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Starwood Property Trust Reports Results for the Quarter Ended September 30, 2021

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Starwood Property Trust (NYSE: STWD) reported strong Q3 2021 results, with GAAP net income at $128.6 million ($0.44/share) and Distributable Earnings of $155.1 million ($0.52/share). Post-quarter, the company established a new fund for its Woodstar affordable housing portfolio, selling a 20.6% interest for $1.1 billion above cost, enhancing shareholder value and validating $4.57/share in estimated property gains. Capital deployment reached $3.8 billion, with total portfolio growth to over $21 billion. The balance sheet was strengthened through a $400 million sustainability bond issuance.

Positive
  • GAAP net income of $128.6 million ($0.44/share) for Q3 2021.
  • Distributable Earnings of $155.1 million ($0.52/share) in the same quarter.
  • Established an investment fund for Woodstar portfolio and sold a 20.6% interest for $1.1 billion above cost.
  • Successfully deployed $3.8 billion in capital, raising portfolio to over $21 billion.
Negative
  • None.

GREENWICH, Conn., Nov. 9, 2021 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended September 30, 2021.  The Company's third quarter 2021 GAAP net income was $128.6 million, or $0.44 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $155.1 million, or $0.52 per diluted share.

"We have been telling you for years about the significant unrealized gains in our property portfolio which highlights the uniqueness of our diversified platform and differentiates us from our peers.  We are pleased to announce that after quarter end, we established a new investment fund to hold our Woodstar affordable housing portfolio and sold a 20.6% interest in the fund at a valuation that is approximately $1.1 billion in excess of our cost.  This crystallized a portion of our embedded gain and validated over 80% of the $4.57 per share estimated fair market value gains in our properties that we have spoken with you about.  Our unique ability to monetize these embedded gains and create incremental value for our shareholders provides us enormous financial flexibility," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

"We deployed $3.8 billion of capital this quarter, growing our portfolio to an all-time high of over $21.0 billion.  We further enhanced the strength of our balance sheet with the issuance of a $400.0 million corporate sustainability bond, and upsizes to our revolver, term loan and multifamily portfolio debt.  We have a strong pipeline of domestic and international opportunities across our business cylinders and have already closed over $2.0 billion of investments in the fourth quarter, including $1.1 billion in commercial lending," 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 Tuesday, November 9, 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:  13723497
The playback can be accessed through November 16, 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 $76 billion of capital since inception and manages a portfolio of over $21 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, 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 September 30, 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

$

179,486



$

21,566



$



$

2,200



$



$

203,252



$



$

203,252


Interest income from investment securities

16,043



540





25,140





41,723



(31,026)



10,697


Servicing fees

99







15,447





15,546



(5,073)



10,473


Rental income

1,358





66,673



9,481





77,512





77,512


Other revenues

59



66



54



173





352





352


Total revenues

197,045



22,172



66,727



52,441





338,385



(36,099)



302,286


Costs and expenses:
















Management fees

286







(1,239)



24,680



23,727





23,727


Interest expense

52,066



9,381



17,002



5,652



31,651



115,752



(221)



115,531


General and administrative

9,178



3,307



913



21,022



4,372



38,792



72



38,864


Acquisition and investment pursuit costs

158







56





214





214


Costs of rental operations

438





26,634



4,444





31,516





31,516


Depreciation and amortization

312



101



17,882



3,746





22,041





22,041


Credit loss provision (reversal), net

19



(582)









(563)





(563)


Other expense







23





23





23


Total costs and expenses

62,457



12,207



62,431



33,704



60,703



231,502



(149)



231,353


Other income (loss):
















Change in net assets related to consolidated VIEs













28,049



28,049


Change in fair value of servicing rights







(410)





(410)



2,647



2,237


Change in fair value of investment securities, net

(8,682)







2,870





(5,812)



5,513



(299)


Change in fair value of mortgage loans, net

22,464







9,263





31,727





31,727


Earnings (loss) from unconsolidated entities

1,666



399





153





2,218



(176)



2,042


Loss on sale of investments and other assets, net

(47)











(47)





(47)


Gain (loss) on derivative financial instruments, net

38,016



87



(318)



3,992



35



41,812





41,812


Foreign currency (loss) gain, net

(26,820)



(168)



(16)



1





(27,003)





(27,003)


Loss on extinguishment of debt



(18)







(481)



(499)





(499)


Other loss, net

(964)











(964)





(964)


Total other income (loss)

25,633



300



(334)



15,869



(446)



41,022



36,033



77,055


Income (loss) before income taxes

160,221



10,265



3,962



34,606



(61,149)



147,905



83



147,988


Income tax (provision) benefit

(5,652)



488





(2,337)





(7,501)





(7,501)


Net income (loss)

154,569



10,753



3,962



32,269



(61,149)



140,404



83



140,487


Net income attributable to non-controlling interests

(3)





(4,691)



(7,108)





(11,802)



(83)



(11,885)


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

$

154,566



$

10,753



$

(729)



$

25,161



$

(61,149)



$

128,602



$



$

128,602


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 September 30, 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.

$

154,566



$

10,753



$

(729)



$

25,161



$

(61,149)



$

128,602


Add / (Deduct):












Non-controlling interests attributable to Woodstar II Class A Units





4,691







4,691


Non-cash equity compensation expense

1,787



423



54



1,108



6,080



9,452


Management incentive fee









953



953


Acquisition and investment pursuit costs

(98)





(89)







(187)


Depreciation and amortization

252



91



17,950



3,884





22,177


Credit loss provision (reversal), net

19



(582)









(563)


Interest income adjustment for securities

(171)







3,748





3,577


Extinguishment of debt, net









(246)



(246)


Other non-cash items

3





(282)



173



(2)



(108)


Reversal of GAAP unrealized (gains) / losses on:












Loans

(22,464)







(9,263)





(31,727)


Securities

8,682







(2,870)





5,812


Derivatives

(40,473)



(150)



(1,495)



(4,660)



2,406



(44,372)


Foreign currency

26,820



168



16



(1)





27,003


(Earnings) loss from unconsolidated entities

(1,666)



(399)





(153)





(2,218)


Sales of properties












Recognition of Distributable realized gains / (losses) on:












Loans

19,010







9,141





28,151


Securities

(11,093)







3,642





(7,451)


Derivatives

6,129





(35)



4,183





10,277


Foreign currency

(1,171)



(13)



(16)



1





(1,199)


Earnings (loss) from unconsolidated entities

1,806



399





261





2,466


Sales of properties












Distributable Earnings (Loss)

$

141,938



$

10,690



$

20,065



$

34,355



$

(51,958)



$

155,090


Distributable Earnings (Loss) per Weighted Average Diluted Share

$

0.47



$

0.04



$

0.07



$

0.11



$

(0.17)



$

0.52


 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the nine months ended September 30, 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

$

515,776



$

61,545



$



$

5,778



$



$

583,099



$



$

583,099


Interest income from investment securities

51,618



1,659





71,748





125,025



(92,070)



32,955


Servicing fees

333







44,268





44,601



(14,862)



29,739


Rental income

4,116





197,187



29,666





230,969





230,969


Other revenues

223



228



138



3,032





3,621





3,621


Total revenues

572,066



63,432



197,325



154,492





987,315



(106,932)



880,383


Costs and expenses:
















Management fees

901







(793)



91,584



91,692



21



91,713


Interest expense

144,717



27,916



49,697



16,890



89,970



329,190



(632)



328,558


General and administrative

30,922



10,281



2,964



65,182



13,172



122,521



244



122,765


Acquisition and investment pursuit costs

522



249





35





806





806


Costs of rental operations

1,348





76,516



13,128





90,992





90,992


Depreciation and amortization

930



301



53,883



11,878





66,992





66,992


Credit loss (reversal) provision, net

(12,957)



594









(12,363)





(12,363)


Other expense

31





583



94





708





708


Total costs and expenses

166,414



39,341



183,643



106,414



194,726



690,538



(367)



690,171


Other income (loss):
















Change in net assets related to consolidated VIEs













80,303



80,303


Change in fair value of servicing rights







795





795



1,945



2,740


Change in fair value of investment securities, net

(20,134)







(2,545)





(22,679)



23,582



903


Change in fair value of mortgage loans, net

24,079







44,037





68,116





68,116


Earnings from unconsolidated entities

5,415



75





235





5,725



277



6,002


Gain on sale of investments and other assets, net

16,627



27





9,723





26,377





26,377


Gain (loss) on derivative financial instruments, net

59,212



883



4,034



7,544



(5,881)



65,792





65,792


Foreign currency loss, net

(35,699)



(279)



(16)



(63)





(36,057)





(36,057)


Loss on extinguishment of debt

(289)



(1,264)



(141)



(22)



(481)



(2,197)





(2,197)


Other (loss) income, net

(6,468)



23





29





(6,416)





(6,416)


Total other income (loss)

42,743



(535)



3,877



59,733



(6,362)



99,456



106,107



205,563


Income (loss) before income taxes

448,395



23,556



17,559



107,811



(201,088)



396,233



(458)



395,775


Income tax benefit (provision)

886



338





(7,602)





(6,378)





(6,378)


Net income (loss)

449,281



23,894



17,559



100,209



(201,088)



389,855



(458)



389,397


Net (income) loss attributable to non-controlling interests

(10)





(14,682)



(18,873)





(33,565)



458



(33,107)


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

$

449,271



$

23,894



$

2,877



$

81,336



$

(201,088)



$

356,290



$



$

356,290


 

Reconciliation of Net Income to Distributable Earnings

For the nine months ended September 30, 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.

$

449,271



$

23,894



$

2,877



$

81,336



$

(201,088)



$

356,290


Add / (Deduct):












Non-controlling interests attributable to Woodstar II Class A Units





14,682







14,682


Non-cash equity compensation expense

5,427



1,163



142



3,179



19,448



29,359


Management incentive fee









19,107



19,107


Acquisition and investment pursuit costs

(458)





(266)



(58)





(782)


Depreciation and amortization

750



272



54,080



11,299





66,401


Credit loss (reversal) provision, net

(12,957)



594









(12,363)


Interest income adjustment for securities

(2,332)







11,405





9,073


Extinguishment of debt, net









(739)



(739)


Income tax (provision) benefit associated with realized (gains) losses

(6,495)







405





(6,090)


Other non-cash items

12





(881)



585



413



129


Reversal of GAAP unrealized (gains) / losses on:












Loans

(24,079)







(44,037)





(68,116)


Securities

20,134







2,545





22,679


Derivatives

(64,050)



(1,068)



(9,342)



(9,452)



13,251



(70,661)


Foreign currency

35,699



279



16



63





36,057


(Earnings) loss from unconsolidated entities

(5,415)



(75)





(235)





(5,725)


Sales of properties

(17,693)







(9,723)





(27,416)


Recognition of Distributable realized gains / (losses) on:












Loans

44,625







44,436





89,061


Realized credit loss

(7,757)











(7,757)


Securities

(32,042)







2,639





(29,403)


Derivatives

5,533





(104)



5,060





10,489


Foreign currency

10,131



(54)



(16)



(63)





9,998


Earnings (loss) from unconsolidated entities

9,468



75





2,001





11,544


Sales of properties

8,298







4,975





13,273


Distributable Earnings (Loss)

$

416,070



$

25,080



$

61,188



$

106,360



$

(149,608)



$

459,090


Distributable Earnings (Loss) per Weighted Average Diluted Share

$

1.39



$

0.08



$

0.20



$

0.36



$

(0.50)



$

1.53


 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of September 30, 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

$

19,626



$

16,695



$

32,162



$

29,027



$

175,197



$

272,707



$

609



$

273,316


Restricted cash

60,183



23,628



6,807



19,854





110,472





110,472


Loans held-for-investment, net

11,603,370



1,688,847





781





13,292,998





13,292,998


Loans held-for-sale

1,813,458



84,253





285,808





2,183,519





2,183,519


Investment securities

927,411



33,323





1,128,921





2,089,655



(1,418,768)



670,887


Properties, net

124,691





1,928,853



175,318





2,228,862





2,228,862


Intangible assets





35,958



68,596





104,554



(39,432)



65,122


Investment in unconsolidated entities

45,129



25,170





38,239





108,538



(14,538)



94,000


Goodwill



119,409





140,437





259,846





259,846


Derivative assets

31,835



36



96



78



20,521



52,566





52,566


Accrued interest receivable

101,539



4,372





1,887



447



108,245



(119)



108,126


Other assets

159,296



4,186



77,928



34,054



19,298



294,762



(92)



294,670


VIE assets, at fair value













62,346,480



62,346,480


Total Assets

$

14,886,538



$

1,999,919



$

2,081,804



$

1,923,000



$

215,463



$

21,106,724



$

60,874,140



$

81,980,864


Liabilities and Equity
















Liabilities:
















Accounts payable, accrued expenses and other liabilities

$

55,572



$

10,064



$

48,663



$

44,405



$

51,321



$

210,025



$

55



$

210,080


Related-party payable









23,378



23,378





23,378


Dividends payable









139,738



139,738





139,738


Derivative liabilities

14,924



419





272





15,615





15,615


Secured financing agreements, net

7,206,946



905,343



1,873,053



763,555



774,812



11,523,709



(21,657)



11,502,052


Collateralized loan obligations and single asset securitization, net

2,209,270



404,960









2,614,230





2,614,230


Unsecured senior notes, net









1,733,684



1,733,684





1,733,684


VIE liabilities, at fair value













60,894,975



60,894,975


Total Liabilities

9,486,712



1,320,786



1,921,716



808,232



2,722,933



16,260,379



60,873,373



77,133,752


Equity:
















Starwood Property Trust, Inc. Stockholders' Equity:
















Common stock









2,961



2,961





2,961


Additional paid-in capital

929,932



636,911



17,137



(377,386)



4,063,671



5,270,265





5,270,265


Treasury stock









(138,022)



(138,022)





(138,022)


Accumulated other comprehensive income

40,486











40,486





40,486


Retained earnings (accumulated deficit)

4,429,290



42,222



(65,568)



1,342,156



(6,436,080)



(687,980)





(687,980)


Total Starwood Property Trust, Inc. Stockholders' Equity

5,399,708



679,133



(48,431)



964,770



(2,507,470)



4,487,710





4,487,710


Non-controlling interests in consolidated subsidiaries

118





208,519



149,998





358,635



767



359,402


Total Equity

5,399,826



679,133



160,088



1,114,768



(2,507,470)



4,846,345



767



4,847,112


Total Liabilities and Equity

$

14,886,538



$

1,999,919



$

2,081,804



$

1,923,000



$

215,463



$

21,106,724



$

60,874,140



$

81,980,864


 

Cision View original content:https://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-september-30-2021-301419295.html

SOURCE Starwood Property Trust, Inc.

FAQ

What were the Q3 2021 earnings for Starwood Property Trust (STWD)?

Starwood Property Trust reported Q3 2021 GAAP net income of $128.6 million, or $0.44 per diluted share.

How much capital did Starwood Property Trust deploy in Q3 2021?

The company deployed $3.8 billion of capital during Q3 2021.

What is the value of the interest sold in the Woodstar fund by Starwood Property Trust?

Starwood Property Trust sold a 20.6% interest in the Woodstar fund valued at $1.1 billion above cost.

What is the current portfolio size of Starwood Property Trust (STWD)?

Starwood Property Trust's portfolio has grown to over $21 billion.

STARWOOD PROPERTY TRUST, INC.

NYSE:STWD

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6.55B
318.36M
5.52%
51.5%
2.9%
REIT - Mortgage
Real Estate Investment Trusts
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United States of America
GREENWICH