Starwood Property Trust Reports Results for the Quarter Ended September 30, 2014

GREENWICH, Conn., Nov. 5, 2014 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended September 30, 2014.  The Company's Core Earnings, a Non-GAAP financial measure, were $124.8 million, or $0.55 per diluted share, for the third quarter of 2014, an increase of 8% over the $115.2 million, or $0.51 per diluted share, reported for the second quarter of 2014.

GAAP net income attributable to the Company for the third quarter of 2014 was $165.0 million, or $0.73 per diluted share, an increase of 40% over the $117.9 million, or $0.52 per diluted share, reported for the second quarter of 2014.

"We continue to grow our investment portfolio, as we successfully deployed $2.3 billion of capital in the quarter, despite increased competition and market volatility. Our team's ability to source and structure large and complex real estate lending transactions continues to provide a robust pipeline of financing opportunities with very attractive risk adjusted returns in a yield starved world.  As we move on in the real estate cycle, we remain focused on maintaining both our rigorous underwriting standards and the credit quality of our investments, and we are encouraged that the LTV of our $5.5 billion loan portfolio remains below 65%.  I am pleased with the diversity of our investment portfolios, the success we have had deploying significant capital into new business lines, such as CMBS and B-pieces, and the profitability of our conduit operations," stated Barry Sternlicht, Chairman and Chief Executive Officer of Starwood Property Trust.

Mr. Sternlicht continued, "Our job since our inception was to find the most attractive risk adjusted opportunities for our shareholders that can offer both safety and predictable cash flows to support our distributions.  Accordingly, we believe it is prudent to take advantage of market conditions by complementing our core lending and servicing segments with targeted core plus real estate investments. Subsequent to the quarter end, we participated in the acquisition of a high quality and attractively priced regional mall portfolio. We intend to take full advantage of Starwood Capital Group's global coverage, expertise and scale in all the major asset classes as we seek to further diversify our business. Our focus remains the same – to build the premiere diversified real estate investment and finance company which generates sustainable, attractive risk adjusted total returns for our shareholders."

Highlights for the Third Quarter 2014 by Business Segment

The Company operates in two reportable segments: Real Estate Investment Lending and LNR.  The Single-Family Residential segment, now called Starwood Waypoint Residential Trust, was spun off to the Company's shareholders on January 31, 2014, and as such, the results of this segment prior to spinoff are included in the year-to-date numbers presented herein.

Real Estate Investment Lending Segment

The Lending Segment represents the Company's commercial real estate finance business.  During the third quarter of 2014, the Lending Segment contributed GAAP and Core Earnings of $69.2 million and $71.0 million, respectively.  Originations and acquisitions during the quarter, all of which consisted of LIBOR-based floating rate loans, totaled $1.7 billion and include the following significant transactions:

  • Originated a $480.0 million first mortgage and mezzanine financing for the construction of a 54-story Class A+ office and luxury condominium tower in San Francisco, California.
  • Originated a $264.3 million first mortgage land improvement loan on 196 acres of oceanfront land in Orange County, California.
  • Originated a $150.0 million first mortgage financing for the redevelopment of a luxury resort in Maui, Hawaii.
  • Announced the co-origination of £86.75 million in a £101.75 million first mortgage loan for the development of a 46-story residential tower and 18-story housing development containing a total of 366 private residential and affordable housing units located in London. 
  • Acquired a $123.4 million portfolio of diverse office, retail and multi-family loans throughout the United States.
  • Originated a $103.3 million first mortgage and mezzanine loan to refinance and expand a 149-key, full service boutique hotel in Boston, Massachusetts.
  • Originated an $81.5 million first mortgage and mezzanine financing secured by a 36-building office and industrial portfolio in Lenexa, Kansas.
  • Co-originated €58.0 million of a €99.0 million mortgage loan for the refinancing and refurbishment of a 239-key, full service hotel located in Amsterdam, Netherlands.

As of September 30, 2014, 95% of the Lending Segment's pipeline and 78% of the existing loan portfolio is indexed to LIBOR.  In addition, 87% of the floating rate portfolio benefits from having a LIBOR floor at an average rate of 0.36%.  For the 22% of the portfolio that is fixed rate, the weighted average coupon is 8.7%. 

The carrying value of the Lending Segment's total investment portfolio was $6.1 billion as of September 30, 2014, of which $5.7 billion represents its target portfolio.  This portfolio is anticipated to generate a current leveraged return of 10.1% and an optimal asset-level return of 10.9% (refer to footnotes (3) and (4) in the following table for a discussion of how these returns are computed). 

The following is a summary of the Lending Segment's investments as of September 30, 2014:

Lending Segment Investment Portfolio

(Amounts in millions)


Investment

Face Amount

Carry
Value (1)

Asset Specific
Financing
(2)

Net
Investment

Return
on Asset

Current
Leveraged 
Return (3)

Optimal
Asset-Level 
Return (4)

First mortgages held for investment

$

3,437

$

3,377

$

1,501

$

1,876

6.3%

8.5%

9.8%

Subordinated mortgages held for investment

418

387

2

385

11.1%

11.1%

11.2%

Mezzanine loans held for investment

1,430

1,431

58

1,373

11.5%

11.7%

12.1%

Preferred equity investments held to maturity

288

287

-

287

10.0%

10.0%

10.0%

CMBS (5)

182

190

58

132

9.0%

12.0%

12.0%

Target portfolio of Lending Segment

$

5,755

$

5,672

$

1,619

$

4,053

8.2%

10.1%

10.9%

RMBS available-for-sale at fair value

284

216

130

86

15.2%



Loans transferred as secured borrowings or 
     
held-for-sale

143

143

143

-




Equity security

15

15

-

15




Investment in unconsolidated entities

N/A

48

-

48




Total investments

$

6,197

$

6,094

$

1,892

$

4,202





(1)

The difference between the Carry Value and Face Amount of the loans held for investment consists of unamortized
purchase discount, deferred loan fees and loan origination costs. The difference between the Carry Value and Face Amount
of the available-for-sale securities consists of the unrealized gains/(losses) on the fair value of the securities and
unamortized purchase discount.

(2)

Current financings are either floating rate or swapped to fixed rate to match the interest rate characteristics of the underlying asset.

(3)

The leveraged return represents the compounded effective rate of return earned over the life of the investment based on existing leverage levels as of September 30, 2014, and calculated on a weighted average basis. Leveraged returns include the loan coupon, amortization of premium or discount, and the effects of costs and fees, all recognized on the effective interest method. Leveraged returns are presented solely for informational purposes and will not equal income recognized in prior or future periods due mainly to the fact that (i) interest earned on the Company's floating rate loans will change in the future when interest rates change, and these leveraged returns assume interest rates remain at current levels and (ii) the leveraged returns assume that the leverage levels existing at September 30, 2014 will be maintained either throughout the remaining term of the applicable credit facilities or the remaining term of the investment, if shorter. However, leverage levels in future periods will likely fluctuate as the Company manages its day-to-day liquidity.

(4)

 The optimal asset-level return assumes (i) maximum available leverage in place or in negotiation for each asset, notwithstanding the amount actually borrowed, and (ii) full syndication of the first mortgage when syndication is deemed probable.

(5)

 Consists of available-for-sale and held-to-maturity CMBS with carrying values of $106 million and $84 million, respectively.

Loan-to-Value of Portfolio

The following table reflects the weighted average loan-to-value ("LTV") ratio of the Lending Segment's loan portfolio as of September 30, 2014:

Weighted Average LTV of Loan Portfolio (1)





First Mortgages


Subordinated Mortgages


Mezzanine


Preferred Equity


Total (2)

Beginning LTV


0.0%


36.8%


28.0%


38.9%


12.4%

Ending LTV


63.2%


70.5%


67.1%


53.1%


64.2%



(1)

Underlying property values are determined by the Company's management based on its ongoing asset assessments, and loan balances that are the face value of a loan regardless of whether the Company has purchased the loan at a discount or premium to par. Assets characterized as first mortgages include all loan components where the Company owns the senior most interest in the loan and assets characterized as subordinated mortgages are the subordinated components of first mortgages where the Company does not own the senior most interest in the loan. For any loans collateralized by ground-up construction projects without significant leasing or units with executed sales contracts, the fully funded loan balance is included in the numerator and the fully budgeted construction cost including costs of acquisition of the property is included in the denominator. For ground up construction loans which have significant leasing or units under contract for sale the fully funded loan balance is included in the numerator with an estimate of the stabilized value upon completion of construction included in the denominator. Includes loans held for investment and preferred equity.

(2)

Represents the Company's entire investment, which includes all components of the capital stack that it owns (i.e., first mortgages, subordinated mortgages, mezzanine loans and preferred equity).

LNR Segment

For the third quarter of 2014, the LNR Segment contributed GAAP and Core Earnings of $95.8 million and $53.9 million, or $0.42 and $0.24 per diluted share, respectively, each after (i) $12.6 million in shared cost allocations of management fees and corporate interest expense and (ii) an income tax provision of $4.1 million.

At September 30, 2014, the carrying amount of the LNR Segment's principal assets, consisting mainly of CMBS, servicing intangibles and conduit loans, was $1.2 billion and is summarized below:

LNR Investments as of September 30, 2014

(Amounts in millions)


Investment


Face Amount


Carry Value


Asset
Specific Financing


Net Investment

CMBS


$

3,935


$

698


$

-


$

698

Special servicing intangibles


N/A


203


-


203

Conduit loans


249


248


169


79

Loans held-for-investment


7


4


-


4

Investment in unconsolidated entities


N/A


69


-


69

     Total investments


$

4,191


$

1,222


$

169


$

1,053

Significant activity during the third quarter with respect to these assets includes:

  • CMBS purchases of $43.4 million, including new issue B-piece purchases of $36.8 million.
  • Realized and unrealized gains in the CMBS portfolio of $12.7 million and $39.4 million, respectively. 
  • Net decrease in the fair value of the domestic servicing intangible on a GAAP and Core basis of $18.3 million, resulting from the continued amortization of this asset, net of increases in fair value due to the attainment of new servicing contracts.   
  • As of September 30, 2014, LNR was named special servicer on $15.0 billion of loans and real estate owned ("REO").
  • The conduit loan business contributed net securitization profits of $17.0 million and $16.3 million on a GAAP and Core basis, respectively.

Financing Activities

As of September 30, 2014, the Company had an aggregate outstanding balance of $3.8 billion and a maximum borrowing capacity of $4.8 billion under its twelve financing facilities and two convertible senior notes. The Company continues to maintain conservative overall leverage, with a debt-to-equity ratio of 1.0x at the end of the quarter.

During the third quarter, the Company:

  • Entered into a new $250.0 million revolving repurchase facility.
  • Amended one of its revolving repurchase facilities to upsize available borrowings from $225.0 million to $325.0 million and reduced pricing.
  • Established a share repurchase program which allows for the repurchase of up to $250.0 million of its common stock over a one year period. During the quarter, the Company repurchased $13.0 million of common stock at a weighted average share price of $22.10.

Subsequent to quarter end, the Company:

  • Issued $431.3 million of 3.75% Convertible Senior Notes due 2017.
  • Increased available borrowings from $1.0 billion to $1.25 billion under one of its revolving repurchase facilities.
  • Extended the maturity dates on two facilities while reducing pricing on one of these facilities.

These subsequent financings increased the Company's maximum borrowing capacity to $5.4 billion.

Interest Rate Sensitivity

The Company should benefit from a rising rate environment given its high volume of LIBOR-based floating rate loans.  The Company continues to pursue its strategy of financing floating rate investments with floating rate debt and fixed rate investments with either fixed rate debt or floating rate debt hedged by interest swaps. Additional benefit would be realized from the Company's fixed-rate convertible notes, which limit exposure to rising rates.

The following table summarizes the impact to annual net income from a specified hypothetical change in LIBOR (amounts in millions): 

Income (Expense) Subject to Interest Rate 


Variable-rate
investments and
indebtedness


3.0%
Increase


2.5%
Increase


2.0% 
Increase


1.5%
Increase


1.0%
Increase

Investment income from variable-rate
     investments


$

4,284


$

133


$          110


$          86


$            63


$            40

Interest expense from variable-rate

    debt



(2,580)


(74)


(61)


(48)


(35)


(23)

Net investment income from variable 
     rate instruments


$

1,704


$

59


$            49


$          38


$            28


$            17

Additionally, LNR's special servicing revenues would likely benefit from a rising rate environment due to an expected increase in the number of loans that would enter special servicing. 

Book Value and Fair Value Per Share, Net of Minority Interest

The fair value of the Company's net assets at September 30, 2014 was approximately $17.65 per fully diluted share, assuming debt is valued at its par settlement amount, up 3% from $17.20 at June 30, 2014. On a fully diluted basis, the Company's GAAP book value at September 30, 2014 was $17.06 per share, up 3% from $16.59 at June 30, 2014. These amounts reflect share dilution as of September 30, 2014 and June 30, 2014 of 1.0 million and 4.1 million shares, respectively, resulting from the in-the-money portion of the Company's convertible notes. 

Investment Related Activity Subsequent to September 30, 2014

Subsequent to quarter end, the Lending Segment invested in the following:

  • $150 million core plus equity co-investment in a partnership established to acquire and operate four high-quality regional shopping malls.
  • $120 million first mortgage and mezzanine loan to refinance and redevelop two office buildings in New Orleans, Louisiana, one of which will include a new 195-key hotel.

Subsequent to quarter end, the following occurred in the LNR Segment:


  • Originated conduit loans of $218.5 million.
  • Received proceeds of $194.2 million from the securitization of conduit loan inventory, bringing the total number of year-to-date securitization to nine.

Investment Capacity

As of October 31, 2014, the Company had approximately $280.9 million of available cash and equivalents, approximately $87.5 million of net equity invested in RMBS that are classified as available-for-sale, $83.5 million of approved but undrawn capacity under existing financing facilities and $749.4 million of unallocated warehouse capacity. In addition, the Company expects to receive $417.0 million during the fourth quarter from loan financings, maturities, prepayments, sales and participations. These liquidity sources provide the Company with the capacity to acquire or originate up to $1.4 billion of new investments.

Dividend

On November 5, 2014, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending December 31, 2014.  The dividend is payable on January 15, 2015 to common shareholders of record as of December 31, 2014.  During the nine months ended September 30, 2014, the Company paid dividends of $1.44 per share compared to core earnings per diluted share of $1.67.

2014 Guidance

For 2014, the Company is narrowing its Core Earnings guidance to a range of $2.12 to $2.16 per diluted share.  This guidance reflects the Company's estimates on the (i) yield on existing investments; (ii) yield on incremental investments inclusive of the Company's existing pipeline; (iii) amount and timing of debt and equity capital deployment to fund new investments; (iv) costs of additional debt and equity capital to fund new investments; (v) pace of amortization of the servicing intangible based on the amount and timing of servicing fees on existing contracts; (vi) taxation associated with the TRSs, particularly the LNR TRSs, which house this segment's servicing and conduit loan operations, both of which generate significant taxable income; and (vii) changes in costs and expenses reflective of the Company's forecasted operations.  All guidance is based on current expectations of future economic conditions, the dynamics of the commercial real estate markets in which it operates and the judgment of the Company's management team. 

Supplemental Schedules

The Company has published supplemental earnings schedules in order to provide additional disclosure and financial information for the benefit of the Company's stakeholders.  These can be found at the Company's website in the Investor Relations section under "Financial Information".

Conference Call and Webcast Information 

The Company will host a webcast and conference call on Wednesday, November 5, 2014 at 9:00 a.m. Eastern Time to discuss third quarter financial results and recent events.  A webcast will be available on the Company's website at www.starwoodpropertytrust.com.  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.

To Participate in the Telephone Conference Call:

Dial in at least 15 minutes prior to start time.

Domestic:  1-800-946-0709 
International:  1-719-457-2604

Conference Call Playback:
Domestic:  1-877-870-5176 
International:  1-858-384-5517 
Passcode:  9281101

The playback can be accessed through November 19, 2014.

About Starwood Property Trust, Inc.

Starwood Property Trust (NYSE: STWD), an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the United States. The Company's core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt investments. Through its subsidiaries LNR Property, LLC and Hatfield Philips International, the Company also operates as the largest commercial mortgage special servicer in the United States and one of the largest primary and special servicers in Europe.

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.  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 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 from time to time in the Company's reports filed with the SEC.

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the three months ended September 30, 2014

(Amounts in thousands)



Real Estate
Investment
Lending


LNR


Subtotal


LNR VIEs


Total

Revenues:










Interest income from loans

$

106,369


$

4,300


$

110,669


$


$

110,669

Interest income from investment securities

15,729


30,136


45,865


(17,225)


28,640

Servicing fees

63


58,826


58,889


(24,248)


34,641

Other revenues

130


7,604


7,734


(316)


7,418

Total revenues

122,291


100,866


223,157


(41,789)


181,368

Costs and expenses:










Management fees

17,330


7,571


24,901


42


24,943

Interest expense

33,138


6,601


39,739



39,739

General and administrative

9,049


38,414


47,463


177


47,640

Acquisition and investment pursuit costs

583


176


759



759

Depreciation and amortization


3,017


3,017



3,017

Loan loss allowance, net

1,575



1,575



1,575

Other expense


2,701


2,701



2,701

Total costs and expenses

61,675


58,480


120,155


219


120,374

Income before other income, income taxes and non‑controlling interests

60,616


42,386


103,002


(42,008)


60,994

Other income:










Income of consolidated VIEs, net




87,778


87,778

Change in fair value of servicing rights


(18,312)


(18,312)


10,415


(7,897)

Change in fair value of investment securities, net

(140)


52,067


51,927


(50,067)


1,860

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


15,517


15,517



15,517

Earnings from unconsolidated entities

1,875


5,905


7,780


(3,975)


3,805

Gain on sale of investments, net

1,332



1,332



1,332

Gain on derivative financial instruments, net

26,540


2,735


29,275



29,275

Foreign currency (loss), net

(21,019)


(447)


(21,466)



(21,466)

Other-than-temporary-impairment, net





Other income, net


28


28



28

Total other income

8,588


57,493


66,081


44,151


110,232

Income before income taxes

69,204


99,879


169,083


2,143


171,226

Income tax benefit (provision)

233


(4,069)


(3,836)



(3,836)

Net income

69,437


95,810


165,247


2,143


167,390

Net income attributable to non‑controlling interests

(203)



(203)


(2,143)


(2,346)

Net income attributable to Starwood Property Trust, Inc.

$

69,234


$

95,810


$

165,044


$


$

165,044

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, depreciation and amortization (to the extent that the Company owns any properties), 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. The amount will be 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 September 30, 2014

(Amounts in thousands except per share data)




Real Estate
Investment
Lending


LNR


Total

Net income attributable to Starwood Property Trust, Inc.


$

69,234


$

95,810


$

165,044

Add / (Deduct):







Non‑cash equity compensation expense


6,498


272


6,770

Management incentive fee



4,288


4,288

Depreciation and amortization



532


532

Loan loss allowance, net


1,575



1,575

Interest income adjustment for securities


542


3,085


3,627

Other non-cash items



338


338

Reversal of unrealized (gains) / losses on:







Loans held‑for‑sale



(15,517)


(15,517)

Securities


(396)


(52,067)


(52,463)

Derivatives


(27,088)


(4,001)


(31,089)

Foreign currency


21,020



21,020

Earnings from unconsolidated entities



(4,671)


(4,671)

Recognition of realized gains / (losses) on:







Loans held‑for‑sale



16,660


16,660

Securities


413


8,175


8,588

Derivatives


12


947


959

Foreign currency


(858)



(858)

Earnings from unconsolidated entities




Core Earnings


$

70,952


$

53,851


$

124,803

Core Earnings per Weighted Average Diluted Share


$

0.31


$

0.24


$

0.55

 


Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the nine months ended September 30, 2014

(Amounts in thousands)



Real Estate
Investment
Lending


LNR


Single Family
Residential


Subtotal


LNR VIEs


Total

Revenues:












Interest income from loans

$

311,348


$

9,686


$


$

321,034


$


$

321,034

Interest income from investment securities

49,196


83,225



132,421


(46,707)


85,714

Servicing fees

253


172,845



173,098


(71,565)


101,533

Other revenues

318


16,437



16,755


(939)


15,816

Total revenues

361,115


282,193



643,308


(119,211)


524,097

Costs and expenses:












Management fees

51,959


24,979


791


77,729


120


77,849

Interest expense

95,949


18,225


1,091


115,265



115,265

General and administrative

21,900


114,391



136,291


544


136,835

Acquisition and investment pursuit costs

1,318


606



1,924



1,924

Depreciation and amortization


12,807



12,807



12,807

Loan loss allowance, net

1,933




1,933



1,933

Other expense

52


10,364



10,416



10,416

Total costs and expenses

173,111


181,372


1,882


356,365


664


357,029

Income before other income, income taxes and non‑controlling interests

188,004


100,821


(1,882)


286,943


(119,875)


167,068

Other income:












Income of consolidated VIEs, net





190,810


190,810

Change in fair value of servicing rights


(43,291)



(43,291)


24,620


(18,671)

Change in fair value of investment securities, net

565


105,313



105,878


(90,698)


15,180

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


48,018



48,018



48,018

Earnings from unconsolidated entities

6,847


9,741



16,588


(3,156)


13,432

Gain on sale of investments, net

12,965




12,965



12,965

Gain (loss) on derivative financial instruments, net

16,142


(4,523)



11,619



11,619

Foreign currency (loss), net

(15,376)


(836)



(16,212)



(16,212)

Other-than-temporary-impairment, net

(214)


(796)



(1,010)



(1,010)

Other income, net

54


684



738



738

Total other income

20,983


114,310



135,293


121,576


256,869

Income from continuing operations before income taxes

208,987


215,131


(1,882)


422,236


1,701


423,937

Income tax provision

(293)


(13,440)



(13,733)



(13,733)

Income from continuing operations

208,694


201,691


(1,882)


408,503


1,701


410,204

Loss from discontinued operations, net of tax



(1,551)


(1,551)



(1,551)

Net income

208,694


201,691


(3,433)


406,952


1,701


408,653

Net income attributable to non‑controlling interests

(3,439)




(3,439)


(1,701)


(5,140)

Net income attributable to Starwood Property Trust, Inc.

$

205,255


$

201,691


$

(3,433)


$

403,513


$


$

403,513

 

Reconciliation of Net Income to Core Earnings

For the nine months ended September 30, 2014

(Amounts in thousands except per share data)




Real Estate
Investment
Lending


LNR


Single Family
Residential


Total

Net income attributable to Starwood Property Trust, Inc.


$

205,255


$

201,691


$

(3,433)


$

403,513

Add / (Deduct):









Non‑cash equity compensation expense


20,787


714



21,501

Management incentive fee



15,511



15,511

Change in Control Plan



1,279



1,279

Depreciation and amortization



1,602


1,540


3,142

Loan loss allowance, net


1,933




1,933

Interest income adjustment for securities


(808)


8,940



8,132

Other non-cash items



587



587

Reversal of unrealized (gains) / losses on:









Loans held‑for‑sale



(48,018)



(48,018)

Securities


(12,027)


(105,313)



(117,340)

Derivatives


(16,408)


2,082



(14,326)

Foreign currency


15,376




15,376

Earnings from unconsolidated entities



(5,263)



(5,263)

Recognition of realized gains / (losses) on:









Loans held‑for‑sale



46,045



46,045

Securities


10,992


22,306



33,298

Derivatives


(851)


(1,810)



(2,661)

Foreign currency


(1,139)




(1,139)

Earnings from unconsolidated entities





Core Earnings


$

223,110


$

140,353


$

(1,893)


$

361,570

Core Earnings per Weighted Average Diluted Share


$

1.03


$

0.65


$

(0.01)


$

1.67

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of September 30, 2014

(Amounts in thousands)




Real Estate
Investment
Lending


LNR


Subtotal


LNR VIEs


Total


Assets:












Cash and cash equivalents              


$

140,142


$

186,531


$

326,673


$

649


$

327,322


Restricted cash


33,769


11,956


45,725



45,725


Loans held-for-investment, net


5,194,824


4,103


5,198,927



5,198,927


Loans held-for-sale



248,165


248,165



248,165


Loans transferred as secured borrowings.......


142,516



142,516



142,516


Investment securities


709,343


697,733


1,407,076


(512,774)


894,302


Intangible assets—servicing rights



203,503


203,503


(57,713)


145,790


Investment in unconsolidated entities


47,934


69,175


117,109


(6,540)


110,569


Goodwill



140,437


140,437



140,437


Derivative assets


10,532


2,822


13,354



13,354


Accrued interest receivable


34,338


727


35,065



35,065


Other assets


38,054


86,722


124,776


(1,304)


123,472


VIE assets, at fair value





109,468,293


109,468,293


Total Assets


$

6,351,452


$

1,651,874


$

8,003,326


$

108,890,611


$

116,893,937


Liabilities and Equity












Liabilities:












Accounts payable, accrued expenses and other liabilities


$

49,659


$

103,981


$

153,640


$

418


$

154,058


Related-party payable


20,268


4,598


24,866



24,866


Dividends payable


108,056



108,056



108,056


Derivative liabilities


5,189


273


5,462



5,462


Secured financing agreements, net


2,538,886


169,222


2,708,108



2,708,108


Convertible senior notes, net


1,006,927



1,006,927



1,006,927


Secured borrowings on transferred loans........


142,575



142,575



142,575


VIE liabilities, at fair value





108,879,922


108,879,922


Total Liabilities


3,871,560


278,074


4,149,634


108,880,340


113,029,974


Equity:












Starwood Property Trust, Inc. Stockholders' Equity:












Preferred stock







Common stock


2,236



2,236



2,236


Additional paid-in capital


2,401,673


1,391,755


3,793,428



3,793,428


Treasury stock


(23,635)



(23,635)



(23,635)


Accumulated other comprehensive income


64,184


5,497


69,681



69,681


Retained earnings (deficit)


30,754


(23,452)


7,302



7,302


Total Starwood Property Trust, Inc. Stockholders' Equity


2,475,212


1,373,800


3,849,012



3,849,012


Non-controlling interests in consolidated subsidiaries


4,680



4,680


10,271


14,951


Total Equity


2,479,892


1,373,800


3,853,692


10,271


3,863,963


Total Liabilities and Equity


$

6,351,452


$

1,651,874


$

8,003,326


$

108,890,611


$

116,893,937


 

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

 

SOURCE Starwood Property Trust, Inc.

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