Related-Party Transactions	6 Months Ended
Jun. 30, 2019
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 June 30, 2019 and 2018, approximately $18.9 million and $18.0 million, respectively, was incurred for base management fees. For the six months ended June 30, 2019 and 2018, approximately $38.5 million and $35.5 million, respectively, was incurred for base management fees. As of both June 30, 2019 and December 31, 2018, there were $19.2 million of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets. Incentive Fee. There were no incentive fees incurred during the three months ended June 30, 2019. For the three months ended June 30, 2018, approximately $5.7 million was incurred for incentive fees. For the six months ended June 30, 2019 and 2018, approximately $0.2 million and $15.3 million, respectively, was incurred for incentive fees. As of June 30, 2019, there were no unpaid incentive fees. As of December 31, 2018, approximately $21.8 million of unpaid incentive fees were included in related-party payable in our condensed consolidated balance sheet. Expense Reimbursement. For the three months ended June 30, 2019 and 2018, approximately $1.7 million and $1.9 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 six months ended June 30, 2019 and 2018, approximately $3.9 million and $4.0 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of June 30, 2019 and December 31, 2018, approximately $2.0 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 June 30, 2019, we granted 68,645 RSAs at grant date fair value of $1.5 million. During the three months ended June 30, 2018, there were no RSAs granted. Expenses related to the vesting of awards to employees of affiliates of our Manager were $1.0 million and $0.8 million during the three months ended June 30, 2019 and 2018, respectively, and are reflected in general and administrative expenses in our condensed consolidated statements of operations. During the six months ended June 30, 2019 and 2018, we granted 182,861 and 189,813 RSAs, respectively, at grant date fair values of $4.1 million and $4.0 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $1.8 million and $1.3 million during the six months ended June 30, 2019 and 2018, respectively. These shares generally vest over a three-year period. Manager Equity Plan In May 2017, the Company’s shareholders approved the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the “2017 Manager Equity Plan”), which replaced the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In April 2018, we granted 775,000 RSUs to our Manager under the 2017 Manager Equity Plan. In March 2017, we granted 1,000,000 RSUs to our Manager under the 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 $3.2 million and $3.3 million within management fees in our condensed consolidated statements of operations for the three months ended June 30, 2019 and 2018, respectively. For the six months ended June 30, 2019 and 2018, we recognized $6.4 million and $6.2 million, respectively, related to these awards. Refer to Note 16 for further discussion of these grants. Investments in Loans In February 2019, the Company acquired a $60.0 million first priority infrastructure term loan participation which bears interest at LIBOR plus 3.75%. In April 2019, the Company acquired an additional $5.0 million participation in the term loan, bringing the total participation to $65.0 million. The loan is secured by two domestic natural gas power plants. An affiliate of our Manager, Starwood Energy Group, is the loan sponsor. In March 2019, the Company originated a $22.5 million loan to refinance the debt of a commercial real estate partnership in which we hold a 50% equity interest. During the three and six months ended June 30, 2019, the Company acquired $103.3 million and $175.2 million, respectively, of loans from a residential mortgage originator in which it holds an equity interest. Refer to Note 7 for further discussion. Other Related-Party Arrangements During the three and six months ended June 30, 2019, we engaged Highmark Residential (“Highmark”) (formerly known as Milestone Management), an affiliate of our Manager, to provide property management services for two and 11 additional properties, respectively, within our Woodstar I Portfolio, bringing the total number of our properties managed by Highmark to 21. Fees paid to Highmark are calculated as a percentage of gross receipts and are at market terms. During the three and six months ended June 30, 2019, property management fees paid to Highmark were $0.4 million and $0.7 million, respectively. 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. No real estate assets were acquired from consolidated CMBS trusts during the three months ended June 30, 2019 and 2018 or during the six months ended June 30, 2019. During the six months ended June 30, 2018, we acquired $27.7 million of net real estate assets from consolidated CMBS trusts for a gross purchase price of $28.0 million. Refer to Note 16 to the consolidated financial statements included in our Form 10-K for further discussion of related-party agreements.

Related-Party Transactions

6 Months Ended

Jun. 30, 2019

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 June 30, 2019 and 2018, approximately $18.9 million and $18.0 million, respectively, was incurred for base management fees. For the six months ended June 30, 2019 and 2018, approximately $38.5 million and $35.5 million, respectively, was incurred for base management fees. As of both June 30, 2019 and December 31, 2018, there were $19.2 million of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets.

Incentive Fee. There were no incentive fees incurred during the three months ended June 30, 2019. For the three months ended June 30, 2018, approximately $5.7 million was incurred for incentive fees. For the six months ended June 30, 2019 and 2018, approximately $0.2 million and $15.3 million, respectively, was incurred for incentive fees. As of June 30, 2019, there were no unpaid incentive fees. As of December 31, 2018, approximately $21.8 million of unpaid incentive fees were included in related-party payable in our condensed consolidated balance sheet.

Expense Reimbursement. For the three months ended June 30, 2019 and 2018, approximately $1.7 million and $1.9 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 six months ended June 30, 2019 and 2018, approximately $3.9 million and $4.0 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of June 30, 2019 and December 31, 2018, approximately $2.0 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 June 30, 2019, we granted 68,645 RSAs at grant date fair value of $1.5 million. During the three months ended June 30, 2018, there were no RSAs granted. Expenses related to the vesting of awards to employees of affiliates of our Manager were $1.0 million and $0.8 million during the three months ended June 30, 2019 and 2018, respectively, and are reflected in general and administrative expenses in our condensed consolidated statements of operations. During the six months ended June 30, 2019 and 2018, we granted 182,861 and 189,813 RSAs, respectively, at grant date fair values of $4.1 million and $4.0 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $1.8 million and $1.3 million during the six months ended June 30, 2019 and 2018, respectively. These shares generally vest over a three-year period.

Manager Equity Plan

In May 2017, the Company’s shareholders approved the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the “2017 Manager Equity Plan”), which replaced the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In April 2018, we granted 775,000 RSUs to our Manager under the 2017 Manager Equity Plan. In March 2017, we granted 1,000,000 RSUs to our Manager under the 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 $3.2 million and $3.3 million within management fees in our condensed consolidated statements of operations for the three months ended June 30, 2019 and 2018, respectively. For the six months ended June 30, 2019 and 2018, we recognized $6.4 million and $6.2 million, respectively, related to these awards. Refer to Note 16 for further discussion of these grants.

Investments in Loans

In February 2019, the Company acquired a $60.0 million first priority infrastructure term loan participation which bears interest at LIBOR plus 3.75%. In April 2019, the Company acquired an additional $5.0 million participation in the term loan, bringing the total participation to $65.0 million. The loan is secured by two domestic natural gas power plants. An affiliate of our Manager, Starwood Energy Group, is the loan sponsor.

In March 2019, the Company originated a $22.5 million loan to refinance the debt of a commercial real estate partnership in which we hold a 50% equity interest.

During the three and six months ended June 30, 2019, the Company acquired $103.3 million and $175.2 million, respectively, of loans from a residential mortgage originator in which it holds an equity interest. Refer to Note 7 for further discussion.

Other Related-Party Arrangements

During the three and six months ended June 30, 2019, we engaged Highmark Residential (“Highmark”) (formerly known as Milestone Management), an affiliate of our Manager, to provide property management services for two and 11 additional properties, respectively, within our Woodstar I Portfolio, bringing the total number of our properties managed by Highmark to 21. Fees paid to Highmark are calculated as a percentage of gross receipts and are at market terms. During the three and six months ended June 30, 2019, property management fees paid to Highmark were $0.4 million and $0.7 million, respectively.

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. No real estate assets were acquired from consolidated CMBS trusts during the three months ended June 30, 2019 and 2018 or during the six months ended June 30, 2019. During the six months ended June 30, 2018, we acquired $27.7 million of net real estate assets from consolidated CMBS trusts for a gross purchase price of $28.0 million.

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