Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q1 2023 Earnings Presentation
44 slides from Starwood Property Trust's earnings presentation, May 4, 2023
Slide 1: Q1 2023 Supplemental Reporting Information
Q1 SUPPLEMENTAL REPORTING 2023 INFORMATION Cover photo: Photo courtesy of Enviva; Wood pellet storage facility in Port of Chesapeake, VA (Q1 Infrastructure Loan Participation)
Slide 2: Table of Contents
Table of Contents Press Release Page 1 Highlights Page 7 Commercial and Residential Lending Segment Page 10 Infrastructure Lending Segment Page 16 Property Segment Page 17 Investing and Servicing Segment Page 20 Capitalization Page 22 Appendix Page 28 (i)
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for Quarter Ended March 31, 2023
For Immediate Release Starwood Property Trust Reports Results for Quarter Ended March 31, 2023 – Quarterly GAAP Earnings of $0.16 and Distributable Earnings (DE) of $0.49 per Diluted Share – – Undepreciated Book Value Per Share of $21.37 – – LNR Affirmed by Fitch at CSS1, Only Special Servicer Carry
Slide 5: Webcast and Conference Call Information
Webcast and Conference Call Information The Company will host a live webcast and conference call on Thursday, May 4, 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 any n
Slide 6: Company website and investor 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
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended March 31, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment
Slide 8: Definition of Distributable Earnings
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 Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of March 31, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs
Slide 10: Highlights
HIGHLIGHTS
Slide 11: STWD Highlights
STWD Highlights Leading diverse global multi-cylinder platform, built to thrive in all market environments $28.5B of total assets with an adjusted debt- Strong Balance Sheet to-equity ratio of 2.5x and undepreciated book value per share of $21.37 Consistent Dividend Paid Q1 dividend of $0.48, equati
Slide 12: Q1 2023 Highlights
Q1 2023 Highlights • GAAP book value per share of $20.44 and undepreciated book value of $21.37 ◦ Undepreciated book value increased 25% over the last two years ◦ GAAP book value reflects $0.49 per share of CECL reserves as of March 31 • GAAP earnings of $0.16 and Distributable Earnings ("DE") of $0
Slide 13: Total Assets $28.5B
Total Assets Ø U.S. office represents only 10% of our diversified $28.5B asset base Int'l Office Commercial U.S. Office Loans 3% Multifamily 10% 59% Intangibles 20% 1% Ot he r3 Ca % sh &A /R 3 % REIS CM BS 4% $28.5B Hotel 10% Infrastructure Lending 8% 1% % Mixed Use a se 2 6% Le fice 2% ter f Ma s O
Slide 14: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 15: Commercial Lending Portfolio
Commercial Lending Portfolio (1) Q1 Activity Risk Rating • $38M funded on new investments 5 • $222M follow on fundings 4 1 (6 loans) • $257M repayments (4 loans) (2 loans) 3 2 (107 loans) (54 loans) $16.9B 2.8 W.A. Risk Total Portfolio Rating * * 2.6 in prior quarter NOTE: Amounts are as of and for
Slide 16: Commercial Lending Characteristics and Top Loans
Top 10 Loans by Largest Property Types Multifamily Office Hotel International Characteristics 1% 15% 15% U.S. 12% Property 27% 7% $5.7B $0.9B $2.8B 20% 13% 26% 59% $2.9B 88% 26% 11% 80% Southeast Southwest West Northeast Leisure Extended Stay Mid-Atlantic Midwest International Class A Class B Busine
Slide 17: Commercial Portfolio Geographic Diversification
(2) Commercial Portfolio Geographic Diversification 2% Manhattan U.S. Southeast 17 % Northeast 16 % Southwest 16 % West 10 % Mid-Atlantic 9% Midwest 3% Europe Australia Bahamas / Bermuda Europe: International UK 14 % Ireland 3% Italy 1% Other Europe 2% Australia 7% Bahamas/Bermuda 2% NOTE: Amounts a
Slide 18: Commercial Lending Metrics
Commercial Lending Metrics (3) Mezzanine Subordinated First Mortgages Lending CMBS (3) Preferred Equity Total CRE ($ millions) Loans Mortgages Carrying $15,601 $679 $472 $72 $31 $16,855 Value Unlevered (4) 8.8% 9.3% 14.2% 15.2% 23.3% 9.0% Return (5) First Mortgages Lending CMBS Mezzanine Loans Subor
Slide 19: 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* $ 920.5 $ 920.5 Senior/Mezz Dec 2021 Dec 2025 Various, Ireland Industrial 518.7 187.5 Senior F
Slide 20: Residential Portfolio
Residential Portfolio $ millions Significant Activity During the Quarter: Ø $16M net unrealized fair value decrease: – Loans - $8M increase – RMBS - $15M increase – Interest Rate Hedges - $39M decrease to FMV of $107M Asset Carrying Values Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31,
Slide 21: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 22: Infrastructure Portfolio Metrics and Activity
Portfolio Metrics and Activity Q1 Activity • $160M funded on new loans • $15M follow on fundings • $204M repayments $2.4B Total Portfolio Other Thermal 1% Renewables 2% Northeast Midstream / Downstream 40% 37% Geographic Location Southwest 22% (7) Sector Int'l 1% Midwest West 21% Other - U.S. 2% The
Slide 23: Property Segment
PROPERTY SEGMENT 25
Slide 24: Property Segment Investment Portfolio
Investment Portfolio $ millions Net Asset Q1'23 Net Net Operating Occupancy Investment Carrying Specific (8) Investment (9) Rate Value Financing Income Wholly-Owned: Medical Office Portfolio $ 771 $ 597 $ 174 $ 11.3 92% Master Lease Portfolio 344 193 151 7.3 100% Subtotal - Undepreciated Carrying Va
Slide 25: 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 26: 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% 95% 1,230 Northeast 30% $ 228 100% 430 Midwest 36% $ 123 100% 757 Central 77% 99% 11
Slide 27: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 28: Investing and Servicing Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Securitized $12M of conduit loans Ø Total named servicing portfolio of $107B, including 2 new assignments with a UPB of $1.5B Ø Affirmed highest special servicer rating by Fitch, making LNR the only special servicer with this
Slide 29: CMBS and Special Servicing
CMBS and Special Servicing (10) Owned CMBS by Vintage LNR Special Servicer $ millions $ billions Named SS: 180 $106.7B $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 Q1 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q
Slide 30: Capitalization
CAPITALIZATION 27
Slide 31: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios 3.8x Ba2 / BB / BB+ Current Corporate Issuer Rating Off-Balance Sheet $4.2B 2.5x Total Unencumbered Assets 1.6x On-Balance Fixed Charge Coverage Ratio Sheet 1.8x Unencumbered Assets to Unsecured Debt (11) Adjusted On Balance Sheet
Slide 32: Capitalization Overview, continued
Capitalization Overview, continued $ billions Ø 87% of our outstanding debt does not permit valuation adjustments based on capital market events Total Debt Outstanding Margin Call Provisions (including off-balance sheet) (including off-balance sheet) Secured Debt $14.9 Spread and Credit $3.5 Unsecur
Slide 33: Book Value and Fair Value per Share Bridge
Book Value and Fair Value per Share Bridge $0.18 $21.55 $0.93 $21.37 $20.44 Q1'23 Q1'23 Q1'23 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 34: Financing Facilities
Financing Facilities $ millions $25.6B $8.3B 25 Max Facility Size Available Capacity Counterparties Debt Obligations Maximum Facility (13) Available Type (13) Drawn Size Capacity Asset Specific Financing: Large Loans, Commercial $ 13,411 $ 8,075 $ 5,336 Infrastructure Lending Segment 2,209 1,060 1,1
Slide 35: Financial Capacity
Financial Capacity Total Available Capital + Available On-BS Financing (14) $ $ 635 7,763 $ millions Total Potential Liquidity $ 8,398 $1,800 $1,500 $1,200 $411 $(171) $(225) $900 $635 $449 $620 $600 $300 $171 $0 Cash & Approved and Current liquidity 90-day 90-day Working capital Total available equ
Slide 36: Share Count
Share Count shares in thousands 2023 2022 Q1 Q4 Number of Shares, GAAP EPS: Basic — Average shares outstanding 308,408 307,352 Effect of dilutive securities — Convertible Notes — 9,649 Effect of dilutive securities — Other 588 587 Diluted — Average shares outstanding 308,996 317,588 Shares Outstandi
Slide 37: Appendix
APPENDIX 34
Slide 38: 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 39: Footnotes
Footnotes 1. Excludes $709M of commercial portfolio which are classfied 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 $1,264M are included in the first mortgage balance as of March 31, 2023. 4. U
Slide 40: Footnotes, continued
Footnotes, continued 12. Includes our share of the Woodstar portfolio debt with a UPB of $1,002M. 13. Excludes non-recourse CLOs, SASB, residential lending securitizations, commercial lending A-note sales, third party securitizations and our share of the Woodstar portfolio debt. Drawn amounts also e
Slide 41: 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 42: 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 43: 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 44: NYSE: STWD
NYSE : STWD
Starwood Property Trust — Q1 2023 Earnings Presentation on 6ix