Starwood Property Trust Reports Results for the Quarter Ended March 31, 2020

GREENWICH, Conn., May 4, 2020 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2020.  The Company had a first quarter 2020 GAAP net loss of $66.8 million, or $(0.24) per diluted share, and Core Earnings of $162.1 million, or $0.55 per diluted share. GAAP net loss includes the unrealized, non-cash impacts of mark-to-market adjustments and the recently implemented CECL accounting standard, totaling $148.6 million ($0.53 per diluted share) and $48.7 million ($0.17 per diluted share), respectively, both of which reflect the market volatility and dislocation caused by the COVID-19 pandemic. 

"Starwood Property Trust has one of the strongest balance sheets in the commercial mortgage REIT industry, with over $870 million in cash and approved undrawn capacity, and well over $1.0 billion of additional liquidity available to us if ever needed. Our powerful balance sheet is bolstered by our diversified platform, anchored by our real estate equity book and multiple business lines that create considerable stability in an uncertain time. We continue to benefit from our scale, relatively low leverage and $3.3 billion unencumbered asset base. STWD is well positioned to take advantage of dislocations in the market and to weather this economic storm with immense human and financial resources," commented Barry Sternlicht, Chairman and CEO 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 Monday, May 4, 2020, at 8:30 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:  13702227
The playback can be accessed through May 11, 2020.

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 $63 billion of capital since inception and manages a portfolio of over $17 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, 2019 and our quarterly report on Form 10-Q for the quarter ended March 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, 2020
(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


$

192,381


$

22,413


$


$

2,633


$


$

217,427


$


$

217,427

Interest income from investment securities



18,628



701





24,800





44,129



(28,889)



15,240

Servicing fees



172







6,442





6,614



(1,821)



4,793

Rental income



78





63,961



10,107





74,146





74,146

Other revenues



178



143



122



513





956



(2)



954

Total revenues 



211,437



23,257



64,083



44,495





343,272



(30,712)



312,560

Costs and expenses:

























Management fees



351







239



40,107



40,697



31



40,728

Interest expense



53,950



13,117



17,121



7,194



28,805



120,187



(162)



120,025

General and administrative



8,132



4,423



1,078



20,684



4,301



38,618



84



38,702

Acquisition and investment pursuit costs



860



17



12



20





909





909

Costs of rental operations



778





22,852



4,584





28,214





28,214

Depreciation and amortization



415



70



19,288



4,207





23,980





23,980

Credit loss provision, net



40,217



8,452









48,669





48,669

Other expense



77





311







388





388

Total costs and expenses 



104,780



26,079



60,662



36,928



73,213



301,662



(47)



301,615

Other (loss) income:

























Change in net assets related to consolidated VIEs















(45,493)



(45,493)

Change in fair value of servicing rights









318





318



(711)



(393)

Change in fair value of investment securities, net



(27,879)







(47,216)





(75,095)



77,599



2,504

Change in fair value of mortgage loans, net



(35,517)







19,383





(16,134)





(16,134)

Earnings (loss) from unconsolidated entities



51







620





671



(574)



97

Gain on sale of investments and other assets, net





296









296





296

Gain (loss) on derivative financial instruments, net



30,805



(1,001)



(30,223)



(19,106)



29,235



9,710





9,710

Foreign currency (loss) gain, net



(34,001)



(473)



(19)



7





(34,486)





(34,486)

Loss on extinguishment of debt





(170)









(170)





(170)

Other income, net







50



76





126





126

Total other (loss) income



(66,541)



(1,348)



(30,192)



(45,918)



29,235



(114,764)



30,821



(83,943)

Income (loss) before income taxes 



40,116



(4,170)



(26,771)



(38,351)



(43,978)



(73,154)



156



(72,998)

Income tax benefit



4,422



145





2,162





6,729





6,729

Net income (loss) 



44,538



(4,025)



(26,771)



(36,189)



(43,978)



(66,425)



156



(66,269)

Net (income) loss attributable to non-controlling interests



(3)





(5,111)



4,770





(344)



(156)



(500)

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


$

44,535


$

(4,025)


$

(31,882)


$

(31,419)


$

(43,978)


$

(66,769)


$


$

(66,769)

 

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, 2020
(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.


$

44,535


$

(4,025)


$

(31,882)


$

(31,419)


$

(43,978)


$

(66,769)

Add / (Deduct):



















Non-controlling interests attributable to Woodstar II Class A Units







5,111







5,111

Non-cash equity compensation expense



1,112



466



73



1,263



5,886



8,800

Management incentive fee











15,799



15,799

Acquisition and investment pursuit costs



358





(89)







269

Depreciation and amortization



355



51



19,381



3,807





23,594

Credit loss provision, net



40,217



8,452









48,669

Interest income adjustment for securities



124







6,315





6,439

Extinguishment of debt, net











(246)



(246)

Income tax benefit associated with fair value adjustments



(5,821)







(1,442)





(7,263)

Other non-cash items



3





(491)



248



156



(84)

Reversal of GAAP unrealized (gains) / losses on:



















Loans



35,517







(19,383)





16,134

Securities



27,879







47,216





75,095

Derivatives



(30,563)



1,013



30,569



19,013



(27,649)



(7,617)

Foreign currency



34,001



473



19



(7)





34,486

Earnings from unconsolidated entities



(51)







(620)





(671)

Recognition of Core realized gains / (losses) on:



















Loans



2,164



(62)





16,559





18,661

Securities









(4,212)





(4,212)

Derivatives



3,250



118



(35)



(6,087)





(2,754)

Foreign currency



(4,271)



(194)



(19)



7





(4,477)

(Loss) earnings from unconsolidated entities



(556)







3,738





3,182

Core Earnings (Loss)


$

148,253


$

6,292


$

22,637


$

34,996


$

(50,032)


$

162,146

Core Earnings (Loss) per Weighted Average Diluted Share


$

0.50


$

0.02


$

0.08


$

0.12


$

(0.17)


$

0.55

 

 

Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet by Segment
As of March 31, 2020
(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


$

22,910


$

40


$

28,137


$

36,913


$

719,222


$

807,222


$

4,434


$

811,656

Restricted cash



50,331



43,679



7,362



18,365





119,737





119,737

Loans held-for-investment, net



9,106,441



1,381,271





1,224





10,488,936





10,488,936

Loans held-for-sale



886,076



101,895





186,963





1,174,934





1,174,934

Investment securities



955,614



44,141





1,095,990





2,095,745



(1,317,773)



777,972

Properties, net



26,585





2,014,007



212,478





2,253,070





2,253,070

Intangible assets







45,331



63,632





108,963



(26,958)



82,005

Investment in unconsolidated entities



50,017



25,862





31,321





107,200



(19,866)



87,334

Goodwill





119,409





140,437





259,846





259,846

Derivative assets



57,238



6



98



2,250



41,856



101,448





101,448

Accrued interest receivable



49,942



4,949





1,047



3,357



59,295



(758)



58,537

Other assets



61,109



5,108



76,776



52,119



8,812



203,924



(15)



203,909

VIE assets, at fair value















61,157,805



61,157,805

Total Assets


$

11,266,263


$

1,726,360


$

2,171,711


$

1,842,739


$

773,247


$

17,780,320


$

59,796,869


$

77,577,189

Liabilities and Equity

























Liabilities:

























Accounts payable, accrued expenses and other liabilities


$

33,645


$

11,933


$

48,748


$

48,090


$

79,178


$

221,594


$

75


$

221,669

Related-party payable









5



39,261



39,266





39,266

Dividends payable











137,529



137,529





137,529

Derivative liabilities



3,740



1,292





86





5,118





5,118

Secured financing agreements, net



5,611,239



1,190,995



1,698,044



692,941



510,414



9,703,633



(13,950)



9,689,683

Collateralized loan obligations, net



928,683











928,683





928,683

Unsecured senior notes, net











1,930,584



1,930,584





1,930,584

VIE liabilities, at fair value















59,807,306



59,807,306

Total Liabilities



6,577,307



1,204,220



1,746,792



741,122



2,696,966



12,966,407



59,793,431



72,759,838

Equity:

























Starwood Property Trust, Inc. Stockholders' Equity:

























Common stock











2,894



2,894





2,894

Additional paid-in capital



1,159,771



531,986



229,223



(200,489)



3,438,578



5,159,069





5,159,069

Treasury stock











(133,024)



(133,024)





(133,024)

Accumulated other comprehensive income (loss)



35,948







(64)





35,884





35,884

Retained earnings (accumulated deficit)



3,493,119



(9,846)



(31,451)



1,163,580



(5,232,167)



(616,765)





(616,765)

Total Starwood Property Trust, Inc. Stockholders' Equity



4,688,838



522,140



197,772



963,027



(1,923,719)



4,448,058





4,448,058

Non-controlling interests in consolidated subsidiaries



118





227,147



138,590





365,855



3,438



369,293

Total Equity



4,688,956



522,140



424,919



1,101,617



(1,923,719)



4,813,913



3,438



4,817,351

Total Liabilities and Equity


$

11,266,263


$

1,726,360


$

2,171,711


$

1,842,739


$

773,247


$

17,780,320


$

59,796,869


$

77,577,189

 

Cision View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-march-31-2020-301051687.html

SOURCE Starwood Property Trust, Inc.

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