Le Lézard
Classified in: Business
Subjects: ERN, CCA, DIV

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



GREENWICH, Conn., Nov. 8, 2017 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended September 30, 2017.  The Company's third quarter 2017 GAAP net income was $88.4 million, or $0.33 per diluted share, and Core Earnings (a non-GAAP financial measure) was $170.9 million, or $0.65 per diluted share. Third quarter GAAP net income and Core Earnings included $0.05 and $0.13 per diluted share, respectively, from the sale of the Company's investment in Ten-X.

"Our third quarter results were strong and were highlighted by over $2 billion of capital deployment across all of our business segments and the continued expansion of our borrowing capacity. We also completed the sale of our investment in Ten-X which resulted in proceeds of $66 million," stated Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

"With our pipeline, the tremendous credit profile of our book and excellent liquidity position, we remain well positioned for the future."

Dividend

On November 8, 2017, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending December 31, 2017. The dividend is payable on January 15, 2018 to common stockholders of record as of December 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, November 8, 2017, at 10:00 a.m. Eastern Time to discuss third 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:  1-888-430-8709
International:  1-719-325-4874

Conference Call Playback:
Domestic:  1-844-512-2921
International:  1-412-317-6671
Passcode:  3775308

The playback can be accessed through November 22, 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 $37 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 September 30, 2017

(Amounts in thousands)





























Investing






Investing





Lending


Property


and Servicing






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Revenues:






















Interest income from loans


$

134,149


$

?


$

4,450


$

?


$

138,599


$

?


$

138,599

Interest income from investment
   securities



11,540



?



31,740



?



43,280



(30,829)



12,451

Servicing fees



142



?



23,093



?



23,235



(8,393)



14,842

Rental income



?



47,663



12,490



?



60,153



?



60,153

Other revenues



181



164



441



?



786



(64)



722

Total revenues



146,012



47,827



72,214



?



266,053



(39,286)



226,767

Costs and expenses:






















Management fees



482



?



18



30,370



30,870



110



30,980

Interest expense



27,929



11,360



5,710



31,709



76,708



(277)



76,431

General and administrative



5,302



1,090



24,167



2,251



32,810



82



32,892

Acquisition and investment pursuit
   costs



807



245



(28)



?



1,024



?



1,024

Costs of rental operations



?



18,660



5,139



?



23,799



?



23,799

Depreciation and amortization



17



17,852



5,002



?



22,871



?



22,871

Loan loss allowance, net



(171)



?



?



?



(171)



?



(171)

Other expense



72



97



207



?



376



?



376

Total costs and expenses



34,438



49,304



40,215



64,330



188,287



(85)



188,202

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



111,574



(1,477)



31,999



(64,330)



77,766



(39,201)



38,565

Other income (loss):






















Change in net assets related to
   consolidated VIEs



?



?



?



?



?



56,177



56,177

Change in fair value of servicing
   rights



?



?



(5,652)



?



(5,652)



785



(4,867)

Change in fair value of investment
   securities, net



276



?



13,962



?



14,238



(14,635)



(397)

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



(397)



?



19,882



?



19,485



?



19,485

Earnings (loss) from unconsolidated
   entities



848



(33,731)



30,225



?



(2,658)



(2,031)



(4,689)

Gain on sale of investments and other
   assets, net



?



?



11,877



?



11,877



?



11,877

Loss on derivative financial
   instruments, net



(10,813)



(11,276)



(2,135)



?



(24,224)



?



(24,224)

Foreign currency gain (loss), net



10,657



(1)



4



?



10,660



?



10,660

Other income, net



?



?



28



?



28



?



28

Total other income (loss)



571



(45,008)



68,191



?



23,754



40,296



64,050

Income (loss) before income taxes



112,145



(46,485)



100,190



(64,330)



101,520



1,095



102,615

Income tax benefit (provision)



11



?



(9,827)



?



(9,816)



?



(9,816)

Net income (loss)



112,156



(46,485)



90,363



(64,330)



91,704



1,095



92,799

Net income attributable to non-
   controlling interests



(357)



?



(2,919)



?



(3,276)



(1,095)



(4,371)

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


$

111,799


$

(46,485)


$

87,444


$

(64,330)


$

88,428


$

?


$

88,428

 

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 September 30, 2017

(Amounts in thousands except per share data)







Investing








Lending


Property


and Servicing








Segment


Segment


Segment


Corporate


Total

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


$

111,799


$

(46,485)


$

87,444


$

(64,330)


$

88,428

Add / (Deduct):
















Non-cash equity compensation expense



783



33



1,015



3,379



5,210

Management incentive fee



?



?



?



10,378



10,378

Acquisition and investment pursuit costs



74



151



49



?



274

Depreciation and amortization



17



18,102



4,600



?



22,719

Loan loss allowance, net



(171)



?



?



?



(171)

Interest income adjustment for securities



(225)



?



5,071



?



4,846

Income tax adjustment for discrete transactions



?



?



(9,356)



?



(9,356)

Other non-cash items



?



(496)



187



?



(309)

Reversal of unrealized (gains) / losses on:
















Loans held-for-sale



397



?



(19,882)



?



(19,485)

Securities



(276)



?



(13,962)



?



(14,238)

Derivatives



10,394



11,291



1,555



?



23,240

Foreign currency



(10,657)



1



(4)



?



(10,660)

Earnings from unconsolidated entities



(848)



33,731



(30,225)



?



2,658

Purchases and sales of properties



?



?



?



?



?

Recognition of realized gains / (losses) on:
















Loans held-for-sale



(397)



?



19,330



?



18,933

Securities



?



?



(2,657)



?



(2,657)

Derivatives



(290)



(140)



(500)



(247)



(1,177)

Foreign currency



549



?



(240)



?



309

Earnings from unconsolidated entities



849



?



52,921



?



53,770

Purchases and sales of properties



?



?



(1,838)



?



(1,838)

Core Earnings (Loss)


$

111,998


$

16,188


$

93,508


$

(50,820)


$

170,874

Core Earnings (Loss) per Weighted Average
   Diluted Share


$

0.43


$

0.06


$

0.36


$

(0.20)


$

0.65


 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the nine months ended September 30, 2017

(Amounts in thousands)







Investing






Investing





Lending


Property


and Servicing






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Revenues:






















Interest income from loans


$

360,188


$

?


$

10,906


$

?


$

371,094


$

?


$

371,094

Interest income from investment
   securities



35,870



?



104,768



?



140,638



(100,593)



40,045

Servicing fees



568



?



86,837



?



87,405



(39,833)



47,572

Rental income



?



138,795



37,366



?



176,161



?



176,161

Other revenues



553



430



1,450



?



2,433



(249)



2,184

Total revenues



397,179



139,225



241,327



?



777,731



(140,675)



637,056

Costs and expenses:






















Management fees



1,405



?



54



78,328



79,787



210



79,997

Interest expense



72,372



32,466



14,924



94,667



214,429



(821)



213,608

General and administrative



14,872



3,471



69,536



7,719



95,598



243



95,841

Acquisition and investment
   pursuit costs



1,707



516



9



?



2,232



?



2,232

Costs of rental operations



?



51,843



15,858



?



67,701



?



67,701

Depreciation and amortization



50



52,288



14,793



?



67,131



?



67,131

Loan loss allowance, net



(3,170)



?



?



?



(3,170)



?



(3,170)

Other expense



72



63



1,141



?



1,276



?



1,276

Total costs and expenses



87,308



140,647



116,315



180,714



524,984



(368)



524,616

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



309,871



(1,422)



125,012



(180,714)



252,747



(140,307)



112,440

Other income (loss):






















Change in net assets related to
   consolidated VIEs



?



?



?



?



?



203,108



203,108

Change in fair value of servicing
   rights



?



?



(28,956)



?



(28,956)



7,655



(21,301)

Change in fair value of investment

   securities, net



299



?



45,263



?



45,562



(49,623)



(4,061)

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



(549)



?



46,033



?



45,484



?



45,484

Earnings (loss) from unconsolidated
   entities



2,548



(28,782)



67,134



?



40,900



(13,137)



27,763

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



(59)



77



16,986



?



17,004



?



17,004

Loss on derivative financial
   instruments, net



(30,274)



(32,268)



(3,617)



?



(66,159)



?



(66,159)

Foreign currency gain, net



28,402



16



16



?



28,434



?



28,434

OTTI



(109)



?



?



?



(109)



?



(109)

Loss on extinguishment of debt



?



?



?



(5,916)



(5,916)



?



(5,916)

Other income, net



?



?



1,097



?



1,097



(613)



484

Total other income (loss)



258



(60,957)



143,956



(5,916)



77,341



147,390



224,731

Income (loss) before income taxes



310,129



(62,379)



268,968



(186,630)



330,088



7,083



337,171

Income tax provision



(331)



?



(17,954)



?



(18,285)



?



(18,285)

Net income (loss)



309,798



(62,379)



251,014



(186,630)



311,803



7,083



318,886

Net income attributable to non-
   controlling interests



(1,064)



?



(2,573)



?



(3,637)



(7,083)



(10,720)

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


$

308,734


$

(62,379)


$

248,441


$

(186,630)


$

308,166


$

?


$

308,166

 

 


Reconciliation of Net Income to Core Earnings

For the nine months ended September 30, 2017

(Amounts in thousands except per share data)







Investing







Lending


Property


and Servicing







Segment


Segment


Segment


Corporate


Total

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


$

308,734


$

(62,379)


$

248,441


$

(186,630)


$

308,166

Add / (Deduct):
















Non-cash equity compensation expense



2,353



82



2,491



8,340



13,266

Management incentive fee



?



?



?



20,183



20,183

Acquisition and investment pursuit costs



74



162



91



?



327

Depreciation and amortization



50



52,982



13,441



?



66,473

Loan loss allowance, net



(3,170)



?



?



?



(3,170)

Interest income adjustment for securities



(697)



?



9,436



?



8,739

Income tax adjustment for discrete transactions



?



?



555



?



555

Other non-cash items



?



(1,665)



1,005



5,916



5,256

Reversal of unrealized (gains) / losses on:
















Loans held-for-sale



549



?



(46,033)



?



(45,484)

Securities



(189)



?



(45,263)



?



(45,452)

Derivatives



28,897



31,510



2,056



?



62,463

Foreign currency



(28,402)



(16)



(16)



?



(28,434)

Earnings from unconsolidated entities



(2,548)



28,782



(67,134)



?



(40,900)

Purchases and sales of properties



?



?



(613)



?



(613)

Recognition of realized gains / (losses) on:
















Loans held-for-sale



(549)



?



48,950



?



48,401

Securities



?



?



8,332



?



8,332

Derivatives



14,567



(18)



(1,251)



(493)



12,805

Foreign currency



(12,655)



16



(1,138)



?



(13,777)

Earnings from unconsolidated entities



2,529



3,563



55,774



?



61,866

Purchases and sales of properties



?



(153)



611



?



458

Core Earnings (Loss)


$

309,543


$

52,866


$

229,735


$

(152,684)


$

439,460

Core Earnings (Loss) per Weighted Average
   Diluted Share


$

1.18


$

0.20


$

0.88


$

(0.58)


$

1.68

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of September 30, 2017

(Amounts in thousands)







Investing






Investing





Lending


Property


and Servicing






and Servicing





Segment


Segment


Segment


Corporate


Subtotal


VIEs


Total

Assets:






















Cash and cash equivalents


$

43,513


$

8,581


$

58,584


$

298,006


$

408,684


$

5,161


$

413,845

Restricted cash



22,527



20,189



11,875



?



54,591



?



54,591

Loans held-for-investment, net



6,378,468



?



3,903



?



6,382,371



?



6,382,371

Loans held-for-sale



418,618



?



190,006



?



608,624



?



608,624

Loans transferred as secured
   
borrowings



74,339



?



?



?



74,339



?



74,339

Investment securities



677,977



?



1,026,634



?



1,704,611



(1,002,793)



701,818

Properties, net



?



2,234,646



286,696



?



2,521,342



?



2,521,342

Intangible assets



?



116,856



91,591



?



208,447



(26,582)



181,865

Investment in unconsolidated
   entities



36,831



109,607



117,772



?



264,210



(20,760)



243,450

Goodwill



?



?



140,437



?



140,437



?



140,437

Derivative assets



13,513



22,480



2,300



?



38,293



?



38,293

Accrued interest receivable



34,569



?



478



?



35,047



?



35,047

Other assets



10,286



40,705



61,787



2,293



115,071



(2,806)



112,265

VIE assets, at fair value



?



?



?



?



?



51,197,981



51,197,981

Total Assets


$

7,710,641


$

2,553,064


$

1,992,063


$

300,299


$

12,556,067


$

50,150,201


$

62,706,268

Liabilities and Equity






















Liabilities:






















Accounts payable, accrued
   expenses and other liabilities


$

27,821


$

71,726


$

78,398


$

24,739


$

202,684


$

1,098


$

203,782

Related-party payable



?



?



43



29,946



29,989



?



29,989

Dividends payable



?



?



?



125,674



125,674



?



125,674

Derivative liabilities



14,105



8,784



1



?



22,890



?



22,890

Secured financing agreements,
   net



3,223,863



1,501,006



516,933



296,593



5,538,395



(23,700)



5,514,695

Unsecured senior notes, net



?



?



?



2,044,523



2,044,523



?



2,044,523

Secured borrowings on
   transferred loans, net



74,200



?



?



?



74,200



?



74,200

VIE liabilities, at fair value



?



?



?



?



?



50,150,781



50,150,781

Total Liabilities



3,339,989



1,581,516



595,375



2,521,475



8,038,355



50,128,179



58,166,534

Equity:






















Starwood Property Trust, Inc.
   Stockholders' Equity:






















Common stock



?



?



?



2,654



2,654



?



2,654

Additional paid-in capital



1,808,624



981,129



747,298



1,167,993



4,705,044



?



4,705,044

Treasury stock



?



?



?



(92,104)



(92,104)



?



(92,104)

Accumulated other comprehensive
   income (loss)



55,687



9,668



(84)



?



65,271



?



65,271

Retained earnings (accumulated
    deficit)



2,495,536



(19,249)



639,359



(3,299,719)



(184,073)



?



(184,073)

Total Starwood Property
   Trust, Inc. Stockholders' Equity



4,359,847



971,548



1,386,573



(2,221,176)



4,496,792



?



4,496,792

Non-controlling interests in
   consolidated subsidiaries



10,805



?



10,115



?



20,920



22,022



42,942

Total Equity



4,370,652



971,548



1,396,688



(2,221,176)



4,517,712



22,022



4,539,734

Total Liabilities and Equity


$

7,710,641


$

2,553,064


$

1,992,063


$

300,299


$

12,556,067


$

50,150,201


$

62,706,268

 

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

SOURCE Starwood Property Trust, Inc.


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