,175



62,187,175

Total Assets


$

11,041,742


$

1,760,818


$

2,196,667


$

1,914,222


$

393,225


$

17,306,674


$

60,735,662


$

78,042,336

Liabilities and Equity

























Liabilities:

























Accounts payable, accrued expenses and other liabilities


$

30,594


$

6,443


$

48,370


$

73,021


$

53,494


$

211,922


$

84


$

212,006

Related-party payable









5



40,920



40,925





40,925

Dividends payable











137,427



137,427





137,427

Derivative liabilities



7,698



750





292





8,740





8,740

Secured financing agreements, net



5,038,876



1,217,066



1,698,334



574,507



391,215



8,919,998



(13,950)



8,906,048

Collateralized loan obligations, net



928,060











928,060





928,060

Unsecured senior notes, net











1,928,622



1,928,622





1,928,622

VIE liabilities, at fair value















60,743,494



60,743,494

Total Liabilities



6,005,228



1,224,259



1,746,704



647,825



2,551,678



12,175,694



60,729,628



72,905,322

Equity:

























Starwood Property Trust, Inc. Stockholders' Equity:

























Common stock











2,874



2,874





2,874

Additional paid-in capital



1,522,360



529,668



208,650



(123,210)



2,995,064



5,132,532





5,132,532

Treasury stock











(104,194)



(104,194)





(104,194)

Accumulated other comprehensive income (loss)



50,996







(64)





50,932





50,932

Retained earnings (accumulated deficit)



3,463,158



6,891



5,431



1,194,998



(5,052,197)



(381,719)





(381,719)

Total Starwood Property Trust, Inc. Stockholders' Equity



5,036,514



536,559



214,081



1,071,724



(2,158,453)



4,700,425





4,700,425

Non-controlling interests in consolidated subsidiaries







235,882



194,673





430,555



6,034



436,589

Total Equity



5,036,514



536,559



449,963



1,266,397



(2,158,453)



5,130,980



6,034



5,137,014

Total Liabilities and Equity


$

11,041,742


$

1,760,818


$

2,196,667


$

1,914,222


$

393,225


$

17,306,674


$

60,735,662


$

78,042,336

 

Cision View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-and-year-ended-december-31-2019-301010434.html

SOURCE Starwood Property Trust, Inc.

View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com