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

Rhea-AI Summary

Starwood Property Trust (NYSE: STWD) reported strong financial results for the fourth quarter and full year 2020. The fourth quarter saw a GAAP net income of $107 million ($0.37 per diluted share) and Distributable Earnings of $148.4 million ($0.50 per diluted share). For the entire year, GAAP net income totaled $331.7 million ($1.16 per diluted share), with Distributable Earnings reaching $585.3 million ($1.98 per diluted share). CEO Barry Sternlicht highlighted the company’s resilience during the pandemic, emphasizing liquidity and the successful deployment of $3 billion in capital to seize emerging opportunities.

Positive

• Fourth quarter GAAP net income of $107 million ($0.37 per diluted share).
• Full year GAAP net income of $331.7 million ($1.16 per diluted share).
• Successful deployment of $3 billion in capital across various business lines.
• Strong liquidity position without the need for distressed asset sales.

Negative

• None.

GREENWICH, Conn., February 25, 2021 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: 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 (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 $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

 

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SOURCE Starwood Property Trust, Inc.

FAQ

What were Starwood Property Trust's Q4 2020 earnings?

Starwood Property Trust reported a GAAP net income of $107 million for Q4 2020, equating to $0.37 per diluted share.

What is the total Distributable Earnings for Starwood Property Trust in 2020?

The total Distributable Earnings for Starwood Property Trust in 2020 was $585.3 million, or $1.98 per diluted share.

How much capital did Starwood deploy in 2020?

Starwood Property Trust deployed $3 billion of capital across various business lines in 2020.

What were the total GAAP net income figures for Starwood Property Trust in 2020?

The total GAAP net income for Starwood Property Trust in 2020 was $331.7 million, or $1.16 per diluted share.

When did Starwood Property Trust announce its Q4 2020 results?

Starwood Property Trust announced its Q4 2020 results on February 25, 2021.