21. Segment Data

In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis prior to the impact of consolidating VIEs under ASC 810. The segment information within this note is reported on that basis. Refer to Note 24 to the consolidated financial statements included in our Form 10-K for further discussion of the composition of our reportable business segments.

The table below presents our results of operations for the three months ended June 30, 2014 by business segment (amounts in thousands):

	Real Estate Investment Lending			LNR			Subtotal			LNR VIEs			Total
Revenues:
Interest income from loans	$	102,892		$	2,563		$	105,455		$	—		$	105,455
Interest income from investment securities	15,178			30,081			45,259			(17,639		)	27,620
Servicing fees	153			57,834			57,987			(25,306		)	32,681
Other revenues	108			5,236			5,344			(350		)	4,994
Total revenues	118,331			95,714			214,045			(43,295		)	170,750
Costs and expenses:
Management fees (1)	20,423			4,622			25,045			40			25,085
Interest expense (1)	31,557			6,138			37,695			—			37,695
General and administrative	7,921			34,992			42,913			181			43,094
Acquisition and investment pursuit costs	523			248			771			—			771
Depreciation and amortization	—			5,154			5,154			—			5,154
Loan loss allowance, net	(139		)	—			(139		)	—			(139		)
Other expense	66			5,960			6,026			—			6,026
Total costs and expenses	60,351			57,114			117,465			221			117,686
Income before other income, income taxes and non-controlling interests	57,980			38,600			96,580			(43,516		)	53,064
Other income:
Income of consolidated VIEs, net	—			—			—			47,028			47,028
Change in fair value of servicing rights	—			(12,804		)	(12,804		)	7,281			(5,523		)
Change in fair value of investment securities, net	861			16,294			17,155			(12,196		)	4,959
Change in fair value of mortgage loans held- for-sale, net	—			11,608			11,608			—			11,608
Earnings from unconsolidated entities	3,432			5,219			8,651			912			9,563
Gain on sale of investments, net	10,078			—			10,078			—			10,078
Loss on derivative financial instruments, net	(7,610		)	(2,180		)	(9,790		)	—			(9,790		)
Foreign currency gain (loss), net	4,082			(305		)	3,777			—			3,777
OTTI	—			(797		)	(797		)	—			(797		)
Other income, net	35			657			692			—			692
Total other income	10,878			17,692			28,570			43,025			71,595
Income from continuing operations before income taxes	68,858			56,292			125,150			(491		)	124,659
Income tax provision	(443		)	(3,834		)	(4,277		)	—			(4,277		)
Income from continuing operations	68,415			52,458			120,873			(491		)	120,382
Loss from discontinued operations, net of tax	—			—			—			—			—
Net income	68,415			52,458			120,873			(491		)	120,382
Net income attributable to non-controlling interests	(3,005		)	—			(3,005		)	491			(2,514		)
Net income attributable to Starwood Property Trust, Inc.	$	65,410		$	52,458		$	117,868		$	—		$	117,868

(1) Due to the structure of our business, certain costs incurred by one segment may benefit other segments. Costs that are identifiable are allocated to the segments that benefit so that one segment is not solely burdened by this cost. Allocated costs currently include interest expense related to our consolidated debt (excluding VIEs) and management fees payable to our Manager, both of which represent shared costs. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. During the three months ended June 30, 2014, management fees and interest expense of $4.6 million and $5.2 million, respectively, were allocated to the LNR segment.

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

	Real Estate Investment Lending			LNR			Single Family Residential			Subtotal			LNR VIEs			Total
Revenues:
Interest income from loans	$	72,676		$	2,260		$	—		$	74,936		$	—		$	74,936
Interest income from investment securities	13,638			11,758			—			25,396			(6,819		)	18,577
Servicing fees	—			52,860			—			52,860			(13,725		)	39,135
Other revenues	96			1,972			—			2,068			(273		)	1,795
Total revenues	86,410			68,850			—			155,260			(20,817		)	134,443
Costs and expenses:
Management fees	13,854			2,274			—			16,128			18			16,146
Interest expense	19,941			2,707			—			22,648			—			22,648
General and administrative	3,615			40,573			—			44,188			147			44,335
Business combination costs	13,420			—			—			13,420			—			13,420
Acquisition and investment pursuit costs	525			391			—			916			—			916
Depreciation and amortization	—			2,228			—			2,228			—			2,228
Loan loss allowance	725			—			—			725			—			725
Other expense	58			138			—			196			—			196
Total costs and expenses	52,138			48,311			—			100,449			165			100,614
Income before other income, income taxes and non-controlling interests	34,272			20,539			—			54,811			(20,982		)	33,829
Other income:							—
Income of consolidated VIEs, net	—			—			—			—			31,949			31,949
Change in fair value of servicing rights	—			6,114			—			6,114			(3,216		)	2,898
Change in fair value of investment securities, net	(331		)	6,388			—			6,057			(7,449		)	(1,392		)
Change in fair value of mortgage loans held- for-sale, net	—			458			—			458			—			458
Earnings from unconsolidated entities	1,851			2,115			—			3,966			(196		)	3,770
Loss on sale of investments	(18		)	—			—			(18		)	—			(18		)
(Loss) gain on derivative financial instruments	(2,001		)	8,159			—			6,158			—			6,158
Foreign currency gain (loss), net	1,647			(67		)	—			1,580			—			1,580
OTTI	(359		)	—			—			(359		)	—			(359		)
Other income, net	—			39			—			39			—			39
Total other income	789			23,206			—			23,995			21,088			45,083
Income from continuing operations before income taxes	35,061			43,745			—			78,806			106			78,912
Income tax provision	(411		)	(10,932		)	—			(11,343		)	—			(11,343		)
Income from continuing operations	34,650			32,813			—			67,463			106			67,569
Loss from discontinued operations, net of tax	—			—			(6,058		)	(6,058		)	—			(6,058		)
Net income	34,650			32,813			(6,058		)	61,405			106			61,511
Net income attributable to non-controlling interests	(951		)	—			—			(951		)	(106		)	(1,057		)
Net income attributable to Starwood Property Trust, Inc.	$	33,699		$	32,813		$	(6,058	)	$	60,454		$	—		$	60,454

The table below presents our results of operations for the six months ended June 30, 2014 by business segment (amounts in thousands):

	Real Estate Investment Lending			LNR			Single Family Residential			Subtotal			LNR VIEs			Total
Revenues:
Interest income from loans	$	204,979		$	5,386		$	—		$	210,365		$	—		$	210,365
Interest income from investment securities	33,467			53,089			—			86,556			(29,482		)	57,074
Servicing fees	190			114,019			—			114,209			(47,317		)	66,892
Other revenues	188			8,833			—			9,021			(623		)	8,398
Total revenues	238,824			181,327			—			420,151			(77,422		)	342,729
Costs and expenses:
Management fees (1)	41,778			10,259			791			52,828			78			52,906
Interest expense (1)	62,811			11,624			1,091			75,526			—			75,526
General and administrative	15,066			73,762			—			88,828			367			89,195
Acquisition and investment pursuit costs	735			430			—			1,165			—			1,165
Depreciation and amortization	—			9,790			—			9,790			—			9,790
Loan loss allowance, net	358			—			—			358			—			358
Other expense	52			7,663			—			7,715			—			7,715
Total costs and expenses	120,800			113,528			1,882			236,210			445			236,655
Income before other income, income taxes and non-controlling interests	118,024			67,799			(1,882		)	183,941			(77,867		)	106,074
Other income:
Income of consolidated VIEs, net	—			—			—			—			103,032			103,032
Change in fair value of servicing rights	—			(24,979		)	—			(24,979		)	14,205			(10,774		)
Change in fair value of investment securities, net	705			53,246			—			53,951			(40,631		)	13,320
Change in fair value of mortgage loans held- for-sale, net	—			32,501			—			32,501			—			32,501
Earnings from unconsolidated entities	4,972			3,836			—			8,808			819			9,627
Gain on sale of investments, net	11,633			—			—			11,633			—			11,633
Loss on derivative financial instruments, net	(10,398		)	(7,258		)	—			(17,656		)	—			(17,656		)
Foreign currency gain (loss), net	5,643			(389		)	—			5,254			—			5,254
OTTI	(213		)	(797		)	—			(1,010		)	—			(1,010		)
Other income, net	53			657			—			710			—			710
Total other income	12,395			56,817			—			69,212			77,425			146,637
Income from continuing operations before income taxes	130,419			124,616			(1,882		)	253,153			(442		)	252,711
Income tax provision	(526		)	(9,371		)	—			(9,897		)	—			(9,897		)
Income from continuing operations	129,893			115,245			(1,882		)	243,256			(442		)	242,814
Loss from discontinued operations, net of tax	—			—			(1,551		)	(1,551		)	—			(1,551		)
Net income	129,893			115,245			(3,433		)	241,705			(442		)	241,263
Net income attributable to non-controlling interests	(3,236		)	—			—			(3,236		)	442			(2,794		)
Net income attributable to Starwood Property Trust, Inc.	$	126,657		$	115,245		$	(3,433	)	$	238,469		$	—		$	238,469

(1) Refer to Note 1 to the table above for the three months ended June 30, 2014. During the six months ended June 30, 2014, management fees and interest expense of $10.2 million and $9.7 million, respectively, were allocated to the LNR segment while $0.8 million and $1.1 million, respectively, were allocated to the SFR segment.

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

	Real Estate Investment Lending			LNR			Single Family Residential			Subtotal			LNR VIEs			Total
Revenues:
Interest income from loans	$	140,366		$	2,260		$	—		$	142,626		$	—		$	142,626
Interest income from investment securities	29,878			11,758			—			41,636			(6,819		)	34,817
Servicing fees	—			52,860			—			52,860			(13,725		)	39,135
Other revenues	175			1,972			—			2,147			(273		)	1,874
Total revenues	170,419			68,850			—			239,269			(20,817		)	218,452
Costs and expenses:
Management fees	28,923			2,274			—			31,197			18			31,215
Interest expense	37,367			2,707			—			40,074			—			40,074
General and administrative	7,653			40,573			—			48,226			147			48,373
Business combination costs	17,616			—			—			17,616			—			17,616
Acquisition and investment pursuit costs	606			391			—			997			—			997
Depreciation and amortization	—			2,228			—			2,228			—			2,228
Loan loss allowance	755			—			—			755			—			755
Other expense	91			138			—			229			—			229
Total costs and expenses	93,011			48,311			—			141,322			165			141,487
Income before other income, income taxes and non-controlling interests	77,408			20,539			—			97,947			(20,982		)	76,965
Other income:							—
Income of consolidated VIEs, net	—			—			—			—			31,949			31,949
Change in fair value of servicing rights	—			6,114			—			6,114			(3,216		)	2,898
Change in fair value of investment securities	74			6,388			—			6,462			(7,449		)	(987		)
Change in fair value of mortgage loans held- for-sale, net	—			458			—			458			—			458
Earnings from unconsolidated entities	2,592			2,115			—			4,707			(196		)	4,511
Gain on sale of investments	13,506			—			—			13,506			—			13,506
Gain on derivative financial instruments	14,227			8,159			—			22,386			—			22,386
Foreign currency loss, net	(6,018		)	(67		)	—			(6,085		)	—			(6,085		)
OTTI	(401		)	—			—			(401		)	—			(401		)
Other income, net	—			39			—			39			—			39
Total other income	23,980			23,206			—			47,186			21,088			68,274
Income from continuing operations before income taxes	101,388			43,745			—			145,133			106			145,239
Income tax provision	(1,026		)	(10,932		)	—			(11,958		)	—			(11,958		)
Income from continuing operations	100,362			32,813			—			133,175			106			133,281
Loss from discontinued operations, net of tax	—			—			(8,346		)	(8,346		)	—			(8,346		)
Net income	100,362			32,813			(8,346		)	124,829			106			124,935
Net income attributable to non-controlling interests	(2,132		)	—			—			(2,132		)	(106		)	(2,238		)
Net income attributable to Starwood Property Trust, Inc.	$	98,230		$	32,813		$	(8,346	)	$	122,697		$	—		$	122,697

The table below presents our condensed consolidated balance sheet as of June 30, 2014 by business segment (amounts in thousands):

	Real Estate Investment Lending			LNR			Subtotal			LNR VIEs			Total
Assets:
Cash and cash equivalents	$	382,285		$	136,148		$	518,433		$	194		$	518,627
Restricted cash	34,324			10,237			44,561			—			44,561
Loans held-for-investment, net	4,881,439			4,415			4,885,854			—			4,885,854
Loans held-for-sale	8,750			145,662			154,412			—			154,412
Loans transferred as secured borrowings	142,867			—			142,867			—			142,867
Investment securities	733,876			638,069			1,371,945			(469,521		)	902,424
Intangible assets—servicing rights	—			224,676			224,676			(67,830		)	156,846
Investment in unconsolidated entities	52,541			68,644			121,185			(2,564		)	118,621
Goodwill	—			140,437			140,437			—			140,437
Derivative assets	2,321			2,360			4,681			—			4,681
Accrued interest receivable	36,904			579			37,483			—			37,483
Other assets	80,279			86,432			166,711			(1,179		)	165,532
VIE assets, at fair value	—			—			—			114,091,158			114,091,158
Total Assets	$	6,355,586		$	1,457,659		$	7,813,245		$	113,550,258		$	121,363,503
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	50,540		$	89,904		$	140,444		$	365		$	140,809
Related-party payable	19,784			4,691			24,475			—			24,475
Dividends payable	108,012			—			108,012			—			108,012
Derivative liabilities	25,019			1,275			26,294			—			26,294
Secured financing agreements, net	2,465,699			95,568			2,561,267			—			2,561,267
Convertible senior notes, net	1,003,847			—			1,003,847			—			1,003,847
Secured borrowings on transferred loans	142,815			—			142,815			—			142,815
VIE liabilities, at fair value	—			—			—			113,541,151			113,541,151
Total Liabilities	3,815,716			191,438			4,007,154			113,541,516			117,548,670
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Preferred stock	—			—			—			—			—
Common stock	2,232			—			2,232			—			2,232
Additional paid-in capital	2,417,704			1,366,871			3,784,575			—			3,784,575
Treasury stock	(10,642		)	—			(10,642		)	—			(10,642		)
Accumulated other comprehensive income	65,712			9,250			74,962			—			74,962
Retained earnings (deficit)	60,214			(109,900		)	(49,686		)	—			(49,686		)
Total Starwood Property Trust, Inc. Stockholders’ Equity	2,535,220			1,266,221			3,801,441			—			3,801,441
Non-controlling interests in consolidated subsidiaries	4,650			—			4,650			8,742			13,392
Total Equity	2,539,870			1,266,221			3,806,091			8,742			3,814,833
Total Liabilities and Equity	$	6,355,586		$	1,457,659		$	7,813,245		$	113,550,258		$	121,363,503

The table below presents our condensed consolidated balance sheet as of December 31, 2013 by business segment (amounts in thousands):

	Real Estate Investment Lending			LNR			Single Family Residential		Subtotal			LNR VIEs			Total
Assets:
Cash and cash equivalents	$	232,270		$	40,274		$	44,807	$	317,351		$	276		$	317,627
Restricted cash	36,593			32,208			251		69,052			—			69,052
Loans held-for-investment, net	4,350,937			12,781			—		4,363,718			—			4,363,718
Loans held-for-sale	—			206,672			—		206,672			—			206,672
Loans transferred as secured borrowings	180,414			—			—		180,414			—			180,414
Investment securities	794,147			550,282			—		1,344,429			(409,322		)	935,107
Intangible assets-servicing rights	—			257,736			—		257,736			(80,563		)	177,173
Residential real estate, net	—			—			749,214		749,214			—			749,214
Non-performing residential loans	—			—			215,371		215,371			—			215,371
Investment in unconsolidated entities	50,167			76,170			—		126,337			(3,383		)	122,954
Goodwill	—			140,437			—		140,437			—			140,437
Derivative assets	3,138			4,631			—		7,769			—			7,769
Accrued interest receivable	35,501			2,129			—		37,630			—			37,630
Other assets	31,020			57,620			8,045		96,685			(872		)	95,813
VIE assets, at fair value	—			—			—		—			103,151,624			103,151,624
Total Assets	$	5,714,187		$	1,380,940		$	1,017,688	$	8,112,815		$	102,657,760		$	110,770,575
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	66,127		$	135,882		$	23,056	$	225,065		$	309		$	225,374
Related-party payable	11,245			6,548			—		17,793			—			17,793
Dividends payable	90,171			—			—		90,171			—			90,171
Derivative liabilities	24,149			43			—		24,192			—			24,192
Secured financing agreements, net	2,127,717			129,843			—		2,257,560			—			2,257,560
Convertible senior notes, net	997,851			—			—		997,851			—			997,851
Secured borrowings on transferred loans	181,238			—			—		181,238			—			181,238
VIE liabilities, at fair value	—			—			—		—			102,649,263			102,649,263
Total Liabilities	3,498,498			272,316			23,056		3,793,870			102,649,572			106,443,442
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Preferred stock	—			—			—		—			—			—
Common stock	1,961			—			—		1,961			—			1,961
Additional paid-in capital	1,987,133			1,308,500			1,004,846		4,300,479			—			4,300,479
Treasury stock	(10,642		)	—			—		(10,642		)	—			(10,642		)
Accumulated other comprehensive income	68,092			7,357			—		75,449			—			75,449
Retained earnings (deficit)	132,625			(207,233		)	(10,111		(84,719		)	—			(84,719		)
Total Starwood Property Trust, Inc. Stockholders’ Equity	2,179,169			1,108,624			994,735		4,282,528			—			4,282,528
Non-controlling interests in consolidated subsidiaries	36,520			—			(103		36,417			8,188			44,605
Total Equity	2,215,689			1,108,624			994,632		4,318,945			8,188			4,327,133
Total Liabilities and Equity	$	5,714,187		$	1,380,940		$	1,017,688	$	8,112,815		$	102,657,760		$	110,770,575