Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2018

GREENWICH, Conn., Feb. 28, 2019 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter and year ended December 31, 2018.  The Company's fourth quarter 2018 GAAP net income was $92.1 million, or $0.33 per diluted share, and $385.8 million, or $1.42 per diluted share, for the full year.  Core Earnings (a non-GAAP financial measure) for the fourth quarter was $155.4 million, or $0.54 per diluted share and $608.1 million, or $2.19 per diluted share, for the full year. 

"As we approach our ten year anniversary as a public company, we are proud to have created a generational enterprise, with multiple business lines, allowing us to achieve best in class returns. We could achieve higher returns through increased leverage but have instead chosen a more conservative strategy," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust. "Our platform delivered outstanding results in 2018, led by record origination volumes in our commercial lending segment and a property segment which produces double digit cash returns. We are well positioned to capitalize on our robust investment pipeline with ample liquidity and available credit capacity and the significant unrealized gains in our property book."

Dividend

On February 28, 2019, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending March 31, 2019. The dividend is payable on April 15, 2019 to common stockholders of record as of March 29, 2019.

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.

Conference Call and Webcast Information 

The Company will host a webcast and conference call on Thursday, February 28, 2019, at 10:00 a.m. Eastern Time to discuss the quarter's 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 five 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:  13686953

The playback can be accessed through March 14, 2019.

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 $51 billion of capital since inception and manages a portfolio in excess of $16 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.  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.

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, 2018

(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


$

145,411


$

25,942


$


$

5,365


$


$

176,718


$


$

176,718

Interest income from investment securities



16,374



988





27,752





45,114



(25,842)



19,272

Servicing fees



108







11,645





11,753



(4,193)



7,560

Rental income







75,275



13,276





88,551





88,551

Other revenues



219



575



93



326



133



1,346



(29)



1,317

Total revenues 



162,112



27,505



75,368



58,364



133



323,482



(30,064)



293,418

Costs and expenses:

























Management fees



442







18



44,238



44,698



102



44,800

Interest expense



50,600



18,691



19,795



9,161



28,673



126,920



(165)



126,755

General and administrative



6,362



5,094



1,603



20,972



3,145



37,176



83



37,259

Acquisition and investment pursuit costs



237



81





(196)





122





122

Costs of rental operations







27,101



7,186





34,287





34,287

Depreciation and amortization



26





24,029



5,407





29,462





29,462

Loan loss allowance, net



7,095











7,095





7,095

Other expense



77





(27)



5





55





55

Total costs and expenses 



64,839



23,866



72,501



42,553



76,056



279,815



20



279,835

Other income (loss):

























Change in net assets related to consolidated VIEs















36,004



36,004

Change in fair value of servicing rights









44





44



(1,255)



(1,211)

Change in fair value of investment securities, net



(2,781)







9,106





6,325



(3,834)



2,491

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



(6,686)







20,635





13,949





13,949

Earnings from unconsolidated entities



1,302





2,252



893





4,447



(540)



3,907

Gain on sale of investments and other assets, net



3,558





21,585



8,342





33,485





33,485

Gain (loss) on derivative financial instruments, net



1,727



1,366



(4,978)



(8,018)



17,008



7,105





7,105

Foreign currency loss, net



(4,556)



(894)



(2)







(5,452)





(5,452)

Loss on extinguishment of debt







(2,661)



(132)



(289)



(3,082)





(3,082)

Other income, net



1







2





3





3

Total other income (loss)



(7,435)



472



16,196



30,872



16,719



56,824



30,375



87,199

Income (loss) before income taxes 



89,838



4,111



19,063



46,683



(59,204)



100,491



291



100,782

Income tax benefit (provision)



180



(292)



(5,552)



4,814





(850)





(850)

Net income (loss) 



90,018



3,819



13,511



51,497



(59,204)



99,641



291



99,932

Net income attributable to non-controlling interests



(364)





(5,717)



(1,428)





(7,509)



(291)



(7,800)

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


$

89,654


$

3,819


$

7,794


$

50,069


$

(59,204)


$

92,132


$


$

92,132

 

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 December 31, 2018

(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.


$

89,654


$

3,819


$

7,794


$

50,069


$

(59,204)


$

92,132

Add / (Deduct):



















Non-controlling interests attributable to Woodstar II Class A Units







5,717







5,717

Non-cash equity compensation expense



778



464



72



1,321



3,677



6,312

Management incentive fee











21,779



21,779

Acquisition and investment pursuit costs



(39)



57



(88)



(118)





(188)

Depreciation and amortization



26





24,359



5,042





29,427

Loan loss allowance, net



7,095











7,095

Interest income adjustment for securities



(205)







8,548





8,343

Extinguishment of debt, net











(387)



(387)

Other non-cash items







(625)



10



295



(320)

Reversal of GAAP unrealized (gains) / losses on:



















Loans held-for-sale



6,686







(20,635)





(13,949)

Securities



(504)







(9,106)





(9,610)

Derivatives



(1,774)



(1,366)



6,374



7,553



(17,276)



(6,489)

Foreign currency



4,556



894



2







5,452

Earnings from unconsolidated entities



(1,302)





(2,252)



(893)





(4,447)

Recognition of Core realized gains / (losses) on:



















Loans held-for-sale



(2,103)







17,778





15,675

Securities



3,286







10,628





13,914

Derivatives



(1,410)



(105)



(3,138)



(4,407)





(9,060)

Foreign currency



1,777



51



(2)



(31)





1,795

Earnings from unconsolidated entities



1,192







1,367





2,559

Sales of properties







(5,014)



(5,293)





(10,307)

Core Earnings (Loss)


$

107,713


$

3,814


$

33,199


$

61,833


$

(51,116)


$

155,443

Core Earnings (Loss) per Weighted Average Diluted Share


$

0.37


$

0.01


$

0.12


$

0.22


$

(0.18)


$

0.54

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the year ended December 31, 2018

(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


$

576,564


$

28,995


$


$

14,984


$


$

620,543


$


$

620,543

Interest income from investment securities



50,063



1,095





127,100





178,258



(121,419)



56,839

Servicing fees



421







103,866





104,287



(25,521)



78,766

Rental income







292,453



57,231





349,684





349,684

Other revenues



902



619



444



1,299



360



3,624



(176)



3,448

Total revenues 



627,950



30,709



292,897



304,480



360



1,256,396



(147,116)



1,109,280

Costs and expenses:

























Management fees



1,838







72



127,133



129,043



412



129,455

Interest expense



160,769



20,949



75,192



27,459



124,805



409,174



(986)



408,188

General and administrative



26,324



5,631



7,113



84,978



11,747



135,793



339



136,132

Acquisition and investment pursuit costs



2,490



6,806



(46)



(663)





8,587





8,587

Costs of rental operations







99,632



27,436





127,068





127,068

Depreciation and amortization



76





110,684



21,889





132,649





132,649

Loan loss allowance, net



34,821











34,821





34,821

Other expense



307





(27)



452





732





732

Total costs and expenses 



226,625



33,386



292,548



161,623



263,685



977,867



(235)



977,632

Other income (loss):

























Change in net assets related to consolidated VIEs















165,892



165,892

Change in fair value of servicing rights









(14,373)





(14,373)



4,171



(10,202)

Change in fair value of investment securities, net



(2,765)







33,229





30,464



(20,119)



10,345

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



(6,851)







47,373





40,522





40,522

Earnings from unconsolidated entities



5,063





3,658



3,809





12,530



(1,990)



10,540

Gain on sale of investments and other assets, net



4,019





28,468



26,557





59,044





59,044

Gain (loss) on derivative financial instruments, net



17,654



1,821



22,756



(298)



(7,330)



34,603





34,603

Foreign currency loss, net



(7,816)



(1,425)



(2)



(2)





(9,245)





(9,245)

Loss on extinguishment of debt



(730)





(2,661)



(318)



(2,099)



(5,808)





(5,808)

Other income (loss), net



43





508



(1,363)





(812)





(812)

Total other income (loss)



8,617



396



52,727



94,614



(9,429)



146,925



147,954



294,879

Income (loss) before income taxes 



409,942



(2,281)



53,076



237,471



(272,754)



425,454



1,073



426,527

Income tax provision



(2,801)



(292)



(7,549)



(4,688)





(15,330)





(15,330)

Net income (loss) 



407,141



(2,573)



45,527



232,783



(272,754)



410,124



1,073



411,197

Net income attributable to non-controlling interests



(1,451)





(17,623)



(5,220)





(24,294)



(1,073)



(25,367)

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


$

405,690


$

(2,573)


$

27,904


$

227,563


$

(272,754)


$

385,830


$


$

385,830

 

 

Reconciliation of Net Income to Core Earnings

For the year ended December 31, 2018

(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.


$

405,690


$

(2,573)


$

27,904


$

227,563


$

(272,754)


$

385,830

Add / (Deduct):



















Non-controlling interests attributable to Woodstar II Class A Units







17,623







17,623

Non-cash equity compensation expense



2,857



477



300



4,934



14,312



22,880

Management incentive fee











41,399



41,399

Acquisition and investment pursuit costs



1,391



3,827



(337)



(333)





4,548

Depreciation and amortization



76





112,007



20,295





132,378

Loan loss allowance, net



34,821











34,821

Interest income adjustment for securities



(736)







16,754





16,018

Extinguishment of debt, net











8,199



8,199

Other non-cash items







(3,031)



2,204



3,057



2,230

Reversal of GAAP unrealized (gains) / losses on:



















Loans held-for-sale



6,851







(47,373)





(40,522)

Securities



(763)







(33,229)





(33,992)

Derivatives



(18,439)



(1,821)



(18,854)



(1,235)



9,521



(30,828)

Foreign currency



7,816



1,425



2



2





9,245

Earnings from unconsolidated entities



(5,063)





(3,658)



(3,809)





(12,530)

Recognition of Core realized gains / (losses) on:



















Loans held-for-sale



(616)







46,063





45,447

Securities



3,528







6,209





9,737

Derivatives



(7,258)



(105)



(4,076)



2,790





(8,649)

Foreign currency



9,913



43



(2)



(73)





9,881

Earnings from unconsolidated entities



5,178







4,242





9,420

Sales of properties







(5,379)



(9,667)





(15,046)

Core Earnings (Loss)


$

445,246


$

1,273


$

122,499


$

235,337


$

(196,266)


$

608,089

Core Earnings (Loss) per Weighted Average Diluted Share


$

1.61


$


$

0.44


$

0.85


$

(0.71)


$

2.19

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of December 31, 2018

(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


$

14,385


$

13


$

27,408


$

31,449


$

164,015


$

237,270


$

2,554


$

239,824

Restricted cash



28,324



175,659



25,144



11,679



7,235



248,041





248,041

Loans held-for-investment, net



7,072,220



1,456,779





3,357





8,532,356





8,532,356

Loans held-for-sale



670,155



469,775





47,622





1,187,552





1,187,552

Loans transferred as secured borrowings



74,346











74,346





74,346

Investment securities



1,050,920



60,768





998,820





2,110,508



(1,204,040)



906,468

Properties, net







2,512,847



272,043





2,784,890





2,784,890

Intangible assets







90,889



78,219





169,108



(24,075)



145,033

Investment in unconsolidated entities



35,274





114,362



44,129





193,765



(22,000)



171,765

Goodwill





119,409





140,437





259,846





259,846

Derivative assets



18,174



1,066



32,733



718





52,691





52,691

Accrued interest receivable



39,862



6,982



359



616



13,177



60,996



(641)



60,355

Other assets



13,958



20,472



67,098



49,363



2,057



152,948



(26)



152,922

VIE assets, at fair value















53,446,364



53,446,364

Total Assets


$

9,017,618


$

2,310,923


$

2,870,840


$

1,678,452


$

186,484


$

16,064,317


$

52,198,136


$

68,262,453

Liabilities and Equity

























Liabilities:

























Accounts payable, accrued expenses and other liabilities


$

26,508


$

26,476


$

67,415


$

75,655


$

21,467


$

217,521


$

142


$

217,663

Related-party payable









53



43,990



44,043





44,043

Dividends payable











133,466



133,466





133,466

Derivative liabilities



1,290



477



37



1,423



12,188



15,415





15,415

Secured financing agreements, net



4,405,599



1,524,551



1,884,187



585,258



297,920



8,697,515



(13,950)



8,683,565

Unsecured senior notes, net











1,998,831



1,998,831





1,998,831

Secured borrowings on transferred loans, net



74,239











74,239





74,239

VIE liabilities, at fair value















52,195,042



52,195,042

Total Liabilities



4,507,636



1,551,504



1,951,639



662,389



2,507,862



11,181,030



52,181,234



63,362,264

Equity:

























Starwood Property Trust, Inc. Stockholders' Equity:

























Common stock











2,808



2,808





2,808

Additional paid-in capital



1,430,503



761,992



645,561



87,779



2,069,321



4,995,156





4,995,156

Treasury stock











(104,194)



(104,194)





(104,194)

Accumulated other comprehensive income (loss)



53,516





5,208



(64)





58,660





58,660

Retained earnings (accumulated deficit)



3,015,676



(2,573)



13,570



913,642



(4,289,313)



(348,998)





(348,998)

Total Starwood Property Trust, Inc. Stockholders' Equity



4,499,695



759,419



664,339



1,001,357



(2,321,378)



4,603,432





4,603,432

Non-controlling interests in consolidated subsidiaries



10,287





254,862



14,706





279,855



16,902



296,757

Total Equity



4,509,982



759,419



919,201



1,016,063



(2,321,378)



4,883,287



16,902



4,900,189

Total Liabilities and Equity


$

9,017,618


$

2,310,923


$

2,870,840


$

1,678,452


$

186,484


$

16,064,317


$

52,198,136


$

68,262,453

 

Cision View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-and-year-ended-december-31-2018-300803884.html

SOURCE Starwood Property Trust, Inc.

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