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Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2016

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- Quarterly GAAP Earnings of $0.49 and Core Earnings of $0.50 per Diluted Common Share - - Deploys $1.2 Billion of Capital in Lending Segment During the Quarter - - Completes Inaugural Senior Unsecured Notes Offering - - Declares Dividend of $0.48 per share for the First Quarter of 2017 -

February 23, 2017 6:45 AM EST

GREENWICH, Conn., Feb. 23, 2017 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter and year ended December 31, 2016.  The Company's fourth quarter 2016 GAAP net income was $121.3 million, or $0.49 per diluted share, and $365.2 million, or $1.50 per diluted share, for the full year.  Core Earnings (a non-GAAP financial measure) for the fourth quarter was $122.6 million, or $0.50 per diluted share, and $502.5 million or $2.09 per diluted share, for the full year.  Excluding the write-off of unamortized costs associated with the early retirement of the Company's term loan due 2020, GAAP and Core Earnings per diluted share for the quarter were $0.52 and $0.53, respectively. 

"We continued to generate strong results driven by the successful execution of our business plan, as evidenced by the $6.4 billion of capital we deployed in 2016 across our diversified platform. The fourth quarter was actually the most active of the year for our largest business, our lending segment, and that momentum has continued into the first quarter.  We also expanded our capital sources, highlighted by the completion of our inaugural senior unsecured notes offering, which brought our maximum total borrowing capacity to $10.2 billion. As a result of these efforts, we received a corporate credit rating upgrade which is an important endorsement of our ability to maintain an attractive risk return profile with our high credit quality standards. As we look ahead to 2017, we expect to continue to capitalize on our robust pipeline of opportunities in order to deliver attractive total returns for our shareholders."

Dividend

On February 23, 2017, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending March 31, 2017. The dividend is payable on April 14, 2017 to common stockholders of record as of March 31, 2017. 

2017 Outlook

Given its current outlook, the Company is confident that it will generate Core Earnings in excess of the dividend and expects to maintain a $1.92 per share distribution for the full year.

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 "Financial Information" at www.starwoodpropertytrust.com.

Conference Call and Webcast Information 

The Company will host a webcast and conference call on Thursday, February 23, 2017, at 10:00 a.m. Eastern Time to discuss fourth 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 five 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:  1-888-334-3034International:  1-719-457-0349

Conference Call Playback:Domestic:  1-844-512-2921International:  1-412-317-6671Passcode:  2989173

The playback can be accessed through March 9, 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 $32 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 December 31, 2016

(Amounts in thousands)

Investing

Investing

Lending

and Servicing

Property

and Servicing

Segment

Segment

Segment

Corporate

Subtotal

VIEs

Total

Revenues:

Interest income from loans

$

101,010

$

4,871

$

—

$

—

$

105,881

$

—

$

105,881

Interest income from investment securities

13,266

31,357

—

—

44,623

(27,654)

16,969

Servicing fees

222

33,796

—

—

34,018

(15,983)

18,035

Rental income

—

13,009

29,489

—

42,498

—

42,498

Other revenues

62

1,145

27

—

1,234

(140)

1,094

Total revenues

114,560

84,178

29,516

—

228,254

(43,777)

184,477

Costs and expenses:

Management fees

534

24

—

40,333

40,891

50

40,941

Interest expense

20,415

4,540

5,846

27,031

57,832

(270)

57,562

General and administrative

4,988

25,414

1,079

1,612

33,093

171

33,264

Acquisition and investment pursuit costs

63

969

6,369

379

7,780

—

7,780

Costs of rental operations

—

6,043

12,540

—

18,583

—

18,583

Depreciation and amortization

—

4,854

8,747

—

13,601

—

13,601

Loan loss allowance, net

364

—

—

—

364

—

364

Other expense

—

—

—

—

—

—

—

Total costs and expenses

26,364

41,844

34,581

69,355

172,144

(49)

172,095

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

88,196

42,334

(5,065)

(69,355)

56,110

(43,728)

12,382

Other income (loss):

Change in net assets related to consolidated VIEs

—

—

—

—

—

57,205

57,205

Change in fair value of servicing rights

—

(9,548)

—

—

(9,548)

(4,388)

(13,936)

Change in fair value of investment securities, net

57

(645)

—

—

(588)

(99)

(687)

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

—

4,129

—

—

4,129

—

4,129

Earnings from unconsolidated entities

903

5,657

2,423

—

8,983

(109)

8,874

Gain on sale of investments and other assets, net

1,551

226

—

—

1,777

—

1,777

Gain on derivative financial instruments, net

23,752

13,462

40,313

—

77,527

—

77,527

Foreign currency (loss) gain, net

(14,094)

699

3

5

(13,387)

—

(13,387)

OTTI

—

(17)

—

—

(17)

—

(17)

Loss on extinguishment of debt

—

—

—

(8,781)

(8,781)

—

(8,781)

Other income, net

—

8,847

—

2,487

11,334

(8,822)

2,512

Total other income (loss)

12,169

22,810

42,739

(6,289)

71,429

43,787

115,216

Income (loss) before income taxes

100,365

65,144

37,674

(75,644)

127,539

59

127,598

Income tax benefit (provision)

1,685

(6,562)

—

—

(4,877)

—

(4,877)

Net income (loss)

102,050

58,582

37,674

(75,644)

122,662

59

122,721

Net income attributable to non-controlling interests

(348)

(1,024)

—

—

(1,372)

(59)

(1,431)

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

$

101,702

$

57,558

$

37,674

$

(75,644)

$

121,290

$

—

$

121,290

 

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 December 31, 2016

(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.

$

101,702

$

57,558

$

37,674

$

(75,644)

$

121,290

Add / (Deduct):

Non-cash equity compensation expense

719

3,585

22

5,812

10,138

Management incentive fee

—

—

—

19,072

19,072

Acquisition and investment pursuit costs

—

517

6,334

344

7,195

Depreciation and amortization

—

3,850

8,865

—

12,715

Loan loss allowance, net

364

—

—

—

364

Interest income adjustment for securities

(276)

8,756

—

—

8,480

Bargain purchase gains

—

(8,822)

—

—

(8,822)

Other non-cash items

—

(202)

(593)

—

(795)

Reversal of unrealized (gains) / losses on:

Loans held-for-sale

—

(4,129)

—

—

(4,129)

Securities

(57)

645

—

—

588

Derivatives

(24,344)

(13,804)

(40,334)

—

(78,482)

Foreign currency

14,094

(699)

(3)

(5)

13,387

Earnings from unconsolidated entities

(903)

(5,657)

(2,423)

—

(8,983)

Recognition of realized gains / (losses) on:

Loans held-for-sale

—

2,802

—

—

2,802

Securities

—

8,848

—

—

8,848

Derivatives

73

13,845

212

—

14,130

Foreign currency

(887)

527

3

5

(352)

Earnings from unconsolidated entities

903

1,818

2,425

—

5,146

Core Earnings (Loss)

$

91,388

$

69,438

$

12,182

$

(50,416)

$

122,592

Core Earnings (Loss) per Weighted Average Diluted Share

$

0.38

$

0.28

$

0.05

$

(0.21)

$

0.50

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the year ended December 31, 2016

(Amounts in thousands)

Investing

Investing

Lending

and Servicing

Property

and Servicing

Segment

Segment

Segment

Corporate

Subtotal

VIEs

Total

Revenues:

Interest income from loans

$

449,470

$

17,725

$

—

$

—

$

467,195

$

—

$

467,195

Interest income from investment securities

47,241

146,692

—

—

193,933

(123,085)

70,848

Servicing fees

782

144,941

—

—

145,723

(56,767)

88,956

Rental income

—

38,223

114,537

—

152,760

—

152,760

Other revenues

242

5,255

62

—

5,559

(651)

4,908

Total revenues

497,735

352,836

114,599

—

965,170

(180,503)

784,667

Costs and expenses:

Management fees

1,829

78

—

115,348

117,255

196

117,451

Interest expense

88,000

15,983

22,009

105,267

231,259

(460)

230,799

General and administrative

18,517

121,140

3,338

9,243

152,238

703

152,941

Acquisition and investment pursuit costs

1,665

2,520

7,886

1,391

13,462

—

13,462

Costs of rental operations

—

17,638

47,463

—

65,101

—

65,101

Depreciation and amortization

—

16,117

50,669

—

66,786

—

66,786

Loan loss allowance, net

3,759

—

—

—

3,759

—

3,759

Other expense

—

100

—

—

100

—

100

Total costs and expenses

113,770

173,576

131,365

231,249

649,960

439

650,399

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

383,965

179,260

(16,766)

(231,249)

315,210

(180,942)

134,268

Other income (loss):

Change in net assets related to consolidated VIEs

—

—

—

—

—

151,593

151,593

Change in fair value of servicing rights

—

(43,258)

—

—

(43,258)

(3,891)

(47,149)

Change in fair value of investment securities, net

20

(44,094)

—

—

(44,074)

42,673

(1,401)

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

—

74,251

—

—

74,251

—

74,251

Earnings from unconsolidated entities

3,447

8,937

9,736

—

22,120

(397)

21,723

Gain on sale of investments and other assets, net

1,716

226

—

—

1,942

—

1,942

Gain (loss) on derivative financial instruments, net

41,576

(4,318)

33,476

—

70,734

—

70,734

Foreign currency (loss) gain, net

(37,595)

3,661

(38)

5

(33,967)

—

(33,967)

OTTI

—

(215)

(513)

—

(728)

—

(728)

Loss on extinguishment of debt

—

—

—

(8,781)

(8,781)

—

(8,781)

Other income, net

—

8,959

9,102

4,271

22,332

(8,822)

13,510

Total other income (loss)

9,164

4,149

51,763

(4,505)

60,571

181,156

241,727

Income (loss) before income taxes

393,129

183,409

34,997

(235,754)

375,781

214

375,995

Income tax benefit (provision)

1,610

(9,954)

—

—

(8,344)

—

(8,344)

Net income (loss)

394,739

173,455

34,997

(235,754)

367,437

214

367,651

Net income attributable to non-controlling interests

(1,398)

(853)

—

—

(2,251)

(214)

(2,465)

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

$

393,341

$

172,602

$

34,997

$

(235,754)

$

365,186

$

—

$

365,186

 

 

Reconciliation of Net Income to Core Earnings

For the year ended December 31, 2016

(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.

$

393,341

$

172,602

$

34,997

$

(235,754)

$

365,186

Add / (Deduct):

Non-cash equity compensation expense

2,829

7,370

111

22,705

33,015

Management incentive fee

—

—

—

32,842

32,842

Acquisition and investment pursuit costs

—

1,421

7,755

356

9,532

Depreciation and amortization

—

12,768

50,862

—

63,630

Loan loss allowance, net

3,759

—

—

—

3,759

Interest income adjustment for securities

(1,016)

19,376

—

—

18,360

Bargain purchase gains

—

(8,822)

(8,406)

—

(17,228)

Other non-cash items

—

45

(3,109)

—

(3,064)

Reversal of unrealized (gains) / losses on:

Loans held-for-sale

—

(74,251)

—

—

(74,251)

Securities

(20)

44,094

—

—

44,074

Derivatives

(44,151)

2,526

(33,497)

—

(75,122)

Foreign currency

37,595

(3,661)

38

(5)

33,967

Earnings from unconsolidated entities

(3,447)

(8,937)

(9,736)

—

(22,120)

Recognition of realized gains / (losses) on:

Loans held-for-sale

—

74,192

—

—

74,192

Securities

—

(2,288)

—

—

(2,288)

Derivatives

33,384

(2,013)

186

—

31,557

Foreign currency

(32,803)

3,352

(38)

5

(29,484)

Earnings from unconsolidated entities

4,051

4,673

7,245

—

15,969

Core Earnings (Loss)

$

393,522

$

242,447

$

46,408

$

(179,851)

$

502,526

Core Earnings (Loss) per Weighted Average Diluted Share

$

1.64

$

1.01

$

0.19

$

(0.75)

$

2.09

 

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of December 31, 2016

(Amounts in thousands)

Investing

Investing

Lending

and Servicing

Property

and Servicing

Segment

Segment

Segment

Corporate

Subtotal

VIEs

Total

Assets:

Cash and cash equivalents

$

7,085

$

38,798

$

7,701

$

560,790

$

614,374

$

1,148

$

615,522

Restricted cash

17,885

8,202

9,146

—

35,233

—

35,233

Loans held-for-investment, net

5,827,553

20,442

—

—

5,847,995

—

5,847,995

Loans held-for-sale

—

63,279

—

—

63,279

—

63,279

Loans transferred as secured borrowings

35,000

—

—

—

35,000

—

35,000

Investment securities

776,072

990,570

—

—

1,766,642

(959,024)

807,618

Properties, net

—

277,612

1,667,108

—

1,944,720

—

1,944,720

Intangible assets

—

125,327

128,159

—

253,486

(34,238)

219,248

Investment in unconsolidated entities

30,874

56,376

124,977

—

212,227

(7,622)

204,605

Goodwill

—

140,437

—

—

140,437

—

140,437

Derivative assets

45,282

1,186

42,893

—

89,361

—

89,361

Accrued interest receivable

25,831

2,393

—

—

28,224

—

28,224

Other assets

13,470

59,503

29,569

1,866

104,408

(2,645)

101,763

VIE assets, at fair value

—

—

—

—

—

67,123,261

67,123,261

Total Assets

$

6,779,052

$

1,784,125

$

2,009,553

$

562,656

$

11,135,386

$

66,120,880

$

77,256,266

Liabilities and Equity

Liabilities:

Accounts payable, accrued expenses and other liabilities

$

20,769

$

68,603

$

81,873

$

26,003

$

197,248

$

886

$

198,134

Related-party payable

—

440

—

37,378

37,818

—

37,818

Dividends payable

—

—

—

125,075

125,075

—

125,075

Derivative liabilities

3,388

516

—

—

3,904

—

3,904

Secured financing agreements, net

2,258,462

426,683

1,196,830

295,851

4,177,826

(23,700)

4,154,126

Unsecured senior notes, net

—

—

—

2,011,544

2,011,544

—

2,011,544

Secured borrowings on transferred loans

35,000

—

—

—

35,000

—

35,000

VIE liabilities, at fair value

—

—

—

—

—

66,130,592

66,130,592

Total Liabilities

2,317,619

496,242

1,278,703

2,495,851

6,588,415

66,107,778

72,696,193

Equity:

Starwood Property Trust, Inc. Stockholders' Equity:

Common stock

—

—

—

2,639

2,639

—

2,639

Additional paid-in capital

2,218,671

883,761

696,049

892,699

4,691,180

—

4,691,180

Treasury stock

—

—

—

(92,104)

(92,104)

—

(92,104)

Accumulated other comprehensive income (loss)

44,903

(437)

(8,328)

—

36,138

—

36,138

Retained earnings (accumulated deficit)

2,186,727

390,994

43,129

(2,736,429)

(115,579)

—

(115,579)

Total Starwood Property Trust, Inc. Stockholders' Equity

4,450,301

1,274,318

730,850

(1,933,195)

4,522,274

—

4,522,274

Non-controlling interests in consolidated subsidiaries

11,132

13,565

—

—

24,697

13,102

37,799

Total Equity

4,461,433

1,287,883

730,850

(1,933,195)

4,546,971

13,102

4,560,073

Total Liabilities and Equity

$

6,779,052

$

1,784,125

$

2,009,553

$

562,656

$

11,135,386

$

66,120,880

$

77,256,266

 

 

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: [email protected]

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-and-year-ended-december-31-2016-300412335.html

SOURCE Starwood Property Trust, Inc.


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