Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2013

Segment Reporting

Schedule of results of operations by business segment

The table below presents our results of operations for the three months ended September 30, 2013 by business segment (amounts in thousands):

	Real Estate Investment Lending			Single Family Residential			LNR			Subtotal			LNR VIEs			Total
Revenues:
Interest income from loans	$	90,837		$	—		$	3,208		$	94,045		$	—		$	94,045
Interest income from investment securities	12,301			—			18,792			31,093			(13,289		)	17,804
Servicing fees	—			—			59,566			59,566			(23,057		)	36,509
Other revenues	116			75			2,229			2,420			(322		)	2,098
Rental income	—			5,080			—			5,080			—			5,080
Total revenues	103,254			5,155			83,795			192,204			(36,668		)	155,536
Costs and expenses:
Management fees	15,581			3,310			5,298			24,189			46			24,235
Interest expense	29,866			2,287			4,590			36,743			—			36,743
General and administrative	3,748			652			43,752			48,152			183			48,335
Business combination costs	342			—			—			342			—			342
Acquisition and investment pursuit costs	742			223			212			1,177			—			1,177
Residential segment, other operating costs	—			6,023			—			6,023			—			6,023
Depreciation and amortization	—			1,553			3,435			4,988			—			4,988
Loan loss allowance	1,160			—			—			1,160			—			1,160
Other expense	59			—			245			304			—			304
Total costs and expenses	51,498			14,048			57,532			123,078			229			123,307
Income before other income (loss), income taxes and non-controlling interests	51,756			(8,893		)	26,263			69,126			(36,897		)	32,229
Other income:
Income of consolidated VIEs, net	—			—			—			—			47,963			47,963
Change in fair value of servicing rights	—			—			(3,939		)	(3,939		)	2,072			(1,867		)
Change in fair value of investment securities, net	(157		)	—			9,820			9,663			(11,941		)	(2,278		)
Change in fair value of mortgage loans held-for-sale, net	—			—			25,857			25,857			—			25,857
Earnings from unconsolidated entities	896			—			4,459			5,355			(778		)	4,577
Gain on sale of investments, net	6,184			1,875			—			8,059			—			8,059
Loss on derivative financial instruments, net	(17,166		)	—			(5,285		)	(22,451		)	—			(22,451		)
Foreign currency gain, net	9,555			—			25			9,580			—			9,580
OTTI	(52		)	—			—			(52		)	—			(52		)
Other income	—			3,320			385			3,705			—			3,705
Total other income (loss)	(740		)	5,195			31,322			35,777			37,316			73,093
Income (loss) before income taxes	51,016			(3,698		)	57,585			104,903			419			105,322
Income tax provision	619			—			13,102			13,721			—			13,721
Net income (loss)	50,397			(3,698		)	44,483			91,182			419			91,601
Net income attributable to non-controlling interests	1,451			16			—			1,467			419			1,886
Net income (loss) attributable to Starwood Property Trust, Inc.	$	48,946		$	(3,714	)	$	44,483		$	89,715		$	—		$	89,715

The table below presents our results of operations for the three months ended September 30, 2012 by business segment (amounts in thousands):

	Real Estate Investment Lending			Single Family Residential			Total
Revenues:
Interest income from loans	$	56,261		$	—		$	56,261
Interest income from investment securities	16,585			—			16,585
Other revenues	64			2			66
Rental income	—			59			59
Total revenues	72,910			61			72,971
Costs and expenses:
Management fees	14,563			96			14,659
Interest expense	12,030			—			12,030
General and administrative	3,084			—			3,084
Acquisition and investment pursuit costs	465			157			622
Residential segment, other operating costs	—			327			327
Depreciation and amortization	—			78			78
Total costs and expenses	30,142			658			30,800
Income before other income (loss), income taxes and non-controlling interests	42,768			(597		)	42,171
Other income:
Earnings from unconsolidated entities	787			—			787
Gain (loss) on sale of investments, net	9,019			(2		)	9,017
Loss on derivative financial instruments, net	(7,561		)	—			(7,561		)
Foreign currency gain, net	6,725			—			6,725
OTTI	(676		)	—			(676		)
Other income	180			—			180
Total other income (loss)	8,474			(2		)	8,472
Income (loss) before income taxes	51,242			(599		)	50,643
Income tax provision	301			—			301
Net income (loss)	50,941			(599		)	50,342
Net income attributable to non-controlling interests	130			—			130
Net income (loss) attributable to Starwood Property Trust, Inc.	$	50,811		$	(599	)	$	50,212

The table below presents our results of operations for the nine months ended September 30, 2013 by business segment (amounts in thousands):

	Real Estate Investment Lending			Single Family Residential			LNR			Subtotal			LNR VIEs			Total
Revenues:
Interest income from loans	$	231,203		$	—		$	5,468		$	236,671		$	—		$	236,671
Interest income from investment securities	42,179			—			30,550			72,729			(20,108		)	52,621
Servicing fees	—			—			112,426			112,426			(36,782		)	75,644
Other revenues	291			180			4,201			4,672			(595		)	4,077
Rental income	—			8,733			—			8,733			—			8,733
Total revenues	273,673			8,913			152,645			435,231			(57,485		)	377,746
Costs and expenses:
Management fees	44,504			6,535			7,572			58,611			64			58,675
Interest expense	66,794			3,587			7,297			77,678			—			77,678
General and administrative	11,401			1,713			84,325			97,439			330			97,769
Business combination costs	17,958			—			—			17,958			—			17,958
Acquisition and investment pursuit costs	1,787			2,105			603			4,495			—			4,495
Residential segment, other operating costs	—			10,622			—			10,622			—			10,622
Depreciation and amortization	—			2,981			5,663			8,644			—			8,644
Loan loss allowance	1,915			—			—			1,915			—			1,915
Other expense	150			—			383			533			—			533
Total costs and expenses	144,509			27,543			105,843			277,895			394			278,289
Income (loss) before other income, income taxes and non-controlling interests	129,164			(18,630		)	46,802			157,336			(57,879		)	99,457
Other income:
Income of consolidated VIEs, net	—			—			—			—			79,912			79,912
Change in fair value of servicing rights	—			—			2,175			2,175			(1,144		)	1,031
Change in fair value of investment securities, net	(83		)	—			16,208			16,125			(19,390		)	(3,265		)
Change in fair value of mortgage loans held-for-sale, net	—			—			26,315			26,315			—			26,315
Earnings from unconsolidated entities	3,488			—			8,401			11,889			(974		)	10,915
Gain on sale of investments, net	19,690			3,278			—			22,968			—			22,968
Gain (loss) on derivative financial instruments, net	(2,939		)	—			2,874			(65		)	—			(65		)
Foreign currency gain (loss), net	3,537			—			(42		)	3,495			—			3,495
OTTI	(453		)	—			—			(453		)	—			(453		)
Other income	—			3,320			424			3,744			—			3,744
Total other income	23,240			6,598			56,355			86,193			58,404			144,597
Income (loss) before income taxes	152,404			(12,032		)	103,157			243,529			525			244,054
Income tax provision	1,645			12			24,034			25,691			—			25,691
Net income (loss)	150,759			(12,044		)	79,123			217,838			525			218,363
Net income attributable to non-controlling interests	3,599			—			—			3,599			525			4,124
Net income (loss) attributable to Starwood Property Trust, Inc.	$	147,160		$	(12,044	)	$	79,123		$	214,239		$	—		$	214,239

The table below presents our results of operations for the nine months ended September 30, 2012 by business segment (amounts in thousands):

	Real Estate Investment Lending			Single Family Residential			Total
Revenues:
Interest income from loans	$	179,078		$	—		$	179,078
Interest income from investment securities	40,404			—			40,404
Other revenues	178			2			180
Rental income				59			59
Total revenues	219,660			61			219,721
Costs and expenses:
Management fees	42,526			147			42,673
Interest expense	34,345			—			34,345
General and administrative	8,838			—			8,838
Acquisition and investment pursuit costs	2,032			705			2,737
Residential segment, other operating costs	—			327			327
Depreciation and amortization	—			78			78
Total costs and expenses	87,741			1,257			88,998
Income (loss) before other income (loss), income taxes and non-controlling interests	131,919			(1,196		)	130,723
Other income:
Change in fair value of mortgage loans held-for-sale	(5,760		)	—			(5,760		)
Earnings from unconsolidated entities	2,739			—			2,739
Gain (loss) on sale of investments, net	19,149			(2		)	19,147
Loss on derivative financial instruments, net	(9,784		)	—			(9,784		)
Foreign currency gain, net	11,222			—			11,222
OTTI	(2,728		)	—			(2,728		)
Other income	530			—			530
Total other income (loss)	15,368			(2		)	15,366
Income (loss) before income taxes	147,287			(1,198		)	146,089
Income tax provision	840			—			840
Net income (loss)	146,447			(1,198		)	145,249
Net income attributable to non-controlling interests	388			—			388
Net income (loss) attributable to Starwood Property Trust, Inc.	$	146,059		$	(1,198	)	$	144,861

Schedule of condensed consolidated balance sheet by business segment

The table below presents our condensed consolidated balance sheet as of September 30, 2013 by business segment (amounts in thousands):

	Real Estate Investment Lending			Single Family Residential			LNR			Subtotal			LNR VIEs			Total
Assets:
Cash and cash equivalents	$	282,553		$	30,089		$	223,915		$	536,557		$	277		$	536,834
Restricted cash	38,052			1,836			42,818			82,706			—			82,706
Loans held-for-investment, net	3,782,479			—			7,783			3,790,262			—			3,790,262
Loans held-for-sale	66,018			—			279,121			345,139			—			345,139
Loans transferred as secured borrowings	85,590			—			—			85,590			—			85,590
Investment securities	481,082			—			410,071			891,153			(324,360		)	566,793
Intangible assets — servicing rights	—			—			276,295			276,295			(88,563		)	187,732
Residential real estate, net	—			548,022			—			548,022			—			548,022
Non-performing residential loans	—			197,716			—			197,716			—			197,716
Investment in unconsolidated entities	35,413			—			106,675			142,088			(3,920		)	138,168
Goodwill	—			—			107,099			107,099			—			107,099
Derivative assets	6,582			—			2,931			9,513			—			9,513
Accrued interest receivable	20,679			—			273			20,952			—			20,952
Other assets	41,415			18,882			38,799			99,096			(713		)	98,383
VIE assets, at fair value	—			—			—			—			97,359,666			97,359,666
Total Assets	$	4,839,863		$	796,545		$	1,495,780		$	7,132,188		$	96,942,387		$	104,074,575
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	55,953		$	10,489		$	122,512		$	188,954		$	218		$	189,172
Related-party payable	20,780			—			6,008			26,788			—			26,788
Dividends payable	90,130			—			—			90,130			—			90,130
Derivative liabilities	27,082			—			5,170			32,252			—			32,252
Secured financing agreements, net	1,107,211			—			204,833			1,312,044			—			1,312,044
Convertible senior notes, net	995,072			—			—			995,072			—			995,072
Loan transfer secured borrowings	86,682			—			—			86,682			—			86,682
Loan participation liability	95,000			—			—			95,000			—			95,000
VIE liabilities, at fair value	—			—			—			—			96,934,006			96,934,006
Total Liabilities	2,477,910			10,489			338,523			2,826,922			96,934,224			99,761,146
Commitments and contingencies
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Preferred stock	—			—			—			—			—			—
Common stock	1,959			—			—			1,959			—			1,959
Additional paid-in capital	2,320,035			791,817			1,183,206			4,295,058			—			4,295,058
Treasury stock	(10,642		)	—			—			(10,642		)	—			(10,642		)
Accumulated other comprehensive income	64,955			—			4,332			69,287			—			69,287
Accumulated deficit	(47,800		)	(7,258		)	(30,281		)	(85,339		)	—			(85,339		)
Total Starwood Property Trust, Inc. Stockholders’ Equity	2,328,507			784,559			1,157,257			4,270,323			—			4,270,323
Non-controlling interests in consolidated subsidiaries	33,446			1,497			—			34,943			8,163			43,106
Total Equity	2,361,953			786,056			1,157,257			4,305,266			8,163			4,313,429
Total Liabilities and Equity	$	4,839,863		$	796,545		$	1,495,780		$	7,132,188		$	96,942,387		$	104,074,575

The table below presents our condensed consolidated balance sheet as of December 31, 2012 by business segment (amounts in thousands):

	Real Estate Investment Lending			Single Family Residential			Total
Assets:
Cash and cash equivalents	$	169,427		$	8,244		$	177,671
Restricted cash	3,298			131			3,429
Loans held-for-investment, net	2,914,434			—			2,914,434
Loans held-for-sale	—			—			—
Loans transferred as secured borrowings	85,901			—			85,901
Investment securities	884,254			—			884,254
Intangible assets — servicing rights	—			—			—
Residential real estate, net	—			99,115			99,115
Non-performing residential loans	—			68,883			68,883
Investment in unconsolidated entities	32,318			—			32,318
Goodwill	—			—			—
Derivative assets	9,227			—			9,227
Accrued interest receivable	24,120			—			24,120
Other assets	19,299			5,722			25,021
VIE assets, at fair value	—			—			—
Total Assets	$	4,142,278		$	182,095		$	4,324,373
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	28,987		1,107			30,094
Related-party payable	1,803			—			1,803
Dividends payable	73,796			—			73,796
Derivative liabilities	27,770			—			27,770
Secured financing agreements, net	1,305,812			—			1,305,812
Convertible senior notes, net	—			—			—
Loan transfer secured borrowings	87,893			—			87,893
VIE liabilities, at fair value	—			—			—
Total Liabilities	1,526,061			1,107			1,527,168
Commitments and contingencies	—			—			—
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Preferred stock	—			—			—
Common stock	1,361			—			1,361
Additional paid-in capital	2,538,860			182,493			2,721,353
Treasury stock	(10,642		)	—			(10,642		)
Accumulated other comprehensive income	79,675			—			79,675
Accumulated deficit	(70,396		)	(2,005		)	(72,401		)
Total Starwood Property Trust, Inc. Stockholders’ Equity	2,538,858			180,488			2,719,346
Non-controlling interests in consolidated subsidiaries	77,359			500			77,859
Total Equity	2,616,217			180,988			2,797,205
Total Liabilities and Equity	$	4,142,278		$	182,095		$	4,324,373