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Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2020

- Quarterly GAAP Earnings of $0.37 and Distributable Earnings of $0.50 per Diluted Share - - Originated or Acquired $1.2 Billion of Assets in Q4 - - Originated or Acquired $4.6 Billion of Assets in 2020, Including $3.0 Billion after Q1 - - Paid Fourth Quarter Dividend of $0.48 per Share - - Subsequent to Quarter End, Priced $500 Million Inaugural Infrastructure CLO -

February 25, 2021 7:00 AM EST

GREENWICH, Conn., February 25, 2021 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter and year ended December 31, 2020.  The Company's fourth quarter 2020 GAAP net income was $107.0 million, or $0.37 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $148.4 million, or $0.50 per diluted share.  The Company's full year 2020 GAAP net income was $331.7 million, or $1.16 per diluted share, and Distributable Earnings was $585.3 million, or $1.98 per diluted share.

"At no time other than 2020 was the power and strength of the company we built from a blind pool of capital over a decade ago more evident. We have proven that we are more than a portfolio of real estate mortgage loans, as good as our book has proven to be.  The pandemic presented us with one of the most challenging market cycles and opportunities we have seen since our inception.  Given our superior liquidity position, we never contemplated distressed asset sales or capital raises that would have been dilutive to our fair value in order to navigate the immense challenges of 2020. Our multiple business cylinders allowed us to generate excess liquidity, while unlocking accretive avenues to deploy that capital. Once we felt the worst had passed, we among our peers uniquely deployed $3.0 billion of capital in multiple business lines after the first quarter, including $2.3 billion in commercial and residential lending.

We enter 2021 in a position of significant strength, with access to multiple sources of liquidity, a robust commercial lending pipeline and an increasingly large array of investment opportunities across business lines," commented Barry Sternlicht, Chairman and CEO 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, February 25, 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 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:  1-844-512-2921International:  1-412-317-6671Passcode:  13715683 The playback can be accessed through March 4, 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 $66 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 TanenbaumStarwood Property Trust Phone: 203-422-7788 Email: [email protected]

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the three months ended December 31, 2020

(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

$

173,014

$

18,477

$

$

2,518

$

$

194,009

$

$

194,009

Interest income from investment securities

21,132

618

20,512

42,262

(29,920)

12,342

Servicing fees

125

13,024

13,149

(4,514)

8,635

Rental income

1,924

64,000

9,070

74,994

74,994

Other revenues

114

155

65

248

582

582

Total revenues 

196,309

19,250

64,065

45,372

324,996

(34,434)

290,562

Costs and expenses:

Management fees

(191)

221

40,115

40,145

12

40,157

Interest expense

41,987

9,204

16,147

5,507

29,643

102,488

(224)

102,264

General and administrative

12,742

3,345

1,089

25,549

4,207

46,932

85

47,017

Acquisition and investment pursuit costs

211

4

(26)

189

189

Costs of rental operations

777

25,279

4,252

30,308

30,308

Depreciation and amortization

433

96

18,675

4,219

23,423

23,423

Credit loss reversal, net

(5,037)

(7,094)

(12,131)

(12,131)

Other expense

77

99

176

176

Total costs and expenses 

50,999

5,555

61,289

39,722

73,965

231,530

(127)

231,403

Other income (loss):

Change in net assets related to consolidated VIEs

13,905

13,905

Change in fair value of servicing rights

1,809

1,809

(3,196)

(1,387)

Change in fair value of investment securities, net

(6,294)

(15,377)

(21,671)

23,932

2,261

Change in fair value of mortgage loans, net

20,002

33,422

53,424

53,424

Earnings (loss) from unconsolidated entities

4,804

431

341

5,576

(324)

5,252

Gain on sale of investments and other assets, net

10

532

542

542

(Loss) gain on derivative financial instruments, net

(49,156)

(171)

758

1,627

(751)

(47,693)

(47,693)

Foreign currency gain (loss), net

43,962

260

39

(5)

44,256

44,256

Loss on extinguishment of debt

(789)

(488)

(1,277)

(1,277)

Other (loss) income, net

(406)

(406)

(406)

Total other income (loss)

13,318

(259)

391

22,349

(1,239)

34,560

34,317

68,877

Income (loss) before income taxes 

158,628

13,436

3,167

27,999

(75,204)

128,026

10

128,036

Income tax provision

(5,556)

(120)

(7,705)

(13,381)

(13,381)

Net income (loss) 

153,072

13,316

3,167

20,294

(75,204)

114,645

10

114,655

Net income attributable to non-controlling interests

(4)

(5,100)

(2,573)

(7,677)

(10)

(7,687)

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

$

153,068

$

13,316

$

(1,933)

$

17,721

$

(75,204)

$

106,968

$

$

106,968

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 December 31, 2020

(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.

$

153,068

$

13,316

$

(1,933)

$

17,721

$

(75,204)

$

106,968

Add / (Deduct):

Non-controlling interests attributable to Woodstar II Class A Units

5,100

5,100

Non-cash equity compensation expense

891

299

34

869

6,707

8,800

Management incentive fee

14,974

14,974

Acquisition and investment pursuit costs

(278)

(89)

(367)

Depreciation and amortization

372

86

18,736

3,832

23,026

Credit loss reversal, net

(5,037)

(7,094)

(12,131)

Interest income adjustment for securities

(1,102)

5,245

4,143

Extinguishment of debt, net

(247)

(247)

Income tax provision associated with fair value adjustments

4,883

550

5,433

Other non-cash items

4

(374)

239

161

30

Reversal of GAAP unrealized (gains) / losses on:

Loans

(20,002)

(33,422)

(53,424)

Securities

6,294

15,377

21,671

Derivatives

48,046

105

(2,480)

(2,218)

3,945

47,398

Foreign currency

(43,962)

(260)

(39)

5

(44,256)

Earnings from unconsolidated entities

(4,804)

(431)

(341)

(5,576)

Recognition of Distributable realized gains / (losses) on:

Loans

2,461

32,528

34,989

Securities

398

(9,389)

(8,991)

Derivatives

(3,858)

(34)

20

(3,872)

Foreign currency

631

14

39

(5)

679

Earnings from unconsolidated entities

2,914

431

745

4,090

Distributable Earnings (Loss)

$

140,919

$

6,466

$

18,960

$

31,756

$

(49,664)

$

148,437

Distributable Earnings (Loss) per Weighted Average Diluted    Share

$

0.47

$

0.02

$

0.07

$

0.11

$

(0.17)

$

0.50

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the year ended December 31, 2020

(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

$

665,503

$

77,851

$

$

8,589

$

$

751,943

$

$

751,943

Interest income from investment securities

78,490

2,637

93,823

174,950

(120,538)

54,412

Servicing fees

549

41,806

42,355

(12,721)

29,634

Rental income

4,706

255,452

37,670

297,828

297,828

Other revenues

412

499

293

1,139

2,343

(5)

2,338

Total revenues 

749,660

80,987

255,745

183,027

1,269,419

(133,264)

1,136,155

Costs and expenses:

Management fees

796

901

125,372

127,069

58

127,127

Interest expense

176,230

40,913

65,390

24,303

113,313

420,149

(386)

419,763

General and administrative

41,972

15,673

4,542

80,039

15,312

157,538

336

157,874

Acquisition and investment pursuit costs

2,406

1,183

12

(29)

3,572

3,572

Costs of rental operations

3,186

97,136

17,354

117,676

117,676

Depreciation and amortization

1,708

342

76,246

16,109

94,405

94,405

Credit loss provision (reversal), net

47,256

(4,103)

43,153

43,153

Other expense

307

531

838

838

Total costs and expenses 

273,861

54,008

243,857

138,677

253,997

964,400

8

964,408

Other income (loss):

Change in net assets related to consolidated VIEs

78,258

78,258

Change in fair value of servicing rights

11,415

11,415

(15,130)

(3,715)

Change in fair value of investment securities, net

(15,108)

(51,403)

(66,511)

71,904

5,393

Change in fair value of mortgage loans, net

76,897

56,227

133,124

133,124

Earnings (loss) from unconsolidated entities

8,779

(767)

30,845

38,857

(1,540)

37,317

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

(961)

306

7,965

7,310

7,310

(Loss) gain on derivative financial instruments, net

(58,664)

(1,499)

(34,392)

(21,269)

33,646

(82,178)

(82,178)

Foreign currency gain (loss), net

42,205

207

(14)

(3)

42,395

42,395

Loss on extinguishment of debt

(22)

(959)

(2,185)

(488)

(3,654)

(3,654)

Other (loss) income, net

(166)

447

281

281

Total other income (loss)

53,126

(2,712)

(36,757)

34,224

33,158

81,039

133,492

214,531

Income (loss) before income taxes 

528,925

24,267

(24,869)

78,574

(220,839)

386,058

220

386,278

Income tax (provision) benefit

(21,091)

(117)

1,011

(20,197)

(20,197)

Net income (loss) 

507,834

24,150

(24,869)

79,585

(220,839)

365,861

220

366,081

Net income attributable to non-controlling interests

(14)

(20,394)

(13,764)

(34,172)

(220)

(34,392)

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

$

507,820

$

24,150

$

(45,263)

$

65,821

$

(220,839)

$

331,689

$

$

331,689

 

Reconciliation of Net Income to Distributable Earnings

For the year ended December 31, 2020

(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.

$

507,820

$

24,150

$

(45,263)

$

65,821

$

(220,839)

$

331,689

Add / (Deduct):

Non-controlling interests attributable to Woodstar II Class A    Units

20,394

20,394

Non-cash equity compensation expense

4,454

1,120

219

4,594

20,854

31,241

Management incentive fee

30,773

30,773

Acquisition and investment pursuit costs

123

(355)

(72)

(304)

Depreciation and amortization

1,467

294

76,544

14,501

92,806

Credit loss provision (reversal), net

46,215

(4,103)

42,112

Interest income adjustment for securities

(864)

15,101

14,237

Extinguishment of debt, net

(986)

(986)

Income tax provision (benefit) associated with fair value    adjustments

6,495

(405)

6,090

Other non-cash items

14

(2,063)

942

631

(476)

Reversal of GAAP unrealized (gains) / losses on:

Loans

(76,897)

(56,227)

(133,124)

Securities

15,108

51,403

66,511

Derivatives

56,862

1,365

30,113

19,768

(19,564)

88,544

Foreign currency

(42,205)

(207)

14

3

(42,395)

(Earnings) loss from unconsolidated entities

(8,779)

767

(30,845)

(38,857)

Recognition of Distributable realized gains / (losses) on:

Loans

48,203

(62)

55,287

103,428

Securities

398

(18,100)

(17,702)

Derivatives

(7,711)

118

(473)

(13,418)

(21,484)

Foreign currency

(4,810)

(133)

(14)

(3)

(4,960)

Earnings (loss) from unconsolidated entities

5,686

(382)

18,247

23,551

Sales of properties

(5,789)

(5,789)

Distributable Earnings (Loss)

$

551,579

$

22,927

$

79,116

$

120,808

$

(189,131)

$

585,299

Distributable Earnings (Loss) per Weighted Average    Diluted Share

$

1.86

$

0.08

$

0.27

$

0.41

$

(0.64)

$

1.98

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of December 31, 2020

(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

$

160,007

$

4,440

$

32,080

$

19,546

$

346,372

$

562,445

$

772

$

563,217

Restricted cash

93,445

45,113

7,192

13,195

158,945

158,945

Loans held-for-investment, net

9,673,625

1,412,440

1,008

11,087,073

11,087,073

Loans held-for-sale

841,963

120,540

90,332

1,052,835

1,052,835

Investment securities

1,014,402

35,681

1,112,145

2,162,228

(1,425,570)

736,658

Properties, net

103,896

1,969,414

197,843

2,271,153

2,271,153

Intangible assets

40,370

71,123

111,493

(41,376)

70,117

Investment in unconsolidated entities

54,407

25,095

44,664

124,166

(16,112)

108,054

Goodwill

119,409

140,437

259,846

259,846

Derivative assets

6,595

41

147

33,772

40,555

40,555

Accrued interest receivable

87,922

2,091

123

5,978

96,114

(134)

95,980

Other assets

61,638

4,531

69,859

44,579

10,148

190,755

(7)

190,748

VIE assets, at fair value

64,238,328

64,238,328

Total Assets

$

12,097,900

$

1,769,340

$

2,118,956

$

1,735,142

$

396,270

$

18,117,608

$

62,755,901

$

80,873,509

Liabilities and Equity

Liabilities:

Accounts payable, accrued expenses and other   liabilities

$

41,104

$

12,144

$

43,630

$

45,309

$

64,583

$

206,770

$

75

$

206,845

Related-party payable

5

39,165

39,170

39,170

Dividends payable

137,959

137,959

137,959

Derivative liabilities

39,082

1,718

524

41,324

41,324

Secured financing agreements, net

5,893,999

1,240,763

1,794,609

606,100

632,719

10,168,190

(22,000)

10,146,190

Collateralized loan obligations, net

930,554

930,554

930,554

Unsecured senior notes, net

1,732,520

1,732,520

1,732,520

VIE liabilities, at fair value

62,776,371

62,776,371

Total Liabilities

6,904,739

1,254,625

1,838,239

651,938

2,606,946

13,256,487

62,754,446

76,010,933

Equity:

Starwood Property Trust, Inc. Stockholders' Equity:

Common stock

2,921

2,921

2,921

Additional paid-in capital

1,192,584

496,387

98,882

(322,992)

3,744,878

5,209,739

5,209,739

Treasury stock

(138,022)

(138,022)

(138,022)

Accumulated other comprehensive income (loss)

44,057

(64)

43,993

43,993

Retained earnings (accumulated deficit)

3,956,405

18,328

(44,832)

1,260,819

(5,820,453)

(629,733)

(629,733)

Total Starwood Property Trust, Inc. Stockholders' Equity

5,193,046

514,715

54,050

937,763

(2,210,676)

4,488,898

4,488,898

Non-controlling interests in consolidated subsidiaries

115

226,667

145,441

372,223

1,455

373,678

Total Equity

5,193,161

514,715

280,717

1,083,204

(2,210,676)

4,861,121

1,455

4,862,576

Total Liabilities and Equity

$

12,097,900

$

1,769,340

$

2,118,956

$

1,735,142

$

396,270

$

18,117,608

$

62,755,901

$

80,873,509

 

Cision View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-and-year-ended-december-31-2020-301235370.html

SOURCE Starwood Property Trust, Inc.



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