Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2020

GREENWICH, Conn., February 25, 2021 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter and year ended December 31, 2020.  The Company's fourth quarter 2020 GAAP net income was $107.0 million, or $0.37 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $148.4 million, or $0.50 per diluted share.  The Company's full year 2020 GAAP net income was $331.7 million, or $1.16 per diluted share, and Distributable Earnings was $585.3 million, or $1.98 per diluted share.

"At no time other than 2020 was the power and strength of the company we built from a blind pool of capital over a decade ago more evident. We have proven that we are more than a portfolio of real estate mortgage loans, as good as our book has proven to be.  The pandemic presented us with one of the most challenging market cycles and opportunities we have seen since our inception.  Given our superior liquidity position, we never contemplated distressed asset sales or capital raises that would have been dilutive to our fair value in order to navigate the immense challenges of 2020. Our multiple business cylinders allowed us to generate excess liquidity, while unlocking accretive avenues to deploy that capital. Once we felt the worst had passed, we among our peers uniquely deployed $3.0 billion of capital in multiple business lines after the first quarter, including $2.3 billion in commercial and residential lending.

We enter 2021 in a position of significant strength, with access to multiple sources of liquidity, a robust commercial lending pipeline and an increasingly large array of investment opportunities across business lines," 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 Thursday, February 25, 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:  13715683
The playback can be accessed through March 4, 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 $66 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 December 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


$

173,014


$

18,477


$


$

2,518


$


$

194,009


$


$

194,009

Interest income from investment securities



21,132



618





20,512





42,262



(29,920)



12,342

Servicing fees



125







13,024





13,149



(4,514)



8,635

Rental income



1,924





64,000



9,070





74,994





74,994

Other revenues



114



155



65



248





582





582

Total revenues 



196,309



19,250



64,065



45,372





324,996



(34,434)



290,562

Costs and expenses:

























Management fees



(191)







221



40,115



40,145



12



40,157

Interest expense



41,987



9,204



16,147



5,507



29,643



102,488



(224)



102,264

General and administrative



12,742



3,345



1,089



25,549



4,207



46,932



85



47,017

Acquisition and investment pursuit costs



211



4





(26)





189





189

Costs of rental operations



777





25,279



4,252





30,308





30,308

Depreciation and amortization



433



96



18,675



4,219





23,423





23,423

Credit loss reversal, net



(5,037)



(7,094)









(12,131)





(12,131)

Other expense



77





99







176





176

Total costs and expenses 



50,999



5,555



61,289



39,722



73,965



231,530



(127)



231,403

Other income (loss):

























Change in net assets related to consolidated VIEs















13,905



13,905

Change in fair value of servicing rights









1,809





1,809



(3,196)



(1,387)

Change in fair value of investment securities, net



(6,294)







(15,377)





(21,671)



23,932



2,261

Change in fair value of mortgage loans, net



20,002







33,422





53,424





53,424

Earnings (loss) from unconsolidated entities



4,804



431





341





5,576



(324)



5,252

Gain on sale of investments and other assets, net





10





532





542





542

(Loss) gain on derivative financial instruments, net



(49,156)



(171)



758



1,627



(751)



(47,693)





(47,693)

Foreign currency gain (loss), net



43,962



260



39



(5)





44,256





44,256

Loss on extinguishment of debt





(789)







(488)



(1,277)





(1,277)

Other (loss) income, net







(406)







(406)





(406)

Total other income (loss)



13,318



(259)



391



22,349



(1,239)



34,560



34,317



68,877

Income (loss) before income taxes 



158,628



13,436



3,167



27,999



(75,204)



128,026



10



128,036

Income tax provision



(5,556)



(120)





(7,705)





(13,381)





(13,381)

Net income (loss) 



153,072



13,316



3,167



20,294



(75,204)



114,645



10



114,655

Net income attributable to non-controlling interests



(4)





(5,100)



(2,573)





(7,677)



(10)



(7,687)

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


$

153,068


$

13,316


$

(1,933)


$

17,721


$

(75,204)


$

106,968


$


$

106,968

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 December 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.


$

153,068


$

13,316


$

(1,933)


$

17,721


$

(75,204)


$

106,968

Add / (Deduct):



















Non-controlling interests attributable to Woodstar II Class A Units







5,100







5,100

Non-cash equity compensation expense



891



299



34



869



6,707



8,800

Management incentive fee











14,974



14,974

Acquisition and investment pursuit costs



(278)





(89)







(367)

Depreciation and amortization



372



86



18,736



3,832





23,026

Credit loss reversal, net



(5,037)



(7,094)









(12,131)

Interest income adjustment for securities



(1,102)







5,245





4,143

Extinguishment of debt, net











(247)



(247)

Income tax provision associated with fair value adjustments



4,883







550





5,433

Other non-cash items



4





(374)



239



161



30

Reversal of GAAP unrealized (gains) / losses on:



















Loans



(20,002)







(33,422)





(53,424)

Securities



6,294







15,377





21,671

Derivatives



48,046



105



(2,480)



(2,218)



3,945



47,398

Foreign currency



(43,962)



(260)



(39)



5





(44,256)

Earnings from unconsolidated entities



(4,804)



(431)





(341)





(5,576)

Recognition of Distributable realized gains / (losses) on:



















Loans



2,461







32,528





34,989

Securities



398







(9,389)





(8,991)

Derivatives



(3,858)





(34)



20





(3,872)

Foreign currency



631



14



39



(5)





679

Earnings from unconsolidated entities



2,914



431





745





4,090

Distributable Earnings (Loss)


$

140,919


$

6,466


$

18,960


$

31,756


$

(49,664)


$

148,437

Distributable Earnings (Loss) per Weighted Average Diluted
   Share


$

0.47


$

0.02


$

0.07


$

0.11


$

(0.17)


$

0.50

 

Starwood Property Trust, Inc. and Subsidiaries


Condensed Consolidated Statement of Operations by Segment


For the year ended December 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


$

665,503


$

77,851


$


$

8,589


$


$

751,943


$


$

751,943

Interest income from investment securities



78,490



2,637





93,823





174,950



(120,538)



54,412

Servicing fees



549







41,806





42,355



(12,721)



29,634

Rental income



4,706





255,452



37,670





297,828





297,828

Other revenues



412



499



293



1,139





2,343



(5)



2,338

Total revenues 



749,660



80,987



255,745



183,027





1,269,419



(133,264)



1,136,155

Costs and expenses:

























Management fees



796







901



125,372



127,069



58



127,127

Interest expense



176,230



40,913



65,390



24,303



113,313



420,149



(386)



419,763

General and administrative



41,972



15,673



4,542



80,039



15,312



157,538



336



157,874

Acquisition and investment pursuit costs



2,406



1,183



12



(29)





3,572





3,572

Costs of rental operations



3,186





97,136



17,354





117,676





117,676

Depreciation and amortization



1,708



342



76,246



16,109





94,405





94,405

Credit loss provision (reversal), net



47,256



(4,103)









43,153





43,153

Other expense



307





531







838





838

Total costs and expenses 



273,861



54,008



243,857



138,677



253,997



964,400



8



964,408

Other income (loss):

























Change in net assets related to consolidated VIEs















78,258



78,258

Change in fair value of servicing rights









11,415





11,415



(15,130)



(3,715)

Change in fair value of investment securities, net



(15,108)







(51,403)





(66,511)



71,904



5,393

Change in fair value of mortgage loans, net



76,897







56,227





133,124





133,124

Earnings (loss) from unconsolidated entities



8,779



(767)





30,845





38,857



(1,540)



37,317

(Loss) gain on sale of investments and other assets, net



(961)



306





7,965





7,310





7,310

(Loss) gain on derivative financial instruments, net



(58,664)



(1,499)



(34,392)



(21,269)



33,646



(82,178)





(82,178)

Foreign currency gain (loss), net



42,205



207



(14)



(3)





42,395





42,395

Loss on extinguishment of debt



(22)



(959)



(2,185)





(488)



(3,654)





(3,654)

Other (loss) income, net







(166)



447





281





281

Total other income (loss)



53,126



(2,712)



(36,757)



34,224



33,158



81,039



133,492



214,531

Income (loss) before income taxes 



528,925



24,267



(24,869)



78,574



(220,839)



386,058



220



386,278

Income tax (provision) benefit



(21,091)



(117)





1,011





(20,197)





(20,197)

Net income (loss) 



507,834



24,150



(24,869)



79,585



(220,839)



365,861



220



366,081

Net income attributable to non-controlling interests



(14)





(20,394)



(13,764)





(34,172)



(220)



(34,392)

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


$

507,820


$

24,150


$

(45,263)


$

65,821


$

(220,839)


$

331,689


$


$

331,689

 

Reconciliation of Net Income to Distributable Earnings


For the year ended December 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
.


$

507,820


$

24,150


$

(45,263)


$

65,821


$

(220,839)


$

331,689

Add / (Deduct):



















Non-controlling interests attributable to Woodstar II Class A 
   Units







20,394







20,394

Non-cash equity compensation expense



4,454



1,120



219



4,594



20,854



31,241

Management incentive fee











30,773



30,773

Acquisition and investment pursuit costs



123





(355)



(72)





(304)

Depreciation and amortization



1,467



294



76,544



14,501





92,806

Credit loss provision (reversal), net



46,215



(4,103)









42,112

Interest income adjustment for securities



(864)







15,101





14,237

Extinguishment of debt, net











(986)



(986)

Income tax provision (benefit) associated with fair value
   adjustments



6,495







(405)





6,090

Other non-cash items



14





(2,063)



942



631



(476)

Reversal of GAAP unrealized (gains) / losses on:



















Loans



(76,897)







(56,227)





(133,124)

Securities



15,108







51,403





66,511

Derivatives



56,862



1,365



30,113



19,768



(19,564)



88,544

Foreign currency



(42,205)



(207)



14



3





(42,395)

(Earnings) loss from unconsolidated entities



(8,779)



767





(30,845)





(38,857)

Recognition of Distributable realized gains / (losses) on:



















Loans



48,203



(62)





55,287





103,428

Securities



398







(18,100)





(17,702)

Derivatives



(7,711)



118



(473)



(13,418)





(21,484)

Foreign currency



(4,810)



(133)



(14)



(3)





(4,960)

Earnings (loss) from unconsolidated entities



5,686



(382)





18,247





23,551

Sales of properties









(5,789)





(5,789)

Distributable Earnings (Loss)


$

551,579


$

22,927


$

79,116


$

120,808


$

(189,131)


$

585,299

Distributable Earnings (Loss) per Weighted Average
   Diluted Share


$

1.86


$

0.08


$

0.27


$

0.41


$

(0.64)


$

1.98

 

Starwood Property Trust, Inc. and Subsidiaries


Condensed Consolidated Balance Sheet by Segment


As of December 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


$

160,007


$

4,440


$

32,080


$

19,546


$

346,372


$

562,445


$

772


$

563,217

Restricted cash



93,445



45,113



7,192



13,195





158,945





158,945

Loans held-for-investment, net



9,673,625



1,412,440





1,008





11,087,073





11,087,073

Loans held-for-sale



841,963



120,540





90,332





1,052,835





1,052,835

Investment securities



1,014,402



35,681





1,112,145





2,162,228



(1,425,570)



736,658

Properties, net



103,896





1,969,414



197,843





2,271,153





2,271,153

Intangible assets







40,370



71,123





111,493



(41,376)



70,117

Investment in unconsolidated entities



54,407



25,095





44,664





124,166



(16,112)



108,054

Goodwill





119,409





140,437





259,846





259,846

Derivative assets



6,595





41



147



33,772



40,555





40,555

Accrued interest receivable



87,922



2,091





123



5,978



96,114



(134)



95,980

Other assets



61,638



4,531



69,859



44,579



10,148



190,755



(7)



190,748

VIE assets, at fair value















64,238,328



64,238,328

Total Assets


$

12,097,900


$

1,769,340


$

2,118,956


$

1,735,142


$

396,270


$

18,117,608


$

62,755,901


$

80,873,509

Liabilities and Equity

























Liabilities:

























Accounts payable, accrued expenses and other 
  liabilities


$

41,104


$

12,144


$

43,630


$

45,309


$

64,583


$

206,770


$

75


$

206,845

Related-party payable









5



39,165



39,170





39,170

Dividends payable











137,959



137,959





137,959

Derivative liabilities



39,082



1,718





524





41,324





41,324

Secured financing agreements, net



5,893,999



1,240,763



1,794,609



606,100



632,719



10,168,190



(22,000)



10,146,190

Collateralized loan obligations, net



930,554











930,554





930,554

Unsecured senior notes, net











1,732,520



1,732,520





1,732,520

VIE liabilities, at fair value















62,776,371



62,776,371

Total Liabilities



6,904,739



1,254,625



1,838,239



651,938



2,606,946



13,256,487



62,754,446



76,010,933

Equity:

























Starwood Property Trust, Inc. Stockholders' Equity:

























Common stock











2,921



2,921





2,921

Additional paid-in capital



1,192,584



496,387



98,882



(322,992)



3,744,878



5,209,739





5,209,739

Treasury stock











(138,022)



(138,022)





(138,022)

Accumulated other comprehensive income (loss)



44,057







(64)





43,993





43,993

Retained earnings (accumulated deficit)



3,956,405



18,328



(44,832)



1,260,819



(5,820,453)



(629,733)





(629,733)

Total Starwood Property Trust, Inc. Stockholders' Equity



5,193,046



514,715



54,050



937,763



(2,210,676)



4,488,898





4,488,898

Non-controlling interests in consolidated subsidiaries



115





226,667



145,441





372,223



1,455



373,678

Total Equity



5,193,161



514,715



280,717



1,083,204



(2,210,676)



4,861,121



1,455



4,862,576

Total Liabilities and Equity


$

12,097,900


$

1,769,340


$

2,118,956


$

1,735,142


$

396,270


$

18,117,608


$

62,755,901


$

80,873,509

 

Cision View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-and-year-ended-december-31-2020-301235370.html

SOURCE Starwood Property Trust, Inc.

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