PR Newswire | May 6, 2021 07:02AM EDT

05/06 06:00 CDT

Starwood Property Trust Reports Results for the Quarter Ended March 31, 2021-- Quarterly GAAP Earnings of $0.38 and Distributable Earnings of $0.50 per Diluted Share --- Originated or Acquired $2.7 Billion of Assets, Including $2.2 Billion in Commercial Lending --- Paid Dividend of $0.48 per Share for 29th Straight Quarter --- Completed $500 Million Inaugural Infrastructure CLO and $1.3 Billion CRE CLO --- LNR Upgraded by Fitch to CSS1, Only Special Servicer Carrying Highest Rating -- GREENWICH, Conn., May 6, 2021

GREENWICH, Conn., May 6, 2021 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2021. The Company's first quarter 2021 GAAP net income was $111.4 million, or $0.38 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $150.8 million, or $0.50 per diluted share.

"We benefited from a strong start to the year with $2.7 billion of capital deployed in the first quarter across our business cylinders, including $2.2 billion in Commercial Lending, bringing our post-COVID capital deployment to $5.7 billion. The credit performance of our diversified business lines coupled with our robust liquidity position gave us the confidence to continue our strong pace of investment activity. Eleven years into our journey, the LTV of our loan book remains low at 60.1%, and we continue to provide an attractive yield in a low rate world," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

"After quarter end, we closed two CLOs totaling $1.8 billion: our inaugural Infrastructure CLO for $500 million and our second CRE CLO for $1.3 billion. These financings allowed us to further de-risk our balance sheet and diversify our funding sources.

"After a year of unprecedented distress which led to record volume in our special servicer, LNR was upgraded by Fitch to its highest servicer rating and is the only CMBS special servicer at this level globally. We are extremely proud of this achievement which recognizes the strength and tenure of our team, years of operating at the highest level, our commitment to technology and our exemplary performance," commented Jeff DiModica, President of Starwood Property Trust.

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 on the Company's website in the Investor Relations section under "Quarterly Results" at www.starwoodpropertytrust.com.

Webcast and Conference Call Information

The Company will host a live webcast and conference call on Thursday, May 6, 2021, at 10:00 a.m. Eastern Time. To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. The webcast is available at www.starwoodpropertytrust.com in the Investor Relations section of the website. The Company encourages use of the webcast due to potential extended wait times to access the conference call via dial-in.

To Participate via Telephone Conference Call:

Dial in at least 15 minutes prior to start time.Domestic: 1-877-407-9039 International: 1-201-689-8470

Conference Call Playback:Domestic: 1-844-512-2921International: 1-412-317-6671Passcode: 13718432 The playback can be accessed through May 13, 2021.

About Starwood Property Trust, Inc.

Starwood Property Trust (NYSE: STWD) is a leading diversified finance company with a core focus on the real estate and infrastructure sectors. An affiliate of global private investment firm Starwood Capital Group, the Company has successfully deployed over $69 billion of capital since inception and manages a portfolio of over $18 billion across debt and equity investments. Starwood Property Trust's investment objective is to generate attractive and stable returns for shareholders, primarily through dividends, by leveraging a premiere global organization to identify and execute on the best risk adjusted returning investments across its target assets. Additional information can be found at www.starwoodpropertytrust.com.

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. Forward-looking statements are developed by combining currently available information with our beliefs and assumptions and are generally identified by the words "believe," "expect," "anticipate" and other similar expressions. 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, but are not limited to, the severity and duration of economic disruption caused by the COVID-19 global pandemic, completion of pending investments and financings, continued ability to acquire additional investments, competition within the finance and real estate industries, availability of financing and other risks detailed under the heading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as well as other risks and uncertainties set forth from time to time in the Company's reports filed with the SEC.

In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained herein will in fact occur. Except to the extent required by applicable law or regulation, we undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, changes to future results over time or otherwise.

Additional information can be found on the Company's website at www.starwoodpropertytrust.com.

Contact:Zachary TanenbaumStarwood Property Trust Phone: 203-422-7788 Email: ztanenbaum@starwood.com

Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended March 31, 2021 (Amounts in thousands)



Commercial and

Residential Infrastructure Investing

Lending Lending Property and Servicing Securitization

Segment Segment Segment Segment Corporate Subtotal VIEs Total

Revenues:

Interest income from loans $ 170,593 $ 18,808 $- $ 1,174 $- $190,575 $ - $190,575

Interest income from investment securities 18,385 564 - 20,940 - 39,889 (28,279) 11,610

Servicing fees 124 - - 12,456 - 12,580 (4,178) 8,402

Rental income 1,339 - 65,104 9,895 - 76,338 - 76,338

Other revenues 90 93 40 82 - 305 - 305

Total revenues 190,531 19,465 65,144 44,547 - 319,687 (32,457) 287,230

Costs and expenses:

Management fees 315 - - 222 38,188 38,725 11 38,736

Interest expense 44,295 8,841 15,832 5,449 29,148 103,565 (191) 103,374

General and administrative 11,333 3,442 1,023 18,440 4,311 38,549 87 38,636

Acquisition and investment pursuit costs 185 - - - - 185 - 185

Costs of rental operations 477 - 23,960 4,308 - 28,745 - 28,745

Depreciation and amortization 307 100 18,100 3,967 - 22,474 - 22,474

Credit loss (reversal) provision, net (529) 573 - - - 44 - 44

Other expense 31 - 583 71 - 685 - 685

Total costs and expenses 56,414 12,956 59,498 32,457 71,647 232,972 (93) 232,879

Other income (loss):

Change in net assets related to consolidated VIEs - - - - - - 39,745 39,745

Change in fair value of servicing rights - - - 745 - 745 (1,541) (796)

Change in fair value of investment securities, net (2,050) - - 7,170 - 5,120 (5,426) (306)

Change in fair value of mortgage loans, net (10,714) - - 1,236 - (9,478) - (9,478)

Earnings (loss) from unconsolidated entities 1,753 (254) - 589 - 2,088 (354) 1,734

Gain on sale of investments and other assets, net 17,693 - - - - 17,693 - 17,693

Gain (loss) on derivative financial instruments, net 26,141 684 4,724 9,283 (6,843) 33,989 - 33,989

Foreign currency (loss) gain, net (11,594) (49) 25 (63) - (11,681) - (11,681)

Loss on extinguishment of debt (68) (307) (141) - - (516) - (516)

Other income, net - 21 - - - 21 - 21

Total other income (loss) 21,161 95 4,608 18,960 (6,843) 37,981 32,424 70,405

Income (loss) before income taxes 155,278 6,604 10,254 31,050 (78,490) 124,696 60 124,756

Income tax provision (1,505) (92) - (633) - (2,230) - (2,230)

Net income (loss) 153,773 6,512 10,254 30,417 (78,490) 122,466 60 122,526

Net income attributable to non-controlling interests (3) - (5,077) (6,008) - (11,088) (60) (11,148)

Net income (loss) attributable to Starwood $ 153,770 $ 6,512 $5,177 $ 24,409 $(78,490)$111,378 $ - $111,378 Property Trust, Inc.

Definition of Distributable Earnings

Distributable 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, Distributable 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 and, to the extent deducted from net income (loss), distributions payable with respect to equity securities of subsidiaries issued in exchange for properties or interests therein. 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 Distributable Earnings For the three months ended March 31, 2021 (Amounts in thousands except per share data)



Commercial

and

ResidentialInfrastructure Investing

Lending Lending Property and Servicing

Segment Segment Segment Segment Corporate Total

Net income (loss) attributable to Starwood Property Trust, Inc. $ 153,770 $6,512 $5,177 $ 24,409 $(78,490)$111,378

Add / (Deduct):

Non-controlling interests attributable to Woodstar II Class A Units - - 5,077 - - 5,077

Non-cash equity compensation expense 1,781 300 31 881 7,317 10,310

Management incentive fee - - - - 13,123 13,123

Acquisition and investment pursuit costs (164) - (89) - - (253)

Depreciation and amortization 247 91 18,161 3,603 - 22,102

Credit loss (reversal) provision, net (529) 573 - - - 44

Interest income adjustment for securities (1,300) - - 3,995 - 2,695

Extinguishment of debt, net - - - - (246) (246)

Income tax (provision) benefit associated with realized (gains) losses (6,495) - - 405 - (6,090)

Other non-cash items 3 - (337) 207 415 288

Reversal of GAAP unrealized (gains) / losses on:

Loans 10,714 - - (1,236) - 9,478

Securities 2,050 - - (7,170) - (5,120)

Derivatives (27,171) (745) (6,446) (9,719) 9,313 (34,768)

Foreign currency 11,594 49 (25) 63 - 11,681

(Earnings) loss from unconsolidated entities (1,753) 254 - (589) - (2,088)

Sales of properties (17,693) - - - - (17,693)

Recognition of Distributable realized gains / (losses) on:

Loans 14,553 - - 4,672 - 19,225

Realized credit loss (7,757) - - - - (7,757)

Securities (2,861) - - 1,776 - (1,085)

Derivatives 1,950 - (35) 1,595 - 3,510

Foreign currency 4,784 (10) 25 (63) - 4,736

Earnings (loss) from unconsolidated entities 3,218 (254) - 964 - 3,928

Sales of properties 8,298 - - - - 8,298

Distributable Earnings (Loss) $ 147,239 $6,770 $21,539 $ 23,793 $(48,568)$150,773

Distributable Earnings (Loss) per Weighted Average Diluted $ 0.49 $0.02 $0.07 $ 0.08 $(0.16) $0.50 Share

Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of March 31, 2021 (Amounts in thousands)



Commercial and

Residential Infrastructure Investing

Lending Lending Property and Servicing Securitization

Segment Segment Segment Segment Corporate Subtotal VIEs Total

Assets:

Cash and cash equivalents $ 56,629 $ 7,873 $39,791 $ 29,064 $217,049 $350,406 $ 784 $351,190

Restricted cash 69,882 27,973 6,672 14,197 - 118,724 - 118,724

Loans held-for-investment, net 10,733,752 1,586,808 - 933 - 12,321,493 - 12,321,493

Loans held-for-sale 587,037 89,368 - 168,226 - 844,631 - 844,631

Investment securities 969,968 34,951 - 1,106,000 - 2,110,919 (1,432,632) 678,287

Properties, net 93,718 - 1,954,880 196,150 - 2,244,748 - 2,244,748

Intangible assets - - 38,833 70,857 - 109,690 (42,918) 66,772

Investment in unconsolidated entities 47,514 24,840 - 44,435 - 116,789 (15,882) 100,907

Goodwill - 119,409 - 140,437 - 259,846 - 259,846

Derivative assets 13,088 - 162 320 24,459 38,029 - 38,029

Accrued interest receivable 97,853 3,310 - 274 408 101,845 (132) 101,713

Other assets 61,677 7,107 85,740 44,719 9,646 208,889 (16) 208,873

VIE assets, at fair value - - - - - - 62,367,110 62,367,110

Total Assets $ 12,731,118 $ 1,901,639 $2,126,078$ 1,815,612 $251,562 $18,826,009$ 60,876,314 $79,702,323

Liabilities and Equity

Liabilities:

Accounts payable, accrued expenses and other $ 37,206 $ 16,010 $44,184 $ 24,110 $56,614 $178,124 $ 91 $178,215 liabilities

Related-party payable - - - - 36,135 36,135 - 36,135

Dividends payable - - - - 138,906 138,906 - 138,906

Derivative liabilities 33,190 1,310 - 305 - 34,805 - 34,805

Secured financing agreements, net 6,502,059 1,259,813 1,871,026 653,222 631,655 10,917,775 (21,843) 10,895,932

Collateralized loan obligations, net 931,178 - - - - 931,178 - 931,178

Unsecured senior notes, net - - - - 1,735,658 1,735,658 - 1,735,658

VIE liabilities, at fair value - - - - - - 60,896,709 60,896,709

Total Liabilities 7,503,633 1,277,133 1,915,210 677,637 2,598,968 13,972,581 60,874,957 74,847,538

Equity:

Starwood Property Trust, Inc. Stockholders' Equity:

Common stock - - - - 2,943 2,943 - 2,943

Additional paid-in capital 1,074,553 599,666 25,905 (298,098) 3,823,011 5,225,037 - 5,225,037

Treasury stock - - - - (138,022) (138,022) - (138,022)

Accumulated other comprehensive income 41,654 - - - - 41,654 - 41,654

Retained earnings (accumulated deficit) 4,111,160 24,840 (40,641) 1,285,229 (6,035,338) (654,750) - (654,750)

Total Starwood Property Trust, Inc. Stockholders' 5,227,367 624,506 (14,736) 987,131 (2,347,406) 4,476,862 - 4,476,862 Equity

Non-controlling interests in consolidated subsidiaries 118 - 225,604 150,844 - 376,566 1,357 377,923

Total Equity 5,227,485 624,506 210,868 1,137,975 (2,347,406) 4,853,428 1,357 4,854,785

Total Liabilities and Equity $ 12,731,118 $ 1,901,639 $2,126,078$ 1,815,612 $251,562 $18,826,009$ 60,876,314 $79,702,323

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SOURCE Starwood Property Trust, Inc.