EX-99.1 2 stwd_pressrelease-q22022.htm EX-99.1 Document
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Exhibit 99.1
For Immediate Release
Starwood Property Trust Reports Results for
Quarter Ended June 30, 2022
– Quarterly GAAP Earnings of $0.67 and Distributable Earnings (DE) of $0.51 per Diluted Share –
– $3.8 Billion of Investment Activity, Including $2.2 Billion in Commercial Lending –
– Undepreciated Book Value Increased 26% Year-over-Year to $21.51 -
– Paid Dividend of $0.48 per Share –
GREENWICH, Conn., August 4, 2022 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended June 30, 2022. The Company’s second quarter 2022 GAAP net income was $212.3 million, or $0.67 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $162.5 million, or $0.51 per diluted share. GAAP net income reflects unrealized increases in fair value of the Woodstar Fund’s affordable housing investments, net of non-controlling interests. It also reflects unrealized reductions in the fair value of residential lending investments, which together resulted in a net increase to undepreciated book value in the quarter of $0.25(*).

“Our diversified platform delivered strong performance this quarter despite a turbulent equity and credit market backdrop. We closed on nearly $4 billion of new investments, growing our portfolio to a record of $27 billion. Book value increased again this quarter, driven in large part by our affordable housing assets which appreciated due to continued robust rent growth. Today, our commercial loan portfolio LTV stands at just 61%, a major cushion to possible adverse movements in equity cap rates, and is 99% floating rate, providing upside to higher rates. Moreover, the commercial loan book has dramatically changed in its constitution, from 13% in the resilient multifamily sector pre-COVID to more than one third multifamily at quarter end. Similarly, the proportion of loans in the more challenged office asset class has dropped from almost 40% to roughly half that today,” stated Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

“There are great opportunities for our enterprise as the banks take steps back from the lending market but we must be, as we have through each cycle since we created STWD in 2009, careful to balance growth against a cushion that is prudent in this volatile and uncertain world right now. In addition to our available funds, we believe we can access incremental capital through partial or full sales of our owned property assets or obtaining leverage on our unencumbered asset portfolio. As we always do, we will continue to balance growth and liquidity preservation for the remainder of the year,” added Jeffrey DiModica, President of Starwood Property Trust.

(*) These fair values represent estimates and are subject to change. The fair value of the Woodstar Fund’s investments is an estimate that is subject to future increases or decreases as property values are affected by, among other things, the availability of capital, occupancy rates, rental rates and interest and inflation rates. Similarly, residential lending investments are impacted by changes in interest rates and credit spreads, which could cause increases or decreases to fair value.

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.
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Webcast and Conference Call Information
The Company will host a live webcast and conference call on Thursday, August 4, 2022, 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 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: 13730650
The playback can be accessed through August 11, 2022.
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 $91 billion of capital since inception and manages a portfolio of $27 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 (including the emergence of new strains of the virus), 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 the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as well as other risks and uncertainties set forth from time to time in the Company’s reports filed with the SEC, including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.
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.

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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
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the three months ended June 30, 2022
(Amounts in thousands)
Commercial and
Residential
Lending
Segment		Infrastructure
Lending
Segment		Property
Segment		Investing
and Servicing
Segment		CorporateSubtotalSecuritization
VIEs		Total
Revenues:
Interest income from loans$227,555 $30,096 $— $3,499 $— $261,150 $— $261,150 
Interest income from investment securities22,591 1,173 — 20,990 — 44,754 (29,448)15,306 
Servicing fees142 — — 15,616 — 15,758 (3,205)12,553 
Rental income1,044 — 22,628 7,852 — 31,524 — 31,524 
Other revenues61 90 48 4,854 3 5,056 (3)5,053 
Total revenues251,393 31,359 22,676 52,811 3 358,242 (32,656)325,586 
Costs and expenses:
Management fees254 — — — 31,370 31,624 — 31,624 
Interest expense88,226 15,001 7,074 6,391 36,142 152,834 (216)152,618 
General and administrative11,845 3,631 975 23,114 5,342 44,907 98 45,005 
Acquisition and investment pursuit costs738 — 2 (223)— 517 — 517 
Costs of rental operations1,826 — 5,216 3,556 — 10,598 — 10,598 
Depreciation and amortization1,183 104 8,179 2,774 — 12,240 — 12,240 
Credit loss provision, net7,925 513 — — — 8,438 — 8,438 
Other expense1,251 — — 7 — 1,258 — 1,258 
Total costs and expenses113,248 19,249 21,446 35,619 72,854 262,416 (118)262,298 
Other income (loss):
Change in net assets related to consolidated VIEs— — — — — — 8,373 8,373 
Change in fair value of servicing rights— — — 543 — 543 (908)(365)
Change in fair value of investment securities, net(19,312)— — (8,150)— (27,462)26,217 (1,245)
Change in fair value of mortgage loans, net(121,356)— — 7,876 — (113,480)— (113,480)
Income from affordable housing fund investments— — 307,165 — — 307,165 — 307,165 
Earnings (loss) from unconsolidated entities2,786 394 — 1,748 — 4,928 (1,063)3,865 
Gain on sale of investments and other assets, net138 — — — — 138 — 138 
Gain (loss) on derivative financial instruments, net127,140 265 5,354 9,007 (13,183)128,583 — 128,583 
Foreign currency (loss) gain, net(78,331)(289)18 — — (78,602)— (78,602)
Other loss, net(33,809)— — — — (33,809)— (33,809)
Total other income (loss)(122,744)370 312,537 11,024 (13,183)188,004 32,619 220,623 
Income (loss) before income taxes15,401 12,480 313,767 28,216 (86,034)283,830 81 283,911 
Income tax (provision) benefit(557)1 — (1,650)— (2,206)— (2,206)
Net income (loss)14,844 12,481 313,767 26,566 (86,034)281,624 81 281,705 
Net income attributable to non-controlling interests(4)— (67,482)(1,851)— (69,337)(81)(69,418)
Net income (loss) attributable to Starwood Property Trust, Inc.$14,840 $12,481 $246,285 $24,715 $(86,034)$212,287 $— $212,287 
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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 June 30, 2022
(Amounts in thousands except per share data)
Commercial and
Residential
Lending
Segment		Infrastructure
Lending
Segment		Property
Segment		Investing
and Servicing
Segment		CorporateTotal
Net income (loss) attributable to Starwood Property Trust, Inc.$14,840 $12,481 $246,285 $24,715 $(86,034)$212,287 
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units— — 4,691 — — 4,691 
Non-controlling interests attributable to unrealized gains/losses— — 60,043 (1,910)— 58,133 
Non-cash equity compensation expense2,036 345 76 1,424 6,026 9,907 
Management incentive fee— — — — 5,271 5,271 
Acquisition and investment pursuit costs(39)— (82)— — (121)
Depreciation and amortization1,229 96 8,250 2,895 — 12,470 
Interest income adjustment for securities2,573 — — 3,723 — 6,296 
Extinguishment of debt, net— — — — (247)(247)
Other non-cash items32,666 — 336 80 — 33,082 
Reversal of GAAP unrealized (gains) / losses on:
Loans121,356 — — (7,876)— 113,480 
Credit loss provision, net7,925 513 — — — 8,438 
Securities19,312 — — 8,150 — 27,462 
Woodstar Fund investments— — (307,165)— — (307,165)
Derivatives(130,811)(290)(6,108)(9,818)15,693 (131,334)
Foreign currency78,331 289 (18)— — 78,602 
Earnings from unconsolidated entities(2,786)(394)— (1,748)— (4,928)
Recognition of Distributable realized gains / (losses) on:
Loans(36,343)— — 7,753 — (28,590)
Securities(333)— — (4,413)— (4,746)
Woodstar Fund investments— — 15,175 — — 15,175 
Derivatives42,576 — (34)8,247 — 50,789 
Foreign currency(2,117)(31)18 — — (2,130)
Earnings from unconsolidated entities2,903 394 — 2,375 — 5,672 
Distributable Earnings (Loss)$153,318 $13,403 $21,467 $33,597 $(59,291)$162,494 
Distributable Earnings (Loss) per Weighted Average Diluted Share$0.48 $0.04 $0.07 $0.11 $(0.19)$0.51 
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the six months ended June 30, 2022
(Amounts in thousands)
Commercial and
Residential
Lending
Segment		Infrastructure
Lending
Segment		Property
Segment		Investing
and Servicing
Segment		CorporateSubtotalSecuritization
VIEs		Total
Revenues:
Interest income from loans$430,025 $57,079 $— $7,665 $— $494,769 $— $494,769 
Interest income from investment securities43,427 1,920 — 48,379 — 93,726 (64,437)29,289 
Servicing fees278 — — 29,687 — 29,965 (7,420)22,545 
Rental income2,730 — 44,993 15,381 — 63,104 — 63,104 
Other revenues113 158 98 9,508 3 9,880 (9)9,871 
Total revenues476,573 59,157 45,091 110,620 3 691,444 (71,866)619,578 
Costs and expenses:
Management fees531 — — — 86,388 86,919 — 86,919 
Interest expense156,828 26,931 13,155 12,601 69,984 279,499 (430)279,069 
General and administrative23,447 7,142 2,031 46,557 9,970 89,147 179 89,326 
Acquisition and investment pursuit costs1,237 1 7 (306)— 939 — 939 
Costs of rental operations2,345 — 10,217 7,326 — 19,888 — 19,888 
Depreciation and amortization1,477 209 16,398 5,803 — 23,887 — 23,887 
Credit loss provision, net4,626 154 — — — 4,780 — 4,780 
Other expense1,251 — 55 7 — 1,313 — 1,313 
Total costs and expenses191,742 34,437 41,863 71,988 166,342 506,372 (251)506,121 
Other income (loss):
Change in net assets related to consolidated VIEs— — — — — — 35,122 35,122 
Change in fair value of servicing rights— — — 326 — 326 393 719 
Change in fair value of investment securities, net(21,417)— — (17,441)— (38,858)37,258 (1,600)
Change in fair value of mortgage loans, net(237,584)— — (1,679)— (239,263)— (239,263)
Income from affordable housing fund investments— — 541,206 — — 541,206 — 541,206 
Earnings (loss) from unconsolidated entities1,446 739 — 1,899 — 4,084 (1,129)2,955 
Gain on sale of investments and other assets, net86,748 — — 11,858 — 98,606 — 98,606 
Gain (loss) on derivative financial instruments, net245,535 897 22,900 36,870 (50,351)255,851 — 255,851 
Foreign currency (loss) gain, net(105,585)(317)19 — — (105,883)— (105,883)
Loss on extinguishment of debt(206)(469)— (148)— (823)— (823)
Other (loss) income, net(34,597)— — — — (34,597)25 (34,572)
Total other income (loss)(65,660)850 564,125 31,685 (50,351)480,649 71,669 552,318 
Income (loss) before income taxes219,171 25,570 567,353 70,317 (216,690)665,721 54 665,775 
Income tax benefit (provision)4,583 5 — (4,344)— 244 — 244 
Net income (loss)223,754 25,575 567,353 65,973 (216,690)665,965 54 666,019 
Net income attributable to non-controlling interests(7)— (119,893)(9,179)— (129,079)(54)(129,133)
Net income (loss) attributable to Starwood Property Trust, Inc.$223,747 $25,575 $447,460 $56,794 $(216,690)$536,886 $— $536,886 
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Reconciliation of Net Income to Distributable Earnings
For the six months ended June 30, 2022
(Amounts in thousands except per share data)
Commercial and
Residential
Lending
Segment		Infrastructure
Lending
Segment		Property
Segment		Investing
and Servicing
Segment		CorporateTotal
Net income (loss) attributable to Starwood Property Trust, Inc.$223,747 $25,575 $447,460 $56,794 $(216,690)$536,886 
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units— — 9,382 — — 9,382 
Non-controlling interests attributable to unrealized gains/losses— — 104,945 646 — 105,591 
Non-cash equity compensation expense4,453 642 134 2,699 12,072 20,000 
Management incentive fee— — — — 34,226 34,226 
Acquisition and investment pursuit costs(337)— (160)(169)— (666)
Depreciation and amortization1,463 191 16,542 6,047 — 24,243 
Interest income adjustment for securities5,063 — — 2,015 — 7,078 
Extinguishment of debt, net— — — — (493)(493)
Income tax (provision) benefit associated with realized (gains) losses— — — — — — 
Other non-cash items32,669 — 792 202 — 33,663 
Reversal of GAAP unrealized (gains) / losses on:
Loans237,584 — — 1,679 — 239,263 
Credit loss provision, net4,626154———4,780
Securities21,417 — — 17,441 — 38,858 
Woodstar Fund investments— — (541,206)— — (541,206)
Derivatives(251,983)(975)(25,278)(38,907)56,466 (260,677)
Foreign currency105,585 317 (19)— — 105,883 
Earnings from unconsolidated entities(1,446)(739)— (1,899)— (4,084)
Sales of properties(86,610)— — (11,858)— (98,468)
Recognition of Distributable realized gains / (losses) on:
Loans(72,551)— — (2,808)— (75,359)
Securities(3,101)— — (4,387)— (7,488)
Woodstar Fund investments— — 30,834 — — 30,834 
Derivatives79,469 — (69)32,886 — 112,286 
Foreign currency(2,295)81 19 — — (2,195)
Earnings from unconsolidated entities1,664 739 — 2,845 — 5,248 
Sales of properties84,738 — 177 — 84,915 
Distributable Earnings (Loss)$384,155 $25,985 $43,376 $63,403 $(114,419)$402,500 
Distributable Earnings (Loss) per Weighted Average Diluted Share$1.21 $0.08 $0.14 $0.20 $(0.36)$1.27 
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Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet by Segment
As of June 30, 2022
(Amounts in thousands)
Commercial and
Residential
Lending
Segment		Infrastructure
Lending
Segment		Property
Segment		Investing
and Servicing
Segment		CorporateSubtotalSecuritization
VIEs		Total
Assets:
Cash and cash equivalents$67,812 $26,325 $27,926 $27,863 $120,192 $270,118 $2,056 $272,174 
Restricted cash2,889 38,835 958 10,011 11,939 64,632 — 64,632 
Loans held-for-investment, net15,623,041 2,263,006 — 9,742 — 17,895,789 — 17,895,789 
Loans held-for-sale2,195,953 — — 40,694 — 2,236,647 — 2,236,647 
Investment securities1,338,195 67,336 — 1,210,361 — 2,615,892 (1,702,532)913,360 
Properties, net215,099 — 874,119 136,761 — 1,225,979 — 1,225,979 
Investments of consolidated affordable housing fund— — 1,558,850 — — 1,558,850 — 1,558,850 
Investments in unconsolidated entities38,612 27,454 — 35,246 — 101,312 (15,802)85,510 
Goodwill— 119,409 — 140,437 — 259,846 — 259,846 
Intangible assets14,948 — 32,050 69,691 — 116,689 (41,725)74,964 
Derivative assets126,546 232 371 1,578 — 128,727 — 128,727 
Accrued interest receivable117,918 4,941 14 1,118 7,827 131,818 (158)131,660 
Other assets126,936 6,952 66,483 34,667 22,453 257,491 (306)257,185 
VIE assets, at fair value— — — — — — 57,993,563 57,993,563 
Total Assets$19,867,949 $2,554,490 $2,560,771 $1,718,169 $162,411 $26,863,790 $56,235,096 $83,098,886 
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities$152,679 $24,052 $10,161 $48,634 $37,823 $273,349 $65 $273,414 
Related-party payable— — — — 30,754 30,754 — 30,754 
Dividends payable— — — — 149,991 149,991 — 149,991 
Derivative liabilities11,899 197 — — 43,041 55,137 — 55,137 
Secured financing agreements, net9,999,749 1,025,145 788,557 584,395 770,965 13,168,811 (21,364)13,147,447 
Collateralized loan obligations and single asset securitization, net2,951,308 812,843 — — — 3,764,151 — 3,764,151 
Unsecured senior notes, net— — — — 2,324,772 2,324,772 — 2,324,772 
VIE liabilities, at fair value— — — — — — 56,256,080 56,256,080 
Total Liabilities13,115,635 1,862,237 798,718 633,029 3,357,346 19,766,965 56,234,781 76,001,746 
Temporary Equity: Redeemable non-controlling interests
— — 322,753 — — 322,753 — 322,753 
Permanent Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock— — — — 3,167 3,167 — 3,167 
Additional paid-in capital1,926,108 624,101 (378,128)(556,122)4,150,574 5,766,533 — 5,766,533 
Treasury stock— — — — (138,022)(138,022)— (138,022)
Accumulated other comprehensive income28,970 — — — — 28,970 — 28,970 
Retained earnings (accumulated deficit)4,797,121 68,152 1,608,794 1,469,935 (7,210,654)733,348 — 733,348 
Total Starwood Property Trust, Inc. Stockholders’ Equity6,752,199 692,253 1,230,666 913,813 (3,194,935)6,393,996 — 6,393,996 
Non-controlling interests in consolidated subsidiaries115 — 208,634 171,327 — 380,076 315 380,391 
Total Permanent Equity6,752,314 692,253 1,439,300 1,085,140 (3,194,935)6,774,072 315 6,774,387 
Total Liabilities and Equity$19,867,949 $2,554,490 $2,560,771 $1,718,169 $162,411 $26,863,790 $56,235,096 $83,098,886 
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