U.S. Markets closed

Starwood Property Trust Reports Results for the Quarter Ended March 31, 2019

- Deploys $2.0 Billion of Capital, Including $1.0 Billion in Commercial Lending -

- Declares Dividend of $0.48 per share for the Second Quarter of 2019 -

GREENWICH, Conn., May 8, 2019 /PRNewswire/ -- Starwood Property Trust, Inc. (STWD) today announced operating results for the fiscal quarter ended March 31, 2019.  The Company's first quarter 2019 GAAP net income was $70.4 million, or $0.25 per diluted share, and Core Earnings was $82.9 million, or $0.28 per diluted share. These amounts reflect a write down of the Company's interest in a regional mall portfolio of $44.9 million and $68.9 million for GAAP and Core Earnings, respectively, or $0.16 and $0.24 per diluted share, respectively.

"Our multi-cylinder platform continues to generate consistent returns, led by our commercial lending business, which deployed $1.0 billion of capital during the quarter.  We are also proud of the performance of our owned property portfolio, marked by 98% occupancy and stable and growing double-digit cash returns on invested capital.  We believe this portfolio on an undepreciated basis has over $500 million in unrealized gains," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

"We continue to source attractive and high credit quality investments across our businesses, with our commercial lending portfolio growing to $8.2 billion and our asset base growing to $16.7 billion, both record highs. With low leverage, ample capacity and the ability to monetize appreciated assets, our balance sheet and access to capital remain strong. We believe we are well-positioned to execute on our long-term business plan, regardless of interest rate environment, by prudently allocating capital across our multiple cylinders to generate attractive and sustainable risk adjusted returns for our shareholders." 

Dividend

On May 8, 2019, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending June 30, 2019. The dividend is payable on July 15, 2019 to common stockholders of record as of June 28, 2019.

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 Wednesday, May 8, 2019, 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 ten 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:  13689755
The playback can be accessed through May 15, 2019.

About Starwood Property Trust, Inc.

Starwood Property Trust (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 $53 billion of capital since inception and manages a portfolio in excess of $16 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, 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, 2018, 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, 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


$

154,595


$

26,915


$


$

1,906


$


$

183,416


$


$

183,416

Interest income from investment securities



19,908



885





24,293





45,086



(27,454)



17,632

Servicing fees



123







27,243





27,366



(2,933)



24,433

Rental income







70,521



13,312





83,833





83,833

Other revenues



204



686



78



196



20



1,184



(18)



1,166

Total revenues 



174,830



28,486



70,599



66,950



20



340,885



(30,405)



310,480

Costs and expenses:

























Management fees



411







18



22,988



23,417



49



23,466

Interest expense



61,604



18,577



18,990



7,746



27,915



134,832



(160)



134,672

General and administrative



6,768



4,479



1,518



18,851



3,226



34,842



88



34,930

Acquisition and investment pursuit costs



249



16





77





342





342

Costs of rental operations



19





22,937



6,695





29,651





29,651

Depreciation and amortization



71





23,896



5,287





29,254





29,254

Loan loss provision, net



(11)



774









763





763

Other expense



77





134







211





211

Total costs and expenses 



69,188



23,846



67,475



38,674



54,129



253,312



(23)



253,289

Other income (loss):

























Change in net assets related to consolidated VIEs















47,836



47,836

Change in fair value of servicing rights









(515)





(515)



(252)



(767)

Change in fair value of investment securities, net



(1,694)







18,140





16,446



(16,384)



62

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



1,386







9,880





11,266





11,266

Earnings (loss) from unconsolidated entities



577





(43,805)



594





(42,634)



(566)



(43,200)

Gain on sale of investments and other assets, net



2,755



790





940





4,485





4,485

(Loss) gain on derivative financial instruments, net



(9,297)



(395)



1,290



(3,432)



9,627



(2,207)





(2,207)

Foreign currency gain (loss), net



5,239



300



9



(1)





5,547





5,547

(Loss) gain on extinguishment of debt





(3,304)







6



(3,298)





(3,298)

Other loss, net











(73)



(73)





(73)

Total other income (loss)



(1,034)



(2,609)



(42,506)



25,606



9,560



(10,983)



30,634



19,651

Income (loss) before income taxes 



104,608



2,031



(39,382)



53,882



(44,549)



76,590



252



76,842

Income tax benefit (provision)



248



85



(258)



(409)





(334)





(334)

Net income (loss) 



104,856



2,116



(39,640)



53,473



(44,549)



76,256



252



76,508

Net (income) loss attributable to non-controlling interests



(371)





(5,717)



215





(5,873)



(252)



(6,125)

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


$

104,485


$

2,116


$

(45,357)


$

53,688


$

(44,549)


$

70,383


$


$

70,383

 

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 March 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.


$

104,485


$

2,116


$

(45,357)


$

53,688


$

(44,549)


$

70,383

Add / (Deduct):



















Non-controlling interests attributable to Woodstar II Class A Units







5,717







5,717

Non-cash equity compensation expense



706



551



69



1,350



3,687



6,363

Management incentive fee











173



173

Acquisition and investment pursuit costs



(38)



2



(89)







(125)

Depreciation and amortization



71





24,211



4,915





29,197

Loan loss provision, net



(11)



774









763

Interest income adjustment for securities



(197)







5,972





5,775

Extinguishment of debt, net











(1,211)



(1,211)

Other non-cash items







(434)



137



168



(129)

Reversal of GAAP unrealized (gains) / losses on:



















Loans held-for-sale



(1,386)







(9,880)





(11,266)

Securities



1,694







(18,140)





(16,446)

Derivatives



9,505



395



316



3,324



(10,144)



3,396

Foreign currency



(5,239)



(300)



(9)



1





(5,547)

Earnings from unconsolidated entities



(577)





43,805



(594)





42,634

Recognition of Core realized gains / (losses) on:



















Loans held-for-sale



(653)







7,430





6,777

Securities









7,532





7,532

Derivatives



87



768



367



(1,625)





(403)

Foreign currency



391



(891)



9



8





(483)

Earnings from unconsolidated entities



98





(68,905)



8,733





(60,074)

Sales of properties









(76)





(76)

Core Earnings (Loss)


$

108,936


$

3,415


$

(40,300)


$

62,775


$

(51,876)


$

82,950

Core Earnings (Loss) per Weighted Average Diluted Share


$

0.37


$

0.01


$

(0.14)


$

0.22


$

(0.18)


$

0.28

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of March 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


$

13,206


$

58


$

36,107


$

47,225


$

295,463


$

392,059


$

20,211


$

412,270

Restricted cash



32,156



68,057



19,671



13,295



535



133,714





133,714

Loans held-for-investment, net



7,513,130



1,450,097





1,498





8,964,725





8,964,725

Loans held-for-sale



688,435



302,803





153,252





1,144,490





1,144,490

Investment securities



1,061,011



59,610





992,739





2,113,360



(1,203,127)



910,233

Properties, net



8,937





2,487,285



273,152





2,769,374





2,769,374

Intangible assets







85,356



75,806





161,162



(24,327)



136,835

Investment in unconsolidated entities



35,351





70,557



54,251





160,159



(35,799)



124,360

Goodwill





119,409





140,437





259,846





259,846

Derivative assets



14,247



1,029



32,093



41





47,410





47,410

Accrued interest receivable



50,269



7,135



392



296



3,079



61,171



(857)



60,314

Other assets



11,259



72,720



65,898



75,348



1,944



227,169



(16)



227,153

VIE assets, at fair value















56,974,864



56,974,864

Total Assets


$

9,428,001


$

2,080,918


$

2,797,359


$

1,827,340


$

301,021


$

16,434,639


$

55,730,949


$

72,165,588

Liabilities and Equity

























Liabilities:

























Accounts payable, accrued expenses and other liabilities


$

29,302


$

6,788


$

63,644


$

71,675


$

21,628


$

193,037


$

106


$

193,143

Related-party payable



1







9



23,935



23,945





23,945

Dividends payable











135,889



135,889





135,889

Derivative liabilities



4,608



772





2,739



2,044



10,163





10,163

Secured financing agreements, net



5,010,958



1,410,124



1,876,514



653,078



298,186



9,248,860



(13,950)



9,234,910

Unsecured senior notes, net











1,922,795



1,922,795





1,922,795

VIE liabilities, at fair value















55,727,776



55,727,776

Total Liabilities



5,044,869



1,417,684



1,940,158



727,501



2,404,477



11,534,689



55,713,932



67,248,621

Equity:

























Starwood Property Trust, Inc. Stockholders' Equity:

























Common stock











2,855



2,855





2,855

Additional paid-in capital



1,199,646



663,692



631,392



118,760



2,466,683



5,080,173





5,080,173

Treasury stock











(104,194)



(104,194)





(104,194)

Accumulated other comprehensive income (loss)



53,128





2,734



(64)





55,798





55,798

Retained earnings (accumulated deficit)



3,120,166



(458)



(31,787)



967,326



(4,468,800)



(413,553)





(413,553)

Total Starwood Property Trust, Inc. Stockholders' Equity



4,372,940



663,234



602,339



1,086,022



(2,103,456)



4,621,079





4,621,079

Non-controlling interests in consolidated subsidiaries



10,192





254,862



13,817





278,871



17,017



295,888

Total Equity



4,383,132



663,234



857,201



1,099,839



(2,103,456)



4,899,950



17,017



4,916,967

Total Liabilities and Equity


$

9,428,001


$

2,080,918


$

2,797,359


$

1,827,340


$

301,021


$

16,434,639


$

55,730,949


$

72,165,588

 

 

Cision

View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-march-31-2019-300845895.html