STARWOOD PROPERTY TRUST, INC. GREENWICH, Conn., Feb. 23, 2017 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter and year ended December 31, 2016. The Company's fourth quarter 2016 GAAP net income was $121.3 million, or $0.49 per diluted share, and $365.2 million, or $1.50 per diluted share, for the full year. Core Earnings (a non-GAAP financial measure) for the fourth quarter was $122.6 million, or $0.50 per diluted share, and $502.5 million or $2.09 per diluted share, for the full year. Excluding the write-off of unamortized costs associated with the early retirement of the Company's term loan due 2020, GAAP and Core Earnings per diluted share for the quarter were $0.52 and $0.53, respectively.
"We continued to generate strong results driven by the successful execution of our business plan, as evidenced by the $6.4 billion of capital we deployed in 2016 across our diversified platform. The fourth quarter was actually the most active of the year for our largest business, our lending segment, and that momentum has continued into the first quarter. We also expanded our capital sources, highlighted by the completion of our inaugural senior unsecured notes offering, which brought our maximum total borrowing capacity to $10.2 billion. As a result of these efforts, we received a corporate credit rating upgrade which is an important endorsement of our ability to maintain an attractive risk return profile with our high credit quality standards. As we look ahead to 2017, we expect to continue to capitalize on our robust pipeline of opportunities in order to deliver attractive total returns for our shareholders."
Dividend
On February 23, 2017, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending March 31, 2017. The dividend is payable on April 14, 2017 to common stockholders of record as of March 31, 2017.
2017 Outlook
Given its current outlook, the Company is confident that it will generate Core Earnings in excess of the dividend and expects to maintain a $1.92 per share distribution for the full year.
Supplemental Schedules
The Company has published supplemental earnings schedules on its website in order to provide additional disclosure and financial information for the benefit of the Company's stakeholders. Specifically, these materials can be found at the Company's website in the Investor Relations section under "Financial Information" at www.starwoodpropertytrust.com.
Conference Call and Webcast Information
The Company will host a webcast and conference call on Thursday, February 23, 2017, at 10:00 a.m. Eastern Time to discuss fourth quarter financial results and recent events. A webcast will be available on the Company's website at www.starwoodpropertytrust.com. To listen to a live broadcast, access the site at least five minutes prior to the scheduled start time in order to register and download and install any necessary audio software.
To Participate in the Telephone Conference Call:
Dial in at least five minutes prior to start time.
Domestic: 1-888-334-3034
International: 1-719-457-0349
Conference Call Playback:
Domestic: 1-844-512-2921
International: 1-412-317-6671
Passcode: 2989173
The playback can be accessed through March 9, 2017.
About Starwood Property Trust, Inc.
Starwood Property Trust (NYSE: STWD), an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the United States. The Company's core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt and equity investments. Through its subsidiary LNR Property, LLC, Starwood Property Trust also operates as the largest commercial mortgage special servicer in the United States. With total capital deployed since inception of over $32 billion, Starwood Property Trust continues to solidify its position as one of the premier real estate finance companies in the country.
Forward-Looking Statements
Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although Starwood Property Trust, Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company's expectations include completion of pending investments, continued ability to acquire additional investments, competition within the finance and real estate industries, economic conditions, availability of financing and other risks detailed from time to time in the Company's reports filed with the SEC.
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the three months ended December 31, 2016
(Amounts in thousands)
Investing Investing
Lending and Servicing Property and Servicing
Segment Segment Segment Corporate Subtotal VIEs Total
------- ------- ------- --------- -------- ---- -----
Revenues:
Interest income from loans $101,010 $4,871 $ - $ - $105,881 $ - $105,881
Interest income from investment 13,266 31,357 - - 44,623 (27,654) 16,969
securities
Servicing fees 222 33,796 - - 34,018 (15,983) 18,035
Rental income - 13,009 29,489 - 42,498 - 42,498
Other revenues 62 1,145 27 - 1,234 (140) 1,094
--- ----- --- --- ----- ---- -----
Total revenues 114,560 84,178 29,516 - 228,254 (43,777) 184,477
------- ------ ------ --- ------- ------- -------
Costs and expenses:
Management fees 534 24 - 40,333 40,891 50 40,941
Interest expense 20,415 4,540 5,846 27,031 57,832 (270) 57,562
General and administrative 4,988 25,414 1,079 1,612 33,093 171 33,264
Acquisition and investment pursuit costs 63 969 6,369 379 7,780 - 7,780
Costs of rental operations - 6,043 12,540 - 18,583 - 18,583
Depreciation and amortization - 4,854 8,747 - 13,601 - 13,601
Loan loss allowance, net 364 - - - 364 - 364
Other expense - - - - - - -
--- --- --- --- --- --- ---
Total costs and expenses 26,364 41,844 34,581 69,355 172,144 (49) 172,095
------ ------ ------ ------ ------- --- -------
Income (loss) before other income (loss), income taxes and non-controlling
interests 88,196 42,334 (5,065) (69,355) 56,110 (43,728) 12,382
Other income (loss):
Change in net assets related to consolidated VIEs - - - - - 57,205 57,205
Change in fair value of servicing - (9,548) - - (9,548) (4,388) (13,936)
rights
Change in fair value of investment securities, net 57 (645) - - (588) (99) (687)
Change in fair value of mortgage - 4,129 - - 4,129 - 4,129
loans held-for-sale, net
Earnings from unconsolidated 903 5,657 2,423 - 8,983 (109) 8,874
entities
Gain on sale of investments and 1,551 226 - - 1,777 - 1,777
other assets, net
Gain on derivative financial 23,752 13,462 40,313 - 77,527 - 77,527
instruments, net
Foreign currency (loss) gain, net (14,094) 699 3 5 (13,387) - (13,387)
OTTI - (17) - - (17) - (17)
Loss on extinguishment of debt - - - (8,781) (8,781) - (8,781)
Other income, net - 8,847 - 2,487 11,334 (8,822) 2,512
--- ----- --- ----- ------ ------ -----
Total other income (loss) 12,169 22,810 42,739 (6,289) 71,429 43,787 115,216
------ ------ ------ ------ ------ ------ -------
Income (loss) before income taxes 100,365 65,144 37,674 (75,644) 127,539 59 127,598
Income tax benefit (provision) 1,685 (6,562) - - (4,877) - (4,877)
----- ------ --- --- ------ --- ------
Net income (loss) 102,050 58,582 37,674 (75,644) 122,662 59 122,721
Net income attributable to non-controlling interests (348) (1,024) - - (1,372) (59) (1,431)
---- ------ --- --- ------ --- ------
Net income (loss) attributable $101,702 $57,558 $37,674 $(75,644) $121,290 $ - $121,290
to 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 December 31, 2016
(Amounts in thousands except per share data)
Investing
Lending and Servicing Property
Segment Segment Segment Corporate Total
------- ------- ------- --------- -----
Net income (loss) attributable to Starwood $101,702 $57,558 $37,674 $(75,644) $121,290
Property Trust, Inc.
Add / (Deduct):
Non-cash equity compensation expense 719 3,585 22 5,812 10,138
Management incentive fee - - - 19,072 19,072
Acquisition and investment pursuit costs - 517 6,334 344 7,195
Depreciation and amortization - 3,850 8,865 - 12,715
Loan loss allowance, net 364 - - - 364
Interest income adjustment for securities (276) 8,756 - - 8,480
Bargain purchase gains - (8,822) - - (8,822)
Other non-cash items - (202) (593) - (795)
Reversal of unrealized (gains) / losses on:
Loans held-for-sale - (4,129) - - (4,129)
Securities (57) 645 - - 588
Derivatives (24,344) (13,804) (40,334) - (78,482)
Foreign currency 14,094 (699) (3) (5) 13,387
Earnings from unconsolidated entities (903) (5,657) (2,423) - (8,983)
Recognition of realized gains / (losses) on:
Loans held-for-sale - 2,802 - - 2,802
Securities - 8,848 - - 8,848
Derivatives 73 13,845 212 - 14,130
Foreign currency (887) 527 3 5 (352)
Earnings from unconsolidated entities 903 1,818 2,425 - 5,146
--- ----- ----- --- -----
Core Earnings (Loss) $91,388 $69,438 $12,182 $(50,416) $122,592
======= ======= ======= ======== ========
Core Earnings (Loss) per Weighted Average $0.38 $0.28 $0.05 $(0.21) $0.50
Diluted Share
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations by Segment
For the year ended December 31, 2016
(Amounts in thousands)
Investing Investing
Lending and Servicing Property and Servicing
Segment Segment Segment Corporate Subtotal VIEs Total
------- ------- ------- --------- -------- ---- -----
Revenues:
Interest income from loans $449,470 $17,725 $ - $ - $467,195 $ - $467,195
Interest income from investment securities 47,241 146,692 - - 193,933 (123,085) 70,848
Servicing fees 782 144,941 - - 145,723 (56,767) 88,956
Rental income - 38,223 114,537 - 152,760 - 152,760
Other revenues 242 5,255 62 - 5,559 (651) 4,908
--- ----- --- --- ----- ---- -----
Total revenues 497,735 352,836 114,599 - 965,170 (180,503) 784,667
------- ------- ------- --- ------- -------- -------
Costs and expenses:
Management fees 1,829 78 - 115,348 117,255 196 117,451
Interest expense 88,000 15,983 22,009 105,267 231,259 (460) 230,799
General and administrative 18,517 121,140 3,338 9,243 152,238 703 152,941
Acquisition and investment pursuit costs 1,665 2,520 7,886 1,391 13,462 - 13,462
Costs of rental operations - 17,638 47,463 - 65,101 - 65,101
Depreciation and amortization - 16,117 50,669 - 66,786 - 66,786
Loan loss allowance, net 3,759 - - - 3,759 - 3,759
Other expense - 100 - - 100 - 100
--- --- --- --- --- --- ---
Total costs and expenses 113,770 173,576 131,365 231,249 649,960 439 650,399
------- ------- ------- ------- ------- --- -------
Income (loss) before other income 383,965 179,260 (16,766) (231,249) 315,210 (180,942) 134,268
(loss), income taxes and non-
controlling interests
Other income (loss):
Change in net assets related to consolidated VIEs - - - - - 151,593 151,593
Change in fair value of servicing - (43,258) - - (43,258) (3,891) (47,149)
rights
Change in fair value of investment securities, net 20 (44,094) - - (44,074) 42,673 (1,401)
Change in fair value of mortgage - 74,251 - - 74,251 - 74,251
loans held-for-sale, net
Earnings from unconsolidated 3,447 8,937 9,736 - 22,120 (397) 21,723
entities
Gain on sale of investments and 1,716 226 - - 1,942 - 1,942
other assets, net
Gain (loss) on derivative financial instruments, net 41,576 (4,318) 33,476 - 70,734 - 70,734
Foreign currency (loss) gain, net (37,595) 3,661 (38) 5 (33,967) - (33,967)
OTTI - (215) (513) - (728) - (728)
Loss on extinguishment of debt - - - (8,781) (8,781) - (8,781)
Other income, net - 8,959 9,102 4,271 22,332 (8,822) 13,510
--- ----- ----- ----- ------ ------ ------
Total other income (loss) 9,164 4,149 51,763 (4,505) 60,571 181,156 241,727
----- ----- ------ ------ ------ ------- -------
Income (loss) before income taxes 393,129 183,409 34,997 (235,754) 375,781 214 375,995
Income tax benefit (provision) 1,610 (9,954) - - (8,344) - (8,344)
----- ------ --- --- ------ --- ------
Net income (loss) 394,739 173,455 34,997 (235,754) 367,437 214 367,651
Net income attributable to non-controlling interests (1,398) (853) - - (2,251) (214) (2,465)
------ ---- --- --- ------ ---- ------
Net income (loss) attributable $393,341 $172,602 $34,997 $(235,754) $365,186 $ - $365,186
to Starwood Property
Trust, Inc.
Reconciliation of Net Income to Core Earnings
For the year ended December 31, 2016
(Amounts in thousands except per share data)
Investing
Lending and Servicing Property
Segment Segment Segment Corporate Total
------- ------- ------- --------- -----
Net income (loss) attributable to Starwood $393,341 $172,602 $34,997 $(235,754) $365,186
Property Trust, Inc.
Add / (Deduct):
Non-cash equity compensation expense 2,829 7,370 111 22,705 33,015
Management incentive fee - - - 32,842 32,842
Acquisition and investment pursuit costs - 1,421 7,755 356 9,532
Depreciation and amortization - 12,768 50,862 - 63,630
Loan loss allowance, net 3,759 - - - 3,759
Interest income adjustment for securities (1,016) 19,376 - - 18,360
Bargain purchase gains - (8,822) (8,406) - (17,228)
Other non-cash items - 45 (3,109) - (3,064)
Reversal of unrealized (gains) / losses on:
Loans held-for-sale - (74,251) - - (74,251)
Securities (20) 44,094 - - 44,074
Derivatives (44,151) 2,526 (33,497) - (75,122)
Foreign currency 37,595 (3,661) 38 (5) 33,967
Earnings from unconsolidated entities (3,447) (8,937) (9,736) - (22,120)
Recognition of realized gains / (losses) on:
Loans held-for-sale - 74,192 - - 74,192
Securities - (2,288) - - (2,288)
Derivatives 33,384 (2,013) 186 - 31,557
Foreign currency (32,803) 3,352 (38) 5 (29,484)
Earnings from unconsolidated entities 4,051 4,673 7,245 - 15,969
----- ----- ----- --- ------
Core Earnings (Loss) $393,522 $242,447 $46,408 $(179,851) $502,526
======== ======== ======= ========= ========
Core Earnings (Loss) per Weighted Average $1.64 $1.01 $0.19 $(0.75) $2.09
Diluted Share
Starwood Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet by Segment
As of December 31, 2016
(Amounts in thousands)
Investing Investing
Lending and Servicing Property and Servicing
Segment Segment Segment Corporate Subtotal VIEs Total
------- ------- ------- --------- -------- ---- -----
Assets:
Cash and cash equivalents $7,085 $38,798 $7,701 $560,790 $614,374 $1,148 $615,522
Restricted cash 17,885 8,202 9,146 - 35,233 - 35,233
Loans held-for-investment, net 5,827,553 20,442 - - 5,847,995 - 5,847,995
Loans held-for-sale - 63,279 - - 63,279 - 63,279
Loans transferred as secured borrowings 35,000 - - - 35,000 - 35,000
Investment securities 776,072 990,570 - - 1,766,642 (959,024) 807,618
Properties, net - 277,612 1,667,108 - 1,944,720 - 1,944,720
Intangible assets - 125,327 128,159 - 253,486 (34,238) 219,248
Investment in unconsolidated entities 30,874 56,376 124,977 - 212,227 (7,622) 204,605
Goodwill - 140,437 - - 140,437 - 140,437
Derivative assets 45,282 1,186 42,893 - 89,361 - 89,361
Accrued interest receivable 25,831 2,393 - - 28,224 - 28,224
Other assets 13,470 59,503 29,569 1,866 104,408 (2,645) 101,763
VIE assets, at fair value - - - - - 67,123,261 67,123,261
--- --- --- --- --- ---------- ----------
Total Assets $6,779,052 $1,784,125 $2,009,553 $562,656 $11,135,386 $66,120,880 $77,256,266
========== ========== ========== ======== =========== =========== ===========
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities $20,769 $68,603 $81,873 $26,003 $197,248 $886 $198,134
Related-party payable - 440 - 37,378 37,818 - 37,818
Dividends payable - - - 125,075 125,075 - 125,075
Derivative liabilities 3,388 516 - - 3,904 - 3,904
Secured financing agreements, net 2,258,462 426,683 1,196,830 295,851 4,177,826 (23,700) 4,154,126
Unsecured senior notes, net - - - 2,011,544 2,011,544 - 2,011,544
Secured borrowings on transferred loans 35,000 - - - 35,000 - 35,000
VIE liabilities, at fair value - - - - - 66,130,592 66,130,592
--- --- --- --- --- ---------- ----------
Total Liabilities 2,317,619 496,242 1,278,703 2,495,851 6,588,415 66,107,778 72,696,193
--------- ------- --------- --------- --------- ---------- ----------
Equity:
Starwood Property Trust, Inc.
Stockholders' Equity:
Common stock - - - 2,639 2,639 - 2,639
Additional paid-in capital 2,218,671 883,761 696,049 892,699 4,691,180 - 4,691,180
Treasury stock - - - (92,104) (92,104) - (92,104)
Accumulated other comprehensive 44,903 (437) (8,328) - 36,138 - 36,138
income (loss)
Retained earnings (accumulated deficit) 2,186,727 390,994 43,129 (2,736,429) (115,579) - (115,579)
--------- ------- ------ ---------- -------- --- --------
Total Starwood Property Trust, Inc. Stockholders' Equity 4,450,301 1,274,318 730,850 (1,933,195) 4,522,274 - 4,522,274
Non-controlling interests in consolidated subsidiaries 11,132 13,565 - - 24,697 13,102 37,799
------ ------ --- --- ------ ------ ------
Total Equity 4,461,433 1,287,883 730,850 (1,933,195) 4,546,971 13,102 4,560,073
--------- --------- ------- ---------- --------- ------ ---------
Total Liabilities and Equity $6,779,052 $1,784,125 $2,009,553 $562,656 $11,135,386 $66,120,880 $77,256,266
========== ========== ========== ======== =========== =========== ===========
Additional information can be found on the Company's website at www.starwoodpropertytrust.com.
Contact:
Zachary Tanenbaum
Starwood Property Trust
Phone: 203-422-7788
Email: ztanenbaum@starwood.com
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SOURCE Starwood Property Trust, Inc.
