STARWOOD PROPERTY TRUST, INC. GREENWICH, Conn., Nov. 5, 2015 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended September 30, 2015. The Company's third quarter 2015 Core Earnings (a non-GAAP financial measure) were $135.4 million, or $0.56 per diluted share, an increase of 8% from the $125.9 million, or $0.53 per diluted share reported for the second quarter of 2015. GAAP net income for the third quarter of 2015 was $116.7 million, or $0.49 per diluted share.
"The debt markets were turbulent in the quarter as the supply-demand imbalance in the high yield market spilled into the CMBS universe. Recognizing this downward momentum and that our opportunity set was improving each week, we were exceedingly careful in our loan commitments. While our Lending Segment stepped back momentarily, our Investing and Servicing Segment took advantage of its unique capabilities and invested in several high yielding opportunities. We also made a major equity investment, closing on the initial assets of an affordable multi-family housing portfolio, which should produce low double digit cash yields financed with 18-year fixed rate debt. The Company's loan-to-value ratio of 62% and its leverage level of 1.2x debt-to-equity reflect our conservative nature and our commitment to credit quality. Our continued performance is a testament to the synergies we achieve through our relationship with Starwood Capital Group and the multi-cylinder business platform we have built and is consistent with our core strategy of delivering a safe and predictable dividend accompanied by best-in-class transparency," stated Barry Sternlicht, Chairman and Chief Executive Officer of Starwood Property Trust.
Mr. Sternlicht continued, "We are differentiated by a seasoned portfolio that enables us to recycle capital in order to take advantage of market dislocations and reinvest in opportunities that generate attractive yields. Our diversified investment focus, coupled with our global expertise across the real estate equity and debt markets, has allowed us to remain invested throughout varying market conditions. However, we will continue to exercise patience as we evaluate the investing landscape and preserve our financial capacity only for the highest quality and best risk-adjusted investments."
Highlights for the Third 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 Lending Segment primarily represents the Company's on-balance sheet loan origination business. The Investing and Servicing Segment includes the Company's U.S. and European servicing businesses, CMBS investment business and conduit loan origination platform. The Property Segment includes the Company's investments in stabilized commercial real estate properties that are held for investment.
Real Estate Lending Segment
During the third quarter of 2015, the Lending Segment contributed Core Earnings of $107.8 million, or $0.44 per diluted share. GAAP earnings during the third quarter of 2015 were $104.2 million, or $0.43 per diluted share.
The Lending Segment originated $309.9 million of new loans during the quarter, with fundings of $415.6 million. Repayments totaled $683.6 million, including $448.4 million from target investments and $220.9 million from the sale of senior interests. Newly originated loans include:
-- A $156.2 million first mortgage and mezzanine loan for the acquisition
and renovation of a 29-property, 1.6 million square foot portfolio of
office buildings located in the Greater Philadelphia area.
-- An $86.5 million first mortgage and mezzanine loan for the acquisition
and renovation of a 548-room hotel and 6-story parking garage located in
Las Vegas, Nevada.
-- A $67.2 million first mortgage and mezzanine loan for the refinancing of
a 30-story office building and adjacent 12-story parking garage located
in Miami, Florida.
Subsequent to quarter end, the Lending Segment closed $212.5 million of new loan originations with $643.7 million in various stages of closing.
At September 30, 2015, the Lending Segment's principal assets are as follows:
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) $4,589 $4,531 $2,035 $2,496 7.0% 9.6% 10.7%
Subordinated mortgages held-for-investment 425 399 2 397 11.3% 11.3% 11.3%
Mezzanine loans held-for-investment (5) 873 886 - 886 10.9% 10.9% 10.9%
Preferred equity investments held-to-maturity 81 82 - 82 10.7% 10.7% 10.7%
CMBS 283 283 166 117 6.2% 10.4% 11.3%
Target portfolio of Lending Segment $6,251 $6,181 $2,203 $3,978 7.8% 10.1% 10.9%
------ ------ ------ ------ --- ---- ----
RMBS available-for-sale at fair value 242 185 7 178 11.6%
Loans held-for-sale 29 27 - 27
Loans transferred as secured borrowings 144 142 144 (2)
Equity security 14 14 - 14
Investment in unconsolidated entities N/A 30 - 30
--- --- --- ---
Total investments $6,680 $6,579 $2,354 $4,225
====== ====== ====== ======
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 September 30, 2015:
Weighted Average LTV of Loan Portfolio (5)(6)
--------------------------------------------
First Subordinated Mezzanine Preferred Total (7)
Mortgages Mortgages Equity
--------- --------- ------
Beginning
LTV 0.0% 29.0% 45.7% 47.5% 9.4%
Ending LTV 61.7% 56.7% 64.3% 52.4% 61.6%
Real Estate Investing and Servicing Segment
During the third quarter of 2015, the Investing and Servicing Segment contributed Core Earnings of $64.7 million, or $0.27 per diluted share, an increase of 6% from the $61.1 million, or $0.25 per diluted share reported for the second quarter of 2015. GAAP earnings during the third quarter of 2015 were $67.1 million, or $0.28 per diluted share.
Significant activity during the quarter includes:
-- Originated $535.6 million of conduit loans and participated in four
securitizations totaling $410.2 million.
-- Purchased $115.0 million of CMBS, including $65.2 million in new issue
B-pieces.
-- Obtained four new servicing contracts representing $4.2 billion of
collateral.
-- Purchased three retail properties from CMBS trusts for a gross purchase
price of $32.5 million.
At September 30, 2015, the Investing and Servicing Segment's principal assets are as follows:
Investing and Servicing Segment Investments
(Amounts in millions)
Investment Carry Value Asset Net
Specific Investment
Financing
--- ---------
CMBS (8) $927 $167 $760
Special servicing
intangibles 156 - 156
Conduit loans 424 287 137
Investment in
unconsolidated
entities 55 - 55
Properties and lease
intangibles, net 90 32 58
--- --- ---
Total investments $1,652 $486 $1,166
====== ==== ======
As of September 30, 2015, the Company was active special servicer on $12.2 billion of loans and real estate owned and named special servicer on $118.3 billion of loans and real estate owned. Subsequent to quarter end, the Company secured four special servicer assignments from new issue CMBS trusts.
Real Estate Property Segment
During the third quarter of 2015, the Property Segment contributed Core Earnings((9)) of $6.2 million, or $0.03 per diluted share. GAAP earnings during the third quarter of 2015 were $1.2 million.
Subsequent to July 1, 2015, the Company entered into definitive agreements to acquire 30 affordable housing communities located throughout Florida for an aggregate acquisition price of $553.2 million. The acquisition will be funded with a combination of existing cash on hand and debt, including third party debt and the assumption of pre-existing federal, state and county sponsored financing. This portfolio is 98% occupied and is comprised of 8,320 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas. The transaction is expected to close in phases, the first of which closed on October 20, 2015 for $143.2 million and is comprised of seven properties. The remaining properties are expected to close by the end of the fourth quarter and are subject to customary closing conditions.
Also during the quarter, the Property Segment completed its acquisition of the Ireland portfolio by purchasing the remaining asset, a fully occupied, net leased office property located in Dublin, for approximately $121.9 million.
At September 30, 2015, the Property Segment's principal assets are as follows:
Property Segment Investments
(Amounts in millions)
Investment Net Carrying Asset Specific Net Net Occupancy Weighted
Value Financing Investment Operating Rate Average
Income (10) Lease Term
--- ---------- ----------
Office (11) $485 $317 $168 $6.3 99.8% 10.0 years
Multi-family residential (11) 17 11 6 0.2 100.0% 0.3 years
Investment in unconsolidated
entity -retail 122 - 122 2.4 (12) 93.5% 9.5 years
--- --- --- ---
$624 $328 $296 $8.9
==== ==== ==== ====
Financing Activities
As of September 30, 2015, the Company had an aggregate outstanding debt balance of $5.1 billion and maximum borrowing capacity of $7.7 billion under its 18 financing facilities and three convertible senior notes, with a debt-to-equity ratio of 1.2x.
During the third quarter, the Company:
-- Attained membership in the Federal Home Loan Bank of Des Moines with a
maximum borrowing capacity of $1.0 billion.
-- Amended its largest repurchase facility to upsize available borrowings
from $1.25 billion to $1.6 billion.
-- 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; (iv) unencumber up to $728.4
million of assets; and (v) provide the Company an option to further
upsize available borrowings from $450.0 million to $650.0 million
subject to certain conditions.
-- Repurchased 1.4 million shares of common stock at an average price of
$20.86 for $29.1 million.
Subsequent to quarter end, in October 2015, the Company amended an existing revolving repurchase facility to upsize available borrowings from $325.0 million to $500.0 million and extend the maturity from October 2018 to October 2020, assuming exercise of available extension options.
Interest Rate Sensitivity
The Company should benefit from a rising rate environment, particularly given its high volume of LIBOR-based floating rate loans. As of September 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 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 September 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 $5,134 $173 $113 $53
Interest expense from variable rate debt (3,670) (110) (74) (37)
------ ---- --- ---
Net investment income from variable rate instruments $1,464 $63 $39 $16
====== === === ===
Impact per diluted share $0.26 $0.17 $0.07
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 Per Share, Net of Minority Interest
---
September 30,
2015
June 30, 2015
-------------
Book value per
diluted share $17.43 $17.39
Investment Capacity
As of November 2, 2015, the Company has the capacity to acquire or originate up to $2.7 billion of new investments through (i) $366.9 million of expected fourth quarter maturities, prepayments, sales and participations; (ii) $1.9 billion of unallocated warehouse capacity; (iii) $229.5 million of approved but undrawn capacity under existing financing facilities; (iv) $331.4 million of available cash and equivalents and (v) approximately $73.2 million of net equity invested in RMBS that are classified as available-for-sale.
Dividend
On November 5, 2015, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending December 31, 2015. The dividend is payable on January 15, 2016 to common shareholders of record as of December 31, 2015.
2015 Guidance
For 2015, the Company is refining its Core Earnings guidance to a range of $2.13 to $2.17 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 Thursday, November 5, 2015 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 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: 1-877-548-7911
International: 1-719-325-4835
Conference Call Playback:
Domestic: 1-877-870-5176
International: 1-858-384-5517
Passcode: 212785
The playback can be accessed through November 19, 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 $21.1 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 September 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 September
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) First mortgages include first mortgage
loans and any contiguous mezzanine
loan components because as a whole,
the expected credit quality of these
loans is more similar to that of a
first mortgage loan. The application
of this methodology resulted in
mezzanine loans with carrying values
of $892.3 million being classified as
first mortgages as of September 30,
2015.
(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 $4.5 billion.
Differences between face amount and
carry value are principally
attributable to purchase discounts and
changes in fair value.
(9) Effective July 1, 2015, the Company
modified the definition of Core
Earnings to exclude acquisition costs
incurred for successful acquisitions.
Such costs are capitalized and
amortized over the associated
property's estimated useful life.
(10) Includes net operating income for the
current quarter, which includes net
operating income subsequent to the
July 24, 2015 acquisition date for the
Ireland portfolio property acquired
during the quarter.
(11) Net carrying value includes all
components of the related asset,
including properties and intangibles.
(12) 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 September 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 $116,049 $4,549 $ - $ - $120,598 $ - $120,598
Interest income from investment securities 18,137 40,615 - - 58,752 (34,078) 24,674
Servicing fees 114 61,394 - - 61,508 (28,980) 32,528
Rental income - 2,758 7,287 - 10,045 - 10,045
Other revenues 154 4,372 - - 4,526 (226) 4,300
--- ----- --- --- ----- ---- -----
Total revenues 134,454 113,688 7,287 - 255,429 (63,284) 192,145
------- ------- ----- --- ------- ------- -------
Costs and expenses:
Management fees 364 18 - 27,614 27,996 86 28,082
Interest expense 20,148 2,793 1,713 26,034 50,688 - 50,688
General and administrative 5,901 30,187 226 2,201 38,515 178 38,693
Acquisition and investment pursuit costs 935 552 2,233 (38) 3,682 - 3,682
Costs of rental operations - 1,562 790 - 2,352 - 2,352
Depreciation and amortization - 2,492 4,742 - 7,234 - 7,234
Loan loss allowance, net (2,667) - - - (2,667) - (2,667)
Other expense - 3 - - 3 - 3
--- --- --- --- --- --- ---
Total costs and expenses 24,681 37,607 9,704 55,811 127,803 264 128,067
------ ------ ----- ------ ------- --- -------
Income (loss) before other income, income taxes
and non-controlling interests 109,773 76,081 (2,417) (55,811) 127,626 (63,548) 64,078
Other income:
Change in net assets related to consolidated
VIEs - - - - - 49,665 49,665
Change in fair value of servicing rights - (13,331) - - (13,331) 9,114 (4,217)
Change in fair value of investment securities,
net (518) (1,941) - - (2,459) 5,076 2,617
Change in fair value of mortgage loans held-
for-sale, net - 19,082 - - 19,082 - 19,082
Earnings from unconsolidated entities 818 2,652 2,436 - 5,906 (200) 5,706
Gain on sale of investments and other assets,
net 2,688 660 - - 3,348 - 3,348
Gain (loss) on derivative financial instruments,
net 10,693 (9,582) 1,119 - 2,230 - 2,230
Foreign currency (loss) gain, net (18,705) 896 27 - (17,782) - (17,782)
Other income, net - 64 - - 64 - 64
--- --- --- --- --- --- ---
Total other (loss) income (5,024) (1,500) 3,582 - (2,942) 63,655 60,713
------ ------ ----- --- ------ ------ ------
Income (loss) before income taxes 104,749 74,581 1,165 (55,811) 124,684 107 124,791
Income tax provision (166) (7,509) - - (7,675) - (7,675)
---- ------ --- --- ------ --- ------
Net income (loss) 104,583 67,072 1,165 (55,811) 117,009 107 117,116
Net income attributable to non-controlling
interests (350) 76 - - (274) (107) (381)
---- --- --- --- ---- ---- ----
Net income (loss) attributable to Starwood
Property Trust, Inc. $104,233 $67,148 $1,165 $(55,811) $116,735 $ - $116,735
======== ======= ====== ======== ======== === === ========
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, 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, 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. $104,233 $67,148 $1,165 $(55,811) $116,735
Add / (Deduct):
Non-cash equity compensation expense 676 850 - 7,106 8,632
Management incentive fee - - - 5,359 5,359
Acquisition and investment pursuit costs - - 1,465 - 1,465
Depreciation and amortization - 1,099 4,658 - 5,757
Loan loss allowance, net (2,667) - - - (2,667)
Interest income adjustment for securities (290) 2,618 - - 2,328
Other non-cash items - - - - -
Reversal of unrealized (gains) / losses on:
Loans held-for-sale - (19,082) - - (19,082)
Securities 518 1,941 - - 2,459
Derivatives (11,482) 8,618 (1,119) - (3,983)
Foreign currency 18,707 (896) (27) - 17,784
Earnings from unconsolidated entities - (2,652) - - (2,652)
Recognition of realized gains / (losses) on:
Loans held-for-sale - 11,573 - - 11,573
Securities - (6,669) - - (6,669)
Derivatives 4,339 (2,281) - - 2,058
Foreign currency (6,203) 896 27 - (5,280)
Earnings from unconsolidated entities - 1,611 - - 1,611
--- ----- --- --- -----
Core Earnings (Loss) $107,831 $64,774 $6,169 $(43,346) $135,428
======== ======= ====== ======== ========
Core Earnings (Loss) per Weighted Average Diluted
Share $0.44 $0.27 $0.03 $(0.18) $0.56
===== ===== ===== ====== =====
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the nine months ended September 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 $343,449 $13,870 $ - $ - $357,319 $ - $357,319
Interest income from investment securities 57,483 112,583 - - 170,066 (93,838) 76,228
Servicing fees 296 166,691 - - 166,987 (76,048) 90,939
Rental income - 6,908 10,823 - 17,731 - 17,731
Other revenues 567 7,603 - - 8,170 (733) 7,437
--- ----- --- --- ----- ---- -----
Total revenues 401,795 307,655 10,823 - 720,273 (170,619) 549,654
------- ------- ------ --- ------- -------- -------
Costs and expenses:
Management fees 1,119 54 - 81,511 82,684 187 82,871
Interest expense 61,868 7,663 2,590 78,900 151,021 - 151,021
General and administrative 16,842 92,002 402 5,573 114,819 542 115,361
Acquisition and investment pursuit costs 1,932 1,270 6,495 38 9,735 - 9,735
Costs of rental operations - 4,138 1,123 - 5,261 - 5,261
Depreciation and amortization - 10,790 6,357 - 17,147 - 17,147
Loan loss allowance, net 311 - - - 311 - 311
Other expense - 378 - - 378 - 378
--- --- --- --- --- --- ---
Total costs and expenses 82,072 116,295 16,967 166,022 381,356 729 382,085
------ ------- ------ ------- ------- --- -------
Income (loss) before other income, income taxes and non-controlling
interests 319,723 191,360 (6,144) (166,022) 338,917 (171,348) 167,569
Other income:
Change in net assets related to consolidated VIEs - - - - - 153,399 153,399
Change in fair value of servicing rights - (26,587) - - (26,587) 18,176 (8,411)
Change in fair value of investment securities, net (347) 3,181 - - 2,834 730 3,564
Change in fair value of mortgage loans held-for-sale, net - 51,044 - - 51,044 - 51,044
Earnings from unconsolidated entities 3,034 10,704 7,631 - 21,369 (622) 20,747
Gain on sale of investments and other assets, net 2,995 17,760 - - 20,755 - 20,755
Gain (loss) on derivative financial instruments, net 19,602 (13,315) 1,036 - 7,323 - 7,323
Foreign currency (loss) gain, net (26,860) (395) 20 - (27,235) - (27,235)
Loss on extinguishment of debt - - - (5,921) (5,921) - (5,921)
Other income, net - 105 - 14 119 - 119
--- --- --- --- --- --- ---
Total other (loss) income (1,576) 42,497 8,687 (5,907) 43,701 171,683 215,384
------ ------ ----- ------ ------ ------- -------
Income (loss) before income taxes 318,147 233,857 2,543 (171,929) 382,618 335 382,953
Income tax provision (136) (27,282) - - (27,418) - (27,418)
---- ------- --- --- ------- --- -------
Net income (loss) 318,011 206,575 2,543 (171,929) 355,200 335 355,535
Net income attributable to non-controlling interests (1,030) 76 - - (954) (335) (1,289)
------ --- --- --- ---- ---- ------
Net income (loss) attributable to Starwood Property Trust, Inc. $316,981 $206,651 $2,543 $(171,929) $354,246 $ - $354,246
======== ======== ====== ========= ======== === === ========
Reconciliation of Net Income to Core Earnings
For the nine months ended September 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. $316,981 $206,651 $2,543 $(171,929) $354,246
Add / (Deduct):
Non-cash equity compensation expense 1,988 3,404 - 21,641 27,033
Management incentive fee - - - 16,126 16,126
Acquisition and investment pursuit costs - - 1,465 - 1,465
Depreciation and amortization - 1,955 6,195 - 8,150
Loan loss allowance, net 311 - - - 311
Interest income adjustment for securities (654) (827) - - (1,481)
Other non-cash items - (775) - - (775)
Reversal of unrealized (gains) / losses on:
Loans held-for-sale - (51,044) - - (51,044)
Securities 347 (3,181) - - (2,834)
Derivatives (21,989) 10,260 (1,036) - (12,765)
Foreign currency 26,861 395 (20) - 27,236
Earnings from unconsolidated entities - (10,704) - - (10,704)
Recognition of realized gains / (losses) on:
Loans held-for-sale - 47,196 - - 47,196
Securities - (16,790) - - (16,790)
Derivatives 15,845 (6,776) - - 9,069
Foreign currency (16,442) (669) 20 - (17,091)
Earnings from unconsolidated entities - 7,674 - - 7,674
--- ----- --- --- -----
Core Earnings (Loss) $323,248 $186,769 $9,167 $(134,162) $385,022
======== ======== ====== ========= ========
Core Earnings (Loss) per Weighted Average Diluted Share $1.38 $0.79 $0.04 $(0.57) $1.64
===== ===== ===== ====== =====
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet by Segment
As of September 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 $112,635 $56,454 $ - $202,766 $371,855 $913 $372,768
Restricted cash 15,352 23,978 4,290 - 43,620 - 43,620
Loans held-for-investment, net 5,814,886 - - - 5,814,886 - 5,814,886
Loans held-for-sale 27,198 423,630 - - 450,828 - 450,828
Loans transferred as secured borrowings 142,456 - - - 142,456 - 142,456
Investment securities 564,101 927,315 - - 1,491,416 (704,955) 786,461
Properties, net - 84,558 445,880 - 530,438 - 530,438
Intangible assets - 162,343 56,616 - 218,959 (27,879) 191,080
Investment in unconsolidated entities 30,155 54,627 121,733 - 206,515 (7,344) 199,171
Goodwill - 140,437 - - 140,437 - 140,437
Derivative assets 26,102 4,389 5,816 - 36,307 - 36,307
Accrued interest receivable 35,214 828 - - 36,042 - 36,042
Other assets 21,722 64,086 40,604 12,784 139,196 (1,900) 137,296
VIE assets, at fair value - - - - - 82,937,617 82,937,617
--- --- --- --- --- ---------- ----------
Total Assets $6,789,821 $1,942,645 $674,939 $215,550 $9,622,955 $82,196,452 $91,819,407
========== ========== ======== ======== ========== =========== ===========
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities $17,143 $85,208 $10,344 $24,431 $137,126 $660 $137,786
Related-party payable - 120 - 22,684 22,804 - 22,804
Dividends payable - - - 115,191 115,191 - 115,191
Derivative liabilities 8,387 6,359 155 - 14,901 - 14,901
Secured financing agreements, net 2,209,851 485,662 328,602 658,159 3,682,274 - 3,682,274
Convertible senior notes, net - - - 1,320,207 1,320,207 - 1,320,207
Secured borrowings on transferred loans 143,926 - - - 143,926 - 143,926
VIE liabilities, at fair value - - - - - 82,181,138 82,181,138
--- --- --- --- --- ---------- ----------
Total Liabilities 2,379,307 577,349 339,101 2,140,672 5,436,429 82,181,798 87,618,227
--------- ------- ------- --------- --------- ---------- ----------
Equity:
Starwood Property Trust, Inc. Stockholders' Equity:
Common stock - - - 2,407 2,407 - 2,407
Additional paid-in capital 2,689,426 1,183,262 329,960 (18,110) 4,184,538 - 4,184,538
Treasury stock - - - (61,525) (61,525) - (61,525)
Accumulated other comprehensive income (loss) 40,830 (2,478) 1,158 - 39,510 - 39,510
Retained earnings (accumulated deficit) 1,668,561 180,456 4,720 (1,847,894) 5,843 - 5,843
--------- ------- ----- ---------- ----- --- -----
Total Starwood Property Trust, Inc. Stockholders' Equity 4,398,817 1,361,240 335,838 (1,925,122) 4,170,773 - 4,170,773
Non-controlling interests in consolidated subsidiaries 11,697 4,056 - - 15,753 14,654 30,407
------ ----- --- --- ------ ------ ------
Total Equity 4,410,514 1,365,296 335,838 (1,925,122) 4,186,526 14,654 4,201,180
--------- --------- ------- ---------- --------- ------ ---------
Total Liabilities and Equity $6,789,821 $1,942,645 $674,939 $215,550 $9,622,955 $82,196,452 $91,819,407
========== ========== ======== ======== ========== =========== ===========
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-september-30-2015-300173037.html
SOURCE Starwood Property Trust, Inc.
