Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q3 2020 Earnings Presentation
45 slides from Starwood Property Trust's earnings presentation, Nov 6, 2020
Slide 1: Supplemental Reporting Information Q3 2020
SUPPLEMENTAL Q3 REPORTING 2020 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: IQ Student Housing Portfolio - Firs
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter Ended September 30, 2020
For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended September 30, 2020 – Quarterly GAAP Earnings of $0.52 and Core Earnings of $0.50 per Diluted Share – – Originated or Acquired $1.5 Billion of Assets – – Paid Third Quarter Dividend of $0.48 per Share – – Subsequent t
Slide 5: Conference Call Details and About Starwood Property Trust
To Participate via Telephone Conference Call: Dial in at least 15 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: 13709052 The playback can be accessed through November 12,
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, 2020 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segm
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 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, 2020 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segme
Slide 9: Reconciliation of Net Income to Core Earnings
Reconciliation of Net Income to Core Earnings For the nine months ended September 30, 2020 (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) attribu
Slide 10: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of September 30, 2020 (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 Continued to demonstrate the strength of our diverse multi-cylinder platform, with GAAP Earnings increasing to $0.52 per share, Core Earnings increasing to $0.50 per share and undepreciated book value increasing to $17.17 per share Consistent Credit Strong Balance Attractive Return
Slide 13: Third Quarter Highlights
Thirds Quarter Highlights Core earnings of $0.50 and GAAP earnings of $0.52 per diluted share, and dividend of $0.48 per share Originated or acquired $1.5B of assets, the entirely of which was funded Q3 Funded an additional $273M under pre-existing loan commitments Performance Received $335M
Slide 14: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 15: Commercial Lending Activity
Commercial Lending Activity Originated or acquired $441M of loans, including: £180M ($238M) first mortgage to finance a portfolio of 27 student housing properties in the United Kingdom €50M ($59M) first mortgage on a portfolio of 139 industrial assets located in the Netherlands and France Q3
Slide 16: Commercial Portfolio Metrics
Commercial Portfolio Metrics $ millions Sept 30, June 30, March 31, Dec 31, Sept 30, Asset Carrying Values 2020 2020 2020 2019 2019 First mortgage loans held-for-inv estment (1) $ 8,524 $ 8,094 $ 8,290 $ 7,927 $ 6,531 Subordinated mortgages 70 69 68 75 53 Mezzanine loans (1) 588 594 524 484 545 CMBS
Slide 17: Commercial Portfolio LTV
Commercial Portfolio LTV (2) $ billions First mortgages Subordinated mortgages Mezzanine loans 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 64.2% 64.6% 64.9% 65.0% 64.1% 6.0 62.1% 62.4% 64.3% 61.0% 60.7% 60.
Slide 18: Commercial Portfolio Snapshot
Commercial Portfolio Snapshot $ millions Geographic Diversification Collateral Diversification West Northeast (5) Other Midwest Industrial 8% 18% 24% 2% Retail 3% Office 5% Mid-Atlantic 34% Mixed-Use Southwest 10% 9% 12% 11% Southeast Residential 8% Other (4) 8% 1% 2% Multifamily 14% International H
Slide 19: Commercial Portfolio Snapshot, continued
Commercial Portfolio Snapshot, continued $3.3B of our portfolio is Office (19% of total assets) and $2.2B is Hotel (12% of total assets) Of our Office and Hotel exposure, less than 0.5% total asset exposure is to CBD San Francisco and less than 2.0% total asset exposure is to CBD Manhattan Offic
Slide 20: Top 10 Commercial Lending Commitments
Top 10 Commercial Lending Commitments $ millions Origination Fully Extended Loan Loan Type City State Property Type UPB LTV Date Maturity Date Commitment 1 Senior/Mezz 12/23/2019 1/9/2022 Washington DC Office $324.3 $273.6 72.1% 2 Senior 1/8/2019 1/11/2026 Birmingham UK Other 322.8 322.8 68.8% 3 Sen
Slide 21: Commercial Portfolio Risk Ratings
Commercial Portfolio Risk Ratings $ millions Below are the risk ratings on our commercial loan portfolio as of: September 30, 2020 June 30, 2020 55.0% 48.9% 32.6% 27.0% 17.3% 17.7% 0.3% 0.4% 0.3% 0.5% 1 2 3 4 5 1 2 3 4 5 Number of loans: Number of loans: 4 29 58 17 1 4 29 54 17 1 Weighted averag
Slide 22: Residential Portfolio Metrics
Residential Portfolio Metrics $ millions Significant Activity During the Quarter: Acquired $787M of loans Securitized $479M UPB of loans in our 8th securitization Executed two new financing facilities totaling $600M (one during the quarter and one subsequent to quarter end), bringing our total
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 Total portfolio carrying amount of $1.6B Funded $64M of loans, of which $20M related to Q3 investments Received $28M from principal repayments CECL: General reserve declined by $4M in the quarter to $16M Extended a financing facility with m
Slide 25: Property Segment
PROPERTY SEGMENT 25
Slide 26: Investment Portfolio
Investment Portfolio $ millions Q3'20 Net Net Carrying Asset Specific Net Occupancy Investment (8) Operating Value Financing Investment Rate Income Wholly-Owned: Medical Office Portfolio $ 760 $ 592 $ 168 $ 10.1 93% Woodstar I Portfolio 634 572 62 11.7 98% Woodstar II Portfolio 608 437 171 10.8 99%
Slide 27: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Medical Office Portfolio Northeast Gross West Occupancy Sq. Ft. Investment Midwest 30% Midwest $ 109 90% 325 17% 15% Northeast 228 100% 430 Southeast 139 95% 366 Texas Southeast Texas 154 92% 457 West 130 88% 372 20% 18% Total $ 760 93% 1,95
Slide 28: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Woodstar I and II Multifamily Portfolios Gross Florida Occupancy Units Investment North $ 77 96% 1,230 Central 957 99% 11,879 South 208 99% 1,948 Total $ 1,242 99% 15,057 North 6% Central 77% South 17% NOTE: Amounts are as of and for the per
Slide 29: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 30: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: As more loans continued to transfer into servicing as a result of COVID-19, active SS increased from $7.7B to $8.8B (10), bringing the year-to-date increase to $3.7B Securitized $151M of conduit loans in one transaction Ass
Slide 31: 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 3% 97% $250 Named SS: # of CMBS Trusts 163 $200 Unpaid Balance $ 81,360 Active SS: SS Loan Balance 5,580 $150 REO Loan Balance 3,245 (10) Total Active SS Balance 8,825 $10
Slide 32: Capitalization
CAPITALIZATION 27
Slide 33: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios 3.4x Total capitalization of $16.9B Interest coverage ratio of 2.5x Current corporate issuer rating of Ba2/BB- 2.1x Total unencumbered assets of $2.9B Unencumbered assets to unsecured debt ratio of 1.5x 1 2 Adjusted on-b
Slide 34: 2020 Book Value per Share Bridge
2020 Book Value per Share Bridge $3.01 $20.18 $1.31 $17.17 $16.66 ($0.23) ($0.31) ($1.44) $1.18 $15.86 Q4’19 Unrealized CECL YTD GAAP Q3’20 Q3’20 Undeprec. Fair Market FMV BV Changes in General Dividend Earnings BV Accum. BV Value Adj* FV Reserve (excl. CECL & Deprec. unrealized FV changes) * Repres
Slide 35: Financing Facilities
Financing Facilities $ millions Debt Obligations Maximum Available Type Facility Size (13) Drawn (13) Capacity Asset Specific Financing: Large Loans, Commercial $ 9,461 $ 4,658 $ 4,803 I nfrastructure Lending Segment 2,464 1,256 1,208 Property Segment 1,816 1,816 - Residential Loans 2,250 643 1,607
Slide 36: Financial Capacity
Financial Capacity ($ millions) Capacity to originate or acquire up to an additional $7.6B of new investments Total Av ailable Capital $652 (15) + Av ailable On-BS Financing $6,988 Total Potential Liquidity $7,640 $379 ($189) $1,250 ($250) $1,000 $57 $383 ($225) $750 $652 $497 $500 $250 $0 Cash an
Slide 37: Share Count
Share Count (shares in thousands) 2020 2020 Q3 Q2 Q1 YTD Number of Shares, GAAP: Basic — Av erage shares outstanding 282,596 281,461 280,990 281,686 Effect of dilutiv e securities — Conv ertible Notes 9,649 9,649 - - Effect of dilutiv e securities — Other 213 183 - 182 Diluted — Av erage shares outs
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 $10.1B and $8.0B in active special servicing as of 9/30/20 and 6/30/20, respectively, these amounts were revised to reflect only those assets where management believes a typical servicing fee will be earned. Assets which formally transferred int
Slide 42: 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 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 2020 Earnings Presentation on 6ix