Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q1 2019 Earnings Presentation
39 slides from Starwood Property Trust's earnings presentation, May 8, 2019
Slide 1: Q1 2019 Supplemental Reporting Information
Q1 SUPPLEMENTAL REPORTING 2019 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 13 Property Segment Page 14 Investing and Servicing Segment Page 17 Capitalization Page 19 Appendix Page 24 Cover photo: 424 Fifth Avenue, New York, NY - $37
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter Ended March 31, 2019
For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended March 31, 2019 – Deploys $2.0 Billion of Capital, Including $1.0 Billion in Commercial Lending – – Declares Dividend of $0.48 per share for the Second Quarter of 2019 – GREENWICH, Conn., May 8, 2019 /PRNewswire/ -- S
Slide 5: Conference Call Details and About Starwood Property Trust
To Participate via Telephone: Dial in at least ten minutes prior to start time. Domestic: 1-877-407-9039 International: 1-201-689-8470 Conference Call Playback: Domestic: 1-844-512-2921 International: 1-412-317-6671 Passcode: 13689755 The playback can be accessed through May 15, 2019. About Starwood
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, 2019 (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, 2019 (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 – First Quarter 2019
Business Highlights – First Quarter 2019 Core earnings of $0.28 and GAAP earnings of $0.25 per diluted share Consolidated Core earnings reflects impact of Regional Mall Portfolio write-down of $0.24 per diluted share Undepreciated book value per outstanding share of $17.62 Commercial: Orig
Slide 11: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 12: Commercial Lending Activity During the Quarter
Commercial Lending Activity During the Quarter Property Type Originated $1.0B of new loans Funded $790M Mixed Use 33% 100% floating rate Office 50% Weighted average LTV of 65% Average loan size: $235M Multi-family 2% Fundings under previously originated Hotel 15% commitments of $219M Geo
Slide 13: Significant Activity During the Quarter
Significant Activity During the Quarter Commercial lending investment activity of $1.0B, including: $379M first mortgage and mezzanine loan for the acquisition and redevelopment of two office buildings located in Manhattan, New York £250M first mortgage loan to the owner of the United Kingdom’
Slide 14: Commercial Portfolio Metrics
Commercial Portfolio Metrics $ millions March 31, Dec 31, Sept 30, June 30, March 31, Asset Carrying Values 2019 2018 2018 2018 2018 First mortgage loans (1), (2) $ 6,828 $ 6,619 $ 6,540 $ 6,363 $ 5,429 Subordinated mortgages (2) 45 45 180 149 177 Mezzanine loans (1) 579 394 352 386 547 CMBS 560 567
Slide 15: Commercial Weighted Average LTV or LTC
Commercial Weighted Average LTV or LTC (3) $ billions Weighted Average Ending LTV / LTC of Loan Portfolio 80.0% 9.0 8.0 Preferred Equity 75.0% Dollar (Carrying values in billions) 7.0 70.0% 6.0 Mezzanine loans 5.0 64.2% 64.3% 65.0% 63.8% Subordinated 63.4% 63.3% 62.8% 62.9% 62.4% 62.5% 61.9% 62.1% 6
Slide 16: Commercial Portfolio Snapshot
Commercial Portfolio Snapshot $ millions Geographic Diversification Collateral Diversification PROPERTY TYPE West Northeast Carrying Value as of: March 31, 2019 December 31, 2018 Midwest 29% Office $ 3,050 37% $ 2,720 35% 21% 28% Hotel 1,785 22% 1,822 23% Mixed-Use 1,219 15% 921 12% 6% 7% Mid-Atlant
Slide 17: Residential Portfolio Metrics
Residential Portfolio Metrics $ millions Residential lending investment activity: Purchased non-agency loans of $458M, bringing the total loan portfolio to $688M with an average FICO of 730 and LTV of 66.1% Securitized $340M of non-agency residential loans and retained $26M of RMBS March 31, D
Slide 18: Infrastructure Lending
INFRASTRUCTURE LENDING 25
Slide 19: Portfolio Metrics and Activity During the Quarter
Portfolio Metrics and Activity During the Quarter Purchased $238M of loans • 100% floating rate Received $458M from sales ($173M) and repayments ($285M) Funded $46M under existing loan commitments Total portfolio carrying amount of $1.8B Portfolio by Geographic Location Portfolio by Sector (
Slide 20: Property Segment
PROPERTY SEGMENT 25
Slide 21: Investment Portfolio
Investment Portfolio $ millions Recognized a write-down to our 33% investment in the Regional Mall Portfolio of $45M and $69M for GAAP and Core Earnings, respectively Net Carrying Q1 2019 Net Asset Specific Net Occupancy Investment (8) Operating Value Financing Investment Rate Income Wholly-Owned:
Slide 22: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Medical Office Portfolio Northeast Gross West Occupancy Sq. Ft. Investment Midwest 17% 30% Midwest 108 89% 325 15% Northeast 228 100% 430 Southeast 139 93% 366 Texas Southeast Texas 155 93% 457 West 130 91% 372 20% 18% Total $ 760 93% 1,950
Slide 23: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Woodstar I and II Ireland Portfolio Gross Gross Florida Occupancy Units Occupancy Sq. Ft. Investment Investment North $ 76 92% 1,230 Total $ 512 98.8% 601 Central 946 99% 11,879 South 205 99% 1,948 Total $ 1,227 99% 15,057 North 6% Dublin Ce
Slide 24: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 25: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Obtained four new servicing assignments for CMBS trusts with a total unpaid principal balance of $3.2B Sold $37M of CMBS for Core gains of $8M Securitized $179M of conduit loans Asset Carrying Values Mar 31, 2019 Dec 31,
Slide 26: CMBS and Special Servicing
CMBS and Special Servicing $ millions Owned CMBS by Vintage (11) LNR Special Servicer Portfolio Statistics CMBS 1.0 CMBS 2.0/3.0 Named SS: 7% 93% # of CMBS Trusts 179 $250 Unpaid Balance $ 86,135 Active SS: $200 SS Loan Balance $ 2,600 REO Loan Balance 3,900 $150 Total Active SS Balance $ 6,500 $100
Slide 27: Capitalization
CAPITALIZATION 27
Slide 28: Capitalization Overview
Capitalization Overview Credit Metrics Net Debt-to-Equity Ratios (12) Total capitalization of $17.4B 2.9x Interest coverage ratio of 1.6x (2.1x excluding Regional Mall Portfolio write- Including 2.1x off Balance down) Sheet On Current corporate issuer rating of Ba2/BB Balance Sheet Outlook r
Slide 29: Financing Facilities
Financing Facilities $ millions Debt Obligations Maximum Available (13) Type Facility Size Drawn Capacity Asset Specific Financing: Large Loans, Commercial $ 7,074 $ 4,143 $ 2,931 I nfrastructure Lending Segment 2,028 1,433 595 Property Segment 1,925 1,893 32 Residential Loans 2,400 500 1,900 Condui
Slide 30: Interest Rate Sensitivity
Interest Rate Sensitivity 93% of the commercial loan portfolio is indexed to LIBOR 100% of the infrastructure loan portfolio is indexed to LIBOR Net Interest Income Per Share Sensitivity to LIBOR $0.20 $0.13 $0.10 $0.08 $0.06 $0.00 $0.00 2.0% Decrease 1.0% Decrease 1.0% Increase 2.0% Increase NO
Slide 31: Financial Capacity
Financial Capacity ($ millions) Capacity to originate or acquire up to an additional $5.7B of new investments $7,000 $6,000 $4,915 $5,747 $5,000 $4,000 $3,000 $2,000 $787 ($351) ($225) $1,000 $832 $234 $248 $139 $0 Cash and Net equity Approved 90-day 90-day Cash Total Available on- Total equivalen
Slide 32: Share Count
Share Count (shares in thousands) 2019 2018 2018 Q1 Q1 Q2 Q3 Q4 Full Year Number of Shares, GAAP: Basic — Av erage shares outstanding 277,544 260,664 260,998 265,355 273,949 265,279 Effect of dilutiv e securities — Conv ertible Notes - 1,209 27,134 - 13,772 22,659 Effect of dilutiv e securities — Ot
Slide 33: Appendix
APPENDIX 34
Slide 34: 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 35: 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 36: Footnotes, continued
Footnotes, continued 9. Net operating income represents rental income less costs of rental operations and excludes interest, depreciation and amortization. It also excludes an allowance for recurring capital expenditures at multifamily properties and any other adjustments that would be made in the c
Slide 37: Calculation Methodologies
Calculation Methodologies Commercial and Residential Lending Segment LTV & LTC For loans which utilize property value as the denominator, value is determined by reference to either appraisals, desk underwriting, discussions with brokers and other experts, or any combination thereof. To the exten
Slide 38: 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 39: NYSE: STWD
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