Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2021

Rhea-AI Summary

Starwood Property Trust (NYSE: STWD) reported its Q4 and full year 2021 results, achieving a GAAP net income of $91.4 million ($0.31 per diluted share) for Q4, and $447.7 million ($1.52 per diluted share) for the full year. Distributable Earnings were $335.0 million ($1.10 per share) for Q4 and $794.1 million ($2.63 per share) for the year, with significant gains from the sale of a 20.6% interest in an affordable housing fund. The company invested a record $16.7 billion in 2021, with a strong liquidity position of $9.0 billion available for future opportunities.

Positive

• Record investment year with $16.7 billion deployed, exceeding previous yearly totals by over 50%.
• Q4 Distributable Earnings included a gain of $191.3 million, enhancing financial performance.
• Strong liquidity with $9.0 billion in available secured financing and corporate debt capacity.

Negative

• None.

GREENWICH, Conn., Feb. 25, 2022 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter and year ended December 31, 2021.  The Company's fourth quarter 2021 GAAP net income was $91.4 million, or $0.31 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $335.0 million, or $1.10 per diluted share. The Company's full year 2021 GAAP net income was $447.7 million, or $1.52 per diluted share, and Distributable Earnings was $794.1 million, or $2.63 per diluted share.  Distributable Earnings in both periods includes a $191.3 million gain related to the sale of a 20.6% interest in the new affordable housing investment fund during the fourth quarter of 2021, or $0.62 and $0.63 per diluted share for the quarter and full year, respectively. For GAAP purposes, the establishment of the fund resulted in a $1.2 billion positive mark-to-market adjustment directly to equity which did not impact earnings.

"2021 was a record investment year at Starwood Property Trust. We leveraged our global multi-cylinder platform to invest $16.7 billion, over 50% more than any previous year. In the fourth quarter alone, we invested $7.1 billion, and closed or committed to close over $3.0 billion after quarter end.  With $24.1 billion of predominately floating rate assets, we remain very well positioned to navigate the current environment," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

"To fund our record pace of investments and our pipeline, we recently raised $1.7 billion from debt and equity.  With $9.0 billion of available secured financing and corporate debt capacity, we have ample liquidity to take advantage of the significant opportunities we see in the market," added Jeffrey DiModica, President 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 Friday, February 25, 2022, 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:  13726790
The playback can be accessed through March 4, 2022.

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 $83 billion of capital since inception and manages a portfolio of over $24 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 (including the emergence of new strains of the virus), 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, 2021, 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, 2021 (Amounts in thousands)
	Commercial and Residential Lending Segment		Infrastructure Lending Segment		Property Segment		Investing and Servicing Segment		Corporate		Subtotal		Securitization VIEs		Total
Revenues:
Interest income from loans	$            189,723		$           23,512		$              —		$           3,957		$              —		$      217,192		$                 —		$        217,192
Interest income from investment securities	15,971		531		—		25,023		—		41,525		(29,312)		12,213
Servicing fees	120		—		—		14,628		—		14,748		(5,748)		9,000
Rental income	1,370		—		37,653		8,839		—		47,862		—		47,862
Other revenues	71		65		60		3,246		—		3,442		(4)		3,438
Total revenues	207,255		24,108		37,713		55,693		—		324,769		(35,064)		289,705
Costs and expenses:
Management fees	47		—		—		—		76,010		76,057		3		76,060
Interest expense	61,636		9,755		10,273		5,653		29,432		116,749		(220)		116,529
General and administrative	11,078		4,276		5,103		23,697		4,300		48,454		83		48,537
Acquisition and investment pursuit costs	371		1		(60)		66		—		378		—		378
Costs of rental operations	421		—		15,674		4,580		—		20,675		—		20,675
Depreciation and amortization	313		101		11,950		3,645		—		16,009		—		16,009
Credit loss provision, net	9,397		11,301		—		—		—		20,698		—		20,698
Other expense	—		—		—		—		—		—		—		—
Total costs and expenses	83,263		25,434		42,940		37,641		109,742		299,020		(134)		298,886
Other income (loss):
Change in net assets related to consolidated VIEs	—		—		—		—		—		—		82,030		82,030
Change in fair value of servicing rights	—		—		—		3,524		—		3,524		(2,686)		838
Change in fair value of investment securities, net	11,857		—		—		30,766		—		42,623		(43,913)		(1,290)
Change in fair value of mortgage loans, net	(10,243)		—		—		11,177		—		934		—		934
Income from affordable housing fund investments	—		—		6,425		—		—		6,425		—		6,425
Earnings (loss) from unconsolidated entities	1,569		1,085		—		580		—		3,234		(484)		2,750
(Loss) gain  on sale of investments and other assets, net	(43)		162		—		12,488		—		12,607		—		12,607
Gain (loss) on derivative financial instruments, net	13,997		370		6,121		744		(4,661)		16,571		—		16,571
Foreign currency (loss) gain, net	(346)		96		16		(1)		—		(235)		—		(235)
Loss on extinguishment of debt	—		—		(5,140)		(91)		—		(5,231)		—		(5,231)
Other (loss) income, net	(939)		—		—		41		—		(898)		—		(898)
Total other income (loss)	15,852		1,713		7,422		59,228		(4,661)		79,554		34,947		114,501
Income (loss) before income taxes	139,844		387		2,195		77,280		(114,403)		105,303		17		105,320
Income tax (provision) benefit	(2,087)		(32)		—		(173)		1		(2,291)		—		(2,291)
Net income (loss)	137,757		355		2,195		77,107		(114,402)		103,012		17		103,029
Net income attributable to non-controlling interests	(4)		—		(5,439)		(6,120)		—		(11,563)		(17)		(11,580)
Net income (loss) attributable to Starwood Property Trust, Inc.	$            137,753		$               355		$         (3,244)		$          70,987		$     (114,402)		$        91,449		$                 —		$          91,449

 

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, 2021 (Amounts in thousands except per share data)
	Commercial and Residential Lending Segment		Infrastructure Lending Segment		Property Segment		Investing and Servicing Segment		Corporate		Total
Net income (loss) attributable to Starwood Property Trust, Inc.	137,753		355		(3,244)		70,987		(114,402)		91,449
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units	—		—		4,691		—		—		4,691
Non-cash equity compensation expense	1,783		1,054		55		950		6,086		9,928
Management incentive fee	—		—		—		—		51,163		51,163
Acquisition and investment pursuit costs	(97)		—		(89)		(108)		—		(294)
Depreciation and amortization	253		91		12,021		3,779		—		16,144
Credit loss provision, net	9,397		11,301		—		—		—		20,698
Interest income adjustment for securities	895		—		—		5,896		—		6,791
Extinguishment of debt, net	—		—		—		—		(247)		(247)
Other non-cash items	2		—		110		(2,020)		2		(1,906)
Reversal of GAAP unrealized (gains) / losses on:
Loans	10,243		—		—		(11,177)		—		(934)
Securities	(11,857)		—		—		(30,766)		—		(42,623)
Woodstar Fund investments	—		—		(6,425)		—		—		(6,425)
Derivatives	(16,690)		(429)		(7,927)		(1,514)		7,095		(19,465)
Foreign currency	346		(96)		(16)		1		—		235
(Earnings) loss from unconsolidated entities	(1,569)		(1,085)		—		(580)		—		(3,234)
Sales of properties	—		—		—		(12,487)		—		(12,487)
Recognition of Distributable realized gains / (losses) on:
Loans	996		—		—		13,287		—		14,283
Realized credit loss	(7,050)		—		—		—		—		(7,050)
Securities	(6,138)		—		—		(594)		—		(6,732)
Woodstar Fund investments	—		—		7,027		—		—		7,027
Sale of interest in Woodstar Fund	—		—		196,410		—		—		196,410
Derivatives	3,718		217		(34)		503		—		4,404
Foreign currency	2,340		(91)		16		(1)		—		2,264
Earnings (loss) from unconsolidated entities	1,888		1,085		—		455		—		3,428
Sales of properties	—		—		—		7,508		—		7,508
Distributable Earnings (Loss)	$                       126,213		$                          12,402		$                       202,595		$                          44,119		$                        (50,303)		$                       335,026
Distributable Earnings (Loss) per Weighted Average Diluted Share	$                              0.41		$                              0.04		$                              0.67		$                              0.15		$                             (0.17)		$                              1.10

 

Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the year ended December 31, 2021 (Amounts in thousands)
	Commercial and Residential Lending Segment		Infrastructure Lending Segment		Property Segment		Investing and Servicing Segment		Corporate		Subtotal		Securitization VIEs		Total
Revenues:
Interest income from loans	$            705,499		$           85,057		$              —		$             9,735		$              —		$      800,291		$                 —		$         800,291
Interest income from investment securities	67,589		2,190		—		96,771		—		166,550		(121,382)		45,168
Servicing fees	453		—		—		58,896		—		59,349		(20,610)		38,739
Rental income	5,486		—		234,840		38,505		—		278,831		—		278,831
Other revenues	294		293		198		6,278		—		7,063		(4)		7,059
Total revenues	779,321		87,540		235,038		210,185		—		1,312,084		(141,996)		1,170,088
Costs and expenses:
Management fees	948		—		—		(793)		167,594		167,749		24		167,773
Interest expense	206,353		37,671		59,970		22,543		119,402		445,939		(852)		445,087
General and administrative	42,000		14,557		8,067		88,879		17,472		170,975		327		171,302
Acquisition and investment pursuit costs	893		250		(60)		101		—		1,184		—		1,184
Costs of rental operations	1,769		—		92,190		17,708		—		111,667		—		111,667
Depreciation and amortization	1,243		402		65,833		15,523		—		83,001		—		83,001
Credit loss (reversal) provision, net	(3,560)		11,895		—		—		—		8,335		—		8,335
Other expense	31		—		583		94		—		708		—		708
Total costs and expenses	249,677		64,775		226,583		144,055		304,468		989,558		(501)		989,057
Other income (loss):
Change in net assets related to consolidated VIEs	—		—		—		—		—		—		162,333		162,333
Change in fair value of servicing rights	—		—		—		4,319		—		4,319		(741)		3,578
Change in fair value of investment securities, net	(8,277)		—		—		28,221		—		19,944		(20,331)		(387)
Change in fair value of mortgage loans, net	13,836		—		—		55,214		—		69,050		—		69,050
Income from affordable housing fund investments	—		—		6,425		—		—		6,425		—		6,425
Earnings (loss) from unconsolidated entities	6,984		1,160		—		815		—		8,959		(207)		8,752
Gain on sale of investments and other assets, net	16,584		189		—		22,211		—		38,984		—		38,984
Gain (loss) on derivative financial instruments, net	73,209		1,253		10,155		8,288		(10,542)		82,363		—		82,363
Foreign currency loss, net	(36,045)		(183)		—		(64)		—		(36,292)		—		(36,292)
Loss on extinguishment of debt	(289)		(1,264)		(5,281)		(113)		(481)		(7,428)		—		(7,428)
Other (loss) income, net	(7,407)		23		—		70		—		(7,314)		—		(7,314)
Total other income (loss)	58,595		1,178		11,299		118,961		(11,023)		179,010		141,054		320,064
Income (loss) before income taxes	588,239		23,943		19,754		185,091		(315,491)		501,536		(441)		501,095
Income tax (provision) benefit	(1,201)		306		—		(7,775)		1		(8,669)		—		(8,669)
Net income (loss)	587,038		24,249		19,754		177,316		(315,490)		492,867		(441)		492,426
Net (income) loss attributable to non-controlling interests	(14)		—		(20,121)		(24,993)		—		(45,128)		441		(44,687)
Net income (loss) attributable to Starwood Property Trust, Inc.	$            587,024		$           24,249		$           (367)		$         152,323		$     (315,490)		$      447,739		$                 —		$         447,739

 

Reconciliation of Net Income to Distributable Earnings For the year ended December 31, 2021 (Amounts in thousands except per share data)
	Commercial and Residential Lending Segment		Infrastructure Lending Segment		Property Segment		Investing and Servicing Segment		Corporate		Total
Net income (loss) attributable to Starwood Property Trust, Inc.	587,024		24,249		(367)		152,323		(315,490)		447,739
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units	—		—		19,373		—		—		19,373
Non-cash equity compensation expense	7,210		2,217		197		4,129		25,534		39,287
Management incentive fee	—		—		—		—		70,270		70,270
Acquisition and investment pursuit costs	(555)		—		(355)		(166)		—		(1,076)
Depreciation and amortization	1,003		363		66,101		15,078		—		82,545
Credit loss (reversal) provision, net	(3,560)		11,895		—		—		—		8,335
Interest income adjustment for securities	(1,437)		—		—		17,301		—		15,864
Extinguishment of debt, net	—		—		—		—		(986)		(986)
Income tax (provision) benefit associated with realized (gains) losses	(6,495)		—		—		405		—		(6,090)
Other non-cash items	14		—		(771)		(1,435)		415		(1,777)
Reversal of GAAP unrealized (gains) / losses on:
Loans	(13,836)		—		—		(55,214)		—		(69,050)
Securities	8,277		—		—		(28,221)		—		(19,944)
Woodstar Fund investments	—		—		(6,425)		—		—		(6,425)
Derivatives	(80,740)		(1,497)		(17,269)		(10,966)		20,346		(90,126)
Foreign currency	36,045		183		—		64		—		36,292
(Earnings) loss from unconsolidated entities	(6,984)		(1,160)		—		(815)		—		(8,959)
Sales of properties	(17,693)		—		—		(22,210)		—		(39,903)
Recognition of Distributable realized gains / (losses) on:
Loans	45,621		—		—		57,723		—		103,344
Realized credit loss	(14,807)		—		—		—		—		(14,807)
Securities	(38,180)		—		—		2,045		—		(36,135)
Woodstar Fund investments	—		—		7,027		—		—		7,027
Sale of interest in Woodstar Fund	—		—		196,410		—		—		196,410
Derivatives	9,251		217		(138)		5,563		—		14,893
Foreign currency	12,471		(145)		—		(64)		—		12,262
Earnings (loss) from unconsolidated entities	11,356		1,160		—		2,456		—		14,972
Sales of properties	8,298		—				12,483		—		20,781
Distributable Earnings (Loss)	$         542,283		$           37,482		$         263,783		$         150,479		$        (199,911)		$         794,116
Distributable Earnings (Loss) per Weighted Average Diluted Share	$               1.80		$               0.12		$               0.87		$               0.50		$              (0.66)		$               2.63

 

Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of December 31, 2021 (Amounts in thousands)
	Commercial and Residential Lending Segment		Infrastructure Lending Segment		Property Segment		Investing and Servicing Segment		Corporate		Subtotal		Securitization VIEs		Total
Assets:
Cash and cash equivalents	$                65,064		$                17,011		$                14,136		$                26,700		$                93,861		$             216,772		$                     590		$             217,362
Restricted cash	39,853		43,408		954		20,337		—		104,552		—		104,552
Loans held-for-investment, net	13,499,520		2,027,426		—		9,903		—		15,536,849		—		15,536,849
Loans held-for-sale	2,590,005		—		—		286,795		—		2,876,800		—		2,876,800
Investment securities	1,155,452		31,923		—		1,165,395		—		2,352,770		(1,491,786)		860,984
Properties, net	124,503		—		887,553		154,331		—		1,166,387		—		1,166,387
Investments of consolidated affordable housing fund	—		—		1,040,309		—		—		1,040,309		—		1,040,309
Investments in unconsolidated entities	44,938		26,255		—		34,160		—		105,353		(15,256)		90,097
Goodwill	—		119,409		—		140,437		—		259,846		—		259,846
Intangible assets	—		—		34,619		71,064		—		105,683		(42,119)		63,564
Derivative assets	34,265		128		8		391		13,424		48,216		—		48,216
Accrued interest receivable	106,251		3,207		—		947		5,988		116,393		(131)		116,262
Other assets	68,908		14,265		43,420		40,395		21,800		188,788		(162)		188,626
VIE assets, at fair value	—		—		—		—		—		—		61,280,543		61,280,543
Total Assets	$       17,728,759		$          2,283,032		$          2,020,999		$          1,950,855		$             135,073		$       24,118,718		$       59,731,679		$       83,850,397
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$                57,267		$                  8,917		$                14,757		$                58,920		$                49,779		$             189,640		$                        56		$             189,696
Related-party payable	—		—		—		—		76,371		76,371		—		76,371
Dividends payable	—		—		—		—		147,624		147,624		—		147,624
Derivative liabilities	12,870		260		—		291		—		13,421		—		13,421
Secured financing agreements, net	9,097,985		1,225,548		787,396		714,237		773,244		12,598,410		(21,560)		12,576,850
Collateralized loan obligations and single asset securitization, net	2,210,798		405,318		—		—		—		2,616,116		—		2,616,116
Unsecured senior notes, net	—		—		—		—		1,828,590		1,828,590		—		1,828,590
VIE liabilities, at fair value	—		—		—		—		—		—		59,752,922		59,752,922
Total Liabilities	11,378,920		1,640,043		802,153		773,448		2,875,608		17,470,172		59,731,418		77,201,590
Temporary Equity: Redeemable non-controlling interests	—		—		214,915		—		—		214,915		—		214,915
Permanent Equity:
Starwood Property Trust, Inc. Stockholders' Equity:
Common stock	—		—		—		—		3,123		3,123		—		3,123
Additional paid-in capital	1,735,397		600,412		(365,922)		(388,196)		4,091,685		5,673,376		—		5,673,376
Treasury stock	—		—		—		—		(138,022)		(138,022)		—		(138,022)
Accumulated other comprehensive income	40,953		—		—		—		—		40,953		—		40,953
Retained earnings (accumulated deficit)	4,573,374		42,577		1,161,334		1,413,142		(6,697,321)		493,106		—		493,106
Total Starwood Property Trust, Inc. Stockholders' Equity	6,349,724		642,989		795,412		1,024,946		(2,740,535)		6,072,536		—		6,072,536
Non-controlling interests in consolidated subsidiaries	115		—		208,519		152,461		—		361,095		261		361,356
Total Permanent Equity	6,349,839		642,989		1,003,931		1,177,407		(2,740,535)		6,433,631		261		6,433,892
Total Liabilities and Equity	$       17,728,759		$          2,283,032		$          2,020,999		$          1,950,855		$             135,073		$       24,118,718		$       59,731,679		$       83,850,397

 

View original content:https://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-and-year-ended-december-31-2021-301490410.html

SOURCE Starwood Property Trust, Inc.

FAQ

What were Starwood Property Trust's Q4 2021 earnings?

Starwood Property Trust reported a Q4 2021 GAAP net income of $91.4 million, or $0.31 per diluted share.

How much did Starwood Property Trust invest in 2021?

In 2021, Starwood Property Trust invested a record $16.7 billion.

What was the full year 2021 Distributable Earnings for STWD?

The full year 2021 Distributable Earnings for Starwood Property Trust was $794.1 million, or $2.63 per diluted share.

What liquidity does STWD have for future investments?

Starwood Property Trust has $9.0 billion in available secured financing and corporate debt capacity.