Related-Party Transactions	9 Months Ended
Sep. 30, 2017
Related-Party Transactions
Related-Party Transactions	15. Related-Party Transactions Management Agreement We are party to a management agreement (the “Management Agreement”) with our Manager. Under the Management Agreement, our Manager, subject to the oversight of our board of directors, is required to manage our day to day activities, for which our Manager receives a base management fee and is eligible for an incentive fee and stock awards. Our Manager’s personnel perform certain due diligence, legal, management and other services that outside professionals or consultants would otherwise perform. As such, in accordance with the terms of our Management Agreement, our Manager is paid or reimbursed for the documented costs of performing such tasks, provided that such costs and reimbursements are in amounts no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis. Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of this agreement. Base Management Fee. For the three months ended September 30, 2017 and 2016, approximately $16.9 million and $15.2 million, respectively, was incurred for base management fees. For the nine months ended September 30, 2017 and 2016, approximately $50.7 million and $45.4 million, respectively, was incurred for base management fees. As of September 30, 2017 and December 31, 2016, there were $16.9 million and $15.7 million, respectively, of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets. Incentive Fee. For the three months ended September 30, 2017 and 2016, approximately $10.4 million and $6.3 million, respectively, was incurred for incentive fees. For the nine months ended September 30, 2017 and 2016, approximately $20.2 million and $13.8 million, respectively, was incurred for incentive fees. As of September 30, 2017 and December 31, 2016, approximately $10.4 million and $19.0 million, respectively, of unpaid incentive fees were included in related-party payable in our condensed consolidated balance sheets. Expense Reimbursement. For the three months ended September 30, 2017 and 2016, approximately $1.7 million and $1.5 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our condensed consolidated statements of operations. For the nine months ended September 30, 2017 and 2016, approximately $4.5 million and $4.1 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of September 30, 2017 and December 31, 2016, approximately $2.7 million and $3.0 million, respectively, of unpaid reimbursable executive compensation and other expenses were included in related-party payable in our condensed consolidated balance sheets. Equity Awards. In certain instances, we issue RSAs to certain employees of affiliates of our Manager who perform services for us. During the three months ended September 30, 2017 and 2016, there were no RSAs granted. Expenses related to the vesting of awards to employees of affiliates of our Manager were $0.7 million and $0.6 million during the three months ended September 30, 2017 and 2016, respectively, and are reflected in general and administrative expenses in our condensed consolidated statements of operations. During the nine months ended September 30, 2017 and 2016, we granted 138,264 and 169,104 RSAs, respectively, at grant date fair values of $3.1 million and $3.3 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $2.1 million and $1.6 million during the nine months ended September 30, 2017 and 2016, respectively. These shares generally vest over a three-year period. Manager Equity Plan In March 2017, we granted 1,000,000 RSUs to our Manager under the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In May 2015, we granted 675,000 RSUs to our Manager under the Manager Equity Plan. In connection with these grants and prior similar grants, we recognized share-based compensation expense of $3.0 million and $5.7 million within management fees in our condensed consolidated statements of operations for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, we recognized $7.4 million and $15.8 million, respectively, related to these awards. Refer to Note 16 for further discussion of these grants. In May 2017, the Company’s shareholders approved the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the “2017 Manager Equity Plan”) which replaces the Manager Equity Plan. Refer to Note 16 for further discussion. Investments in Loans and Securities In March 2017, we were fully repaid $59.0 million upon the maturity of a subordinate single-borrower CMBS that we acquired in March 2015. The bond was secured by 85 U.S. hotel properties, and the borrower was an affiliate of Starwood Distressed Opportunity Fund IX, an affiliate of our Manager. In May 2017, our conduit business acquired certain commercial real estate loans from an unaffiliated third party for an aggregate purchase price of $50.0 million. The underlying borrowers are affiliates of our Manager. During the three months ended September 30, 2017, $25.0 million of such loans were sold. The remaining $25.0 million of such loans, which were included within loans held-for-sale in our condensed consolidated balance sheet as of September 30, 2017, were sold subsequent to September 30, 2017. In June 2017, we amended a £75.0 million first mortgage for the development of a three-property mixed use portfolio located in Greater London, which we co-originated with SEREF, an affiliate of our Manager, in 2016. The amendment reduced the first mortgage’s total commitment to £69.3 million, of which our share is £55.4 million. The loan matures in June 2019. In August 2017, we originated a $339.2 million first mortgage and mezzanine loan for the acquisition of an office campus located in Irvine, California. An affiliate of our Manager has a non-controlling equity interest in the borrower. Investment in Unconsolidated Entities In October 2014, we committed $150.0 million for a 33% equity interest in four regional shopping malls (the “Retail Fund”). In August 2017, we funded the remaining $15.5 million capital commitment associated with this investment (see Note 7). All leasing services and asset management functions for the properties are conducted by an affiliate of our Manager which specializes in redeveloping, managing and repositioning retail real estate assets. In addition, another affiliate of our Manager serves as general partner of the Retail Fund. Acquisitions from Consolidated CMBS Trusts Our Investing and Servicing Segment acquires interests in properties for its REIS Equity Portfolio from CMBS trusts, some of which are consolidated as VIEs on our balance sheet. Acquisitions from consolidated VIEs are reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. During the three months ended September 30, 2016, we acquired $3.3 million of net real estate assets from consolidated CMBS trusts. No real estate assets were acquired from consolidated CMBS trusts during the three months ended September 30, 2017. During the nine months ended September 30, 2017 and 2016, we acquired $19.7 million and $88.4 million, respectively, of net real estate assets from consolidated CMBS trusts and subsequently issued non-controlling interests of $5.5 million on the 2016 acquisitions. No non-controlling interests were issued during the nine months ended September 30, 2017. Refer to Note 3 for further discussion of these acquisitions. Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of related-party agreements.

15. Related-Party Transactions

Management Agreement

We are party to a management agreement (the “Management Agreement”) with our Manager. Under the Management Agreement, our Manager, subject to the oversight of our board of directors, is required to manage our day to day activities, for which our Manager receives a base management fee and is eligible for an incentive fee and stock awards. Our Manager’s personnel perform certain due diligence, legal, management and other services that outside professionals or consultants would otherwise perform. As such, in accordance with the terms of our Management Agreement, our Manager is paid or reimbursed for the documented costs of performing such tasks, provided that such costs and reimbursements are in amounts no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis. Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of this agreement.

Base Management Fee. For the three months ended September 30, 2017 and 2016, approximately $16.9 million and $15.2 million, respectively, was incurred for base management fees. For the nine months ended September 30, 2017 and 2016, approximately $50.7 million and $45.4 million, respectively, was incurred for base management fees. As of September 30, 2017 and December 31, 2016, there were $16.9 million and $15.7 million, respectively, of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets.

Incentive Fee. For the three months ended September 30, 2017 and 2016, approximately $10.4 million and $6.3 million, respectively, was incurred for incentive fees. For the nine months ended September 30, 2017 and 2016, approximately $20.2 million and $13.8 million, respectively, was incurred for incentive fees. As of September 30, 2017 and December 31, 2016, approximately $10.4 million and $19.0 million, respectively, of unpaid incentive fees were included in related-party payable in our condensed consolidated balance sheets.

Expense Reimbursement. For the three months ended September 30, 2017 and 2016, approximately $1.7 million and $1.5 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our condensed consolidated statements of operations. For the nine months ended September 30, 2017 and 2016, approximately $4.5 million and $4.1 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of September 30, 2017 and December 31, 2016, approximately $2.7 million and $3.0 million, respectively, of unpaid reimbursable executive compensation and other expenses were included in related-party payable in our condensed consolidated balance sheets.

Equity Awards. In certain instances, we issue RSAs to certain employees of affiliates of our Manager who perform services for us. During the three months ended September 30, 2017 and 2016, there were no RSAs granted. Expenses related to the vesting of awards to employees of affiliates of our Manager were $0.7 million and $0.6 million during the three months ended September 30, 2017 and 2016, respectively, and are reflected in general and administrative expenses in our condensed consolidated statements of operations. During the nine months ended September 30, 2017 and 2016, we granted 138,264 and 169,104 RSAs, respectively, at grant date fair values of $3.1 million and $3.3 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $2.1 million and $1.6 million during the nine months ended September 30, 2017 and 2016, respectively. These shares generally vest over a three-year period.

Manager Equity Plan

In March 2017, we granted 1,000,000 RSUs to our Manager under the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In May 2015, we granted 675,000 RSUs to our Manager under the Manager Equity Plan. In connection with these grants and prior similar grants, we recognized share-based compensation expense of $3.0 million and $5.7 million within management fees in our condensed consolidated statements of operations for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, we recognized $7.4 million and $15.8 million, respectively, related to these awards. Refer to Note 16 for further discussion of these grants.

In May 2017, the Company’s shareholders approved the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the “2017 Manager Equity Plan”) which replaces the Manager Equity Plan. Refer to Note 16 for further discussion.

Investments in Loans and Securities

In March 2017, we were fully repaid $59.0 million upon the maturity of a subordinate single-borrower CMBS that we acquired in March 2015. The bond was secured by 85 U.S. hotel properties, and the borrower was an affiliate of Starwood Distressed Opportunity Fund IX, an affiliate of our Manager.

In May 2017, our conduit business acquired certain commercial real estate loans from an unaffiliated third party for an aggregate purchase price of $50.0 million. The underlying borrowers are affiliates of our Manager. During the three months ended September 30, 2017, $25.0 million of such loans were sold. The remaining $25.0 million of such loans, which were included within loans held-for-sale in our condensed consolidated balance sheet as of September 30, 2017, were sold subsequent to September 30, 2017.

In June 2017, we amended a £75.0 million first mortgage for the development of a three-property mixed use portfolio located in Greater London, which we co-originated with SEREF, an affiliate of our Manager, in 2016. The amendment reduced the first mortgage’s total commitment to £69.3 million, of which our share is £55.4 million. The loan matures in June 2019.

In August 2017, we originated a $339.2 million first mortgage and mezzanine loan for the acquisition of an office campus located in Irvine, California. An affiliate of our Manager has a non-controlling equity interest in the borrower.

Investment in Unconsolidated Entities

In October 2014, we committed $150.0 million for a 33% equity interest in four regional shopping malls (the “Retail Fund”). In August 2017, we funded the remaining $15.5 million capital commitment associated with this investment (see Note 7). All leasing services and asset management functions for the properties are conducted by an affiliate of our Manager which specializes in redeveloping, managing and repositioning retail real estate assets. In addition, another affiliate of our Manager serves as general partner of the Retail Fund.

Acquisitions from Consolidated CMBS Trusts

Our Investing and Servicing Segment acquires interests in properties for its REIS Equity Portfolio from CMBS trusts, some of which are consolidated as VIEs on our balance sheet. Acquisitions from consolidated VIEs are reflected as repayment of debt of consolidated VIEs in our condensed consolidated statements of cash flows. During the three months ended September 30, 2016, we acquired $3.3 million of net real estate assets from consolidated CMBS trusts. No real estate assets were acquired from consolidated CMBS trusts during the three months ended September 30, 2017. During the nine months ended September 30, 2017 and 2016, we acquired $19.7 million and $88.4 million, respectively, of net real estate assets from consolidated CMBS trusts and subsequently issued non-controlling interests of $5.5 million on the 2016 acquisitions. No non-controlling interests were issued during the nine months ended September 30, 2017. Refer to Note 3 for further discussion of these acquisitions.

Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of related-party agreements.