STARWOOD PROPERTY TRUST, INC. GREENWICH, Conn., Aug. 4, 2015 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended June 30, 2015. The Company's second quarter 2015 Core Earnings (a non-GAAP financial measure) were $125.9 million, or $0.53 per diluted share. Excluding one-time acquisition and pursuit costs of $4.9 million, the Company's second quarter 2015 Core Earnings were $130.8 million, or $0.55 per diluted share.
GAAP net income for the second quarter of 2015 was $117.1 million, or $0.49 per diluted. Excluding one-time acquisition and pursuit costs of $4.9 million, the Company's second quarter 2015 GAAP net income was $122.0 million, or $0.51 per diluted share.
"We experienced another strong quarter of performance, driven by contributions from all of our operating segments. With year-to-date capital deployment of $3.1 billion, we have again demonstrated our ability to source attractive investments despite increased competition and recent market volatility. Importantly, we closed another major real estate acquisition, an office and multifamily portfolio in Dublin, which provides strong cash-on-cash returns, duration to our existing book and the potential for asset appreciation. At this point in the cycle, it is gratifying to see our targeted optimal investment returns increase sequentially quarter-over-quarter from 10.7% to 11.0%, while maintaining a conservative loan-to-value ratio in our lending portfolio. Our pipeline remains robust in both our lending and property segments, and we continue to leverage Starwood Capital's global platform to source unique and differentiated transactions," stated Barry Sternlicht, Chairman and Chief Executive Officer of Starwood Property Trust.
Mr. Sternlicht continued, "Our business is favorably positioned to continue to outperform in today's evolving markets. Given our concentration of floating-rate loans, our lending portfolio will generate greater earnings in a higher interest rate environment. Additionally, our special servicing business provides a hedge against both higher interest rates and weakening credit conditions. Our growth will come from a combination of scaling our existing business, building new verticals organically and adding select new businesses to our platform. We continue to be focused on building a diversified real estate platform that can generate sustainable and attractive risk adjusted returns for our shareholders over the long term."
Highlights for the Second Quarter 2015 by Business Segment
The Company currently operates in three reportable segments: Real Estate Lending (the "Lending Segment"), Real Estate Investing and Servicing (the "Investing and Servicing Segment") and Real Estate Property (the "Property Segment"). The Property Segment was created during the second quarter of 2015, and is comprised of the Company's equity investments in stabilized commercial real estate properties.
Real Estate Lending Segment
The Lending Segment primarily represents the Company's on-balance sheet loan origination business. During the second quarter of 2015, the Lending Segment contributed Core Earnings of $108.1 million, or $0.46 per diluted share. GAAP earnings during the second quarter of 2015 were $100.9 million, or $0.42 per diluted share.
The Lending Segment originated or acquired $810.2 million of new investments during the quarter, of which $559.9 million was funded at closing. During the quarter, the Company also funded an additional $131.9 million of pre-existing loan commitments. The Company's activity during the quarter includes:
-- Originated a $257.9 million first mortgage for the development of a
194-acre coastal residential community in Orange County, California.
-- Originated a $175.0 million first mortgage and mezzanine loan for the
refinancing of a 1,054-room, five-property hotel portfolio located in
California.
-- Originated an $83.5 million first mortgage and mezzanine loan for the
refinancing and development of a 77-acre retail center located in
Albuquerque, New Mexico.
-- Originated an $82.8 million first mortgage and mezzanine loan for the
refinancing of a 270-unit luxury condominium tower located in
Philadelphia, Pennsylvania.
During the quarter, the Company received gross cash of $928.2 million from sales, partial paydowns, prepayments, refinancings and maturities in the Lending Segment, which were reinvested at accretive optimal asset-level returns to the existing portfolio.
At June 30, 2015, the carrying amount of the Lending Segment's principal assets was $6.8 billion and is summarized below:
Lending Segment Investments
(Amounts in millions)
Investment Face Carry Asset Specific Net Unlevered Current Optimal
Amount Value (1) Financing (2) Investment Return on Leveraged Asset-Level
Asset Return (3) Return (4)
--- ----- --------- ---------
First mortgages held-for-investment (5) $4,784 $4,715 $2,172 $2,543 7.0% 9.7% 10.9%
Subordinated mortgages held-for-investment 318 291 2 289 11.3% 11.3% 11.3%
Mezzanine loans held-for-investment (5) 897 908 - 908 10.9% 10.9% 10.9%
Preferred equity investments held-to-maturity 81 81 - 81 10.7% 10.7% 10.7%
CMBS 368 373 98 275 7.7% 9.7% 11.7%
Target portfolio of Lending Segment $6,448 $6,368 $2,272 $4,096 7.8% 10.1% 11.0%
------ ------ ------ ------ --- ---- ----
RMBS available-for-sale at fair value 251 193 66 127 11.5%
Loans held-for-sale 93 88 42 46
Loans transferred as secured borrowings 137 136 137 (1)
Equity security 15 15 - 15
Investment in unconsolidated entities N/A 35 - 35
--- --- --- ---
Total investments $6,944 $6,835 $2,517 $4,318
====== ====== ====== ======
Loan-to-Value of Portfolio
The following table reflects the weighted average loan-to-value ("LTV") ratio of the Lending Segment's loan portfolio as of June 30, 2015:
Weighted Average LTV of Loan Portfolio (5)(6)
--------------------------------------------
First Subordinated Mezzanine Preferred Total (7)
Mortgages Mortgages Equity
--------- --------- ------
Beginning LTV 0.0% 35.7% 45.4% 42.4% 9.0%
Ending LTV 60.8% 61.4% 65.4% 47.6% 61.3%
Real Estate Investing and Servicing Segment
The Investing and Servicing Segment includes the Company's U.S. and European servicing businesses, CMBS investment business and conduit loan origination platform. During the second quarter of 2015, the Investing and Servicing Segment contributed Core Earnings of $61.1 million, or $0.25 per diluted share. GAAP earnings during the second quarter of 2015 were $72.7 million, or $0.31 per diluted share.
At June 30, 2015, the carrying amount of the Investing and Servicing Segment's principal assets was $1.4 billion and is summarized below:
Investing and Servicing Segment Investments
(Amounts in millions)
Investment Carry Value Asset Net
Specific Investment
Financing
--- ---------
CMBS (8) $830 $137 $693
Special
servicing
intangibles 170 - 170
Conduit loans 279 126 153
Loans held-
for-
investment 2 - 2
Investment in
unconsolidated
entities 55 - 55
Properties, net 58 32 26
--- --- ---
Total
investments $1,394 $295 $1,099
====== ==== ======
Significant activity during the second quarter includes:
-- Conduit loan originations of $476.7 million and securitizations of
$551.6 million.
-- Purchase of $37.9 million of CMBS, including $17.5 million in new issue
B-pieces.
-- Purchase of two multi-family properties and one retail property for a
gross purchase price of $33.4 million and a net equity investment of
$13.5 million.
-- Net decrease in the fair value of the domestic servicing intangible on a
GAAP and Core basis of $8.4 million, resulting from the continued
amortization of this asset, net of increases in fair value due to the
attainment of new servicing contracts.
As of June 30, 2015, the Company was active special servicer on $12.6 billion of loans and real estate owned and named special servicer on $124.9 billion of loans and real estate owned.
Real Estate Property Segment
The Property Segment includes the Company's investments in stabilized commercial real estate properties that are held for investment. During the quarter, the Company acquired a portfolio of 11 office properties and one multi-family residential property, all located in the central business district of Dublin, Ireland, for a gross purchase price of EUR341.5 million ($383.0 million). Subsequent to quarter end, the Company acquired the remaining asset in the portfolio, a 103,000 sq. ft. fully occupied office property also located in Dublin, for a gross purchase price of EUR111.0 million ($121.9 million) (collectively the "Ireland Portfolio").
During the second quarter of 2015, the Property Segment contributed Core Earnings of $0.4 million. Excluding the impact of one-time acquisition and pursuit costs of $4.2 million, the Property Segment contributed Core Earnings of $4.6 million, or $0.02 per diluted share during the second quarter of 2015. The Property Segment incurred a GAAP loss of $1.2 million, or $0.01 per diluted share. Excluding the impact of one-time acquisition and pursuit costs of $4.2 million, the Property Segment's second quarter 2015 GAAP earnings were $3.0 million, or $0.01 per diluted share.
At June 30, 2015, the carrying amount of the Property Segment's principal assets was $502.7 million and is summarized below:
Property Segment Investments
(Amounts in millions)
Investment Net Carrying Asset Specific Net Net Occupancy Weighted
Value Financing Investment Operating Rate Average
Income (9) Lease Term
--- --------- ----------
Office (10) $364 $236 $128 $3.1 99.8% 6.8 years
Multi-family residential (10) 18 10 8 0.1 100.0% 0.4 years
Investment in unconsolidated entity - retail 121 - 121 2.6 (11) 95.2% 9.5 years
--- --- --- ---
$503 $246 $257 $5.8
==== ==== ==== ====
Financing Activities
As of June 30, 2015, the Company had an aggregate outstanding balance of $5.0 billion and a maximum borrowing capacity of $6.0 billion under its 17 financing facilities and three convertible senior notes, with a debt-to-equity ratio of 1.2x.
During the second quarter, the Company:
-- Sold 13.8 million shares of common stock for gross proceeds of $326.1
million.
-- Obtained a financing facility for EUR294.0 million to fund the
acquisition of the Ireland Portfolio. As of June 30, 2015, EUR220.5
million ($245.6 million) of this facility was drawn. The remaining
balance was drawn in July 2015 upon acquisition of the remaining asset
in the Ireland Portfolio.
-- Announced a $200.0 million increase in share and convertible note
repurchase authorization, bringing the total size of the program to
$450.0 million.
-- Repurchased 400,000 shares of common stock for $8.8 million.
-- Repurchased $14.5 million aggregate principal amount of the Company's
4.0% Convertible Senior Notes for $16.5 million, resulting in a loss on
extinguishment of debt for the quarter of $0.6 million.
Subsequent to quarter end, in July 2015, the Company amended an existing revolving repurchase facility to (i) permanently upsize available borrowings from $250.0 million to $450.0 million; (ii) extend the maturity date to July 2019 assuming exercise of a one-year extension option; (iii) reduce pricing; and (iv) unencumber up to $728.4 million of assets. In August 2015, the Company upsized its largest repurchase facility's available borrowings from $1.25 billion to $1.6 billion.
Interest Rate Sensitivity
The Company's Lending Segment should benefit from a rising rate environment given its high volume of LIBOR-based floating rate loans. As of June 30, 2015, 82% of the Lending Segment's existing loan portfolio and 100% of its current loan pipeline is indexed to LIBOR. In addition, 82% of the floating rate portfolio benefits from having a LIBOR floor at an average rate of 0.31%. For the 18% of the portfolio that is fixed rate, the weighted average coupon is 7.8%.
The Company continues to pursue its strategy of financing floating rate investments with floating rate debt and fixed rate investments with either fixed rate debt or floating rate debt hedged by interest swaps. The Company realizes an additional benefit from its fixed rate convertible senior notes, which help limit exposure to rising rates.
The following table summarizes the impact to annual net income from a specified hypothetical change in LIBOR:
Interest Rate Sensitivity as of June 30, 2015
(Amounts in millions except per share data)
Income (Expense) Subject to Interest Rate Variable rate 3.0% 2.0% 1.0%
investments and Increase Increase Increase
indebtedness
Investment income from variable rate investments $5,209 $170 $111 $52
Interest expense from variable rate debt (3,567) (104) (68) (33)
------ ---- --- ---
Net investment income from variable rate instruments $1,642 $66 $43 $19
====== === === ===
Impact per diluted share $0.28 $0.18 $0.08
Additionally, the Company's special servicing revenues would likely benefit from a rising rate environment due to an expected increase in the number of loans that would enter special servicing.
Book Value and Fair Value Per Share, Net of Minority Interest
June 30,
2015 March 31, 2015
--------- --------------
Fair value per
diluted share $17.91 $17.21
Book value per
diluted share $17.39 $16.67
Investment Related Activity Subsequent to June 30, 2015
Activity subsequent to quarter end included:
-- Acquired a 103,000 sq. ft., fully leased office property in Dublin,
Ireland, for a gross purchase price of EUR111.0 million ($121.9
million).
-- Closed $153.7 million of new loan originations in the Lending Segment.
-- Obtained four new special servicer assignments, including assignments
relating to three new issue CMBS trusts.
Investment Capacity
As of July 30, 2015, the Company has the capacity to acquire or originate up to $1.5 billion of new investments through (i) $609.3 million of expected third quarter maturities, prepayments, sales and participations; (ii) $438.3 million of unallocated warehouse capacity; (iii) $340.8 million of approved but undrawn capacity under existing financing facilities; (iv) $235.8 million of available cash and equivalents and (v) approximately $79.0 million of net equity invested in RMBS that are classified as available-for-sale.
Dividend
On August 4, 2015, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending September 30, 2015. The dividend is payable on October 15, 2015 to common shareholders of record as of September 30, 2015.
2015 Guidance
For 2015, the Company is reaffirming its Core Earnings guidance in the range of $2.05 to $2.25 per diluted share. This guidance reflects the Company's estimates on the (i) yield on existing investments; (ii) yield on incremental investments inclusive of the Company's existing pipeline; (iii) amount and timing of debt and equity capital deployment to fund new investments; (iv) costs of additional debt and equity capital to fund new investments; (v) pace of amortization of the servicing intangible based on the amount and timing of servicing fees on existing contracts; (vi) taxation associated with the TRSs, particularly the Investing and Servicing TRSs, which house this segment's servicing and conduit loan operations, both of which generate significant taxable income; and (vii) changes in costs and expenses reflective of the Company's forecasted operations. This guidance does not reflect any impact that may result from repurchases of equity or convertible debt securities pursuant to the Company's existing repurchase program. All guidance is based on current expectations of future economic conditions, the dynamics of the commercial real estate markets in which it operates and the judgment of the Company's management team.
Supplemental Schedules
The Company has published supplemental earnings schedules in order to provide additional disclosure and financial information for the benefit of the Company's stakeholders. These can be found at the Company's website in the Investor Relations section under "Financial Information".
Conference Call and Webcast Information
The Company will host a webcast and conference call on Tuesday, August 4, 2015 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 15 minutes prior to start time.
Domestic: 1-888-539-3613
International: 1-719-325-2111
Conference Call Playback:
Domestic: 1-877-870-5176
International: 1-858-384-5517
Passcode: 3892237
The playback can be accessed through August 18, 2015
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 subsidiaries LNR Property, LLC and Hatfield Philips International, Starwood Property Trust also operates as the largest commercial mortgage special servicer in the United States and one of the largest primary and special servicers in Europe. With total capital deployed since inception of approximately $19.9 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.
Footnotes
(1) The difference between the Carry Value
and Face Amount of the loans held for
investment consists of unamortized
purchase discount, deferred loan fees
and loan origination costs. The
difference between the Carry Value
and Face Amount of the available-
for-sale securities consists of the
unrealized gains/(losses) on the
fair value of the securities and
unamortized purchase discount.
(2) Current financings are either floating
rate or swapped to fixed rate to
match the interest rate
characteristics of the underlying
asset.
(3) The current leveraged return
represents the compounded effective
rate of return earned over the life
of the investment based on existing
leverage levels as of June 30, 2015,
and calculated on a weighted average
basis. Leveraged returns include the
loan coupon, amortization of premium
or discount, and the effects of costs
and fees, all recognized on the
effective interest method. Leveraged
returns are presented solely for
informational purposes and will not
equal income recognized in prior or
future periods due mainly to the fact
that (i) interest earned on the
Company's floating rate loans will
change in the future when interest
rates change, and these leveraged
returns assume interest rates remain
at current levels and (ii) the
leveraged returns assume that the
leverage levels existing at June 30,
2015 will be maintained either
throughout the remaining term of the
applicable credit facilities or the
remaining term of the investment, if
shorter. However, leverage levels in
future periods will likely fluctuate
as the Company manages its day-to-
day liquidity.
(4) The optimal asset-level return
assumes (i) maximum available
leverage in place or in negotiation
for each asset, notwithstanding the
amount actually borrowed, and (ii)
full syndication of the first
mortgage when syndication is deemed
probable.
(5) During the second quarter of 2015, the
Company reclassified certain loans
previously included in the mezzanine
loan category to the first mortgage
category. Previously, first mortgage
loans which contained a related
contiguous mezzanine loan component
were classified by their respective
components as first mortgages and
mezzanine loans. These loans are now
classified as first mortgage loans in
their entirety because as a whole,
the expected credit quality of these
loans is more similar to that of a
first mortgage loan. As of June 30,
2015, the application of this
methodology resulted in mezzanine
loans with an aggregate carrying
value of $793.0 million being
classified as first mortgages.
(6) Underlying property values are
determined by the Company's
management based on its ongoing asset
assessments, and loan balances that
are the face value of a loan
regardless of whether the Company has
purchased the loan at a discount or
premium to par. Assets characterized
as first mortgages include all loan
components where the Company owns the
senior most interest in the loan,
which may include subordinated
mortgages and/or mezzanine loans.
Assets characterized as subordinated
mortgages are the subordinated
components of first mortgages where
the Company does not own the senior
most interest in the loan. Assets
characterized as mezzanine loans are
mezzanine loans where the Company
does not own the senior most interest
in the loan. For any loans
collateralized by ground-up
construction projects without
significant leasing or units with
executed sales contracts, the fully
funded loan balance is included in
the numerator and the fully budgeted
construction cost, including costs of
acquisition of the property, is
included in the denominator. For
ground up construction loans which
have significant leasing or units
under contract for sale, the fully
funded loan balance is included in
the numerator with an estimate of the
stabilized value upon completion of
construction included in the
denominator. Includes loans held for
investment and preferred equity.
(7) Represents the Company's entire
investment, which includes all
components of the capital stack that
it owns (i.e., first mortgages,
subordinated mortgages, mezzanine
loans and preferred equity).
(8) Face amount is $4.4 billion.
Differences between face amount and
carry value are principally
attributable to purchase discounts
and changes in fair value.
(9) Includes net operating income for the
current quarter, which includes net
operating income subsequent to the
May 8, 2015 and May 18, 2015
acquisition dates for those Ireland
Portfolio properties acquired during
the quarter.
(10) Net carrying value includes all
components of the related asset,
including properties and intangibles.
(11) Represents the Company's earnings from
unconsolidated entities attributable
to the Company's investment in the
mall portfolio acquired in the fourth
quarter of 2014.
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the three months ended June 30, 2015
(Amounts in thousands)
Investing Investing
Lending and Servicing Property and Servicing
Segment Segment Segment Corporate Subtotal VIEs Total
------- ------- ------- --------- -------- ---- -----
Revenues:
Interest income from loans $113,928 $4,364 $ - $ - $118,292 $ - $118,292
Interest income from investment securities 17,050 47,272 - - 64,322 (40,512) 23,810
Servicing fees 98 54,349 - - 54,447 (24,293) 30,154
Rental income - 1,478 3,536 - 5,014 - 5,014
Other revenues 334 1,301 - - 1,635 (245) 1,390
--- ----- --- --- ----- ---- -----
Total revenues 131,410 108,764 3,536 - 243,710 (65,050) 178,660
------- ------- ----- --- ------- ------- -------
Costs and expenses:
Management fees 367 18 - 26,385 26,770 51 26,821
Interest expense 20,197 2,751 877 25,974 49,799 - 49,799
General and administrative 6,083 32,626 174 2,343 41,226 178 41,404
Acquisition and investment pursuit costs 224 505 4,262 (124) 4,867 - 4,867
Costs of rental operations - 878 333 - 1,211 - 1,211
Depreciation and amortization - 4,213 1,615 - 5,828 - 5,828
Loan loss allowance, net 2,661 - - - 2,661 - 2,661
Total costs and expenses 29,532 40,991 7,261 54,578 132,362 229 132,591
------ ------ ----- ------ ------- --- -------
Income (loss) before other income, income taxes and non-controlling interests 101,878 67,773 (3,725) (54,578) 111,348 (65,279) 46,069
Other income:
Change in net assets related to consolidated VIEs - - - - - 55,873 55,873
Change in fair value of servicing rights - (8,381) - - (8,381) 5,729 (2,652)
Change in fair value of investment securities, net 510 (3,191) - - (2,681) 4,127 1,446
Change in fair value of mortgage loans held-for-sale, net - 10,831 - - 10,831 - 10,831
Earnings from unconsolidated entities 1,361 5,328 2,554 - 9,243 (292) 8,951
Gain on sale of investments and other assets, net 209 - - - 209 - 209
(Loss) gain on derivative financial instruments, net (23,954) 4,274 150 - (19,530) - (19,530)
Foreign currency gain (loss), net 21,181 (120) (207) - 20,854 - 20,854
Loss on extinguishment of debt - - - (629) (629) - (629)
Other income, net - 10 - - 10 - 10
--- --- --- --- --- --- ---
Total other (loss) income (693) 8,751 2,497 (629) 9,926 65,437 75,363
---- ----- ----- ---- ----- ------ ------
Income (loss) before income taxes 101,185 76,524 (1,228) (55,207) 121,274 158 121,432
Income tax provision - (3,792) - - (3,792) - (3,792)
--- ------ --- --- ------ --- ------
Net income (loss) 101,185 72,732 (1,228) (55,207) 117,482 158 117,640
Net income attributable to non-controlling interests (334) - - - (334) (158) (492)
---- --- --- --- ---- ---- ----
Net income (loss) attributable to Starwood Property Trust, Inc. $100,851 $72,732 $(1,228) $(55,207) $117,148 $ - $117,148
======== ======= ======= ======== ======== === === ========
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, depreciation and amortization of real estate, 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, 2015
(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. $100,851 $72,732 $(1,228) $(55,207) $117,148
Add / (Deduct):
Non-cash equity compensation expense 1,135 2,291 - 7,484 10,910
Management incentive fee - - - 4,088 4,088
Depreciation and amortization - 414 1,537 - 1,951
Loan loss allowance, net 2,661 - - - 2,661
Interest income adjustment for securities (301) (7,232) - - (7,533)
Other non-cash items - - - - -
Reversal of unrealized (gains) / losses on:
Loans held-for-sale - (10,831) - - (10,831)
Securities (510) 3,191 - - 2,681
Derivatives 23,160 (5,067) (150) - 17,943
Foreign currency (21,182) 120 207 - (20,855)
Earnings from unconsolidated entities - (5,328) - - (5,328)
Recognition of realized gains / (losses) on:
Loans held-for-sale - 18,188 - - 18,188
Securities - (11,492) - - (11,492)
Derivatives 8,578 (62) - - 8,516
Foreign currency (6,282) (120) (7) - (6,409)
Earnings from unconsolidated entities - 4,274 - - 4,274
--- ----- --- --- -----
Core Earnings (Loss) $108,110 $61,078 $359 $(43,635) $125,912
======== ======= ==== ======== ========
Core Earnings (Loss) per Weighted Average Diluted Share $0.46 $0.25 $ - $(0.18) $0.53
===== ===== === === ====== =====
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the six months ended June 30, 2015
(Amounts in thousands)
Investing Investing
Lending and Servicing Property and Servicing
Segment Segment Segment Corporate Subtotal VIEs Total
------- ------- ------- --------- -------- ---- -----
Revenues:
Interest income from loans $227,400 $9,321 $ - $ - $236,721 $ - $236,721
Interest income from investment securities 39,346 71,968 - - 111,314 (59,760) 51,554
Servicing fees 182 105,297 - - 105,479 (47,068) 58,411
Rental income - 4,150 3,536 - 7,686 - 7,686
Other revenues 413 3,231 - - 3,644 (507) 3,137
--- ----- --- --- ----- ---- -----
Total revenues 267,341 193,967 3,536 - 464,844 (107,335) 357,509
------- ------- ----- --- ------- -------- -------
Costs and expenses:
Management fees 755 36 - 53,897 54,688 101 54,789
Interest expense 41,720 4,870 877 52,866 100,333 - 100,333
General and administrative 10,941 61,815 176 3,372 76,304 364 76,668
Acquisition and investment pursuit costs 997 718 4,262 76 6,053 - 6,053
Costs of rental operations - 2,576 333 - 2,909 - 2,909
Depreciation and amortization - 8,298 1,615 - 9,913 - 9,913
Loan loss allowance, net 2,978 - - - 2,978 - 2,978
Other expense - 375 - - 375 - 375
--- --- --- --- --- --- ---
Total costs and expenses 57,391 78,688 7,263 110,211 253,553 465 254,018
------ ------ ----- ------- ------- --- -------
Income (loss) before other income, income taxes and non-controlling interests 209,950 115,279 (3,727) (110,211) 211,291 (107,800) 103,491
Other income:
Change in net assets related to consolidated VIEs - - - - - 103,734 103,734
Change in fair value of servicing rights - (13,256) - - (13,256) 9,062 (4,194)
Change in fair value of investment securities, net 171 5,122 - - 5,293 (4,346) 947
Change in fair value of mortgage loans held-for-sale, net - 31,962 - - 31,962 - 31,962
Earnings from unconsolidated entities 2,216 8,052 5,195 - 15,463 (422) 15,041
Gain on sale of investments and other assets, net 307 17,100 - - 17,407 - 17,407
Gain (loss) on derivative financial instruments, net 8,909 (3,733) (83) - 5,093 - 5,093
Foreign currency loss, net (8,155) (1,291) (7) - (9,453) - (9,453)
Loss on extinguishment of debt - - - (5,921) (5,921) - (5,921)
Other income, net - 41 - 14 55 - 55
--- --- --- --- --- --- ---
Total other income (loss) 3,448 43,997 5,105 (5,907) 46,643 108,028 154,671
----- ------ ----- ------ ------ ------- -------
Income (loss) before income taxes 213,398 159,276 1,378 (116,118) 257,934 228 258,162
Income tax benefit (provision) 30 (19,773) - - (19,743) - (19,743)
--- ------- --- --- ------- --- -------
Net income (loss) 213,428 139,503 1,378 (116,118) 238,191 228 238,419
Net income attributable to non-controlling interests (680) - - - (680) (228) (908)
---- --- --- --- ---- ---- ----
Net income (loss) attributable to Starwood Property Trust, Inc. $212,748 $139,503 $1,378 $(116,118) $237,511 $ - $237,511
======== ======== ====== ========= ======== === === ========
Reconciliation of Net Income to Core Earnings
For the six months ended June 30, 2015
(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. $212,748 $139,503 $1,378 $(116,118) $237,511
Add / (Deduct):
Non-cash equity compensation expense 1,312 2,554 - 14,535 18,401
Management incentive fee - - - 10,767 10,767
Depreciation and amortization - 856 1,537 - 2,393
Loan loss allowance, net 2,978 - - - 2,978
Interest income adjustment for securities (364) (3,445) - - (3,809)
Other non-cash items - (775) - - (775)
Reversal of unrealized (gains) / losses on:
Loans held-for-sale - (31,962) - - (31,962)
Securities (171) (5,122) - - (5,293)
Derivatives (10,507) 1,642 83 - (8,782)
Foreign currency 8,154 1,291 7 - 9,452
Earnings from unconsolidated entities - (8,052) - - (8,052)
Recognition of realized gains / (losses) on:
Loans held-for-sale - 35,623 - - 35,623
Securities - (10,121) - - (10,121)
Derivatives 11,506 (4,495) - - 7,011
Foreign currency (10,239) (1,565) (7) - (11,811)
Earnings from unconsolidated entities - 6,063 - - 6,063
--- ----- --- --- -----
Core Earnings (Loss) $215,417 $121,995 $2,998 $(90,816) $249,594
======== ======== ====== ======== ========
Core Earnings (Loss) per Weighted Average Diluted Share $0.94 $0.52 $0.01 $(0.39) $1.08
===== ===== ===== ====== =====
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet by Segment
As of June 30, 2015
(Amounts in thousands)
Investing Investing
Lending and Servicing Property and Servicing
Segment Segment Segment Corporate Subtotal VIEs Total
------- ------- ------- --------- -------- ---- -----
Assets:
Cash and cash equivalents $158,795 $47,694 $1,161 $238,072 $445,722 $756 $446,478
Restricted cash 10,969 15,822 - - 26,791 - 26,791
Loans held-for-investment, net 5,913,197 2,199 - - 5,915,396 - 5,915,396
Loans held-for-sale 88,056 279,352 - - 367,408 - 367,408
Loans transferred as secured borrowings 135,940 - - - 135,940 - 135,940
Investment securities 663,014 829,687 - - 1,492,701 (615,463) 877,238
Properties, net - 57,771 339,245 - 397,016 - 397,016
Intangible assets - 170,100 42,499 - 212,599 (36,992) 175,607
Investment in unconsolidated entities 35,283 55,189 120,927 - 211,399 (7,144) 204,255
Goodwill - 140,437 - - 140,437 - 140,437
Derivative assets 16,572 4,485 3,969 - 25,026 - 25,026
Accrued interest receivable 38,078 276 - - 38,354 - 38,354
Other assets 20,084 65,478 19,459 12,918 117,939 (1,741) 116,198
VIE assets, at fair value - - - - - 92,719,092 92,719,092
--- --- --- --- --- ---------- ----------
Total Assets $7,079,988 $1,668,490 $527,260 $250,990 $9,526,728 $92,058,508 $101,585,236
========== ========== ======== ======== ========== =========== ============
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities $16,293 $80,485 $15,261 $28,493 $140,532 $555 $141,087
Related-party payable - 3,484 - 21,075 24,559 - 24,559
Dividends payable - - - 115,575 115,575 - 115,575
Derivative liabilities 5,734 556 - - 6,290 - 6,290
Secured financing agreements, net 2,379,372 294,771 245,609 659,751 3,579,503 - 3,579,503
Convertible senior notes, net - - - 1,315,245 1,315,245 - 1,315,245
Secured borrowings on transferred loans 137,302 - - - 137,302 - 137,302
VIE liabilities, at fair value - - - - - 92,046,550 92,046,550
--- --- --- --- --- ---------- ----------
Total Liabilities 2,538,701 379,296 260,870 2,140,139 5,319,006 92,047,105 97,366,111
--------- ------- ------- --------- --------- ---------- ----------
Equity:
Starwood Property Trust, Inc. Stockholders' Equity:
Common stock - - - 2,402 2,402 - 2,402
Additional paid-in capital 2,918,478 1,174,898 262,513 (182,020) 4,173,869 - 4,173,869
Treasury stock - - - (32,464) (32,464) - (32,464)
Accumulated other comprehensive income (loss) 46,668 (1,090) 323 - 45,901 - 45,901
Retained earnings (accumulated deficit) 1,564,327 113,309 3,554 (1,677,067) 4,123 - 4,123
--------- ------- ----- ---------- ----- --- -----
Total Starwood Property Trust, Inc. Stockholders' Equity 4,529,473 1,287,117 266,390 (1,889,149) 4,193,831 - 4,193,831
Non-controlling interests in consolidated subsidiaries 11,814 2,077 - - 13,891 11,403 25,294
------ ----- --- --- ------ ------ ------
Total Equity 4,541,287 1,289,194 266,390 (1,889,149) 4,207,722 11,403 4,219,125
--------- --------- ------- ---------- --------- ------ ---------
Total Liabilities and Equity $7,079,988 $1,668,490 $527,260 $250,990 $9,526,728 $92,058,508 $101,585,236
========== ========== ======== ======== ========== =========== ============
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
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-june-30-2015-300123031.html
SOURCE Starwood Property Trust, Inc.
