09.08.2017 12:45:00

Starwood Property Trust Reports Results for the Quarter Ended June 30, 2017

GREENWICH, Conn., Aug. 9, 2017 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended June 30, 2017.  The Company's second quarter 2017 GAAP net income was $117.4 million, or $0.44 per diluted share, and Core Earnings (a non-GAAP financial measure) was $136.8 million, or $0.52 per diluted share.

"Our performance this quarter was driven by contributions from across our business segments," stated Barry Sternlicht, Chairman and CEO of Starwood Property Trust. "Our $1.5 billion of capital deployment included $871 million of floating-rate large loan originations that should benefit our results in a rising rate environment. Despite the current competitive landscape, we have maintained our disciplined underwriting, with our portfolio LTV remaining modest at just under 63%, consistent with the composition of our portfolio over the last three years.  In addition, our multi-cylinder investment platform and access to diversified funding sources provides us with a competitive advantage, allowing us to continue to deliver attractive returns to our shareholders.

Shortly after quarter end, we expanded our access to attractive capital through membership in the Federal Home Loan Bank of Chicago. In addition, Ten-X entered into a strategic transaction which will allow us to harvest some of the significant embedded value on our balance sheet next quarter.

With a diverse and growing global pipeline, we will continue to patiently deploy capital across our target assets into the best risk-adjusted opportunities."

Dividend

On August 9, 2017, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending September 30, 2017. The dividend is payable on October 13, 2017 to common stockholders of record as of September 29, 2017. 

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 at the Company's website in the Investor Relations section under "Quarterly Earnings" at www.starwoodpropertytrust.com.

Conference Call and Webcast Information 

The Company will host a webcast and conference call on Wednesday, August 9, 2017, at 10:00 a.m. Eastern Time to discuss second quarter financial results and recent events.  A webcast will be available on the Company's website at www.starwoodpropertytrust.com.  To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register and download and install any necessary audio software.

To Participate in the Telephone Conference Call:

Dial in at least five minutes prior to start time.

Domestic:  1-888-397-5350
International:  1-719-457-2620

Conference Call Playback:
Domestic:  1-844-512-2921
International:  1-412-317-6671
Passcode:  7326243

The playback can be accessed through August 23, 2017.

About Starwood Property Trust, Inc.

Starwood Property Trust (NYSE: STWD), an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the United States. The Company's core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt and equity investments. Through its subsidiary LNR Property, LLC, Starwood Property Trust also operates as the largest commercial mortgage special servicer in the United States. With total capital deployed since inception of over $35 billion, Starwood Property Trust continues to solidify its position as one of the premier real estate finance companies in the country.

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.  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 completion of pending investments, continued ability to acquire additional investments, competition within the finance and real estate industries, economic conditions, availability of financing and other risks detailed from time to time in the Company's reports filed with the SEC.

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the three months ended June 30, 2017

(Amounts in thousands)






Investing








Investing





Lending


and Servicing


Property






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Revenues:






















Interest income from loans


$

116,993


$

3,619


$


$


$

120,612


$


$

120,612

Interest income from investment
  securities



11,611



38,192







49,803



(37,433)



12,370

Servicing fees



216



33,663







33,879



(15,251)



18,628

Rental income





12,687



46,279





58,966





58,966

Other revenues



293



545



221





1,059



(66)



993

Total revenues



129,113



88,706



46,500





264,319



(52,750)



211,569

Costs and expenses:






















Management fees



469



18





24,096



24,583



50



24,633

Interest expense



24,486



4,856



10,899



31,351



71,592



(275)



71,317

General and administrative



5,359



22,789



1,000



3,298



32,446



74



32,520

Acquisition and investment
  pursuit costs



385



53



99





537





537

Costs of rental operations





5,232



17,792





23,024





23,024

Depreciation and amortization



16



4,737



17,279





22,032





22,032

Loan loss allowance, net



(2,694)









(2,694)





(2,694)

Other expense





176



(34)





142





142

Total costs and expenses



28,021



37,861



47,035



58,745



171,662



(151)



171,511

Income (loss) before other income
  (loss), income taxes and non-
  controlling interests



101,092



50,845



(535)



(58,745)



92,657



(52,599)



40,058

Other income (loss):






















Change in net assets related to
  consolidated VIEs













77,761



77,761

Change in fair value of servicing
  rights





(13,667)







(13,667)



5,666



(8,001)

Change in fair value of investment
  securities, net



(149)



12,256







12,107



(14,600)



(2,493)

Change in fair value of mortgage
  loans held-for-sale, net



(152)



15,558







15,406





15,406

Earnings from unconsolidated entities



1,230



35,892



2,488





39,610



(10,145)



29,465

(Loss) gain on sale of investments and
  other assets, net



(3)



5,109



77





5,183





5,183

Loss on derivative financial
  instruments, net



(14,926)



(2,179)



(20,481)





(37,586)





(37,586)

Foreign currency gain, net



12,882



11



17





12,910





12,910

OTTI



(109)









(109)





(109)

Other income, net





704







704



(613)



91

Total other income (loss)



(1,227)



53,684



(17,899)





34,558



58,069



92,627

Income (loss) before income taxes



99,865



104,529



(18,434)



(58,745)



127,215



5,470



132,685

Income tax provision



(127)



(9,325)







(9,452)





(9,452)

Net income (loss)



99,738



95,204



(18,434)



(58,745)



117,763



5,470



123,233

Net income attributable to non-
  controlling interests



(353)



(30)







(383)



(5,470)



(5,853)

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


$

99,385


$

95,174


$

(18,434)


$

(58,745)


$

117,380


$


$

117,380

 

Definition of Core Earnings

Core 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, Core 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. 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 Core Earnings

For the three months ended June 30, 2017

(Amounts in thousands except per share data)






Investing










Lending


and Servicing


Property








Segment


Segment


Segment


Corporate


Total

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



99,385



95,174



(18,434)



(58,745)



117,380

Add / (Deduct):
















Non-cash equity compensation expense



821



847



28



3,209



4,905

Management incentive fee









4,335



4,335

Acquisition and investment pursuit costs





37



(49)





(12)

Depreciation and amortization



16



4,367



17,509





21,892

Loan loss allowance, net



(2,694)









(2,694)

Interest income adjustment for securities



(224)



2,296







2,072

Deferred income tax provision for discrete transactions





9,911







9,911

Other non-cash items





45



(589)





(544)

Reversal of unrealized (gains) / losses on:
















Loans held-for-sale



152



(15,558)







(15,406)

Securities



258



(12,256)







(11,998)

Derivatives



14,482



1,612



20,229





36,323

Foreign currency



(12,882)



(11)



(17)





(12,910)

Earnings from unconsolidated entities



(1,230)



(35,892)



(2,488)





(39,610)

Purchases and sales of properties





(613)







(613)

Recognition of realized gains / (losses) on:
















Loans held-for-sale



(152)



18,888







18,736

Securities





396







396

Derivatives



(66)



(3,069)



(36)



(246)



(3,417)

Foreign currency



377



(68)



16





325

Earnings from unconsolidated entities



1,230



2,387



1,791





5,408

Purchases and sales of properties





2,449



(153)






2,296

Core Earnings (Loss)


$

99,473


$

70,942


$

17,807


$

(51,447)


$

136,775

Core Earnings (Loss) per Weighted Average
  Diluted Share


$

0.38


$

0.27


$

0.07


$

(0.20)


$

0.52


 

 


Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the six months ended June 30, 2017

(Amounts in thousands)






Investing








Investing





Lending


and Servicing


Property






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Revenues:






















Interest income from loans


$

226,039


$

6,456


$


$


$

232,495


$


$

232,495

Interest income from investment
  securities



24,330



73,028







97,358



(69,764)



27,594

Servicing fees



426



63,744







64,170



(31,440)



32,730

Rental income





24,876



91,132





116,008





116,008

Other revenues



372



1,009



266





1,647



(185)



1,462

Total revenues



251,167



169,113



91,398





511,678



(101,389)



410,289

Costs and expenses:






















Management fees



923



36





47,958



48,917



100



49,017

Interest expense



44,443



9,214



21,106



62,958



137,721



(544)



137,177

General and administrative



9,570



45,369



2,381



5,468



62,788



161



62,949

Acquisition and investment
  pursuit costs



900



37



271





1,208





1,208

Costs of rental operations





10,719



33,183





43,902





43,902

Depreciation and amortization



33



9,791



34,436





44,260





44,260

Loan loss allowance, net



(2,999)









(2,999)





(2,999)

Other expense





934



(34)





900





900

Total costs and expenses



52,870



76,100



91,343



116,384



336,697



(283)



336,414

Income (loss) before other income
  (loss), income taxes and non-
  controlling interests



198,297



93,013



55



(116,384)



174,981



(101,106)



73,875

Other income (loss):






















Change in net assets related to
  consolidated VIEs













146,931



146,931

Change in fair value of servicing
  rights





(23,304)







(23,304)



6,870



(16,434)

Change in fair value of investment
  securities, net



23



31,301







31,324



(34,988)



(3,664)

Change in fair value of mortgage
  loans held-for-sale, net



(152)



26,151







25,999





25,999

Earnings from unconsolidated
  entities



1,700



36,909



4,949





43,558



(11,106)



32,452

(Loss) gain on sale of investments
  and other assets, net



(59)



5,109



77





5,127





5,127

Loss on derivative financial
  instruments, net



(19,461)



(1,482)



(20,992)





(41,935)





(41,935)

Foreign currency gain, net



17,745



12



17





17,774





17,774

OTTI



(109)









(109)





(109)

Loss on extinguishment of debt









(5,916)



(5,916)





(5,916)

Other income, net





1,069







1,069



(613)



456

Total other income (loss)



(313)



75,765



(15,949)



(5,916)



53,587



107,094



160,681

Income (loss) before income taxes



197,984



168,778



(15,894)



(122,300)



228,568



5,988



234,556

Income tax provision



(342)



(8,127)







(8,469)





(8,469)

Net income (loss)



197,642



160,651



(15,894)



(122,300)



220,099



5,988



226,087

Net (income) loss attributable to
  non-controlling interests



(707)



346







(361)



(5,988)



(6,349)

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


$

196,935


$

160,997


$

(15,894)


$

(122,300)


$

219,738


$


$

219,738

 

 


Reconciliation of Net Income to Core Earnings

For the six months ended June 30, 2017

(Amounts in thousands except per share data)






Investing









Lending


and Servicing


Property







Segment


Segment


Segment


Corporate


Total

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



196,935



160,997



(15,894)



(122,300)



219,738

Add / (Deduct):
















Non-cash equity compensation expense



1,570



1,476



49



4,961



8,056

Management incentive fee









9,805



9,805

Acquisition and investment pursuit costs





42



11





53

Depreciation and amortization



33



8,841



34,880





43,754

Loan loss allowance, net



(2,999)









(2,999)

Interest income adjustment for securities



(472)



4,365







3,893

Deferred income tax provision for discrete transactions





9,911







9,911

Other non-cash items





818



(1,169)



5,916



5,565

Reversal of unrealized (gains) / losses on:
















Loans held-for-sale



152



(26,151)







(25,999)

Securities



86



(31,301)







(31,215)

Derivatives



18,503



501



20,219





39,223

Foreign currency



(17,745)



(12)



(17)





(17,774)

Earnings from unconsolidated entities



(1,700)



(36,909)



(4,949)





(43,558)

Purchases and sales of properties





(613)







(613)

Recognition of realized gains / (losses) on:
















Loans held-for-sale



(152)



29,620







29,468

Securities





10,989







10,989

Derivatives



14,857



(751)



122



(246)



13,982

Foreign currency



(13,204)



(898)



16





(14,086)

Earnings from unconsolidated entities



1,680



2,853



3,563





8,096

Purchases and sales of properties





2,449



(153)





2,296

Core Earnings (Loss)


$

197,544


$

136,227


$

36,678


$

(101,864)


$

268,585

Core Earnings (Loss) per Weighted Average
 Diluted Share


$

0.76


$

0.52


$

0.14


$

(0.39)


$

1.03

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of June 30, 2017

(Amounts in thousands)






Investing








Investing





Lending


and Servicing


Property






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Assets:






















Cash and cash equivalents


$

664


$

36,185


$

12,744


$

207,719


$

257,312


$

4,582


$

261,894

Restricted cash



15,573



14,846



12,880





43,299





43,299

Loans held-for-investment, net



6,207,067



4,008







6,211,075





6,211,075

Loans held-for-sale



318,634



291,482







610,116





610,116

Investment securities



735,086



1,009,151







1,744,237



(995,303)



748,934

Properties, net





285,190



1,675,308





1,960,498





1,960,498

Intangible assets





97,727



121,007





218,734



(27,368)



191,366

Investment in unconsolidated
  entities



31,261



89,211



127,795





248,267



(18,728)



229,539

Goodwill





140,437







140,437





140,437

Derivative assets



16,538



3,372



26,168





46,078





46,078

Accrued interest receivable



32,866



480







33,346





33,346

Other assets



46,365



59,345



58,932



1,768



166,410



(2,762)



163,648

VIE assets, at fair value













53,902,715



53,902,715

Total Assets


$

7,404,054


$

2,031,434


$

2,034,834


$

209,487


$

11,679,809


$

52,863,136


$

64,542,945

Liabilities and Equity






















Liabilities:






















Accounts payable, accrued
  expenses and other liabilities


$

23,813


$

56,451


$

67,088


$

23,126


$

170,478


$

971


$

171,449

Related-party payable





90





22,688



22,778





22,778

Dividends payable









126,171



126,171





126,171

Derivative liabilities



6,742



328



981





8,051





8,051

Secured financing agreements, net



2,700,190



550,704



1,227,402



296,327



4,774,623



(23,700)



4,750,923

Unsecured senior notes, net









2,039,086



2,039,086





2,039,086

VIE liabilities, at fair value













52,864,038



52,864,038

Total Liabilities



2,730,745



607,573



1,295,471



2,507,398



7,141,187



52,841,309



59,982,496

Equity:






















Starwood Property Trust, Inc.
  Stockholders' Equity:






















Common stock









2,652



2,652





2,652

Additional paid-in capital



2,226,923



861,556



707,726



901,292



4,697,497





4,697,497

Treasury stock









(92,104)



(92,104)





(92,104)

Accumulated other comprehensive
  income (loss)



51,734



(155)



4,402





55,981





55,981

Retained earnings (accumulated
  deficit)



2,383,738



551,915



27,235



(3,109,751)



(146,863)





(146,863)

Total Starwood Property Trust, Inc.
  Stockholders' Equity



4,662,395



1,413,316



739,363



(2,297,911)



4,517,163





4,517,163

Non-controlling interests in
  consolidated subsidiaries



10,914



10,545







21,459



21,827



43,286

Total Equity



4,673,309



1,423,861



739,363



(2,297,911)



4,538,622



21,827



4,560,449

Total Liabilities and Equity


$

7,404,054


$

2,031,434


$

2,034,834


$

209,487


$

11,679,809


$

52,863,136


$

64,542,945

 

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

View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-june-30-2017-300501705.html

SOURCE Starwood Property Trust, Inc.

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