Starwood Property Trust Reports Results for the Quarter Ended March 31, 2019
GREENWICH, Conn., May 8, 2019 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2019. The Company's first quarter 2019 GAAP net income was $70.4 million, or $0.25 per diluted share, and Core Earnings was $82.9 million, or $0.28 per diluted share. These amounts reflect a write down of the Company's interest in a regional mall portfolio of $44.9 million and $68.9 million for GAAP and Core Earnings, respectively, or $0.16 and $0.24 per diluted share, respectively.
"Our multi-cylinder platform continues to generate consistent returns, led by our commercial lending business, which deployed $1.0 billion of capital during the quarter. We are also proud of the performance of our owned property portfolio, marked by 98% occupancy and stable and growing double-digit cash returns on invested capital. We believe this portfolio on an undepreciated basis has over $500 million in unrealized gains," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.
"We continue to source attractive and high credit quality investments across our businesses, with our commercial lending portfolio growing to $8.2 billion and our asset base growing to $16.7 billion, both record highs. With low leverage, ample capacity and the ability to monetize appreciated assets, our balance sheet and access to capital remain strong. We believe we are well-positioned to execute on our long-term business plan, regardless of interest rate environment, by prudently allocating capital across our multiple cylinders to generate attractive and sustainable risk adjusted returns for our shareholders."
Dividend
On May 8, 2019, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending June 30, 2019. The dividend is payable on July 15, 2019 to common stockholders of record as of June 28, 2019.
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.
Conference Call and Webcast Information
The Company will host a live webcast and conference call on Wednesday, May 8, 2019, 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 and download and install any necessary audio software. The webcast is available at www.starwoodpropertytrust.com in the investor relations section of the website.
To Participate via Telephone:
Dial in at least ten 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: 13689755The playback can be accessed through May 15, 2019.
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 $53 billion of capital since inception and manages a portfolio in excess of $16 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, 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 under the heading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, 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 March 31, 2019 (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 | $ | 154,595 | $ | 26,915 | $ | — | $ | 1,906 | $ | — | $ | 183,416 | $ | — | $ | 183,416 | ||||||||
Interest income from investment securities | 19,908 | 885 | — | 24,293 | — | 45,086 | (27,454) | 17,632 | ||||||||||||||||
Servicing fees | 123 | — | — | 27,243 | — | 27,366 | (2,933) | 24,433 | ||||||||||||||||
Rental income | — | — | 70,521 | 13,312 | — | 83,833 | — | 83,833 | ||||||||||||||||
Other revenues | 204 | 686 | 78 | 196 | 20 | 1,184 | (18) | 1,166 | ||||||||||||||||
Total revenues | 174,830 | 28,486 | 70,599 | 66,950 | 20 | 340,885 | (30,405) | 310,480 | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||
Management fees | 411 | — | — | 18 | 22,988 | 23,417 | 49 | 23,466 | ||||||||||||||||
Interest expense | 61,604 | 18,577 | 18,990 | 7,746 | 27,915 | 134,832 | (160) | 134,672 | ||||||||||||||||
General and administrative | 6,768 | 4,479 | 1,518 | 18,851 | 3,226 | 34,842 | 88 | 34,930 | ||||||||||||||||
Acquisition and investment pursuit costs | 249 | 16 | — | 77 | — | 342 | — | 342 | ||||||||||||||||
Costs of rental operations | 19 | — | 22,937 | 6,695 | — | 29,651 | — | 29,651 | ||||||||||||||||
Depreciation and amortization | 71 | — | 23,896 | 5,287 | — | 29,254 | — | 29,254 | ||||||||||||||||
Loan loss provision, net | (11) | 774 | — | — | — | 763 | — | 763 | ||||||||||||||||
Other expense | 77 | — | 134 | — | — | 211 | — | 211 | ||||||||||||||||
Total costs and expenses | 69,188 | 23,846 | 67,475 | 38,674 | 54,129 | 253,312 | (23) | 253,289 | ||||||||||||||||
Other income (loss): | ||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | 47,836 | 47,836 | ||||||||||||||||
Change in fair value of servicing rights | — | — | — | (515) | — | (515) | (252) | (767) | ||||||||||||||||
Change in fair value of investment securities, net | (1,694) | — | — | 18,140 | — | 16,446 | (16,384) | 62 | ||||||||||||||||
Change in fair value of mortgage loans held-for-sale, net | 1,386 | — | — | 9,880 | — | 11,266 | — | 11,266 | ||||||||||||||||
Earnings (loss) from unconsolidated entities | 577 | — | (43,805) | 594 | — | (42,634) | (566) | (43,200) | ||||||||||||||||
Gain on sale of investments and other assets, net | 2,755 | 790 | — | 940 | — | 4,485 | — | 4,485 | ||||||||||||||||
(Loss) gain on derivative financial instruments, net | (9,297) | (395) | 1,290 | (3,432) | 9,627 | (2,207) | — | (2,207) | ||||||||||||||||
Foreign currency gain (loss), net | 5,239 | 300 | 9 | (1) | — | 5,547 | — | 5,547 | ||||||||||||||||
(Loss) gain on extinguishment of debt | — | (3,304) | — | — | 6 | (3,298) | — | (3,298) | ||||||||||||||||
Other loss, net | — | — | — | — | (73) | (73) | — | (73) | ||||||||||||||||
Total other income (loss) | (1,034) | (2,609) | (42,506) | 25,606 | 9,560 | (10,983) | 30,634 | 19,651 | ||||||||||||||||
Income (loss) before income taxes | 104,608 | 2,031 | (39,382) | 53,882 | (44,549) | 76,590 | 252 | 76,842 | ||||||||||||||||
Income tax benefit (provision) | 248 | 85 | (258) | (409) | — | (334) | — | (334) | ||||||||||||||||
Net income (loss) | 104,856 | 2,116 | (39,640) | 53,473 | (44,549) | 76,256 | 252 | 76,508 | ||||||||||||||||
Net (income) loss attributable to non-controlling interests | (371) | — | (5,717) | 215 | — | (5,873) | (252) | (6,125) | ||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 104,485 | $ | 2,116 | $ | (45,357) | $ | 53,688 | $ | (44,549) | $ | 70,383 | $ | — | $ | 70,383 | ||||||||
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 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 Core Earnings For the three months ended March 31, 2019 (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. | $ | 104,485 | $ | 2,116 | $ | (45,357) | $ | 53,688 | $ | (44,549) | $ | 70,383 | ||||||
Add / (Deduct): | ||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 5,717 | — | — | 5,717 | ||||||||||||
Non-cash equity compensation expense | 706 | 551 | 69 | 1,350 | 3,687 | 6,363 | ||||||||||||
Management incentive fee | — | — | — | — | 173 | 173 | ||||||||||||
Acquisition and investment pursuit costs | (38) | 2 | (89) | — | — | (125) | ||||||||||||
Depreciation and amortization | 71 | — | 24,211 | 4,915 | — | 29,197 | ||||||||||||
Loan loss provision, net | (11) | 774 | — | — | — | 763 | ||||||||||||
Interest income adjustment for securities | (197) | — | — | 5,972 | — | 5,775 | ||||||||||||
Extinguishment of debt, net | — | — | — | — | (1,211) | (1,211) | ||||||||||||
Other non-cash items | — | — | (434) | 137 | 168 | (129) | ||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | ||||||||||||||||||
Loans held-for-sale | (1,386) | — | — | (9,880) | — | (11,266) | ||||||||||||
Securities | 1,694 | — | — | (18,140) | — | (16,446) | ||||||||||||
Derivatives | 9,505 | 395 | 316 | 3,324 | (10,144) | 3,396 | ||||||||||||
Foreign currency | (5,239) | (300) | (9) | 1 | — | (5,547) | ||||||||||||
Earnings from unconsolidated entities | (577) | — | 43,805 | (594) | — | 42,634 | ||||||||||||
Recognition of Core realized gains / (losses) on: | ||||||||||||||||||
Loans held-for-sale | (653) | — | — | 7,430 | — | 6,777 | ||||||||||||
Securities | — | — | — | 7,532 | — | 7,532 | ||||||||||||
Derivatives | 87 | 768 | 367 | (1,625) | — | (403) | ||||||||||||
Foreign currency | 391 | (891) | 9 | 8 | — | (483) | ||||||||||||
Earnings from unconsolidated entities | 98 | — | (68,905) | 8,733 | — | (60,074) | ||||||||||||
Sales of properties | — | — | — | (76) | — | (76) | ||||||||||||
Core Earnings (Loss) | $ | 108,936 | $ | 3,415 | $ | (40,300) | $ | 62,775 | $ | (51,876) | $ | 82,950 | ||||||
Core Earnings (Loss) per Weighted Average Diluted Share | $ | 0.37 | $ | 0.01 | $ | (0.14) | $ | 0.22 | $ | (0.18) | $ | 0.28 | ||||||
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of March 31, 2019 (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 | $ | 13,206 | $ | 58 | $ | 36,107 | $ | 47,225 | $ | 295,463 | $ | 392,059 | $ | 20,211 | $ | 412,270 | ||||||||
Restricted cash | 32,156 | 68,057 | 19,671 | 13,295 | 535 | 133,714 | — | 133,714 | ||||||||||||||||
Loans held-for-investment, net | 7,513,130 | 1,450,097 | — | 1,498 | — | 8,964,725 | — | 8,964,725 | ||||||||||||||||
Loans held-for-sale | 688,435 | 302,803 | — | 153,252 | — | 1,144,490 | — | 1,144,490 | ||||||||||||||||
Investment securities | 1,061,011 | 59,610 | — | 992,739 | — | 2,113,360 | (1,203,127) | 910,233 | ||||||||||||||||
Properties, net | 8,937 | — | 2,487,285 | 273,152 | — | 2,769,374 | — | 2,769,374 | ||||||||||||||||
Intangible assets | — | — | 85,356 | 75,806 | — | 161,162 | (24,327) | 136,835 | ||||||||||||||||
Investment in unconsolidated entities | 35,351 | — | 70,557 | 54,251 | — | 160,159 | (35,799) | 124,360 | ||||||||||||||||
Goodwill | — | 119,409 | — | 140,437 | — | 259,846 | — | 259,846 | ||||||||||||||||
Derivative assets | 14,247 | 1,029 | 32,093 | 41 | — | 47,410 | — | 47,410 | ||||||||||||||||
Accrued interest receivable | 50,269 | 7,135 | 392 | 296 | 3,079 | 61,171 | (857) | 60,314 | ||||||||||||||||
Other assets | 11,259 | 72,720 | 65,898 | 75,348 | 1,944 | 227,169 | (16) | 227,153 | ||||||||||||||||
VIE assets, at fair value | — | — | — | — | — | — | 56,974,864 | 56,974,864 | ||||||||||||||||
Total Assets | $ | 9,428,001 | $ | 2,080,918 | $ | 2,797,359 | $ | 1,827,340 | $ | 301,021 | $ | 16,434,639 | $ | 55,730,949 | $ | 72,165,588 | ||||||||
Liabilities and Equity | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 29,302 | $ | 6,788 | $ | 63,644 | $ | 71,675 | $ | 21,628 | $ | 193,037 | $ | 106 | $ | 193,143 | ||||||||
Related-party payable | 1 | — | — | 9 | 23,935 | 23,945 | — | 23,945 | ||||||||||||||||
Dividends payable | — | — | — | — | 135,889 | 135,889 | — | 135,889 | ||||||||||||||||
Derivative liabilities | 4,608 | 772 | — | 2,739 | 2,044 | 10,163 | — | 10,163 | ||||||||||||||||
Secured financing agreements, net | 5,010,958 | 1,410,124 | 1,876,514 | 653,078 | 298,186 | 9,248,860 | (13,950) | 9,234,910 | ||||||||||||||||
Unsecured senior notes, net | — | — | — | — | 1,922,795 | 1,922,795 | — | 1,922,795 | ||||||||||||||||
VIE liabilities, at fair value | — | — | — | — | — | — | 55,727,776 | 55,727,776 | ||||||||||||||||
Total Liabilities | 5,044,869 | 1,417,684 | 1,940,158 | 727,501 | 2,404,477 | 11,534,689 | 55,713,932 | 67,248,621 | ||||||||||||||||
Equity: | ||||||||||||||||||||||||
Starwood Property Trust, Inc. Stockholders' Equity: | ||||||||||||||||||||||||
Common stock | — | — | — | — | 2,855 | 2,855 | — | 2,855 | ||||||||||||||||
Additional paid-in capital | 1,199,646 | 663,692 | 631,392 | 118,760 | 2,466,683 | 5,080,173 | — | 5,080,173 | ||||||||||||||||
Treasury stock | — | — | — | — | (104,194) | (104,194) | — | (104,194) | ||||||||||||||||
Accumulated other comprehensive income (loss) | 53,128 | — | 2,734 | (64) | — | 55,798 | — | 55,798 | ||||||||||||||||
Retained earnings (accumulated deficit) | 3,120,166 | (458) | (31,787) | 967,326 | (4,468,800) | (413,553) | — | (413,553) | ||||||||||||||||
Total Starwood Property Trust, Inc. Stockholders' Equity | 4,372,940 | 663,234 | 602,339 | 1,086,022 | (2,103,456) | 4,621,079 | — | 4,621,079 | ||||||||||||||||
Non-controlling interests in consolidated subsidiaries | 10,192 | — | 254,862 | 13,817 | — | 278,871 | 17,017 | 295,888 | ||||||||||||||||
Total Equity | 4,383,132 | 663,234 | 857,201 | 1,099,839 | (2,103,456) | 4,899,950 | 17,017 | 4,916,967 | ||||||||||||||||
Total Liabilities and Equity | $ | 9,428,001 | $ | 2,080,918 | $ | 2,797,359 | $ | 1,827,340 | $ | 301,021 | $ | 16,434,639 | $ | 55,730,949 | $ | 72,165,588 | ||||||||
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SOURCE Starwood Property Trust, Inc.