Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q4 2023 Earnings Presentation
47 slides from Starwood Property Trust's earnings presentation, Feb 22, 2024
Slide 1: Q4 2023 Supplemental Reporting Information
Q4 SUPPLEMENTAL REPORTING 2023 INFORMATION
Slide 2: Table of Contents
Table of Contents Press Release Page 1 Highlights Page 9 Commercial and Residential Lending Segment Page 12 Infrastructure Lending Segment Page 19 Property Segment Page 20 Investing and Servicing Segment Page 23 Capitalization Page 25 Appendix Page 31 Cover photo: $143M participation in a build-to-s
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for Quarter and Year Ended December 31, 2023
For Immediate Release Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2023 – Quarterly GAAP Earnings of $0.22 and Distributable Earnings (DE) of $0.58 per Diluted Share – – Originated or Acquired $1.6 Billion of Assets in the Quarter and $3.1 Billion for the Year
Slide 5: Webcast and Conference Call Information
Webcast and Conference Call Information The Company will host a live webcast and conference call on Thursday, February 22, 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
Slide 6: 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 (Q4 2023)
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended December 31, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segme
Slide 8: Definition of Distributable Earnings and Reconciliation (Q4)
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 Statement of Operations by Segment (Year 2023)
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the year ended December 31, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segme
Slide 10: Reconciliation of Net Income to Distributable Earnings, Year 2023
Reconciliation of Net Income to Distributable Earnings For the year ended December 31, 2023 (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) attrib
Slide 11: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of December 31, 2023 (Amounts in thousands) Commercial and Infrastructure Investing Residential Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal V
Slide 12: Highlights
HIGHLIGHTS
Slide 13: STWD Highlights
STWD Highlights Leading diverse global multi-cylinder platform, built to thrive in all market environments $27.3B of total assets with an adjusted debt- Strong Balance Sheet to-equity ratio of 2.5x and undepreciated book value per share of $20.93 Paid Q4 dividend of $0.48, equating to a 9.7% annuali
Slide 14: Q4 and 2023 Highlights
Q4 and 2023 Highlights • GAAP book value per share of $19.95 and undepreciated book value of $20.93 ◦ GAAP book value reflects $1.56 per share reduction for CECL reserves and property impairments as of December 31 • GAAP earnings of $0.22 (FY $1.07) and Distributable Earnings ("DE") of $0.58 (FY $2.
Slide 15: Total Assets $27.3B
Total Assets Ø U.S. office loans represent only 10% of our diversified $27.3B asset base Int'l Office 3% Commercial Loans U.S. Office 10% Multifamily 58% Intangibles 21% 1% Ot he r3 % Ca sh &A /R % 2 REIS CM BS 4% $27.3B Hotel 8% Infrastructure Lending Mi 9% xe dU 1% se se e 2% In 4% a Le ffic % d s
Slide 16: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 17: Commercial Lending Portfolio
Commercial Lending Portfolio Q4 Activity Loan Risk Rating • $494M funded on new investments • $170M follow on fundings Not • $815M in repayments 5 Rated • $61M multifamily foreclosure 4 (3 loans) (Investment 1 Securities) (8 loans) (0 loans) $0.6B $0.5B .3B $1 3 $3.8B 2 (112 loans) (32 loans) (1) $1
Slide 18: Characteristics: Top Loans by Largest Property Types
Top 10 Loans by Largest Property Types Multifamily Office Hotel International Characteristics 1% 17% U.S. 19% 12% 26% Property 6% $5.9B 14% $0.8B $2.3B 15% 24% 57% 25% $2.7B 88% 10% 86% Southeast Southwest West Northeast Leisure Extended Stay Mid-Atlantic Midwest International Class A Class B Busine
Slide 19: Collateral Diversification
Collateral Diversification Ø Our commercial loan portfolio has transformed over time, with multifamily overtaking office as our largest property type Multifamily Office Hotel Mixed Use Industrial Residential Retail Other 100% 80% 60% 40% 20% —% 9 0 2 3 0 1 2 3 9 0 1 3 9 1 2 3 9 0 1 2 3'1 4'2 1'2 2'2
Slide 20: Commercial Portfolio Geographic Diversification
(2) Commercial Portfolio Geographic Diversification 2% Manhattan U.S. Southeast 16 % Northeast 16 % Southwest 15 % Mid-Atlantic 10 % West 9% Midwest 3% Europe Australia Bahamas / Bermuda Europe: International UK 13 % Ireland 4% Italy 2% Other Europe 2% Australia 8% Bahamas/Bermuda 2% NOTE: Amounts a
Slide 21: Commercial Lending Metrics
Commercial Lending Metrics (3) Mezzanine Subordinated First Mortgages Lending CMBS (3) Preferred Equity Total CRE ($ millions) Loans Mortgages Carrying $14,947 $581 $273 $77 $10 $15,888 Value Unlevered (4) 9.4% 10.1% 14.0% 16.0% 0.0% 9.5% Return First Mortgages Lending CMBS Mezzanine Loans Subordina
Slide 22: Top Commercial Lending Commitments
Top 10 Commercial Lending Commitments $ millions Fully Extended Loan Loan Type Origination Date Location Property Type UPB Maturity Date Commitment Senior Jun 2022 Jun 2029 Various, Australia Casino Hotel* $ 937.7 $ 937.7 Senior/Mezz Dec 2021 Dec 2025 Various, Ireland Industrial 528.0 365.0 Senior F
Slide 23: Residential Portfolio
Residential Portfolio $ millions Ø During the quarter, recorded $59M net fair value increase: – Loans: $152M increase – RMBS: $6M increase – Interest Rate Hedges: $99M decrease to FMV of $97M Asset Carrying Values Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Loans, held for sale
Slide 24: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 25: Portfolio Metrics and Activity
Portfolio Metrics and Activity Q4 Activity • $386M funded on new loans • $20M follow on fundings $2.6B • $182M repayments Total Portfolio (5) Geographic Location Sector Power Midwest 55% 19% Northeast 33% Upstream 1% Int'l 2% Southwest 28% Midstream Other - U.S. 2% West Other 35% 4% Southeast 10% 2%
Slide 26: Property Segment
PROPERTY SEGMENT 25
Slide 27: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Unrealized fair value increases of $22M (or $18M, net of 20.6% non-controlling interests) in the Woodstar Fund investments Net Asset Q4'23 Net Net Operating Occupancy Investment Carrying Specific (6) Investment (7) Rate Value
Slide 28: 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 29: Portfolio Snapshot
Portfolio Snapshot $ millions, sq. ft. in thousands Woodstar Fund Medical Office Master Lease Gross Gross Region % Occupancy Units Region % Occupancy Sq. Ft. Region % Occupancy Sq. Ft. investment investment North 7% 93% 1,230 Northeast 30% $ 228 100% 430 Midwest 36% $ 123 100% 757 Central 77% 99% 11
Slide 30: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 31: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Securitized $467M of conduit loans in five transactions Ø Total active servicing portfolio increased from $6.1B to $6.6B Ø Sold our controlling interest in a property for net proceeds of $13M, resulting in a net GAAP gain of
Slide 32: CMBS and Special Servicing
CMBS and Special Servicing (8) Owned CMBS by Vintage LNR Special Servicer $ millions $ billions Named SS: 178 $98.7B $250 CMBS Trusts Loan Balance $200 $150 Named SS Balance $150 $100 $100 $50 $50 '19 '20 '15 '21 '16 '22 '17 '23 '18 '19 '20 '14 '21 '15 '22 '16 '23 '17 '18 Q4 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2
Slide 33: Capitalization
CAPITALIZATION 27
Slide 34: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios Ba2 / BB / BB+ Current Corporate Issuer Rating $3.9B 2.98x Total Unencumbered Assets Off-Balance 2.47x Sheet 1.8x Fixed Charge Coverage Ratio On-Balance Sheet 1.8x Unencumbered Assets to Unsecured Debt $27.4B Total Capitalization
Slide 35: Capitalization Overview, continued
Capitalization Overview, continued $ billions Ø 91% of commercial lending debt and 83% of consolidated debt has no markets mark-to-market provisions Total Debt Outstanding Margin Call Provisions (including off-balance sheet) (including off-balance sheet) (10) Secured Debt $14.1 Spread and Credit $3.
Slide 36: Book Value per Share Bridge
Book Value per Share Bridge $0.98 $20.93 $19.95 Q4'23 Q4'23 Q4'23 GAAP Accumulated Undepreciated Book Value Depreciation & Amortization Book Value 23 27
Slide 37: Financing Facilities
Financing Facilities $ millions $25.2B $8.9B 22 Max Facility Size Available Capacity Counterparties Debt Obligations Maximum Facility (12) Available Type (12) Drawn Size Capacity Asset Specific Financing: Large Loans, Commercial $ 13,420 $ 7,574 $ 5,846 Infrastructure Lending Segment 2,212 1,096 1,1
Slide 38: Financial Capacity
Financial Capacity $ millions Total Available Capital $ 1,200 (13) + Available On-BS Financing $ 8,004 $1,800 Total Potential Liquidity $ 9,204 $301 $(98) $1,500 $(225) $951 $1,222 $1,200 $1,200 $900 $600 $300 $271 $0 Cash & Approved and Current liquidity 90-day 90-day expected Working capital Total
Slide 39: Share Count
Share Count shares in thousands 2023 2023 Q4 Q3 Q2 Q1 YTD Number of Shares, GAAP EPS: Basic — Average shares outstanding 310,660 310,268 309,721 308,408 309,771 Effect of dilutive securities — Convertible Notes — — — — — Effect of dilutive securities — Other 789 298 334 588 736 Diluted — Average sha
Slide 40: Appendix
APPENDIX 34
Slide 41: 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 42: Footnotes
Footnotes 1. Excludes $591M 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 $1,030M are included in the first mortgage balanc
Slide 43: Footnotes, continued
Footnotes, continued 11. Includes our share of the Woodstar portfolio debt with a UPB of $1,002M. 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 potenti
Slide 44: 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 45: 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 46: 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 47: NYSE: STWD
NYSE : STWD
Starwood Property Trust — Q4 2023 Earnings Presentation on 6ix