Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q2 2023 Earnings Presentation
46 slides from Starwood Property Trust's earnings presentation, Aug 3, 2023
Slide 1: Q2 2023 Supplemental Reporting Information
Q2 SUPPLEMENTAL 2023 REPORTING INFORMATION Cover photo: Woodstar Portfolio (Waterford Pointe)
Slide 2: Table of Contents
Table of Contents Press Release Page 1 Highlights Page 9 Commercial and Residential Lending Segment Page 12 Infrastructure Lending Segment Page 18 Property Segment Page 19 Investing and Servicing Segment Page 22 Capitalization Page 24 Appendix Page 30 (i)
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for Quarter Ended June 30, 2023
For Immediate Release Starwood Property Trust Reports Results for Quarter Ended June 30, 2023 – Quarterly GAAP Earnings of $0.54 and Distributable Earnings (DE) of $0.49 per Diluted Share – – Undepreciated Book Value Per Share Increased to $21.46 – – Received Repayments of $1.3 Billion in the Quarte
Slide 5: Webcast and Conference Call Information
Webcast and Conference Call Information The Company will host a live webcast and conference call on Thursday, August 3, 2023, 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 an
Slide 6: Contact
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 3
Slide 7: Condensed Consolidated Statement of Operations by Segment, Three Months
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended June 30, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment S
Slide 8: Definition of Distributable Earnings and Reconciliation
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
Slide 9: Condensed Consolidated Statement of Operations by Segment, Six Months
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the six months ended June 30, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Seg
Slide 10: Reconciliation of Net Income to Distributable Earnings, Six Months
Reconciliation of Net Income to Distributable Earnings For the six months ended June 30, 2023 (Amounts in thousands except per share data) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Segment Segment Segment Segment Corporate Total Net income (loss) attr
Slide 11: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of June 30, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs
Slide 12: Highlights
HIGHLIGHTS
Slide 13: STWD Highlights
STWD Highlights Leading diverse global multi-cylinder platform, built to thrive in all market environments $28.0B of total assets with an adjusted debt- Strong Balance Sheet to-equity ratio of 2.4x and undepreciated book value per share of $21.46 Paid Q2 dividend of $0.48, equating to a Consistent D
Slide 14: Q2 2023 Highlights
Q2 2023 Highlights • GAAP book value per share of $20.51 and undepreciated book value of $21.46 ◦ An increase from prior quarter of $0.07 and $0.09 per share, respectively ◦ Undepreciated book value increased $4.39 over the last two years ◦ GAAP book value reflects $0.83 per share reduction for CECL
Slide 15: Total Assets $28.0B
Total Assets Ø U.S. office represents only 10% of our diversified $28.0B asset base Int'l Office 3% Commercial U.S. Office Loans 10% Multifamily 59% Intangibles 20% 1% Ot he r3 % Ca sh &A /R % 2 REIS CM BS 4% $28.0B Hotel 10% Infrastructure Lending 8% Mi xe 1% % d a se 2 Us e6 e e rL fice % % st O f
Slide 16: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 17: Commercial Lending Portfolio
Commercial Lending Portfolio (1) Q2 Activity Risk Rating • $272M funded on new investments 5 • $235M follow on fundings 4 1 (5 loans) • Over $1.0B in repayments (5 loans) (1 loan) 3 2 (103 loans) (51 loans) $16.4B 2.9 W.A. Risk Total Portfolio Rating * * 2.8 in prior quarter NOTE: Amounts are as of
Slide 18: Commercial Lending Characteristics
Top 10 Loans by Largest Property Types Multifamily Office Hotel International Characteristics 1% 16% 16% U.S. 11% 27% Property 7% $5.6B 20% $0.9B $2.7B 11% 27% 57% $2.9B 89% 11% 27% 80% Southeast Southwest West Northeast Leisure Extended Stay Mid-Atlantic Midwest International Class A Class B Busine
Slide 19: Commercial Portfolio Geographic Diversification
(2) Commercial Portfolio Geographic Diversification 2% Manhattan U.S. Southeast 17 % Northeast 16 % Southwest 15 % West 10 % Mid-Atlantic 9% Midwest 3% Europe Australia Bahamas / Bermuda Europe: International UK 13 % Ireland 5% Italy 1% Other Europe 2% Australia 7% Bahamas/Bermuda 2% NOTE: Amounts a
Slide 20: Commercial Lending Metrics
Commercial Lending Metrics (3) Mezzanine Subordinated Loans held for First Mortgages Lending CMBS (3) Preferred Equity Total CRE ($ millions) Loans Mortgages Sale Carrying $15,253 $675 $328 $74 $31 $41 $16,402 Value Unlevered (4) 9.3% 9.9% 13.8% 15.7% 24.3% 14.3% 9.5% Return First Mortgages Lending
Slide 21: Top Commercial Lending Commitments
Top 10 Commercial Lending Commitments $ millions Origination Fully Extended Loan Loan Type Location Property Type UPB Date Maturity Date Commitment Senior Jun 2022 Jun 2029 Various, Australia Casino Hotel* $ 917.9 $ 917.9 Senior/Mezz Dec 2021 Dec 2025 Various, Ireland Industrial 522.1 263.1 Senior F
Slide 22: Residential Portfolio
Residential Portfolio $ millions Ø During the quarter, recorded $20M net unrealized fair value increase: – Loans: $69M decrease – RMBS: $26M increase – Interest Rate Hedges: $63M increase to FMV of $170M Asset Carrying Values Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Loans, he
Slide 23: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 24: Infrastructure Portfolio Metrics and Activity
Portfolio Metrics and Activity Q2 Activity • $78M funded on new loans • $11M follow on fundings • $254M repayments $2.3B Total Portfolio Other Thermal 1% Renewables 2% Northeast Midstream / Downstream 39% 40% Geographic Location Southwest 24% (6) Sector Int'l 1% Midwest West Other - U.S. 2% 19% 4% T
Slide 25: Property Segment
PROPERTY SEGMENT 25
Slide 26: Property Segment Investment Portfolio
Investment Portfolio $ millions Net Asset Q2'23 Net Net Operating Occupancy Investment Carrying Specific (7) Investment (8) Rate Value Financing Income Wholly-Owned: Medical Office Portfolio $ 775 $ 597 $ 178 $ 11.0 90% Master Lease Portfolio 344 194 150 7.3 100% Subtotal - Undepreciated Carrying Va
Slide 27: Woodstar Fund
Woodstar Fund (the "Fund") $ millions Ø The Fund, which was formed in Q4 2021, holds the 15,057 affordable housing units comprising the Woodstar I and Woodstar II portfolios and is accounted for under ASC 946, Financial Services – Investment Companies, with its investments reported on our consolidat
Slide 28: Portfolio Snapshot
Portfolio Snapshot $ millions, sq. ft. in thousands Woodstar Fund Medical Office Master Lease Gross Gross Region % Occupancy Units Region % Occupancy Sq. Ft. Region % Occupancy Sq. Ft. investment investment North 7% 93% 1,230 Northeast 30% $ 228 100% 430 Midwest 36% $ 123 100% 757 Central 77% 99% 11
Slide 29: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 30: Investing and Servicing Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Securitized $161M and priced $57M of conduit loans in four transactions Ø Total active servicing portfolio increased from $5.2B to $5.7B Ø Sold two assets, one classified as property on our balance sheet and the other as a 50
Slide 31: CMBS and Special Servicing
CMBS and Special Servicing (9) Owned CMBS by Vintage LNR Special Servicer $ millions $ billions Named SS: 177 $101.8B $250 CMBS Trusts Loan Balance $200 $150 Named SS Balance $150 $100 $100 $50 $50 '19 '20 '14 '21 '15 '22 '16 '23 '17 '18 '19 '14 '20 '15 '21 '16 '22 '17 '18 Q2 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4
Slide 32: Capitalization
CAPITALIZATION 27
Slide 33: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios Affirmed by all 3 rating agencies in Q2 Ba2 / BB / BB+ Current Corporate Issuer Rating 3.0x Off-Balance $4.4B 2.4x Sheet Total Unencumbered Assets On-Balance Sheet 1.7x Fixed Charge Coverage Ratio 2.1x Unencumbered Assets to Unsec
Slide 34: Capitalization Overview, continued
Capitalization Overview, continued $ billions Ø 90% of commercial lending debt and 83% of consolidated debt has no capital markets mark-to-market provisions Total Debt Outstanding Margin Call Provisions (including off-balance sheet) (including off-balance sheet) Secured Debt Spread and Credit $14.6
Slide 35: Book Value and Fair Value per Share Bridge
Book Value and Fair Value per Share Bridge $0.14 $21.60 $0.95 $21.46 $20.51 Q2'23 Q2'23 Q2'23 Current Current GAAP Accumulated Undepreciated FMV Adjustment* FMV Book Value Depreciation Book Value • Represents the difference between our cost basis and our estimate of fair value. The determination of
Slide 36: Financing Facilities
Financing Facilities $ millions $25.0B $8.3B 25 Max Facility Size Available Capacity Counterparties Debt Obligations Maximum Facility (12) Available Type (12) Drawn Size Capacity Asset Specific Financing: Large Loans, Commercial $ 13,365 $ 7,922 $ 5,443 Infrastructure Lending Segment 2,200 984 1,216
Slide 37: Financial Capacity
Financial Capacity Total Available Capital + Available On-BS Financing (13) $ $ 1,277 7,769 $ millions Total Potential Liquidity $ 9,046 $1,800 $443 $(126) $(225) $1,500 $1,277 $927 $1,185 $1,200 $900 $600 $300 $258 $0 Cash & Approved and Current liquidity 90-day 90-day Working capital Total availab
Slide 38: Share Count
Share Count shares in thousands 2023 2023 Q2 Q1 YTD Number of Shares, GAAP EPS: Basic — Average shares outstanding 309,721 308,408 309,067 Effect of dilutive securities — Convertible Notes — — — Effect of dilutive securities — Other 334 588 346 Diluted — Average shares outstanding 310,055 308,996 30
Slide 39: Appendix
APPENDIX 34
Slide 40: Company Information
Company Information Starwood Property Trust, an affiliate of global private investment firm Starwood Capital Group Global L.P., is the largest commercial mortgage real estate investment trust in the United States. Additional information may be found on the Company’s website, www.starwoodpropertytrus
Slide 41: Footnotes
Footnotes 1. Excludes $706M of commercial portfolio which are classified as CMBS or preferred equity investments. 2. Excludes <1.0% of CMBS which are not associated with a particular region. 3. Contiguous mezzanine loans of $1,108M are included in the first mortgage balance as of June 30, 2023. 4. U
Slide 42: Footnotes, continued
Footnotes, continued 11. Includes our share of the Woodstar portfolio debt with a UPB of $1,002M. 12. Excludes non-recourse CLOs, SASBs and our share of the Woodstar portfolio debt. Drawn amounts also exclude discounts / premiums and unamortized deferred financing costs. 13. Does not include potenti
Slide 43: Calculation Methodologies
Calculation Methodologies Ø Commercial Loan LTVs ▪ In order to determine LTV, the Company utilizes the GAAP hierarchy of valuation techniques based on the observability of inputs utilized in measuring fair value. In doing so, market-based or observable inputs are the preferred source of values, foll
Slide 44: Ratings Criteria
Ratings Criteria Rating Characteristics 1 ▪ Sponsor capability and financial condition – Sponsor is highly rated or investment grade or, if private, the equivalent thereof with significant management experience. ▪ Loan collateral and performance relative to underwriting – The collateral has surpasse
Slide 45: Special Note Regarding Forward-Looking Statements
Special Note Regarding Forward-Looking Statements This presentation contains certain forward-looking statements, including without limitation, statements concerning the Company’s operations, economic performance and financial condition. These forward-looking statements are made pursuant to the safe
Slide 46: NYSE: STWD
NYSE : STWD
Starwood Property Trust — Q2 2023 Earnings Presentation on 6ix