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Starwood Property Trust Reports Results for the Quarter Ended March 31, 2021

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-- Quarterly GAAP Earnings of $0.38 and Distributable Earnings of $0.50 per Diluted Share --

-- Originated or Acquired $2.7 Billion of Assets, Including $2.2 Billion in Commercial Lending --

-- Paid Dividend of $0.48 per Share for 29th Straight Quarter --

-- Completed $500 Million Inaugural Infrastructure CLO and $1.3 Billion CRE CLO --

-- LNR Upgraded by Fitch to CSS1, Only Special Servicer Carrying Highest Rating --

GREENWICH, Conn., May 6, 2021 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2021. The Company's first quarter 2021 GAAP net income was $111.4 million, or $0.38 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $150.8 million, or $0.50 per diluted share.

"We benefited from a strong start to the year with $2.7 billion of capital deployed in the first quarter across our business cylinders, including $2.2 billion in Commercial Lending, bringing our post-COVID capital deployment to $5.7 billion. The credit performance of our diversified business lines coupled with our robust liquidity position gave us the confidence to continue our strong pace of investment activity. Eleven years into our journey, the LTV of our loan book remains low at 60.1%, and we continue to provide an attractive yield in a low rate world," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

"After quarter end, we closed two CLOs totaling $1.8 billion: our inaugural Infrastructure CLO for $500 million and our second CRE CLO for $1.3 billion. These financings allowed us to further de-risk our balance sheet and diversify our funding sources.

"After a year of unprecedented distress which led to record volume in our special servicer, LNR was upgraded by Fitch to its highest servicer rating and is the only CMBS special servicer at this level globally. We are extremely proud of this achievement which recognizes the strength and tenure of our team, years of operating at the highest level, our commitment to technology and our exemplary performance," commented Jeff 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 Thursday, May 6, 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: 13718432
The playback can be accessed through May 13, 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 $69 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 March 31, 2021

(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


$

170,593


$

18,808


$


$

1,174


$


$

190,575


$


$

190,575

Interest income from investment securities



18,385



564





20,940





39,889



(28,279)



11,610

Servicing fees



124







12,456





12,580



(4,178)



8,402

Rental income



1,339





65,104



9,895





76,338





76,338

Other revenues



90



93



40



82





305





305

Total revenues



190,531



19,465



65,144



44,547





319,687



(32,457)



287,230

Costs and expenses:

























Management fees



315







222



38,188



38,725



11



38,736

Interest expense



44,295



8,841



15,832



5,449



29,148



103,565



(191)



103,374

General and administrative



11,333



3,442



1,023



18,440



4,311



38,549



87



38,636

Acquisition and investment pursuit costs



185











185





185

Costs of rental operations



477





23,960



4,308





28,745





28,745

Depreciation and amortization



307



100



18,100



3,967





22,474





22,474

Credit loss (reversal) provision, net



(529)



573









44





44

Other expense



31





583



71





685





685

Total costs and expenses



56,414



12,956



59,498



32,457



71,647



232,972



(93)



232,879

Other income (loss):

























Change in net assets related to consolidated VIEs















39,745



39,745

Change in fair value of servicing rights









745





745



(1,541)



(796)

Change in fair value of investment securities, net



(2,050)







7,170





5,120



(5,426)



(306)

Change in fair value of mortgage loans, net



(10,714)







1,236





(9,478)





(9,478)

Earnings (loss) from unconsolidated entities



1,753



(254)





589





2,088



(354)



1,734

Gain on sale of investments and other assets, net



17,693











17,693





17,693

Gain (loss) on derivative financial instruments, net



26,141



684



4,724



9,283



(6,843)



33,989





33,989

Foreign currency (loss) gain, net



(11,594)



(49)



25



(63)





(11,681)





(11,681)

Loss on extinguishment of debt



(68)



(307)



(141)







(516)





(516)

Other income, net





21









21





21

Total other income (loss)



21,161



95



4,608



18,960



(6,843)



37,981



32,424



70,405

Income (loss) before income taxes



155,278



6,604



10,254



31,050



(78,490)



124,696



60



124,756

Income tax provision



(1,505)



(92)





(633)





(2,230)





(2,230)

Net income (loss)



153,773



6,512



10,254



30,417



(78,490)



122,466



60



122,526

Net income attributable to non-controlling interests



(3)





(5,077)



(6,008)





(11,088)



(60)



(11,148)

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


$

153,770


$

6,512


$

5,177


$

24,409


$

(78,490)


$

111,378


$


$

111,378

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 March 31, 2021

(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.


$

153,770


$

6,512


$

5,177


$

24,409


$

(78,490)


$

111,378

Add / (Deduct):



















Non-controlling interests attributable to Woodstar II Class A Units







5,077







5,077

Non-cash equity compensation expense



1,781



300



31



881



7,317



10,310

Management incentive fee











13,123



13,123

Acquisition and investment pursuit costs



(164)





(89)







(253)

Depreciation and amortization



247



91



18,161



3,603





22,102

Credit loss (reversal) provision, net



(529)



573









44

Interest income adjustment for securities



(1,300)







3,995





2,695

Extinguishment of debt, net











(246)



(246)

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



(6,495)







405





(6,090)

Other non-cash items



3





(337)



207



415



288

Reversal of GAAP unrealized (gains) / losses on:



















Loans



10,714







(1,236)





9,478

Securities



2,050







(7,170)





(5,120)

Derivatives



(27,171)


...

(745)



(6,446)



(9,719)



9,313



(34,768)

Foreign currency



11,594



49



(25)



63





11,681

(Earnings) loss from unconsolidated entities



(1,753)



254





(589)





(2,088)

Sales of properties



(17,693)











(17,693)

Recognition of Distributable realized gains / (losses) on:



















Loans



14,553







4,672





19,225

Realized credit loss



(7,757)











(7,757)

Securities



(2,861)







1,776





(1,085)

Derivatives



1,950





(35)



1,595





3,510

Foreign currency



4,784



(10)



25



(63)





4,736

Earnings (loss) from unconsolidated entities



3,218



(254)





964





3,928

Sales of properties



8,298











8,298

Distributable Earnings (Loss)


$

147,239


$

6,770


$

21,539


$

23,793


$

(48,568)


$

150,773

Distributable Earnings (Loss) per Weighted Average Diluted
Share


$

0.49


$

0.02


$

0.07


$

0.08


$

(0.16)


$

0.50

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of March 31, 2021

(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


$

56,629


$

7,873


$

39,791


$

29,064


$

217,049


$

350,406


$

784


$

351,190

Restricted cash



69,882



27,973



6,672



14,197





118,724





118,724

Loans held-for-investment, net



10,733,752



1,586,808





933





12,321,493





12,321,493

Loans held-for-sale



587,037



89,368





168,226





844,631





844,631

Investment securities



969,968



34,951





1,106,000





2,110,919



(1,432,632)



678,287

Properties, net



93,718





1,954,880



196,150





2,244,748





2,244,748

Intangible assets







38,833



70,857





109,690



(42,918)



66,772

Investment in unconsolidated entities



47,514



24,840





44,435





116,789



(15,882)



100,907

Goodwill





119,409





140,437





259,846





259,846

Derivative assets



13,088





162



320



24,459



38,029





38,029

Accrued interest receivable



97,853



3,310





274



408



101,845



(132)



101,713

Other assets



61,677



7,107



85,740



44,719



9,646



208,889



(16)



208,873

VIE assets, at fair value















62,367,110



62,367,110

Total Assets


$

12,731,118


$

1,901,639


$

2,126,078


$

1,815,612


$

251,562


$

18,826,009


$

60,876,314


$

79,702,323

Liabilities and Equity

























Liabilities:

























Accounts payable, accrued expenses and other
liabilities


$

37,206


$

16,010


$

44,184


$

24,110


$

56,614


$

178,124


$

91


$

178,215

Related-party payable











36,135



36,135





36,135

Dividends payable











138,906



138,906





138,906

Derivative liabilities



33,190



1,310





305





34,805





34,805

Secured financing agreements, net



6,502,059



1,259,813



1,871,026



653,222



631,655



10,917,775



(21,843)



10,895,932

Collateralized loan obligations, net



931,178











931,178





931,178

Unsecured senior notes, net











1,735,658



1,735,658





1,735,658

VIE liabilities, at fair value















60,896,709



60,896,709

Total Liabilities



7,503,633



1,277,133



1,915,210



677,637



2,598,968



13,972,581



60,874,957



74,847,538

Equity:

























Starwood Property Trust, Inc. Stockholders' Equity:

























Common stock











2,943



2,943





2,943

Additional paid-in capital



1,074,553



599,666



25,905



(298,098)



3,823,011



5,225,037





5,225,037

Treasury stock











(138,022)



(138,022)





(138,022)

Accumulated other comprehensive income



41,654











41,654





41,654

Retained earnings (accumulated deficit)



4,111,160



24,840



(40,641)



1,285,229



(6,035,338)



(654,750)





(654,750)

Total Starwood Property Trust, Inc. Stockholders'
Equity



5,227,367



624,506



(14,736)



987,131



(2,347,406)



4,476,862





4,476,862

Non-controlling interests in consolidated subsidiaries



118





225,604



150,844





376,566



1,357



377,923

Total Equity



5,227,485



624,506



210,868



1,137,975



(2,347,406)



4,853,428



1,357



4,854,785

Total Liabilities and Equity


$

12,731,118


$

1,901,639


$

2,126,078


$

1,815,612


$

251,562


$

18,826,009


$

60,876,314


$

79,702,323

Cision
Cision

View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-march-31-2021-301285189.html

SOURCE Starwood Property Trust, Inc.