Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q2 2020 Earnings Presentation
41 slides from Starwood Property Trust's earnings presentation, Aug 5, 2020
Slide 1: Supplemental Information Q2 2020 Reporting
SUPPLEMENTAL Q2 REPORTING 2020 INFORMATION
Slide 2: Table of Contents
Table of Contents Press Release Page 1 Highlights Page 8 Commercial and Residential Lending Segment Page 9 Infrastructure Lending Segment Page 15 Property Segment Page 16 Investing and Servicing Segment Page 19 Capitalization Page 21 Appendix Page 26 Cover photo: Magna Park, United Kingdom - First M
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter Ended June 30, 2020
For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended June 30, 2020 – Received 7th Consecutive NAREIT Gold Award for Investor Communications and Reporting Excellence – – Paid Dividend of $0.48 per share for the Second Quarter of 2020 – GREENWICH, Conn., August 5, 2020 /
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: 13706902 The playback can be accessed through August 12, 20
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 June 30, 2020 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment S
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, Six Months
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the six months ended June 30, 2020 (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 Core Earnings
Reconciliation of Net Income to Core Earnings For the six months ended June 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) attributable
Slide 10: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of June 30, 2020 (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: Business Highlights
Business Highlights ➢ Core earnings of $0.43 and GAAP earnings of $0.49 per diluted share ➢ Undepreciated book value per outstanding share increased by $0.09 to $17.03 Q2 Performance ➢ Capital deployment of $332M in Commercial and Residential Lending ➢ Our $6.2B of domestic floating rate commercial
Slide 13: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 14: Commercial Lending Highlights
Commercial Lending Highlights ➢ Originated or acquired $198M of loans, including: ▪ $120M first mortgage loan to refinance a 54-story oceanfront residential building located in Florida ▪ $58M first mortgage loan for the acquisition of 31 industrial and logistics properties located in the UK, Germany
Slide 15: Commercial Portfolio Metrics
Commercial Portfolio Metrics $ millions June 30, March 31, Dec 31, Sept 30, June 30, Asset Carrying Values 2020 2020 2019 2019 2019 First mortgage loans held-for-inv estment (1) $ 8,094 $ 8,290 $ 7,927 $ 6,531 $ 6,878 Subordinated mortgages 69 68 75 53 53 Mezzanine loans (1) 594 524 484 545 446 CMBS
Slide 16: Commercial Portfolio LTV
Commercial Portfolio LTV (2) $ billions 80.0% 10.0 Weighted Average Ending LTV / LTC of Loan Portfolio 9.0 Preferred Equity 75.0% Dollar (Carrying values in billions) 8.0 7.0 70.0% Mezzanine loans 6.0 64.3% 64.6% 64.9% 65.0% 64.2% 5.0 Subordinated 62.1% 62.5% mortgages 62.1% 62.4% 62.9% 64.1% 4.0 62
Slide 17: Top 10 Loan Commitments
Top 10 Loan 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 $263.4 71.1% 2 Senior 1/8/2019 1/11/2026 Birmingham UK Other 309.9 309.9 74.7% 3 Senior 9/26/2019
Slide 18: Commercial Portfolio Snapshot
Commercial Portfolio Snapshot $ millions Geographic Diversification Collateral Diversification West Northeast (5) Other Midwest Industrial 8% 21% 24% 1% Retail 3% 5% Office Mid-Atlantic 37% Mixed-Use 8% Southwest 9% Residential 8% 12% 11% Southeast Other (4) 9% Multifamily 1% 2% 12% Hotel Internatio
Slide 19: Residential Portfolio Metrics
Residential Portfolio Metrics $ millions Significant Activity During the Quarter: ➢ Completed seventh non-agency residential securitization, selling $584M of loans and retaining $185M of RMBS ➢ Purchased $135M of non-agency loans ➢ Total loan portfolio of $701M, with an average FICO of 730 and LTV o
Slide 20: Infrastructure Lending
INFRASTRUCTURE LENDING 25
Slide 21: Portfolio Metrics and Activity During the Quarter
Portfolio Metrics and Activity During the Quarter ▪ Total portfolio carrying amount of $1.6B ▪ Funded $51M under pre-existing loan commitments ▪ Received $36M from maturities / principal repayments ▪ CECL: General reserve declined by $1M in the quarter to $20M, of which $4M relates to future funding
Slide 22: Property Segment
PROPERTY SEGMENT 25
Slide 23: Investment Portfolio
Investment Portfolio $ millions Q2'20 Net Net Carrying Asset Specific Net Occupancy Investment (8) Operating Value Financing Investment Rate Income Wholly-Owned: Medical Office Portfolio $ 760 $ 591 $ 169 $ 9.5 92.8% Woodstar I Portfolio 633 572 61 11.5 98.3% Woodstar II Portfolio 607 437 170 10.8 9
Slide 24: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Medical Office Portfolio Northeast Gross West Occupancy Sq. Ft. Investment Midwest Midwest $ 109 90% 325 17% 30% Northeast 228 100% 430 15% Southeast 139 94% 366 Texas 154 92% 457 Texas Southeast West 130 87% 372 Total $ 760 93% 1,950 20% 18
Slide 25: 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 955 99% 11,879 South 208 99% 1,948 Total $ 1,240 99% 15,057 North 6% Central 77% South 17% NOTE: Amounts are as of and for the per
Slide 26: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 27: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: ➢ Sold a portion of our equity interest in a servicing and advisory business for $10M in cash, resulting in a realized GAAP and Core gain of $10M ➢ Recognized an unrealized GAAP gain of $18M relating to the implied fair value o
Slide 28: CMBS and Special Servicing
CMBS and Special Servicing $ millions Owned CMBS by Vintage (10) LNR Special Servicer Portfolio Statistics CMBS 1.0 CMBS 2.0/3.0 $250 3% 97% Named SS: # of CMBS Trusts 165 Unpaid Balance $ 82,330 $200 Active SS: SS Loan Balance 4,700 $150 REO Loan Balance 3,338 Total Active SS Balance 8,038 $100 ➢ S
Slide 29: Capitalization
CAPITALIZATION 27
Slide 30: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios 3.2x ▪ Total capitalization of $16.0B ▪ Interest coverage ratio of 2.3x ▪ Current corporate issuer rating of Ba2/BB- 2.0x ▪ Total unencumbered assets of $2.9B ▪ Unencumbered assets to unsecured debt ratio of 1.5x 1 Adjusted on-bal
Slide 31: Book Value per Share
Book Value per Share $20.00 $2.67 $19.70 $1.24 $17.03 $16.66 ($0.38) ($0.32) ($0.96) $0.79 $15.79 $15.00 $10.00 Q4’19 Unrealized CECL YTD GAAP Q2’20 Accum. Undeprec. FMV Adj* FV BV Changes in General Dividend Earnings BV Deprec. BV FV Reserve (excl. CECL & unrealized FV changes) * Represents managem
Slide 32: Financing Facilities
Financing Facilities $ millions Debt Obligations Maximum Available Type Facility Size (12) Drawn (12) Capacity Asset Specific Financing: Large Loans, Commercial $ 9,877 $ 4,099 $ 5,778 I nfrastructure Lending Segment 2,516 1,235 1,281 Property Segment 1,816 1,816 - Residential Loans 2,400 489 1,911
Slide 33: Financial Capacity
Financial Capacity ($ millions) ➢ Capacity to originate or acquire up to an additional $9.2B of new investments Total Av ailable Capital $625 (13) + Av ailable On-BS Financing $8,554 Total Potential Liquidity $9,179 $1,250 $167 ($198) $1,000 $60 ($225) $482 $750 $625 $500 $339 $250 $0 Cash and Appro
Slide 34: Share Count
Share Count (shares in thousands) 2020 2020 Q2 Q1 YTD Number of Shares, GAAP: Basic — Av erage shares outstanding 281,461 280,990 281,225 Effect of dilutiv e securities — Conv ertible Notes 9,649 - - Effect of dilutiv e securities — Other 183 - 215 Diluted — Av erage shares outstanding 291,293 280,9
Slide 35: Appendix
APPENDIX 34
Slide 36: 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 37: 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 38: Footnotes, continued
Footnotes, continued 10. Excludes non-controlling JV interests. CMBS 1.0 deals were originated prior to 2008. CMBS 2.0 / 3.0 deals were originated from 2009 forward. Different credit underwriting and regulatory requirements are applied to CMBS 2.0 / 3.0. 11. Represents (i) total outstanding secured
Slide 39: 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 40: 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 41: NYSE: STWD
NYSE : STWD
Starwood Property Trust — Q2 2020 Earnings Presentation on 6ix