Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q2 2021 Earnings Presentation
45 slides from Starwood Property Trust's earnings presentation, Aug 5, 2021
Slide 1: Supplemental Information Q2 2021 Reporting
SUPPLEMENTAL Q1 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: Thesis Miami - First Mortgage and M
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter Ended June 30, 2021
For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended June 30, 2021 – Quarterly GAAP Earnings of $0.40 and Distributable Earnings of $0.51 per Diluted Share – – $3.1 Billion of Investment Activity in Second Quarter, Including $1.7 Billion in Commercial Lending – – $5.8
Slide 5: Conference Call Playback
Conference Call Playback: Domestic: 1-844-512-2921 International: 1-412-317-6671 Passcode: 13720976 The playback can be accessed through August 12, 2021. About Starwood Property Trust, Inc. Starwood Property Trust (NYSE: STWD) is a leading diversified finance company with a core focus on the real es
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 June 30, 2021 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment S
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
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the six months ended June 30, 2021 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Seg
Slide 9: Reconciliation of Net Income to Distributable Earnings
Reconciliation of Net Income to Distributable Earnings For the six months ended June 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) attr
Slide 10: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of June 30, 2021 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs
Slide 11: Highlights
HIGHLIGHTS
Slide 12: STWD Highlights
STWD Highlights Strong diverse multi-cylinder platform Attractive Returns Consistent Credit Strong Balance Performance Sheet Strong ROE achieved across business lines 60.7% WA LTV and 2.7 WA 2.2x on-balance sheet risk rating of commercial leverage with access to loan portfolio varied capital sources
Slide 13: Q2'21 Highlights
Q2’21 Highlights Ø Distributable earnings of $0.51 and GAAP earnings of $0.40 per diluted share; dividend of $0.48 Ø Originated or acquired $3.1B of assets across business lines ▪ Originated $1.7B in Commercial Lending Q2 Performance Ø Funded $2.9B across business lines th th Ø Completed our 11 and
Slide 14: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 15: Commercial Lending Activity
Commercial Lending Activity Ø Originated or acquired $1.7B of loans, including: ▪ $460M first mortgage, mezzanine loan and preferred equity interest for the refinancing of a five asset portfolio of multifamily and office properties in New York and Connecticut ▪ $253M first mortgage and mezzanine loa
Slide 16: Commercial Portfolio Metrics
Commercial Portfolio Metrics $ millions Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, Asset Carrying Values 2021 2021 2020 2020 2020 (1) First mortgage loans held-for-investment $10,417 $9,955 $8,931 $8,524 $8,094 Subordinated mortgages 64 70 71 70 69 (1) Mezzanine loans 477 603 620 588 594 CMBS 437 436
Slide 17: Commercial Portfolio LTV
(2) Commercial Portfolio LTV $ billions First Mortgages Subordinated Mortgages Mezzanine Mortgages Preferred Equity 80.0% 12.0 Weighted Average Ending LTV / LTC of Loan Portfolio 75.0% 10.0 Dollar (Carrying values in billions) 70.0% 8.0 64.6% 64.9% 64.2% 64.3% 64.1% 65.0% 6.0 62.4% 62.5% 61.0% 60.7%
Slide 18: Commercial Loan Portfolio Snapshot
Commercial Loan Portfolio Snapshot Geographic Diversification Collateral Diversification (5) Other 6% Industrial 3% 18% 20% Retail 3% Office 4% Mixed- 28% Use 13% 10% 10% 1% San 5% Francisco Manhattan 10% Residential 1% 5% Hotel Multifamily 20% 27% 22% NOTE: Amounts are stated as a percentage of com
Slide 19: Commercial Portfolio Snapshot, continued
Commercial Portfolio Snapshot, continued Ø $3.2B of our commercial portfolio is Office and $2.3B is Hotel ▪ Of total Office and Hotel exposure, $310M is in Manhattan and $62M is in San Francisco Office: 61.9% WA LTV Hotel: 57.5% WA LTV US: International: ▪ 19% Extended Stay ▪ 53% Suburban ▪ 34% Subu
Slide 20: 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 1 Senior 2/19/2021 2/25/2028 Various, UK Mixed Use $497.8 $497.8 59.0% 2 Senior/Mezz 4/30/2021 5/11/2026 Northeast, USA Office & Multifamily $460.0
Slide 21: Commercial Portfolio Risk Ratings
Commercial Portfolio Risk Ratings Ø Below are the risk ratings on our commercial loan portfolio as of June 30, 2021: 51.2% 38.8% 7.2% 1.1% 1.7% 1 2 3 4 5 Number of loans: 6 38 65 9 1 Ø Weighted average risk rating of 2.7 NOTE: See the Ratings Criteria section included in the Appendix. 16
Slide 22: Residential Portfolio
Residential Portfolio $ millions Significant Activity During the Quarter: th th Ø Securitized $564M UPB of non-QM loans in our 11 and 12 securitizations Ø Acquired $663M of non-QM loans, including $172M from the redemption of a consolidated RMBS trust Ø Executed a new $150M financing facility, bring
Slide 23: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 24: Portfolio Metrics and Activity During the Quarter
Portfolio Metrics and Activity During the Quarter Ø Total portfolio carrying amount of $1.8B ▪ Funded or acquired $192M of loans, of which $168M related to Q2 investments ▪ Received $85M from principal repayments and $2M from loan sales Ø Completed inaugural $500M Infrastructure CLO with an initial
Slide 25: Property Segment
PROPERTY SEGMENT 25
Slide 26: Investment Portfolio
Investment Portfolio $ millions Net Asset Q2'21 Net Net Occupancy Investment Carrying Specific Operating (8) Investment Rate Value Financing Income Wholly-Owned: Medical Office Portfolio $ 761 $ 593 $ 168 $10.7 94% Woodstar I Portfolio 638 573 65 11.4 99% Woodstar II Portfolio 611 513 98 10.6 99% Ma
Slide 27: Portfolio Snapshot
Portfolio Snapshot $ millions Medical Office Portfolio Northeast West Gross Midwest Occupancy Sq. Ft. Investment 30% Midwest $ 109 91 % 325 17% 15% Northeast 228 100 % 430 Southeast 140 94 % 366 Southeast Texas Texas 154 93 % 457 West 130 89 % 372 18% Total $ 761 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 $ 77 97 % 1,230 Central 963 99 % 11,879 South 209 98 % 1,948 Total $ 1,249 99 % 15,057 North 6% Central 77% South 17% NOTE: Amounts are as of and for the period ended June 30, 2021,
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 $305M of conduit loans in one transaction and priced $237M of conduit loans in two securitizations that settled subsequent to June 30 Ø Sold one REO asset in the quarter for a Distributable Earnings and GAAP gain
Slide 31: CMBS and Special Servicing
CMBS and Special Servicing $ millions (11) Owned CMBS by Vintage LNR Special Servicer CMBS CMBS 1.0 2.0/3.0 1% 99% Portfolio Statistics $250 Named SS: $200 # of CMBS Trusts 156 Unpaid Balance $ 79,100 $150 Active SS: SS Loan Balance $ 4,900 REO Loan Balance 3,300 $100 (10) Total Active SS Balance $
Slide 32: Capitalization
CAPITALIZATION 27
Slide 33: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios ▪ Total capitalization: $21.6B 3.8x ▪ Interest coverage ratio: 2.2x ▪ Current corporate issuer rating: Ba2/BB+ ▪ Rated by Fitch for the first time with 2.2x corporate and bond issuer rating of BB+ ▪ Outlook upgraded by Moody's to
Slide 34: Book Value and Fair Value per Share Bridge
Book Value and Fair Value per Share Bridge $4.48 $21.55 $1.51 $17.07 $15.56 Q2’21 Q2’21 Q2’21 Current Current GAAP Accumulated Undepreciated Fair Market Value (FMV) FMV Book Value Depreciation Book Value Adjustment* • Represents management’s current estimate of fair market value of our property asse
Slide 35: Financing Facilities
Financing Facilities $ millions Ø $20B of available financing across 29 diverse counterparties, not including capacity that would result from selling A-notes or issuing CLOs or securitizations Debt Obligations Maximum (13) Available Type (13) Drawn Facility Size Capacity Asset Specific Financing: La
Slide 36: Financial Capacity
Financial Capacity ($ millions) Total Available Capital $ 1,064 (14) + Available On-BS Financing $ 7,319 Total Potential Liquidity $ 8,383 $2,400 $523 $(400) $1,800 $(136) $977 $1,253 $49 $(225) $1,200 $1,064 $600 $276 $0 Cash & Approved Current RMBS Expected Early Expected Working Total equivalents
Slide 37: Share Count
Share Count (shares in thousands) 2021 2021 Q2 Q1 YTD Number of Shares, GAAP EPS: Basic — Average shares outstanding 284,710 283,319 284,018 Effect of dilutive securities — Convertible Notes 9,649 9,649 9,649 Effect of dilutive securities — Other 212 263 141 Diluted — Average shares outstanding 294,
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. Although the trustee reflects $9.1B in active special servicing as of 6/30/2021, this amount was revised to reflect only those assets where management believes a typical servicing fee will be earned. Assets which formally transferred into and out of special servicing for a s
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 — Q2 2021 Earnings Presentation on 6ix