Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2016

GREENWICH, Conn., Feb. 23, 2017 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter and year ended December 31, 2016.  The Company's fourth quarter 2016 GAAP net income was $121.3 million, or $0.49 per diluted share, and $365.2 million, or $1.50 per diluted share, for the full year.  Core Earnings (a non-GAAP financial measure) for the fourth quarter was $122.6 million, or $0.50 per diluted share, and $502.5 million or $2.09 per diluted share, for the full year.  Excluding the write-off of unamortized costs associated with the early retirement of the Company's term loan due 2020, GAAP and Core Earnings per diluted share for the quarter were $0.52 and $0.53, respectively. 

"We continued to generate strong results driven by the successful execution of our business plan, as evidenced by the $6.4 billion of capital we deployed in 2016 across our diversified platform. The fourth quarter was actually the most active of the year for our largest business, our lending segment, and that momentum has continued into the first quarter.  We also expanded our capital sources, highlighted by the completion of our inaugural senior unsecured notes offering, which brought our maximum total borrowing capacity to $10.2 billion. As a result of these efforts, we received a corporate credit rating upgrade which is an important endorsement of our ability to maintain an attractive risk return profile with our high credit quality standards. As we look ahead to 2017, we expect to continue to capitalize on our robust pipeline of opportunities in order to deliver attractive total returns for our shareholders."

Dividend

On February 23, 2017, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending March 31, 2017. The dividend is payable on April 14, 2017 to common stockholders of record as of March 31, 2017. 

2017 Outlook

Given its current outlook, the Company is confident that it will generate Core Earnings in excess of the dividend and expects to maintain a $1.92 per share distribution for the full year.

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 at the Company's website in the Investor Relations section under "Financial Information" at www.starwoodpropertytrust.com.

Conference Call and Webcast Information 

The Company will host a webcast and conference call on Thursday, February 23, 2017, at 10:00 a.m. Eastern Time to discuss fourth 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 five 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 five minutes prior to start time.

Domestic:  1-888-334-3034
International:  1-719-457-0349

Conference Call Playback:
Domestic:  1-844-512-2921
International:  1-412-317-6671
Passcode:  2989173

The playback can be accessed through March 9, 2017.

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 and equity investments. Through its subsidiary LNR Property, LLC, Starwood Property Trust also operates as the largest commercial mortgage special servicer in the United States. With total capital deployed since inception of over $32 billion, Starwood Property Trust continues to solidify its position as one of the premier real estate finance companies in the country.

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 December 31, 2016

(Amounts in thousands)






Investing








Investing





Lending


and Servicing


Property






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Revenues:






















Interest income from loans


$

101,010


$

4,871


$


$


$

105,881


$


$

105,881

Interest income from investment
securities



13,266



31,357







44,623



(27,654)



16,969

Servicing fees



222



33,796







34,018



(15,983)



18,035

Rental income





13,009



29,489





42,498





42,498

Other revenues



62



1,145



27





1,234



(140)



1,094

Total revenues



114,560



84,178



29,516





228,254



(43,777)



184,477

Costs and expenses:






















Management fees



534



24





40,333



40,891



50



40,941

Interest expense



20,415



4,540



5,846



27,031



57,832



(270)



57,562

General and administrative



4,988



25,414



1,079



1,612



33,093



171



33,264

Acquisition and investment pursuit costs



63



969



6,369



379



7,780





7,780

Costs of rental operations





6,043



12,540





18,583





18,583

Depreciation and amortization





4,854



8,747





13,601





13,601

Loan loss allowance, net



364









364





364

Other expense















Total costs and expenses



26,364



41,844



34,581



69,355



172,144



(49)



172,095

Income (loss) before other income (loss), income taxes and non-controlling interests



88,196



42,334



(5,065)



(69,355)



56,110



(43,728)



12,382

Other income (loss):






















Change in net assets related to consolidated VIEs













57,205



57,205

Change in fair value of servicing
rights





(9,548)







(9,548)



(4,388)



(13,936)

Change in fair value of investment securities, net



57



(645)







(588)



(99)



(687)

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





4,129







4,129





4,129

Earnings from unconsolidated
entities



903



5,657



2,423





8,983



(109)



8,874

Gain on sale of investments and
other assets, net



1,551



226







1,777





1,777

Gain on derivative financial
instruments, net



23,752



13,462



40,313





77,527





77,527

Foreign currency (loss) gain, net



(14,094)



699



3



5



(13,387)





(13,387)

OTTI





(17)







(17)





(17)

Loss on extinguishment of debt









(8,781)



(8,781)





(8,781)

Other income, net





8,847





2,487



11,334



(8,822)



2,512

Total other income (loss)



12,169



22,810



42,739



(6,289)



71,429



43,787



115,216

Income (loss) before income taxes



100,365



65,144



37,674



(75,644)



127,539



59



127,598

Income tax benefit (provision)



1,685



(6,562)







(4,877)





(4,877)

Net income (loss)



102,050



58,582



37,674



(75,644)



122,662



59



122,721

Net income attributable to non-controlling interests



(348)



(1,024)







(1,372)



(59)



(1,431)

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


$

101,702


$

57,558


$

37,674


$

(75,644)


$

121,290


$


$

121,290

 

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. 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 December 31, 2016

(Amounts in thousands except per share data)






Investing









Lending


and Servicing


Property







Segment


Segment


Segment


Corporate


Total

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


$

101,702


$

57,558


$

37,674


$

(75,644)


$

121,290

Add / (Deduct):
















Non-cash equity compensation expense



719



3,585



22



5,812



10,138

Management incentive fee









19,072



19,072

Acquisition and investment pursuit costs





517



6,334



344



7,195

Depreciation and amortization





3,850



8,865





12,715

Loan loss allowance, net



364









364

Interest income adjustment for securities



(276)



8,756







8,480

Bargain purchase gains





(8,822)







(8,822)

Other non-cash items





(202)



(593)





(795)

Reversal of unrealized (gains) / losses on:
















Loans held-for-sale





(4,129)







(4,129)

Securities



(57)



645







588

Derivatives



(24,344)



(13,804)



(40,334)





(78,482)

Foreign currency



14,094



(699)



(3)



(5)



13,387

Earnings from unconsolidated entities



(903)



(5,657)



(2,423)





(8,983)

Recognition of realized gains / (losses) on:
















Loans held-for-sale





2,802







2,802

Securities





8,848







8,848

Derivatives



73



13,845



212





14,130

Foreign currency



(887)



527



3



5



(352)

Earnings from unconsolidated entities



903



1,818



2,425





5,146

Core Earnings (Loss)


$

91,388


$

69,438


$

12,182


$

(50,416)


$

122,592

Core Earnings (Loss) per Weighted Average
Diluted Share


$

0.38


$

0.28


$

0.05


$

(0.21)


$

0.50

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the year ended December 31, 2016

(Amounts in thousands)






Investing








Investing





Lending


and Servicing


Property






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Revenues:






















Interest income from loans


$

449,470


$

17,725


$


$


$

467,195


$


$

467,195

Interest income from investment securities



47,241



146,692







193,933



(123,085)



70,848

Servicing fees



782



144,941







145,723



(56,767)



88,956

Rental income





38,223



114,537





152,760





152,760

Other revenues



242



5,255



62





5,559



(651)



4,908

Total revenues



497,735



352,836



114,599





965,170



(180,503)



784,667

Costs and expenses:






















Management fees



1,829



78





115,348



117,255



196



117,451

Interest expense



88,000



15,983



22,009



105,267



231,259



(460)



230,799

General and administrative



18,517



121,140



3,338



9,243



152,238



703



152,941

Acquisition and investment pursuit costs



1,665



2,520



7,886



1,391



13,462





13,462

Costs of rental operations





17,638



47,463





65,101





65,101

Depreciation and amortization





16,117



50,669





66,786





66,786

Loan loss allowance, net



3,759









3,759





3,759

Other expense





100







100





100

Total costs and expenses



113,770



173,576



131,365



231,249



649,960



439



650,399

Income (loss) before other income
(loss), income taxes and non-
controlling interests



383,965



179,260



(16,766)



(231,249)



315,210



(180,942)



134,268

Other income (loss):






















Change in net assets related to consolidated VIEs













151,593



151,593

Change in fair value of servicing
rights





(43,258)







(43,258)



(3,891)



(47,149)

Change in fair value of investment securities, net



20



(44,094)







(44,074)



42,673



(1,401)

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





74,251







74,251





74,251

Earnings from unconsolidated
entities



3,447



8,937



9,736





22,120



(397)



21,723

Gain on sale of investments and
other assets, net



1,716



226







1,942





1,942

Gain (loss) on derivative financial instruments, net



41,576



(4,318)



33,476





70,734





70,734

Foreign currency (loss) gain, net



(37,595)



3,661



(38)



5



(33,967)





(33,967)

OTTI





(215)



(513)





(728)





(728)

Loss on extinguishment of debt









(8,781)



(8,781)





(8,781)

Other income, net





8,959



9,102



4,271



22,332



(8,822)



13,510

Total other income (loss)



9,164



4,149



51,763



(4,505)



60,571



181,156



241,727

Income (loss) before income taxes



393,129



183,409



34,997



(235,754)



375,781



214



375,995

Income tax benefit (provision)



1,610



(9,954)







(8,344)





(8,344)

Net income (loss)



394,739



173,455



34,997



(235,754)



367,437



214



367,651

Net income attributable to non-controlling interests



(1,398)



(853)







(2,251)



(214)



(2,465)

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


$

393,341


$

172,602


$

34,997


$

(235,754)


$

365,186


$


$

365,186

 

 


Reconciliation of Net Income to Core Earnings

For the year ended December 31, 2016

(Amounts in thousands except per share data)






Investing









Lending


and Servicing


Property







Segment


Segment


Segment


Corporate


Total

Net income (loss) attributable to Starwood

Property Trust, Inc.


$

393,341


$

172,602


$

34,997


$

(235,754)


$

365,186

Add / (Deduct):
















Non-cash equity compensation expense



2,829



7,370



111



22,705



33,015

Management incentive fee









32,842



32,842

Acquisition and investment pursuit costs





1,421



7,755



356



9,532

Depreciation and amortization





12,768



50,862





63,630

Loan loss allowance, net



3,759









3,759

Interest income adjustment for securities



(1,016)



19,376







18,360

Bargain purchase gains





(8,822)



(8,406)





(17,228)

Other non-cash items





45



(3,109)





(3,064)

Reversal of unrealized (gains) / losses on:
















Loans held-for-sale





(74,251)







(74,251)

Securities



(20)



44,094







44,074

Derivatives



(44,151)



2,526



(33,497)





(75,122)

Foreign currency



37,595



(3,661)



38



(5)



33,967

Earnings from unconsolidated entities



(3,447)



(8,937)



(9,736)





(22,120)

Recognition of realized gains / (losses) on:
















Loans held-for-sale





74,192







74,192

Securities





(2,288)







(2,288)

Derivatives



33,384



(2,013)



186





31,557

Foreign currency



(32,803)



3,352



(38)



5



(29,484)

Earnings from unconsolidated entities



4,051



4,673



7,245





15,969

Core Earnings (Loss)


$

393,522


$

242,447


$

46,408


$

(179,851)


$

502,526

Core Earnings (Loss) per Weighted Average
Diluted Share


$

1.64


$

1.01


$

0.19


$

(0.75)


$

2.09

 

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of December 31, 2016

(Amounts in thousands)






Investing








Investing





Lending


and Servicing


Property






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Assets:






















Cash and cash equivalents


$

7,085


$

38,798


$

7,701


$

560,790


$

614,374


$

1,148


$

615,522

Restricted cash



17,885



8,202



9,146





35,233





35,233

Loans held-for-investment, net



5,827,553



20,442







5,847,995





5,847,995

Loans held-for-sale





63,279







63,279





63,279

Loans transferred as secured borrowings



35,000









35,000





35,000

Investment securities



776,072



990,570







1,766,642



(959,024)



807,618

Properties, net





277,612



1,667,108





1,944,720





1,944,720

Intangible assets





125,327



128,159





253,486



(34,238)



219,248

Investment in unconsolidated entities



30,874



56,376



124,977





212,227



(7,622)



204,605

Goodwill





140,437







140,437





140,437

Derivative assets



45,282



1,186



42,893





89,361





89,361

Accrued interest receivable



25,831



2,393







28,224





28,224

Other assets



13,470



59,503



29,569



1,866



104,408



(2,645)



101,763

VIE assets, at fair value













67,123,261



67,123,261

Total Assets


$

6,779,052


$

1,784,125


$

2,009,553


$

562,656


$

11,135,386


$

66,120,880


$

77,256,266

Liabilities and Equity






















Liabilities:






















Accounts payable, accrued expenses and other liabilities


$

20,769


$

68,603


$

81,873


$

26,003


$

197,248


$

886


$

198,134

Related-party payable





440





37,378



37,818





37,818

Dividends payable









125,075



125,075





125,075

Derivative liabilities



3,388



516







3,904





3,904

Secured financing agreements, net



2,258,462



426,683



1,196,830



295,851



4,177,826



(23,700)



4,154,126

Unsecured senior notes, net









2,011,544



2,011,544





2,011,544

Secured borrowings on transferred loans



35,000









35,000





35,000

VIE liabilities, at fair value













66,130,592



66,130,592

Total Liabilities



2,317,619



496,242



1,278,703



2,495,851



6,588,415



66,107,778



72,696,193

Equity:






















Starwood Property Trust, Inc.
Stockholders' Equity:






















Common stock









2,639



2,639





2,639

Additional paid-in capital



2,218,671



883,761



696,049



892,699



4,691,180





4,691,180

Treasury stock









(92,104)



(92,104)





(92,104)

Accumulated other comprehensive
income (loss)



44,903



(437)



(8,328)





36,138





36,138

Retained earnings (accumulated deficit)



2,186,727



390,994



43,129



(2,736,429)



(115,579)





(115,579)

Total Starwood Property Trust, Inc. Stockholders' Equity



4,450,301



1,274,318



730,850



(1,933,195)



4,522,274





4,522,274

Non-controlling interests in consolidated subsidiaries



11,132



13,565







24,697



13,102



37,799

Total Equity



4,461,433



1,287,883



730,850



(1,933,195)



4,546,971



13,102



4,560,073

Total Liabilities and Equity


$

6,779,052


$

1,784,125


$

2,009,553


$

562,656


$

11,135,386


$

66,120,880


$

77,256,266

 

 

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

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-and-year-ended-december-31-2016-300412335.html

SOURCE Starwood Property Trust, Inc.

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