Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q1 2020 Earnings Presentation
38 slides from Starwood Property Trust's earnings presentation, May 4, 2020
Slide 1: Supplemental Information Q1 2020 Reporting
SUPPLEMENTAL Q1 REPORTING 2020 INFORMATION
Slide 2: Table of Contents
Table of Contents Press Release Page 1 Highlights Page 6 Commercial and Residential Lending Segment Page 7 Infrastructure Lending Segment Page 12 Property Segment Page 13 Investing and Servicing Segment Page 16 Capitalization Page 18 Appendix Page 23 Cover photo: Lakeshore Towers, Irvine, CA. - Firs
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter Ended March 31, 2020
For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended March 31, 2020 GREENWICH, Conn., May 4, 2020 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2020. The Company had a first quarter 2
Slide 5: About Starwood Property Trust, Inc.
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 $63 bi
Slide 6: 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, 2020 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment
Slide 7: Definition of Core Earnings
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
Slide 8: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of March 31, 2020 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs
Slide 9: Highlights
HIGHLIGHTS
Slide 10: Business Highlights
Business Highlights Core earnings of $0.55 and GAAP loss of $0.24 per diluted share Undepreciated book value per outstanding share of $16.94, including non-cash impacts of CECL ($0.29) Q1 and mark-to-market ($0.58), both driven by the macroeconomic impacts of COVID-19 Performance Capital deplo
Slide 11: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 12: Commercial Lending Highlights
Commercial Lending Highlights Originated $853M of loans, including: $220M first mortgage and mezzanine loan on a 41-property extended stay portfolio located across the U.S. $197M first mortgage loan to refinance the existing leasehold debt and provide acquisition financing for the fee interest
Slide 13: Commercial Portfolio Metrics
Commercial Portfolio Metrics $ millions March 31, Dec 31, Sept 30, June 30, March 31, Asset Carrying Values 2020 2019 2019 2019 2019 First mortgage loans held-for-inv estment (1) $ 8,290 $ 7,927 $ 6,531 $ 6,878 $ 6,851 Subordinated mortgages 68 75 53 53 53 Mezzanine loans (1) 524 484 545 446 579 CMB
Slide 14: Commercial Portfolio LTV
Commercial Portfolio LTV (2) $ billions 80.0% 10.0 Weighted Average Ending LTV / LTC of Loan Portfolio 9.0 Preferred Equity 75.0% Dollar (Carrying values in billions) 8.0 7.0 70.0% Mezzanine loans 6.0 64.6% 64.9% 65.0% 64.2% 64.3% 64.1% 5.0 62.9% Subordinated 62.4% mortgages 62.1% 63.3% 62.8% 62.5%
Slide 15: Commercial Portfolio Snapshot
Commercial Portfolio Snapshot $ millions Geographic Diversification Collateral Diversification West Northeast (5) Other Industrial 8% Midwest 1% 24% 25% Retail 3% 5% Mixed-Use Office Mid-Atlantic 7% 39% Southwest 8% Residential 9% 12% 10% Southeast Other (4) Multifamily 8% 11% 1% 2% Hotel 22% Intern
Slide 16: Residential Portfolio Metrics
Residential Portfolio Metrics $ millions Significant Activity During the Quarter: Purchased $386M of non-agency loans Completed sixth non-agency residential securitization, selling $381M of loans Total loan portfolio of $1.2B, with an average FICO of 730 and LTV of 68.9% $423M of loans recla
Slide 17: Infrastructure Lending
INFRASTRUCTURE LENDING 25
Slide 18: Portfolio Metrics and Activity During the Quarter
Portfolio Metrics and Activity During the Quarter Total portfolio carrying amount of $1.6B Acquired $15M of loans and funded $48M under pre-existing loan commitments Received $78M from sales and maturities / principal repayments CECL: general reserve of $21M reflects macroeconomic conditions
Slide 19: Property Segment
PROPERTY SEGMENT 25
Slide 20: Investment Portfolio
Investment Portfolio $ millions Q1'20 Net Net Carrying Asset Specific Net Occupancy Investment (8) Operating Value Financing Investment Rate Income Wholly-Owned: Medical Office Portfolio $ 760 $ 591 $ 169 $ 11.8 93.0% Woodstar I Portfolio 631 478 153 11.9 98.3% Woodstar II Portfolio 607 437 170 10.4
Slide 21: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Medical Office Portfolio Northeast Gross Occupancy Sq. Ft. West Investment Midwest Midwest $ 109 90% 325 17% 30% Northeast 228 100% 430 15% Southeast 139 93% 366 Texas 154 94% 457 Texas Southeast West 130 87% 372 Total $ 760 93% 1,950 20% 18
Slide 22: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Woodstar I and II Multifamily Portfolios Gross Florida Occupancy Units Investment North $ 77 95% 1,230 Central 953 99% 11,879 South 208 99% 1,948 Total $ 1,238 99% 15,057 North 6% Central 77% South 17% NOTE: Amounts are as of and for the per
Slide 23: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 24: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Priced and securitized $336M of conduit loans in two transactions Obtained five new special servicing assignments for CMBS trusts with a total unpaid principal balance of $4.2B Asset Carrying Values Mar 31, 2020 Dec 31, 201
Slide 25: CMBS and Special Servicing
CMBS and Special Servicing $ millions Owned CMBS by Vintage (10) LNR Special Servicer Portfolio Statistics CMBS 1.0 CMBS 2.0/3.0 Named SS: 3% 97% $250 # of CMBS Trusts 183 Unpaid Balance $ 94,700 Active SS: $200 SS Loan Balance 2,100 REO Loan Balance 3,450 $150 Total Active SS Balance 5,550 $100 F
Slide 26: Capitalization
CAPITALIZATION 27
Slide 27: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios 3.2x Total capitalization of $15.4B Interest coverage ratio of 2.3x 2.1x Current corporate issuer rating of Ba2/BB- Total unencumbered assets of $3.3B Unencumbered assets to unsecured debt ratio of 1.7x Adjusted on-balan
Slide 28: Book Value per Share
Book Value per Share Q1 CECL reserve and mark-to-market adjustments reflect the macroeconomic impact of COVID-19 No losses or impairments were realized $20.00 $2.71 $19.65 $16.66 $1.18 $16.94 ($0.58) ($0.29) ($0.03) $15.76 $15.00 $10.00 Q4’19 MTM BV CECL BV Other Q1’20 Depreciation Q1’20 FMV Adj
Slide 29: Financing Facilities
Financing Facilities $ millions Debt Obligations Maximum Available Type Facility Size (12) Drawn (12) Capacity Asset Specific Financing: Large Loans, Commercial $ 9,880 $ 4,516 $ 5,364 I nfrastructure Lending Segment 2,490 1,197 1,293 Property Segment 1,717 1,717 - Residential Loans 2,400 838 1,562
Slide 30: Financial Capacity
Financial Capacity ($ millions) Capacity to originate or acquire up to an additional $8.2B of new investments Total Available Capital $844 (13) + Available On-BS Financing $7,374 $323 ($183) Total Potential Liquidity $8,218 $1,250 ($225) $1,000 $58 $61 $844 $810 $750 $500 $250 $0 Cash and Approved
Slide 31: Share Count
Share Count (shares in thousands) 2020 2019 2019 Q1 Q4 Q3 Q2 Q1 Full Year Number of Shares, GAAP: Basic — Av erage shares outstanding 280,990 280,533 279,992 279,239 277,544 279,337 Effect of dilutiv e securities — Conv ertible Notes - 9,649 9,649 9,649 - 9,805 Effect of dilutiv e securities — Other
Slide 32: Appendix
APPENDIX 34
Slide 33: Company Information
Company Information Starwood Property Trust, an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the United States. Additional information may be found on the Company’s website, www.starwoodpropertytrust.com Contac
Slide 34: Footnotes
Footnotes 1. First mortgages include first mortgage loans and any contiguous subordinated mortgage and/or mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The application of this methodology resulted in mezzani
Slide 35: Footnotes, continued
Footnotes, continued 10. Excludes non-controlling JV interests. CMBS 1.0 deals were originated prior to 2008. CMBS 2.0 / 3.0 deals were originated from 2009 forward. Different credit underwriting and regulatory requirements are applied to CMBS 2.0 / 3.0. 11. Represents (i) total outstanding secured
Slide 36: Calculation Methodologies
Calculation Methodologies Commercial and Residential Lending Segment LTV In order to determine LTV, we utilize 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
Slide 37: 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 38: NYSE: STWD
NYSE : STWD
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