Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q3 2023 Earnings Presentation
46 slides from Starwood Property Trust's earnings presentation, Nov 8, 2023
Slide 1: Q3 2023 Supplemental Reporting Information
Q3 SUPPLEMENTAL 2023 REPORTING INFORMATION Cover photo: One Le Pole Square, Dublin, Ireland
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 18 Property Segment Page 19 Investing and Servicing Segment Page 22 Capitalization Page 24 Appendix Page 30 (i)
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for Quarter Ended September 30, 2023
For Immediate Release Starwood Property Trust Reports Results for Quarter Ended September 30, 2023 – Quarterly GAAP Earnings of $0.15 and Distributable Earnings (DE) of $0.49 per Diluted Share – – Undepreciated Book Value Per Share of $21.15 – – Originated or Acquired $652 Million of Assets in the Q
Slide 5: Webcast and Conference Call Information
Webcast and Conference Call Information The Company will host a live webcast and conference call on Wednesday, November 8, 2023, 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 and company website
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, Three Months
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended September 30, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segm
Slide 8: Definition of Distributable Earnings and Reconciliation, Three Months
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, Nine Months
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the nine months ended September 30, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segme
Slide 10: Reconciliation of Net Income to Distributable Earnings, Nine Months
Reconciliation of Net Income to Distributable Earnings For the nine months ended September 30, 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
Slide 11: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of September 30, 2023 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal
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 2.4x and undepreciated book value per share of $21.15 Paid Q3 dividend of $0.48, equating to a Consistent D
Slide 14: Q3 2023 Highlights
Q3 2023 Highlights • GAAP book value per share of $20.18 and undepreciated book value of $21.15 ◦ Undepreciated book value increased $4.01 over the last two years ◦ GAAP book value reflects $0.96 per share reduction for CECL reserves as of September 30 • GAAP earnings of $0.15 and Distributable Earn
Slide 15: Total Assets $27.3B
Total Assets Ø U.S. office represents only 11% of our diversified $27.3B asset base Int'l Office 3% Commercial U.S. Office 11% Loans Multifamily 58% Intangibles 20% 1% Ot he r4 % Ca sh &A /R %2 REIS CM BS 4% $27.3B Hotel 9% Infrastructure Lending 8% Mi xe dU 1% % se a se 2 4 e % te r Le ffic r 2% In
Slide 16: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 17: Commercial Lending Portfolio
Commercial Lending Portfolio Q3 Activity Loan Risk Rating • $88M funded on new investments • $175M follow on fundings Not • $719M in repayments 5 Rated • $42M mezzanine loan sale 4 (4 loans) (Investment 1 Securities) (6 loans) (0 loans) $0.7B $0.5B 0B $1. 3 2 (101 loans) $4.3B (45 loans) (1) $15.8B
Slide 18: Top Loans by Largest Property Types
Top 10 Loans by Largest Property Types Multifamily Office Hotel International Characteristics 1% 16% 18% U.S. 12% Property 28% 7% $5.6B 18% $0.8B $2.4B 10% 56% 26% $2.9B 88% 11% 27% 82% Southeast Southwest West Northeast Leisure Extended Stay Mid-Atlantic Midwest International Class A Class B Busine
Slide 19: Commercial Portfolio Geographic Diversification
(2) Commercial Portfolio Geographic Diversification 2% Manhattan U.S. Southeast 17 % Northeast 16 % Southwest 16 % Mid-Atlantic 10 % West 9% Midwest 3% Europe Australia Bahamas / Bermuda Europe: International UK 13 % Ireland 4% Italy 1% Other Europe 2% Australia 7% Bahamas/Bermuda 2% NOTE: Amounts a
Slide 20: Commercial Lending Metrics
Commercial Lending Metrics (3) Mezzanine Subordinated First Mortgages Lending CMBS (3) Preferred Equity Total CRE ($ millions) Loans Mortgages Carrying $14,803 $672 $247 $75 $5 $15,802 Value Unlevered (4) 9.4% 10.1% 14.0% 16.0% 0.0% 9.5% Return First Mortgages Lending CMBS Mezzanine Loans Subordinat
Slide 21: Top Commercial Lending Commitments
Top 10 Commercial Lending Commitments $ millions Origination Fully Extended Loan Loan Type Location Property Type UPB Date Maturity Date Commitment Senior Jun 2022 Jun 2029 Various, Australia Casino Hotel* $ 886.0 $ 886.0 Senior/Mezz Dec 2021 Dec 2025 Various, Ireland Industrial 505.8 306.3 Senior F
Slide 22: Residential Portfolio
Residential Portfolio $ millions Ø During the quarter, recorded $30M net unrealized fair value decrease: – Loans: $72M decrease – RMBS: $16M increase – Interest Rate Hedges: $26M increase to FMV of $196M Asset Carrying Values Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Loans, he
Slide 23: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 24: Portfolio Metrics and Activity
Portfolio Metrics and Activity Q3 Activity • $351M funded on new loans $2.3B • $8M follow on fundings Total • $265M repayments Portfolio (6) Geographic Location Sector Thermal - Natural Gas 54% Northeast 35% Southwest 28% Upstream 1% Midstream Int'l 3% Midwest Other 35% West 18% Thermal Power Other
Slide 25: Property Segment
PROPERTY SEGMENT 25
Slide 26: Investment Portfolio
Investment Portfolio $ millions Net Asset Q3'23 Net Net Operating Occupancy Investment Carrying Specific (7) Investment (8) Rate Value Financing Income Wholly-Owned: Medical Office Portfolio $ 776 $ 598 $ 178 $ 10.7 90% Master Lease Portfolio 344 194 150 7.3 100% Subtotal - Undepreciated Carrying Va
Slide 27: 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 28: 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% 91% 1,230 Northeast 30% $ 228 100% 430 Midwest 36% $ 123 100% 757 Central 77% 99% 11
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 $63M of conduit loans in two transactions Ø Total active servicing portfolio increased from $5.7B to $6.1B Ø Sold two properties for gross proceeds of $35M, resulting in a net GAAP gain of $11M and a net DE gain o
Slide 31: CMBS and Special Servicing
CMBS and Special Servicing (9) Owned CMBS by Vintage LNR Special Servicer $ millions $ billions Named SS: 178 $101.1B $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 Q3 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
Slide 32: Capitalization
CAPITALIZATION 27
Slide 33: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios Ba2 / BB / BB+ Current Corporate Issuer Rating $4.3B 2.9x Total Unencumbered Assets Off-Balance 2.4x Sheet 1.6x Fixed Charge Coverage Ratio On-Balance Sheet 1.7x Unencumbered Assets to Unsecured Debt $26.7B Total Capitalization (1
Slide 34: Capitalization Overview, continued
Capitalization Overview, continued $ billions Ø 91% of commercial lending debt and 83% 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 $13.7 Spread and Credit
Slide 35: Book Value per Share Bridge
Book Value per Share Bridge $21.15 $0.97 $20.18 Q3'23 Q3'23 Q3'23 GAAP Accumulated Undepreciated Book Value Depreciation & Amortization Book Value 23 26
Slide 36: Financing Facilities
Financing Facilities $ millions $25.3B $9.1B 24 Max Facility Size Available Capacity Counterparties Debt Obligations Maximum Facility (12) Available Type (12) Drawn Size Capacity Asset Specific Financing: Large Loans, Commercial $ 13,341 $ 7,127 $ 6,214 Infrastructure Lending Segment 2,202 944 1,258
Slide 37: Financial Capacity
Financial Capacity Total Available Capital + Available On-BS Financing (13) $ $ 1,302 8,003 $ millions Total Potential Liquidity $ 9,305 $1,800 $533 $(102) $(225) $1,500 $1,302 $1,200 $893 $1,096 $900 $600 $300 $203 $0 Cash & Approved and Current liquidity 90-day 90-day expected Working capital Tota
Slide 38: Share Count
Share Count shares in thousands 2023 2023 Q3 Q2 Q1 YTD Number of Shares, GAAP EPS: Basic — Average shares outstanding 310,268 309,721 308,408 309,471 Effect of dilutive securities — Convertible Notes — — — — Effect of dilutive securities — Other 298 334 588 267 Diluted — Average shares outstanding 3
Slide 39: Appendix
APPENDIX 34
Slide 40: 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 41: Footnotes
Footnotes 1. Excludes $678M of 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 $1,064M are included in the first mortgage balance as
Slide 42: 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 43: Calculation Methodologies
Calculation Methodologies Ø Commercial Loan LTVs ▪ In order to determine LTV, the Company utilizes 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 of values, foll
Slide 44: 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 45: 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 46: NYSE: STWD
NYSE : STWD
Starwood Property Trust — Q3 2023 Earnings Presentation on 6ix