EX-99.1 2 stwd-20210506xex99d1.htm EX-99.1

Exhibit 99.1

Graphic

For Immediate Release

Starwood Property Trust Reports Results for the

Quarter Ended March 31, 2021

Quarterly GAAP Earnings of $0.38 and Distributable Earnings of $0.50 per Diluted Share

Originated or Acquired $2.7 Billion of Assets, Including $2.2 Billion in Commercial Lending

– Paid Dividend of $0.48 per Share for 29th Straight Quarter

Completed $500 Million Inaugural Infrastructure CLO and $1.3 Billion CRE CLO –

LNR Upgraded by Fitch to CSS1, Only Special Servicer Carrying Highest Rating

GREENWICH, Conn., May 6, 2021 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2021.  The Company’s first quarter 2021 GAAP net income was $111.4 million, or $0.38 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $150.8 million, or $0.50 per diluted share.

“We benefited from a strong start to the year with $2.7 billion of capital deployed in the first quarter across our business cylinders, including $2.2 billion in Commercial Lending, bringing our post-COVID capital deployment to $5.7 billion. The credit performance of our diversified business lines coupled with our robust liquidity position gave us the confidence to continue our strong pace of investment activity.  Eleven years into our journey, the LTV of our loan book remains low at 60.1%, and we continue to provide an attractive yield in a low rate world," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.  

“After quarter end, we closed two CLOs totaling $1.8 billion: our inaugural Infrastructure CLO for $500 million and our second CRE CLO for $1.3 billion. These financings allowed us to further de-risk our balance sheet and diversify our funding sources.

“After a year of unprecedented distress which led to record volume in our special servicer, LNR was upgraded by Fitch to its highest servicer rating and is the only CMBS special servicer at this level globally.  We are extremely proud of this achievement which recognizes the strength and tenure of our team, years of operating at the highest level, our commitment to technology and our exemplary performance," commented Jeff DiModica, President of Starwood Property Trust.

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.

Webcast and Conference Call Information

The Company will host a live webcast and conference call on Thursday, May 6, 2021, at 10:00 a.m. Eastern Time.  To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.  The webcast is available at  

1


www.starwoodpropertytrust.com in the Investor Relations section of the website.  The Company encourages use of the webcast due to potential extended wait times to access the conference call via dial-in.

To Participate via Telephone Conference Call:

Dial in at least 15 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: 13718432

The playback can be accessed through May 13, 2021.

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 $69 billion of capital since inception and manages a portfolio of over $18 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.  Forward-looking statements are developed by combining currently available information with our beliefs and assumptions and are generally identified by the words “believe,” “expect,” “anticipate” and other similar expressions.  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, but are not limited to, the severity and duration of economic disruption caused by the COVID-19 global pandemic, completion of pending investments and financings, continued ability to acquire additional investments, competition within the finance and real estate industries, availability of financing and other risks detailed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as well as other risks and uncertainties set forth from time to time in the Company's reports filed with the SEC.

In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained herein will in fact occur. Except to the extent required by applicable law or regulation, we undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, changes to future results over time or otherwise.

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

2


Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the three months ended March 31, 2021

(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

$

170,593

$

18,808

$

$

1,174

$

$

190,575

$

$

190,575

Interest income from investment securities

 

18,385

 

564

 

 

20,940

 

39,889

 

(28,279)

 

11,610

Servicing fees

 

124

 

 

 

12,456

 

12,580

 

(4,178)

 

8,402

Rental income

1,339

65,104

9,895

76,338

76,338

Other revenues

 

90

 

93

 

40

 

82

 

305

 

 

305

Total revenues

 

190,531

 

19,465

 

65,144

 

44,547

 

 

319,687

 

(32,457)

 

287,230

Costs and expenses:

Management fees

 

315

 

 

 

222

 

38,188

 

38,725

 

11

 

38,736

Interest expense

 

44,295

 

8,841

 

15,832

 

5,449

29,148

 

103,565

 

(191)

 

103,374

General and administrative

 

11,333

 

3,442

 

1,023

 

18,440

4,311

 

38,549

 

87

 

38,636

Acquisition and investment pursuit costs

 

185

 

 

 

 

185

 

 

185

Costs of rental operations

477

23,960

4,308

28,745

28,745

Depreciation and amortization

 

307

 

100

 

18,100

 

3,967

 

22,474

 

 

22,474

Credit loss (reversal) provision, net

 

(529)

 

573

 

 

 

44

 

 

44

Other expense

 

31

 

 

583

 

71

 

685

 

 

685

Total costs and expenses

 

56,414

 

12,956

 

59,498

 

32,457

71,647

 

232,972

 

(93)

 

232,879

Other income (loss):

Change in net assets related to consolidated VIEs

 

 

 

 

 

 

 

39,745

 

39,745

Change in fair value of servicing rights

 

 

 

 

745

 

745

 

(1,541)

 

(796)

Change in fair value of investment securities, net

 

(2,050)

 

 

 

7,170

 

5,120

 

(5,426)

 

(306)

Change in fair value of mortgage loans, net

 

(10,714)

 

 

 

1,236

 

(9,478)

 

 

(9,478)

Earnings (loss) from unconsolidated entities

1,753

 

(254)

 

 

589

 

2,088

 

(354)

 

1,734

Gain on sale of investments and other assets, net

17,693

 

 

 

 

17,693

 

 

17,693

Gain (loss) on derivative financial instruments, net

 

26,141

 

684

 

4,724

 

9,283

(6,843)

 

33,989

 

 

33,989

Foreign currency (loss) gain, net

 

(11,594)

 

(49)

 

25

 

(63)

 

(11,681)

 

 

(11,681)

Loss on extinguishment of debt

 

(68)

(307)

(141)

(516)

(516)

Other income, net

 

 

21

 

 

 

21

 

 

21

Total other income (loss)

 

21,161

 

95

 

4,608

 

18,960

(6,843)

 

37,981

 

32,424

 

70,405

Income (loss) before income taxes

 

155,278

 

6,604

 

10,254

 

31,050

(78,490)

 

124,696

 

60

 

124,756

Income tax provision

 

(1,505)

 

(92)

 

 

(633)

 

(2,230)

 

 

(2,230)

Net income (loss)

 

153,773

 

6,512

 

10,254

 

30,417

(78,490)

 

122,466

 

60

 

122,526

Net income attributable to non-controlling interests

 

(3)

 

 

(5,077)

 

(6,008)

 

(11,088)

 

(60)

 

(11,148)

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

$

153,770

$

6,512

$

5,177

$

24,409

$

(78,490)

$

111,378

$

$

111,378

3


Definition of Distributable Earnings

Distributable 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, Distributable 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 Distributable Earnings

For the three months ended March 31, 2021

(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.

$

153,770

$

6,512

$

5,177

$

24,409

$

(78,490)

$

111,378

Add / (Deduct):

Non-controlling interests attributable to Woodstar II Class A Units

5,077

 

5,077

Non-cash equity compensation expense

1,781

300

31

881

7,317

 

10,310

Management incentive fee

13,123

 

13,123

Acquisition and investment pursuit costs

(164)

(89)

 

(253)

Depreciation and amortization

247

91

18,161

3,603

 

22,102

Credit loss (reversal) provision, net

(529)

573

 

44

Interest income adjustment for securities

(1,300)

3,995

 

2,695

Extinguishment of debt, net

(246)

(246)

Income tax (provision) benefit associated with realized (gains) losses

(6,495)

405

(6,090)

Other non-cash items

3

(337)

207

415

 

288

Reversal of GAAP unrealized (gains) / losses on:

Loans

10,714

(1,236)

 

9,478

Securities

2,050

(7,170)

(5,120)

Derivatives

(27,171)

(745)

(6,446)

(9,719)

9,313

 

(34,768)

Foreign currency

11,594

49

(25)

63

 

11,681

(Earnings) loss from unconsolidated entities

(1,753)

254

(589)

 

(2,088)

Sales of properties

(17,693)

 

(17,693)

Recognition of Distributable realized gains / (losses) on:

Loans

14,553

4,672

19,225

Realized credit loss

(7,757)

(7,757)

Securities

(2,861)

1,776

 

(1,085)

Derivatives

1,950

(35)

1,595

 

3,510

Foreign currency

4,784

(10)

25

(63)

 

4,736

Earnings (loss) from unconsolidated entities

3,218

(254)

964

 

3,928

Sales of properties

8,298

 

8,298

Distributable Earnings (Loss)

$

147,239

$

6,770

$

21,539

$

23,793

$

(48,568)

$

150,773

Distributable Earnings (Loss) per Weighted Average Diluted Share

$

0.49

$

0.02

$

0.07

$

0.08

$

(0.16)

$

0.50

4


Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of March 31, 2021

(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

$

56,629

$

7,873

$

39,791

$

29,064

$

217,049

$

350,406

$

784

$

351,190

Restricted cash

 

69,882

 

27,973

 

6,672

 

14,197

 

 

118,724

 

 

118,724

Loans held-for-investment, net

 

10,733,752

 

1,586,808

 

 

933

 

 

12,321,493

 

 

12,321,493

Loans held-for-sale

 

587,037

 

89,368

 

 

168,226

 

 

844,631

 

 

844,631

Investment securities

 

969,968

 

34,951

 

 

1,106,000

 

 

2,110,919

 

(1,432,632)

 

678,287

Properties, net

93,718

1,954,880

196,150

2,244,748

2,244,748

Intangible assets

 

 

 

38,833

 

70,857

 

 

109,690

 

(42,918)

 

66,772

Investment in unconsolidated entities

 

47,514

 

24,840

 

 

44,435

 

 

116,789

 

(15,882)

 

100,907

Goodwill

 

 

119,409

 

 

140,437

 

 

259,846

 

 

259,846

Derivative assets

 

13,088

 

 

162

 

320

 

24,459

 

38,029

 

 

38,029

Accrued interest receivable

 

97,853

 

3,310

 

 

274

 

408

 

101,845

 

(132)

 

101,713

Other assets

 

61,677

 

7,107

 

85,740

 

44,719

 

9,646

 

208,889

 

(16)

 

208,873

VIE assets, at fair value

 

 

 

 

 

 

 

62,367,110

 

62,367,110

Total Assets

$

12,731,118

$

1,901,639

$

2,126,078

$

1,815,612

$

251,562

$

18,826,009

$

60,876,314

$

79,702,323

Liabilities and Equity

Liabilities:

Accounts payable, accrued expenses and other liabilities

$

37,206

$

16,010

$

44,184

$

24,110

$

56,614

$

178,124

$

91

$

178,215

Related-party payable

 

 

 

 

 

36,135

 

36,135

 

 

36,135

Dividends payable

 

 

 

 

 

138,906

 

138,906

 

 

138,906

Derivative liabilities

 

33,190

 

1,310

 

 

305

 

 

34,805

 

 

34,805

Secured financing agreements, net

 

6,502,059

 

1,259,813

 

1,871,026

 

653,222

 

631,655

 

10,917,775

 

(21,843)

 

10,895,932

Collateralized loan obligations, net

931,178

 

 

 

931,178

931,178

Unsecured senior notes, net

 

 

 

 

 

1,735,658

 

1,735,658

 

 

1,735,658

VIE liabilities, at fair value

 

 

 

 

 

 

 

60,896,709

 

60,896,709

Total Liabilities

 

7,503,633

 

1,277,133

 

1,915,210

 

677,637

 

2,598,968

 

13,972,581

 

60,874,957

 

74,847,538

Equity:

Starwood Property Trust, Inc. Stockholders’ Equity:

Common stock

 

 

 

 

 

2,943

 

2,943

 

 

2,943

Additional paid-in capital

 

1,074,553

 

599,666

 

25,905

 

(298,098)

 

3,823,011

 

5,225,037

 

 

5,225,037

Treasury stock

 

 

 

 

 

(138,022)

 

(138,022)

 

 

(138,022)

Accumulated other comprehensive income

 

41,654

 

 

 

 

 

41,654

 

 

41,654

Retained earnings (accumulated deficit)

 

4,111,160

 

24,840

 

(40,641)

 

1,285,229

 

(6,035,338)

 

(654,750)

 

 

(654,750)

Total Starwood Property Trust, Inc. Stockholders’ Equity

 

5,227,367

 

624,506

 

(14,736)

 

987,131

 

(2,347,406)

 

4,476,862

 

 

4,476,862

Non-controlling interests in consolidated subsidiaries

 

118

 

 

225,604

 

150,844

 

 

376,566

 

1,357

 

377,923

Total Equity

 

5,227,485

 

624,506

 

210,868

 

1,137,975

 

(2,347,406)

 

4,853,428

 

1,357

 

4,854,785

Total Liabilities and Equity

$

12,731,118

$

1,901,639

$

2,126,078

$

1,815,612

$

251,562

$

18,826,009

$

60,876,314

$

79,702,323

5