Starwood Property Trust Reports Results for Quarter Ended September 30, 2024
– Quarterly GAAP Earnings of $0.23 and Distributable Earnings (DE) of $0.48 per Diluted Share,
– Originated or Acquired $2.1 Billion of Assets in the Quarter and $3.5 Billion Year-To-Date,
– Received Repayments of $1.6 Billion in the Quarter and $3.7 Billion Year-To-Date,
– Raised $800 Million of Capital Bringing Liquidity to a Record $1.8 Billion,
– Undepreciated Book Value Per Share of $20.22,
– Paid Dividend of $0.48 per Share,
GREENWICH, Conn., Nov. 6, 2024 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE:STWD) today announced operating results for the fiscal quarter ended September 30, 2024. The Company's third quarter 2024 GAAP net income was $76.1 million, inclusive of a $66.4 million credit loss provision, and Distributable Earnings (a non-GAAP financial measure) was $159.0 million.
"STWD's differentiated multi-cylinder business model, created exactly to help us weather storms, has served us well. To date, we are the only company in the United States categorized as a commercial mortgage REIT that did not reduce its dividend, either in the pandemic or because of the Fed's rapid increase in rates. While we remain among the dominant large real estate loan lenders in the nation, our commercial lending book is roughly 60% of our total assets today. Our other cylinders, particularly infrastructure lending, conduit and special servicing, have contributed an increasing share to our performance. We also used this period to significantly reduce our leverage, which is a full turn or more below many of our peers. Like most of our peers, we have had, and are likely to continue to have, restructurings in our loan book as the cycle moves on, but it is gratifying that knowing this, we are still able to move to full offense again," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.
"After successfully accessing the equity and debt markets for the third time this year, which were met with record demand, we have $1.8 billion of liquidity, our highest level ever, and a leverage ratio of just 2.1x. We invested over $2.0 billion in the quarter, our highest volume since the Fed began raising rates in 2022. With record liquidity and a robust pipeline, along with additional access to capital via our $4.6 billion of unencumbered assets and over $4.00 per share of unrealized gains in our property book, we are well positioned to increase our investment pace as transaction volumes return to the real estate markets," 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 Wednesday, November 6, 2024, 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: 1-844-512-2921International: 1-412-317-6671Passcode: 13742861The playback can be accessed through November 20, 2024.
About Starwood Property Trust, Inc.
Starwood Property Trust (NYSE:STWD), an affiliate of global private investment firm Starwood Capital Group, is a leading diversified finance company with a core focus on the real estate and infrastructure sectors. As of September 30, 2024, the Company has successfully deployed over $100 billion of capital since inception and manages a portfolio of $26 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 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 the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as well as other risks and uncertainties set forth from time to time in the Company's reports filed with the SEC, including its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
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 TanenbaumStarwood Property TrustPhone: 203-422-7788Email:
Starwood Property Trust, Inc. and SubsidiariesCondensed Consolidated Statement of Operations by SegmentFor the three months ended September 30, 2024(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
$ 349,589
$ 63,910
$ ,
$ 5,258
$ ,
$ 418,757
$ ,
$ 418,757
Interest income from investment securities
29,392
123
—
24,882
—
54,397
(37,170)
17,227
Servicing fees
109
—
—
15,448
—
15,557
(3,730)
11,827
Rental income
4,267
—
16,352
5,360
—
25,979
—
25,979
Other revenues
2,149
1,410
212
1,338
641
5,750
—
5,750
Total revenues
385,506
65,443
16,564
52,286
641
520,440
(40,900)
479,540
Costs and expenses:
Management fees
185
—
—
—
27,254
27,439
—
27,439
Interest expense
209,464
38,381
10,375
10,160
69,687
338,067
(208)
337,859
General and administrative
14,430
4,440
1,236
24,249
3,699
48,054
—
48,054
Costs of rental operations
3,140
—
6,057
2,936
—
12,133
—
12,133
Depreciation and amortization
2,264
14
5,914
1,745
251
10,188
—
10,188
Credit loss provision, net
65,021
1,406
—
—
—
66,427
—
66,427
Other expense
15
175
—
285
—
475
—
475
Total costs and expenses
294,519
44,416
23,582
39,375
100,891
502,783
(208)
502,575
Other income (loss):
Change in net assets related to consolidated VIEs
—
—
—
—
—
—
16,570
16,570
Change in fair value of servicing rights
—
—
—
975
—
975
(1,316)
(341)
Change in fair value of investment securities, net
2,913
—
—
(29,277)
—
(26,364)
25,586
(778)
Change in fair value of mortgage loans, net
95,747
—
—
19,124
—
114,871
—
114,871
Loss from affordable housing fund investments
—
—
(5,590)
—
—
(5,590)
—
(5,590)
Earnings (loss) from unconsolidated entities
1,277
(963)
—
183
—
497
(148)
349
Gain on sale of investments and other assets, net
—
—
—
8,316
—
8,316
—
8,316
(Loss) gain on derivative financial instruments, net
(108,436)
(104)
(546)
(3,592)
28,737
(83,941)
—
(83,941)
Foreign currency gain (loss), net
58,930
546
(55)
—
—
59,421
—
59,421
Loss on extinguishment of debt
(142)
—
—
(100)
—
(242)
—
(242)
Other (loss) income, net
(2,146)
—
(879)
44
—
(2,981)
—
(2,981)
Total other income (loss)
48,143
(521)
(7,070)
(4,327)
28,737
64,962
40,692
105,654
Income (loss) before income taxes
139,130
20,506
(14,088)
8,584
(71,513)
82,619
—
82,619
Income tax (provision) benefit
(7,422)
156
—
(3,183)
—
(10,449)
—
(10,449)
Net income (loss)
131,708
20,662
(14,088)
5,401
(71,513)
72,170
—
72,170
Net (income) loss attributable to non-controlling interests
(3)
—
(3,148)
7,049
—
3,898
—
3,898
Net income (loss) attributable to Starwood Property Trust, Inc.
$ 131,705
$ 20,662
$ (17,236)
$ 12,450
$ (71,513)
$ 76,068
$ ,
$ 76,068
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 for successful acquisitions, depreciation and amortization of real estate and associated intangibles, any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period 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. Refer to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 for additional information regarding Distributable Earnings.
Reconciliation of Net Income to Distributable EarningsFor the three months ended September 30, 2024(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.
$ 131,705
$ 20,662
$ (17,236)
$ 12,450
$ (71,513)
$ 76,068
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units
—
—
4,659
—
—
4,659
Non-controlling interests attributable to unrealized gains/losses
—
—
(5,065)
(13,975)
—
