Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q3 2021 Earnings Presentation
45 slides from Starwood Property Trust's earnings presentation, Nov 9, 2021
Slide 1: Q3 2021 Supplemental Reporting Information
SUPPLEMENTAL Q1 REPORTING 2021 INFORMATION Q3 SUPPLEMENTAL REPORTING 2021 INFORMATION
Slide 2: Table of Contents
Table of Contents Press Release Page 1 Highlights Page 8 Commercial and Residential Lending Segment Page 10 Infrastructure Lending Segment Page 18 Property Segment Page 19 Investing and Servicing Segment Page 22 Capitalization Page 24 Appendix Page 29 Cover photo: Chase Tower, Dallas, TX - First Mor
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter Ended September 30, 2021
For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended September 30, 2021 – Quarterly GAAP Earnings of $0.44 and Distributable Earnings of $0.52 per Diluted Share – – $3.8 Billion of Investment Activity in Third Quarter – – $9.6 Billion of Investment Activity Year-to-Dat
Slide 5: Conference call details and About Starwood Property Trust
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. Dom
Slide 6: 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 September 30, 2021 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segm
Slide 7: 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 8: Condensed Consolidated Statement of Operations by Segment (Nine Months)
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the nine months ended September 30, 2021 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segme
Slide 9: Reconciliation of Net Income to Distributable Earnings
Reconciliation of Net Income to Distributable Earnings For the nine months ended September 30, 2021 (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
Slide 10: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of September 30, 2021 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal
Slide 11: Highlights
HIGHLIGHTS
Slide 12: STWD Highlights
STWD Highlights Leading diverse multi-cylinder platform New investments across business lines Robust Capital Deployment of $3.8B in Q3 and $9.6B YTD $21.6B of undepreciated assets plus Strong Balance Sheet embedded gains of $1.3B Issued 3.625% $400M corporate Capital Markets Access sustainability bo
Slide 13: Q3'21 Highlights
Q3’21 Highlights • DE of $0.52 and GAAP earnings of $0.44 per diluted share; dividend of $0.48 • Originated or acquired $3.8B of assets across business lines ◦ $1.7B in Commercial Lending, with 44% secured by multifamily and industrial ◦ $1.8B in Residential Lending Q3 • Funded $3.7B across business
Slide 14: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 15: Commercial Lending Portfolio
Commercial Lending Portfolio • $1.4B funded on new originations Q3 Activity • $172M follow on fundings • $872M repayments $12.1B • $35M A-note sales Total Portfolio 60% W.A. LTV 1 5 1 (5) Other 4 2% (1 loan) 1% 5% (7 loans) Industrial 4% 7% (9 loans) Retail Office 2% 30% 2 Mixed-Use 36% 13% (37 loan
Slide 16: Commercial Portfolio Metrics
Commercial Portfolio Metrics $ millions Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, Asset Carrying Values 2021 2021 2021 2020 2020 (1) First mortgage loans held-for-investment $ 10,985 $ 10,417 $ 9,955 $ 8,931 $ 8,524 (1) Subordinated mortgages 81 64 70 71 70 (1) Mezzanine loans 477 477 603 620 588 CM
Slide 17: Commercial Portfolio LTV
(2) Commercial Portfolio LTV $ billions First Mortgages Subordinated Mortgages Mezzanine Mortgages Preferred Equity 80% 13.0 Weighted Average Ending LTV / LTC of Loan Portfolio 12.0 75% 11.0 10.0 Dollar (Carrying values in billions) 9.0 70% 8.0 65% 65% 7.0 64% 64% 64% 65% 62% 6.0 61% 61% 61% 61% 60%
Slide 18: Commercial Portfolio Geographic Diversification
(4) Commercial Portfolio Geographic Diversification Northeast 4% Manhattan 1% San Francisco West 19% U.S. Midwest 17% 4% Mid-Atlantic 4% 11% Southwest 12% Southeast 10% 10% 10% Ireland UK Bahamas / Bermuda Australia International 2% 18% Netherlands 2% 2% 1% 1% Spain NOTE: Amounts are stated as a per
Slide 19: Commercial Portfolio Collateral Transformation
Commercial Portfolio Collateral Transformation Pre-COVID September 30, 2021 (5) (5) Other Other 3% Increased Exposure: 5% Industrial Industrial Multifamily (+85%) 4% 1% Retail Office Retail 30% 2% 3% Office Mixed-Use 38% Mixed-Use 13% 13% Residential POST-COVID Residential 8% TRANSFORMATION 3% Multi
Slide 20: Commercial Portfolio - Office and Hotel Detail
Commercial Portfolio - Office and Hotel Detail $ millions Office: $3.6B (17% of total assets); 62% WA LTV MSA $ Loans US: • 46% Suburban Washington, DC $ 793 5 • 54% CBD 30% Los Angeles, CA 517 4 International: Office United Kingdom 484 4 • 29% Suburban • 71% CBD Houston, TX 289 2 Brooklyn, NY 259 2
Slide 21: Top Commercial Lending Commitments
Top 10 Commercial Lending Commitments $ millions Origination Fully Extended Loan Loan Type Location Property Type UPB LTV Date Maturity Date Commitment Senior 2/19/2021 2/25/2028 Various, UK Mixed Use 485.0 485.0 59% Senior 1/8/2019 1/11/2026 Birmingham, UK Other 336.7 336.7 69% Senior/Mezz 12/23/20
Slide 22: Residential Portfolio
Residential Portfolio $ millions Significant Activity During the Quarter: Ø Acquired $1.8B of loans, including $262M from the redemption of a consolidated RMBS trust Ø Securitized $470M of loans in our 13th securitization Ø Added an additional $650M in capacity to existing financing facilities, brin
Slide 23: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 24: Infrastructure Portfolio Metrics and Activity
Portfolio Metrics and Activity Q3 Activity • $90M funded on new originations • $16M follow on fundings $1.8B • $113M repayments Total Portfolio Mexico Other Thermal Other U.S. 2% Other International 6% 2% 1% Midstream / Downstream Mid-Atlantic 25% 2% Geographic Location West 6% (6) Southeast Sector
Slide 25: Property Segment
PROPERTY SEGMENT 25
Slide 26: Investment Portfolio
Investment Portfolio $ millions Subsequent to Quarter End: Ø Upsized Woodstar I Portfolio financing by $163M at LIBOR + 2.11% for a term of two years plus three one-year extensions Ø Established an investment fund (the "Fund") which holds Woodstar I and Woodstar II affordable housing portfolios Ø So
Slide 27: Portfolio Snapshot
Portfolio Snapshot $ millions Medical Office Portfolio Northeast West Gross Midwest Occupancy Sq. Ft. Investment 30% Northeast $ 228 100 % 430 17% 15% Texas 154 93 % 457 Southeast 139 92 % 366 Southeast Texas West 131 90 % 372 Midwest 110 93 % 325 18% Total $ 762 94 % 1,950 20% Master Lease Portfoli
Slide 28: Portfolio Snapshot
Portfolio Snapshot $ millions Woodstar I and II Multifamily Portfolios Gross Florida Occupancy Units Investment North $ 78 96 % 1,230 Central $ 965 99 % 11,879 South 209 98 % 1,948 Total $ 1,252 98 % 15,057 North 6% Central 77% South 17% NOTE: Amounts are as of and for the period ended September 30,
Slide 29: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 30: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Securitized a single asset loan for $113M and priced $239M of conduit loans in one transaction that settled subsequent to quarter end Ø Sold CMBS for gross proceeds of $17M and a net DE gain of $5M Ø Obtained 17 new servicing
Slide 31: CMBS and Special Servicing
CMBS and Special Servicing $ millions (10) Owned CMBS by Vintage LNR Special Servicer CMBS CMBS Named SS: 1.0 2.0/3.0 1% 99% $250 170 $91,420 $200 CMBS Trusts Unpaid Balance $150 Active SS: $100 $50 $4,685 $2,636 SS Loan Balance REO Loan Balance $0 '08 & '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 P
Slide 32: Capitalization
CAPITALIZATION 27
Slide 33: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios Ba2 / BB+ 4.1x Current Corporate Issuer Rating $2.5B 2.5x Total Unencumbered Assets 2.3x Interest Coverage Ratio 1.4x Adjusted On BS leverage (11) Unencumbered Assets to Unsecured Debt Commercial Lending A-note sales Residential L
Slide 34: Book Value and Fair Value per Share Bridge
Book Value and Fair Value per Share Bridge $4.57 $21.71 $1.59 $17.14 $15.55 Q3’21 Q3’21 Q3’21 Current Current GAAP Accumulated Undepreciated FMV Adjustment* FMV Book Value Depreciation Book Value • Represents management’s current estimate of fair market value (FMV) of our property assets and does no
Slide 35: Financing Facilities
Financing Facilities $ millions $21B Max Facility Size Debt Obligations Maximum (12) Available Type (12) Drawn Facility Size Capacity Asset Specific Financing: Large Loans, Commercial $ 10,771 $ 5,437 $ 5,334 Infrastructure Lending Segment 1,902 915 987 Property Segment 1,894 1,894 — Residential Loa
Slide 36: Financial Capacity
Financial Capacity ($ millions) Total Available Capital $ 549 (13) + Available On-BS Financing $ 6,945 $2,400 Total Potential Liquidity $ 7,494 $1,800 $557 $(300) $1,200 $(287) $216 $(225) $47 $549 $300 $541 $600 $241 $0 Cash & Approved Current RMBS Woodstar Loan Repayment Expected Working Total equ
Slide 37: Share Count
Share Count (shares in thousands) 2021 2021 Q1 Q2 Q3 YTD Number of Shares, GAAP EPS: Basic — Average shares outstanding 283,319 284,710 285,676 284,577 Effect of dilutive securities — Convertible Notes 9,649 9,649 9,649 9,649 Effect of dilutive securities — Other 263 212 123 167 Diluted — Average sh
Slide 38: Appendix
APPENDIX 34
Slide 39: 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 40: 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 41: 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 42: Calculation Methodologies
Calculation Methodologies Ø 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 43: 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 44: 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 45: NYSE: STWD
NYSE : STWD
Starwood Property Trust — Q3 2021 Earnings Presentation on 6ix