Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q1 2024 Earnings Presentation
45 slides from Starwood Property Trust's earnings presentation, May 8, 2024
Slide 1: Q1 2024 Supplemental Reporting Information
Q1 SUPPLEMENTAL 2024 REPORTING INFORMATION
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 17 Property Segment Page 18 Investing and Servicing Segment Page 21 Capitalization Page 23 Appendix Page 29 Cover photo: Cross-collateralized portfolio of f
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for Quarter Ended March 31, 2024
For Immediate Release Starwood Property Trust Reports Results for Quarter Ended March 31, 2024 – Quarterly GAAP Earnings of $0.48 and Distributable Earnings (DE) of $0.59 per Diluted Share – – Issued $600 Million of Senior Unsecured Sustainability Notes due 2029 – – Sold Master Lease Portfolio for $
Slide 5: Webcast and Conference Call Information
Webcast and Conference Call Information The Company will host a live webcast and conference call on Wednesday, May 8, 2024, 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
Slide 6: Additional information and 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, 2024 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment
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 Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of March 31, 2024 (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 $26.1B of total assets with an adjusted debt- Strong Balance Sheet to-equity ratio of 2.3x and undepreciated book value per share of $20.69 Consistent Dividend Paid quarterly dividend of $0.48
Slide 12: Q1 2024 Highlights
Q1 2024 Highlights • GAAP book value per share of $19.85 and undepreciated book value of $20.69 ◦ GAAP book value reflects $1.70 per share reduction for CECL reserves and property impairments • GAAP earnings of $0.48 and Distributable Earnings ("DE") of $0.59 per diluted share • Sold Master Lease Po
Slide 13: Total Assets $26.1B
Total Assets Ø U.S. office represents only 11% of our diversified $26.1B asset base Int'l Office 3% Commercial U.S. Office 11% Loans Multifamily 58% Intangibles 21% 1% Ot he r2 Ca % sh & A/ R2 % REIS CM BS 4% Infrastructure Lending $26.1B Hotel 8% 10% Mi xe dU 2% se e % In 5 % ff ic r 2 d l O e us t
Slide 14: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 15: Commercial Lending Portfolio
Commercial Lending Portfolio Q1 Activity Loan Risk Rating • $128M follow on fundings • $909M in repayments Not 5 Rated 1 (Investment 4 (4 loans) Securities) (1 loan) (10 loans) $0.4B 2 $0.6B $1 3 (26 loans) .6B (107 loans) $3.4B (1) $15.1B 2.9 W.A. Risk Total Portfolio Rating * $9.1B * 2.9 in prior
Slide 16: Commercial Lending Characteristics and Top Loans
Top 10 Loans by Largest Property Types Multifamily Office Hotel International Characteristics 14% 19% 27% U.S. 12% 7% Property $5.6B 14% $0.8B $2.2B 16% 21% 60% 26% $2.8B 88% 10% 86% Southeast Southwest West Northeast Leisure Extended Stay Mid-Atlantic Midwest International Class A Class B Business
Slide 17: Collateral Diversification
Collateral Diversification Ø Commercial loan portfolio transformed over time, with multifamily being our largest property type Multifamily Office Hotel Mixed Use Industrial Residential Retail Other 100% 80% 60% 40% 20% —% 9 1 3 0 1 3 0 2 4 9 1 2 9 1 3 0 2 3 9 0 2 3'1 2'2 1'2 1'2 4'2 3'2 3'2 2'2 1'2
Slide 18: Commercial Portfolio Geographic Diversification
(2) Commercial Portfolio Geographic Diversification 2% Manhattan U.S. Northeast 18 % Southeast 17 % Southwest 16 % Mid-Atlantic 10 % West 9% Midwest 2% Europe Australia Bahamas / Bermuda Europe: International UK 12 % Ireland 2% Italy 2% Other Europe 2% Australia 8% Bahamas/Bermuda 2% NOTE: Amounts a
Slide 19: Commercial Lending Metrics
Commercial Lending Metrics (3) Mezzanine Subordinated First Mortgages Lending CMBS (3) Preferred Equity Total CRE ($ millions) Loans Mortgages $14,099 $561 $297 $77 $17 $15,051 Carrying Value Carrying Value $13,569 $561 $297 $73 $0 $14,500 on Accrual Unlevered Return for Assets on 9.3% 10.2% 14.3% 1
Slide 20: Top Commercial Lending Commitments
Top 10 Commercial Lending Commitments(5) $ millions Origination Fully Extended Loan Loan Type Location Property Type UPB Date Maturity Date Commitment Senior Jun 2022 Jun 2029 Various, Australia Casino Hotel* $ 897.9 $ 897.9 Senior Feb 2021 Feb 2028 Various, UK Mixed Use 444.3 444.3 Senior/Mezz Dec
Slide 21: Residential Portfolio
Residential Portfolio $ millions Ø During the quarter, recorded $9M net unrealized fair value decrease: – Loans: $38M decrease – RMBS: $7M decrease – Interest Rate Hedges: $36M increase to FMV of $133M Asset Carrying Values Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Loans, held
Slide 22: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 23: Portfolio Metrics and Activity
Portfolio Metrics and Activity Q1 Activity • $120M new commitments ($96M funded) $2.5B • $42M follow on fundings Total • $210M repayments Portfolio (6) Geographic Location Sector Power 55% Southwest Northeast 29% 31% Upstream Midwest Midstream Int'l 3% West 1% 20% 35% 4% Southeast Mid-Atlantic 2% Ot
Slide 24: Property Segment
PROPERTY SEGMENT 25
Slide 25: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Sold Master Lease Portfolio for gross proceeds of $387M ($188M net), a net GAAP gain of $91M and a net DE gain of $37M Ø Unrealized fair value decreases of $8M (or $7M, net of 20.6% non-controlling interests) in the Woodstar
Slide 26: 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 27: Portfolio Snapshot
Portfolio Snapshot $ millions, sq. ft. in thousands Medical Office Woodstar Fund Gross Region % Occupancy Sq. Ft. Region % Occupancy Units investment Northeast 30% $ 228 100% 430 North 7% 94% 1,230 Texas 20% 157 86% 457 Central 77% 99% 11,879 Southeast 18% 141 82% 366 South 16% 100% 1,948 West 17% 1
Slide 28: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 29: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Securitized $212M of conduit loans in four transactions Ø Total active servicing portfolio increased from $6.6B to $7.2B Asset Carrying Values Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Owned CMBS, non-V
Slide 30: CMBS and Special Servicing
CMBS and Special Servicing (9) Owned CMBS by Vintage LNR Special Servicer $ millions $ billions Named SS: 177 $96.1B $250 CMBS Trusts Loan Balance $200 $150 Named SS Balance $150 $100 $100 $50 $50 '20 '21 '15 '22 '16 '23 '17 '24 '18 '19 '20 '15 '21 '16 '22 '17 '23 '18 '19 Q1 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
Slide 31: Capitalization
CAPITALIZATION 27
Slide 32: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios Ba2 / BB / BB+ Current Corporate Issuer Rating $4.6B Total Unencumbered Assets 2.79x Off-Balance 2.33x Sheet 1.6x Fixed Charge Coverage Ratio On-Balance Sheet 1.6x Unencumbered Assets to Unsecured Debt $26.1B Total Capitalization
Slide 33: Capitalization Overview, continued
Capitalization Overview, continued $ billions Ø 93% of commercial lending debt and 82% 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 * $12.3 Spread and Credi
Slide 34: Book Value per Share Bridge
Book Value per Share Bridge $20.69 $0.84 $19.85 Q1'24 Q1'24 Q1'24 GAAP Accumulated Undepreciated Book Value Depreciation & Amortization Book Value 23 25
Slide 35: Financing Facilities
Financing Facilities $ millions $25.1B $9.7B 22 Max Facility Size Available Capacity Counterparties Debt Obligations Maximum Facility (12) Available Type (12) Drawn Size Capacity Asset Specific Financing: Large Loans, Commercial $ 13,550 $ 6,419 $ 7,131 Infrastructure Lending Segment 1,705 1,075 630
Slide 36: Financial Capacity
Financial Capacity Total Available Capital + Available On-BS Financing (13) $ $ 1,417 8,398 $ millions Total Potential Liquidity $ 9,815 $352 $(170) $1,800 $(225) $1,500 $1,247 $1,460 $1,417 $1,200 $900 $600 $300 $213 $0 Cash & Approved and Current liquidity 90-day 90-day expected Working capital To
Slide 37: Share Count
Share Count shares in thousands 2024 2023 Q1 Q4 Number of Shares, GAAP EPS: Basic — Average shares outstanding 311,827 310,660 Effect of dilutive securities — Convertible Notes 18,344 — Effect of dilutive securities — Other 669 789 Diluted — Average shares outstanding 330,840 311,449 Shares Outstand
Slide 38: Appendix
APPENDIX 34
Slide 39: 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 40: Footnotes
Footnotes 1. Excludes $578M of the commercial portfolio which are classified as CMBS or preferred equity investments and are not risk rated. 2. Excludes <1.0% of CMBS which are not associated with a particular region. 3. Contiguous mezzanine loans of $983M are included in the first mortgage balance
Slide 41: Footnotes, continued
Footnotes, continued 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 potential proceeds from future A-note sales or CLO securitizations and is as of quar
Slide 42: Calculation Methodologies
Calculation Methodologies Distributable Earnings: Distributable Earnings is a non-GAAP measure. We calculate Distributable Earnings as GAAP net income (loss) excluding the following: (i) non-cash equity compensation expense; (ii) the incentive fee due under our management agreement; (iii) acquisitio
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 — Q1 2024 Earnings Presentation on 6ix