STARWOOD PROPERTY TRUST, INC. GREENWICH, Conn., Aug. 9, 2017 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended June 30, 2017. The Company's second quarter 2017 GAAP net income was $117.4 million, or $0.44 per diluted share, and Core Earnings (a non-GAAP financial measure) was $136.8 million, or $0.52 per diluted share.
"Our performance this quarter was driven by contributions from across our business segments," stated Barry Sternlicht, Chairman and CEO of Starwood Property Trust. "Our $1.5 billion of capital deployment included $871 million of floating-rate large loan originations that should benefit our results in a rising rate environment. Despite the current competitive landscape, we have maintained our disciplined underwriting, with our portfolio LTV remaining modest at just under 63%, consistent with the composition of our portfolio over the last three years. In addition, our multi-cylinder investment platform and access to diversified funding sources provides us with a competitive advantage, allowing us to continue to deliver attractive returns to our shareholders.
Shortly after quarter end, we expanded our access to attractive capital through membership in the Federal Home Loan Bank of Chicago. In addition, Ten-X entered into a strategic transaction which will allow us to harvest some of the significant embedded value on our balance sheet next quarter.
With a diverse and growing global pipeline, we will continue to patiently deploy capital across our target assets into the best risk-adjusted opportunities."
Dividend
On August 9, 2017, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending September 30, 2017. The dividend is payable on October 13, 2017 to common stockholders of record as of September 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, August 9, 2017, 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 five minutes prior to start time.
Domestic: 1-888-397-5350
International: 1-719-457-2620
Conference Call Playback:
Domestic: 1-844-512-2921
International: 1-412-317-6671
Passcode: 7326243
The playback can be accessed through August 23, 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 $35 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 June 30, 2017
(Amounts in thousands)
Investing Investing
Lending and Servicing Property and Servicing
Segment Segment Segment Corporate Subtotal VIEs Total
------- ------- ------- --------- -------- ---- -----
Revenues:
Interest income from loans $116,993 $3,619 $ - $ - $120,612 $ - $120,612
Interest income from investment 11,611 38,192 - - 49,803 (37,433) 12,370
securities
Servicing fees 216 33,663 - - 33,879 (15,251) 18,628
Rental income - 12,687 46,279 - 58,966 - 58,966
Other revenues 293 545 221 - 1,059 (66) 993
--- --- --- --- ----- --- ---
Total revenues 129,113 88,706 46,500 - 264,319 (52,750) 211,569
------- ------ ------ --- ------- ------- -------
Costs and expenses:
Management fees 469 18 - 24,096 24,583 50 24,633
Interest expense 24,486 4,856 10,899 31,351 71,592 (275) 71,317
General and administrative 5,359 22,789 1,000 3,298 32,446 74 32,520
Acquisition and investment 385 53 99 - 537 - 537
pursuit costs
Costs of rental operations - 5,232 17,792 - 23,024 - 23,024
Depreciation and amortization 16 4,737 17,279 - 22,032 - 22,032
Loan loss allowance, net (2,694) - - - (2,694) - (2,694)
Other expense - 176 (34) - 142 - 142
--- --- --- --- --- --- ---
Total costs and expenses 28,021 37,861 47,035 58,745 171,662 (151) 171,511
------ ------ ------ ------ ------- ---- -------
Income (loss) before other income 101,092 50,845 (535) (58,745) 92,657 (52,599) 40,058
(loss), income taxes and non-
controlling interests
Other income (loss):
Change in net assets related to - - - - - 77,761 77,761
consolidated VIEs
Change in fair value of servicing - (13,667) - - (13,667) 5,666 (8,001)
rights
Change in fair value of investment (149) 12,256 - - 12,107 (14,600) (2,493)
securities, net
Change in fair value of mortgage (152) 15,558 - - 15,406 - 15,406
loans held-for-sale, net
Earnings from unconsolidated entities 1,230 35,892 2,488 - 39,610 (10,145) 29,465
(Loss) gain on sale of investments and (3) 5,109 77 - 5,183 - 5,183
other assets, net
Loss on derivative financial (14,926) (2,179) (20,481) - (37,586) - (37,586)
instruments, net
Foreign currency gain, net 12,882 11 17 - 12,910 - 12,910
OTTI (109) - - - (109) - (109)
Other income, net - 704 - - 704 (613) 91
--- --- --- --- --- ---- ---
Total other income (loss) (1,227) 53,684 (17,899) - 34,558 58,069 92,627
------ ------ ------- --- ------ ------ ------
Income (loss) before income taxes 99,865 104,529 (18,434) (58,745) 127,215 5,470 132,685
Income tax provision (127) (9,325) - - (9,452) - (9,452)
---- ------ --- --- ------ --- ------
Net income (loss) 99,738 95,204 (18,434) (58,745) 117,763 5,470 123,233
Net income attributable to non- (353) (30) - - (383) (5,470) (5,853)
controlling interests
Net income (loss) attributable to $99,385 $95,174 $(18,434) $(58,745) $117,380 $ - $117,380
Starwood Property Trust, Inc.
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 June 30, 2017
(Amounts in thousands except per share data)
Investing
Lending and Servicing Property
Segment Segment Segment Corporate Total
------- ------- ------- --------- -----
Net income (loss) attributable to Starwood 99,385 95,174 (18,434) (58,745) 117,380
Property Trust, Inc.
Add / (Deduct):
Non-cash equity compensation expense 821 847 28 3,209 4,905
Management incentive fee - - - 4,335 4,335
Acquisition and investment pursuit costs - 37 (49) - (12)
Depreciation and amortization 16 4,367 17,509 - 21,892
Loan loss allowance, net (2,694) - - - (2,694)
Interest income adjustment for securities (224) 2,296 - - 2,072
Deferred income tax provision for discrete transactions - 9,911 - - 9,911
Other non-cash items - 45 (589) - (544)
Reversal of unrealized (gains) / losses on:
Loans held-for-sale 152 (15,558) - - (15,406)
Securities 258 (12,256) - - (11,998)
Derivatives 14,482 1,612 20,229 - 36,323
Foreign currency (12,882) (11) (17) - (12,910)
Earnings from unconsolidated entities (1,230) (35,892) (2,488) - (39,610)
Purchases and sales of properties - (613) - - (613)
Recognition of realized gains / (losses) on:
Loans held-for-sale (152) 18,888 - - 18,736
Securities - 396 - - 396
Derivatives (66) (3,069) (36) (246) (3,417)
Foreign currency 377 (68) 16 - 325
Earnings from unconsolidated entities 1,230 2,387 1,791 - 5,408
Purchases and sales of properties - 2,449 (153) 2,296
--- ----- ---- -----
Core Earnings (Loss) $99,473 $70,942 $17,807 $(51,447) $136,775
======= ======= ======= ======== ========
Core Earnings (Loss) per Weighted Average $0.38 $0.27 $0.07 $(0.20) $0.52
Diluted Share
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the six months ended June 30, 2017
(Amounts in thousands)
Investing Investing
Lending and Servicing Property and Servicing
Segment Segment Segment Corporate Subtotal VIEs Total
------- ------- ------- --------- -------- ---- -----
Revenues:
Interest income from loans $226,039 $6,456 $ - $ - $232,495 $ - $232,495
Interest income from investment 24,330 73,028 - - 97,358 (69,764) 27,594
securities
Servicing fees 426 63,744 - - 64,170 (31,440) 32,730
Rental income - 24,876 91,132 - 116,008 - 116,008
Other revenues 372 1,009 266 - 1,647 (185) 1,462
--- ----- --- --- ----- ---- -----
Total revenues 251,167 169,113 91,398 - 511,678 (101,389) 410,289
------- ------- ------ --- ------- -------- -------
Costs and expenses:
Management fees 923 36 - 47,958 48,917 100 49,017
Interest expense 44,443 9,214 21,106 62,958 137,721 (544) 137,177
General and administrative 9,570 45,369 2,381 5,468 62,788 161 62,949
Acquisition and investment 900 37 271 - 1,208 - 1,208
pursuit costs
Costs of rental operations - 10,719 33,183 - 43,902 - 43,902
Depreciation and amortization 33 9,791 34,436 - 44,260 - 44,260
Loan loss allowance, net (2,999) - - - (2,999) - (2,999)
Other expense - 934 (34) - 900 - 900
--- --- --- --- --- --- ---
Total costs and expenses 52,870 76,100 91,343 116,384 336,697 (283) 336,414
------ ------ ------ ------- ------- ---- -------
Income (loss) before other income 198,297 93,013 55 (116,384) 174,981 (101,106) 73,875
(loss), income taxes and non-
controlling interests
Other income (loss):
Change in net assets related to - - - - - 146,931 146,931
consolidated VIEs
Change in fair value of servicing - (23,304) - - (23,304) 6,870 (16,434)
rights
Change in fair value of investment 23 31,301 - - 31,324 (34,988) (3,664)
securities, net
Change in fair value of mortgage (152) 26,151 - - 25,999 - 25,999
loans held-for-sale, net
Earnings from unconsolidated 1,700 36,909 4,949 - 43,558 (11,106) 32,452
entities
(Loss) gain on sale of investments (59) 5,109 77 - 5,127 - 5,127
and other assets, net
Loss on derivative financial (19,461) (1,482) (20,992) - (41,935) - (41,935)
instruments, net
Foreign currency gain, net 17,745 12 17 - 17,774 - 17,774
OTTI (109) - - - (109) - (109)
Loss on extinguishment of debt - - - (5,916) (5,916) - (5,916)
Other income, net - 1,069 - - 1,069 (613) 456
--- ----- --- --- ----- ---- ---
Total other income (loss) (313) 75,765 (15,949) (5,916) 53,587 107,094 160,681
---- ------ ------- ------ ------ ------- -------
Income (loss) before income taxes 197,984 168,778 (15,894) (122,300) 228,568 5,988 234,556
Income tax provision (342) (8,127) - - (8,469) - (8,469)
---- ------ --- --- ------ --- ------
Net income (loss) 197,642 160,651 (15,894) (122,300) 220,099 5,988 226,087
Net (income) loss attributable to (707) 346 - - (361) (5,988) (6,349)
non-controlling interests
Net income (loss) attributable $196,935 $160,997 $(15,894) $(122,300) $219,738 $ - $219,738
to Starwood Property
Trust, Inc.
Reconciliation of Net Income to Core Earnings
For the six months ended June 30, 2017
(Amounts in thousands except per share data)
Investing
Lending and Servicing Property
Segment Segment Segment Corporate Total
------- ------- ------- --------- -----
Net income (loss) attributable to Starwood Property 196,935 160,997 (15,894) (122,300) 219,738
Trust, Inc.
Add / (Deduct):
Non-cash equity compensation expense 1,570 1,476 49 4,961 8,056
Management incentive fee - - - 9,805 9,805
Acquisition and investment pursuit costs - 42 11 - 53
Depreciation and amortization 33 8,841 34,880 - 43,754
Loan loss allowance, net (2,999) - - - (2,999)
Interest income adjustment for securities (472) 4,365 - - 3,893
Deferred income tax provision for discrete transactions - 9,911 - - 9,911
Other non-cash items - 818 (1,169) 5,916 5,565
Reversal of unrealized (gains) / losses on:
Loans held-for-sale 152 (26,151) - - (25,999)
Securities 86 (31,301) - - (31,215)
Derivatives 18,503 501 20,219 - 39,223
Foreign currency (17,745) (12) (17) - (17,774)
Earnings from unconsolidated entities (1,700) (36,909) (4,949) - (43,558)
Purchases and sales of properties - (613) - - (613)
Recognition of realized gains / (losses) on:
Loans held-for-sale (152) 29,620 - - 29,468
Securities - 10,989 - - 10,989
Derivatives 14,857 (751) 122 (246) 13,982
Foreign currency (13,204) (898) 16 - (14,086)
Earnings from unconsolidated entities 1,680 2,853 3,563 - 8,096
Purchases and sales of properties - 2,449 (153) - 2,296
--- ----- ---- --- -----
Core Earnings (Loss) $197,544 $136,227 $36,678 $(101,864) $268,585
======== ======== ======= ========= ========
Core Earnings (Loss) per Weighted Average $0.76 $0.52 $0.14 $(0.39) $1.03
Diluted Share
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet by Segment
As of June 30, 2017
(Amounts in thousands)
Investing Investing
Lending and Servicing Property and Servicing
Segment Segment Segment Corporate Subtotal VIEs Total
------- ------- ------- --------- -------- ---- -----
Assets:
Cash and cash equivalents $664 $36,185 $12,744 $207,719 $257,312 $4,582 $261,894
Restricted cash 15,573 14,846 12,880 - 43,299 - 43,299
Loans held-for-investment, net 6,207,067 4,008 - - 6,211,075 - 6,211,075
Loans held-for-sale 318,634 291,482 - - 610,116 - 610,116
Investment securities 735,086 1,009,151 - - 1,744,237 (995,303) 748,934
Properties, net - 285,190 1,675,308 - 1,960,498 - 1,960,498
Intangible assets - 97,727 121,007 - 218,734 (27,368) 191,366
Investment in unconsolidated 31,261 89,211 127,795 - 248,267 (18,728) 229,539
entities
Goodwill - 140,437 - - 140,437 - 140,437
Derivative assets 16,538 3,372 26,168 - 46,078 - 46,078
Accrued interest receivable 32,866 480 - - 33,346 - 33,346
Other assets 46,365 59,345 58,932 1,768 166,410 (2,762) 163,648
VIE assets, at fair value - - - - - 53,902,715 53,902,715
--- --- --- --- --- ---------- ----------
Total Assets $7,404,054 $2,031,434 $2,034,834 $209,487 $11,679,809 $52,863,136 $64,542,945
========== ========== ========== ======== =========== =========== ===========
Liabilities and Equity
Liabilities:
Accounts payable, accrued $23,813 $56,451 $67,088 $23,126 $170,478 $971 $171,449
expenses and other liabilities
Related-party payable - 90 - 22,688 22,778 - 22,778
Dividends payable - - - 126,171 126,171 - 126,171
Derivative liabilities 6,742 328 981 - 8,051 - 8,051
Secured financing agreements, net 2,700,190 550,704 1,227,402 296,327 4,774,623 (23,700) 4,750,923
Unsecured senior notes, net - - - 2,039,086 2,039,086 - 2,039,086
VIE liabilities, at fair value - - - - - 52,864,038 52,864,038
--- --- --- --- --- ---------- ----------
Total Liabilities 2,730,745 607,573 1,295,471 2,507,398 7,141,187 52,841,309 59,982,496
--------- ------- --------- --------- --------- ---------- ----------
Equity:
Starwood Property Trust, Inc.
Stockholders' Equity:
Common stock - - - 2,652 2,652 - 2,652
Additional paid-in capital 2,226,923 861,556 707,726 901,292 4,697,497 - 4,697,497
Treasury stock - - - (92,104) (92,104) - (92,104)
Accumulated other comprehensive 51,734 (155) 4,402 - 55,981 - 55,981
income (loss)
Retained earnings (accumulated 2,383,738 551,915 27,235 (3,109,751) (146,863) - (146,863)
deficit)
Total Starwood Property Trust, Inc. 4,662,395 1,413,316 739,363 (2,297,911) 4,517,163 - 4,517,163
Stockholders' Equity
Non-controlling interests in 10,914 10,545 - - 21,459 21,827 43,286
consolidated subsidiaries
Total Equity 4,673,309 1,423,861 739,363 (2,297,911) 4,538,622 21,827 4,560,449
--------- --------- ------- ---------- --------- ------ ---------
Total Liabilities and Equity $7,404,054 $2,031,434 $2,034,834 $209,487 $11,679,809 $52,863,136 $64,542,945
========== ========== ========== ======== =========== =========== ===========
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
View original content:http://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-ended-june-30-2017-300501705.html
SOURCE Starwood Property Trust, Inc.
