Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2017

Mittwoch, 28.02.2018 12:45 von

PR Newswire

GREENWICH, Conn., Feb. 28, 2018

GREENWICH, Conn., Feb. 28, 2018 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter and year ended December 31, 2017.  The Company's fourth quarter 2017 GAAP net income was $92.6 million, or $0.35 per diluted share, and $400.8 million, or $1.52 per diluted share, for the full year.  Core Earnings (a non-GAAP financial measure) for the fourth quarter was $144.7 million, or $0.55 per diluted share and $584.2 million, or $2.23 per diluted share, for the full year.

"We are very pleased with our performance in 2017.  Each of our business lines continued to perform exceedingly well, demonstrating the strength of our multi-cylinder platform. We grew our diversified portfolio with the deployment of $7.3 billion of capital during the year, including $4.2 billion of originations in our large loan business, an increase of 29% from prior year," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

"Our large loan business continues to be our primary line of business, and we ended the quarter with the highest loan balance on the books in the over eight year history of our firm.  As we expand our originations team, we have maintained credit quality while reducing the cost of our liabilities to create returns that are at or above historical levels, despite changes in the lending environment. Leveraging our diversified platform, our relationship with Starwood Capital Group, and ample liquidity, we expect to close on a record pipeline of over $2.5 billion of investments in the first quarter."

Dividend

On February 28, 2018, the Company's Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending March 31, 2018. The dividend is payable on April 13, 2018 to common stockholders of record as of March 30, 2018.

2018 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 "Quarterly Results" at www.starwoodpropertytrust.com.

Conference Call and Webcast Information 

The Company will host a webcast and conference call on Wednesday, February 28, 2018, at 10:00 a.m. Eastern Time to discuss the quarter's 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:  1-800-289-0517 

International:  1-323-994-2083

Conference Call Playback:

Domestic:  1-844-512-2921

International:  1-412-317-6671

Passcode:  1496293 

The playback can be accessed through March 14, 2018.

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. With total capital deployed since inception of over $39 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, 2017

(Amounts in thousands)









Investing









Investing







Lending

Property

and Servicing









and Servicing







Segment

Segment

Segment

Corporate

Subtotal

VIEs

Total

Revenues:









































Interest income from loans



$

139,618

$

—

$

3,102

$

—

$

142,720

$

—

$

142,720

Interest income from investment securities





10,840



—



29,975



—



40,815



(28,047)



12,768

Servicing fees





143



—



24,321



—



24,464



(10,590)



13,874

Rental income



—



59,671



13,168



—



72,839



—



72,839

Other revenues





133



215



344



—



692



(61)



631

Total revenues





150,734



59,886



70,910



—



281,530



(38,698)



242,832

Costs and expenses:









































Management fees





528



—



18



42,059



42,605



97



42,702

Interest expense





34,795



14,086



4,916



28,534



82,331



(273)



82,058

General and administrative





5,109



1,263



25,089



2,192



33,653



93



33,746

Acquisition and investment pursuit costs





1,533



(141)



(152)



—



1,240



—



1,240

Costs of rental operations



—



20,365



6,192



—



26,557



—



26,557

Depreciation and amortization





16



21,250



5,206



—



26,472



—



26,472

Loan loss allowance, net





(2,288)



—



—



—



(2,288)



—



(2,288)

Other expense





77



47



22



—



146



—



146

Total costs and expenses





39,770



56,870



41,291



72,785



210,716



(83)



210,633

Income (loss) before other

income (loss), income taxes and

non-controlling interests





110,964



3,016



29,619



(72,785)



70,814



(38,615)



32,199

Other income (loss):









































Change in net assets related to consolidated VIEs





—



—



—



—



—



49,326



49,326

Change in fair value of servicing rights





—



—



(1,359)



—



(1,359)



(1,663)



(3,022)

Change in fair value of investment securities, net





(124)



—



9,070



—



8,946



(8,696)



250

Change in fair value of mortgage loans held-for-sale, net





2,873



—



18,630



—



21,503



—



21,503

Earnings from unconsolidated entities





817



1,097



1,058



—



2,972



(230)



2,742

Gain on sale of investments and other assets, net





—



—



3,495



—



3,495



—



3,495

(Loss) gain on derivative financial instruments, net





(4,988)



(65)



1,120



(2,440)



(6,373)



—



(6,373)

Foreign currency gain (loss), net





5,249



(2)



(10)



—



5,237



—



5,237

Gain on extinguishment of debt



—



—



—



1



1



—



1

Other income, net





—



7



8



1,745



1,760



—



1,760

Total other income (loss)



3,827



1,037



32,012



(694)



36,182



38,737



74,919

Income (loss) before income taxes





114,791



4,053



61,631



(73,479)



106,996



122



107,118

Income tax benefit (provision)



188



(249)



(13,176)



—



(13,237)



—



(13,237)

Net income (loss)





114,979



3,804



48,455



(73,479)



93,759



122



93,881

Net income attributable to non-controlling interests





(355)



—



(800)



—



(1,155)



(122)



(1,277)

Net income (loss) attributable to Starwood Property Trust, Inc.



$

114,624

$

3,804

$

47,655

$

(73,479)

$

92,604

$

—

$

92,604

 

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, 2017

(Amounts in thousands except per share data)















Investing













Lending

Property

and Servicing











Segment

Segment

Segment

Corporate

Total

Net income (loss) attributable to Starwood

Property Trust, Inc.

$

114,624

$

3,804

$

47,655

$

(73,479)

$

92,604

Add / (Deduct):





























Non-cash equity compensation expense



663



27



915



3,255



4,860

Management incentive fee



—



—



—



21,961



21,961

Acquisition and investment pursuit costs



1,035



(232)



46



—



849

Depreciation and amortization



16



21,528



4,804



—



26,348

Loan loss allowance, net



(2,288)



—



—



—



(2,288)

Interest income adjustment for securities



(208)



—



4,261



—



4,053

Extinguishment of debt, net



—



—



—



15,213



15,213

Other non-cash items



—



(549)



112



—



(437)

Reversal of unrealized (gains) / losses on:





























Loans held-for-sale



(2,873)



—



(18,630)



—



(21,503)

Securities



123



—



(9,070)



—



(8,947)

Derivatives



4,609



166



(1,595)



2,666



5,846

Foreign currency



(5,249)



2



10



—



(5,237)

Earnings from unconsolidated entities



(817)



(1,097)



(1,058)



—



(2,972)

Purchases and sales of properties



—



—



—



—



—

Recognition of realized gains / (losses) on:





























Loans held-for-sale



(543)



—



15,864



—



15,321

Securities



—



—



(4,095)



—



(4,095)

Derivatives



2,297



(666)



3,060



(246)



4,445

Foreign currency



(1,765)



(2)



(208)



—



(1,975)

Earnings from unconsolidated entities



816



—



1,292



—



2,108

Purchases and sales of properties



—



—



(1,451)



—



(1,451)

Core Earnings (Loss)

$

110,440

$

22,981

$

41,912

$

(30,630)

$

144,703

Core Earnings (Loss) per Weighted Average Diluted Share

$

0.42

$

0.09

$

0.16

$

(0.12)

$

0.55



 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the year ended December 31, 2017

(Amounts in thousands)









Investing









Investing







Lending

Property

and Servicing









and Servicing







Segment

Segment

Segment

Corporate

Subtotal

VIEs

Total

Revenues:









































Interest income from loans



$

499,806

$

—

$

14,008

$

—

$

513,814

$

—

$

513,814

Interest income from investment securities





46,710



—



134,743



—



181,453



(128,640)



52,813

Servicing fees





711



—



111,158



—



111,869



(50,423)



61,446

Rental income



—



198,466



50,534



—



249,000



—



249,000

Other revenues





686



645



1,794



—



3,125



(310)



2,815

Total revenues





547,913



199,111



312,237



—



1,059,261



(179,373)



879,888

Costs and expenses:









































Management fees





1,933



—



72



120,387



122,392



307



122,699

Interest expense





107,167



46,552



19,840



123,201



296,760



(1,094)



295,666

General and administrative





19,981



4,734



94,625



9,911



129,251



336



129,587

Acquisition and investment pursuit costs





3,240



375



(143)



—



3,472



—



3,472

Costs of rental operations



—



72,208



22,050



—



94,258



—



94,258

Depreciation and amortization





66



73,538



19,999



—



93,603



—



93,603

Loan loss allowance, net





(5,458)



—



—



—



(5,458)



—



(5,458)

Other expense





149



110



1,163



—



1,422



—



1,422

Total costs and expenses





127,078



197,517



157,606



253,499



735,700



(451)



735,249

Income (loss) before other

income (loss), income taxes and

non-controlling interests





420,835



1,594



154,631



(253,499)



323,561



(178,922)



144,639

Other income (loss):









































Change in net assets related to consolidated VIEs





—



—



—



—



—



252,434



252,434

Change in fair value of servicing rights





—



—



(30,315)



—



(30,315)



5,992



(24,323)

Change in fair value of investment securities, net





175



—



54,333



—



54,508



(58,319)



(3,811)

Change in fair value of mortgage loans held-for-sale, net





2,324



—



64,663



—



66,987



—



66,987

Earnings (loss) from unconsolidated entities





3,365



(27,685)



68,192



—



43,872



(13,367)



30,505

(Loss) gain on sale of investments and other assets, net





(59)



77



20,481



—



20,499



—



20,499

Loss on derivative financial instruments, net





(35,262)



(32,333)



(2,497)



(2,440)



(72,532)



—



(72,532)

Foreign currency gain, net





33,651



14



6



—



33,671



—



33,671

OTTI





(109)



—



—



—



(109)



—



(109)

Loss on extinguishment of debt



—



—



—



(5,915)



(5,915)



—



(5,915)

Other income, net





—



7



1,105



1,745



2,857



(613)



2,244

Total other income (loss)



4,085



(59,920)



175,968



(6,610)



113,523



186,127



299,650

Income (loss) before income taxes





424,920



(58,326)



330,599



(260,109)



437,084



7,205



444,289

Income tax provision



(143)



(249)



(31,130)



—



(31,522)



—



(31,522)

Net income (loss)





424,777



(58,575)



299,469



(260,109)



405,562



7,205



412,767

Net income attributable to non-controlling interests





(1,419)



—



(3,373)



—



(4,792)



(7,205)



(11,997)

Net income (loss) attributable to Starwood Property Trust, Inc.



$

423,358

$

(58,575)

$

296,096

$

(260,109)

$

400,770

$

—

$

400,770

 

Reconciliation of Net Income to Core Earnings

For the year ended December 31, 2017

(Amounts in thousands except per share data)









Investing













Lending

Property

and Servicing











Segment

Segment

Segment

Corporate

Total

Net income (loss) attributable to Starwood

Property Trust, Inc.

$

423,358

$

(58,575)

$

296,096

$

(260,109)

$

400,770

Add / (Deduct):





























Non-cash equity compensation expense



3,016



109



3,406



11,595



18,126

Management incentive fee



—



—



—



42,144



42,144

Acquisition and investment pursuit costs



1,109



(70)



137



—



1,176

Depreciation and amortization



66



74,510



18,245



—



92,821

Loan loss allowance, net



(5,458)



—



—



—



(5,458)

Interest income adjustment for securities



(905)



—



13,697



—



12,792

Extinguishment of debt, net



—



—



—



21,129



21,129

Other non-cash items



—



(2,214)



1,672



—



(542)

Reversal of unrealized (gains) / losses on:





























Loans held-for-sale



(2,324)



—



(64,663)



—



(66,987)

Securities



(66)



—



(54,333)



—



(54,399)

Derivatives



33,506



31,676



461



2,666



68,309

Foreign currency



(33,651)



(14)



(6)



—



(33,671)

Earnings from unconsolidated entities



(3,365)



27,685



(68,192)



—



(43,872)

Purchases and sales of properties



—



—



(613)



—



(613)

Recognition of realized gains / (losses) on:





























Loans held-for-sale



(1,092)



—



64,814



—



63,722

Securities



—



—



4,237



—



4,237

Derivatives



16,864



(684)



1,809



(739)



17,250

Foreign currency



(14,420)



14



(1,346)



—



(15,752)

Earnings from unconsolidated entities



3,345



3,563



57,066



—



63,974

Purchases and sales of properties



—



(153)



(840)



—



(993)

Core Earnings (Loss)

$

419,983

$

75,847

$

271,647

$

(183,314)

$

584,163

Core Earnings (Loss) per Weighted Average Diluted Share

$

1.60

$

0.29

$

1.04

$

(0.70)

$

2.23

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of December 31, 2017

(Amounts in thousands)





















































Investing









Investing







Lending

Property

and Servicing









and Servicing







Segment

Segment

Segment

Corporate

Subtotal

VIEs

Total

Assets:









































Cash and cash equivalents

$

14,580

$

10,388

$

39,446

$

299,308

$

363,722

$

5,726

$

369,448

Restricted cash



21,555



12,491



10,289



4,490



48,825



—



48,825

Loans held-for-investment, net



6,558,699



—



3,796



—



6,562,495



—



6,562,495

Loans held-for-sale



613,287



—



132,456



—



745,743



—



745,743

Loans transferred as secured borrowings



74,403



—



—



—



74,403



—



74,403

Investment securities



694,012



—



1,024,143



—



1,718,155



(999,952)



718,203

Properties, net



—



2,364,806



282,675



—



2,647,481



—



2,647,481

Intangible assets



—



116,081



95,257



—



211,338



(28,246)



183,092

Investment in unconsolidated entities



45,028



110,704



50,759



—



206,491



(20,988)



185,503

Goodwill



—



—



140,437



—



140,437



—



140,437

Derivative assets



6,487



26,775



636



—



33,898



—



33,898

Accrued interest receivable



46,650



68



243



786



47,747



—



47,747

Other assets



5,648



71,929



59,676



3,755



141,008



(2,868)



138,140

VIE assets, at fair value



—



—



—



—



—



51,045,874



51,045,874

Total Assets

$

8,080,349

$

2,713,242

$

1,839,813

$

308,339

$

12,941,743

$

49,999,546

$

62,941,289

Liabilities and Equity









































Liabilities:









































Accounts payable, accrued expenses and other liabilities

$

23,054

$

62,890

$

74,426

$

23,536

$

183,906

$

1,211

$

185,117

Related-party payable



20



—



31



42,318



42,369



—



42,369

Dividends payable



—



—



—



125,916



125,916



—



125,916

Derivative liabilities



20,386



13,063



85



2,666



36,200



—



36,200

Secured financing agreements, net



3,466,487



1,621,885



411,526



296,858



5,796,756



(23,700)



5,773,056

Unsecured senior notes, net



—



—



—



2,125,235



2,125,235



—



2,125,235

Secured borrowings on

transferred loans, net



74,185



—



—



—



74,185



—



74,185

VIE liabilities, at fair value



—



—



—



—



—



50,000,010



50,000,010

Total Liabilities



3,584,132



1,697,838



486,068



2,616,529



8,384,567



49,977,521



58,362,088

Equity:









































Starwood Property Trust, Inc. Stockholders' Equity:









































Common stock



—



—



—



2,660



2,660



—



2,660

Additional paid-in capital



1,818,559



957,329



659,062



1,280,296



4,715,246



—



4,715,246

Treasury stock



—



—



—



(92,104)



(92,104)



—



(92,104)

Accumulated other comprehensive income (loss)



57,914



12,076



(66)



—



69,924



—



69,924

Retained earnings (accumulated deficit)



2,609,050



(14,335)



687,015



(3,499,042)



(217,312)



—



(217,312)

Total Starwood Property

Trust, Inc. Stockholders' Equity



4,485,523



955,070



1,346,011



(2,308,190)



4,478,414



—



4,478,414

Non-controlling interests in consolidated subsidiaries



10,694



60,334



7,734



—



78,762



22,025



100,787

Total Equity



4,496,217



1,015,404



1,353,745



(2,308,190)



4,557,176



22,025



4,579,201

Total Liabilities and Equity

$

8,080,349

$

2,713,242

$

1,839,813

$

308,339

$

12,941,743

$

49,999,546

$

62,941,289

 

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.

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