Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q3 2019 Earnings Presentation
44 slides from Starwood Property Trust's earnings presentation, Nov 8, 2019
Slide 1: Supplemental Reporting Information Q3 2019
SUPPLEMENTAL Q3 REPORTING 2019 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 18 Property Segment Page 19 Investing and Servicing Segment Page 22 Capitalization Page 24 Appendix Page 29 Cover photo: The Wharf, Phase II, Washington D.C
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter Ended September 30, 2019
For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended September 30, 2019 – Quarterly GAAP Earnings of $0.49 and Core Earnings of $0.52 per Diluted Common Share – – Deploys $2.5 Billion of Capital, Including $1.2 Billion in Commercial Lending – – Executes $1.1 Billion CR
Slide 5: Conference call and webcast information; About Starwood Property Trust
can be found on the Company’s website in the Investor Relations section under “Quarterly Results” at www.starwoodpropertytrust.com. Conference Call and Webcast Information The Company will host a live webcast and conference call on Friday, November 8, 2019, at 10:00 a.m. Eastern Time. To listen to a
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 (Three Months)
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended September 30, 2019 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segm
Slide 8: 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 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, 2019 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segme
Slide 10: Reconciliation of Net Income to Core Earnings
Reconciliation of Net Income to Core Earnings For the nine months ended September 30, 2019 (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 11: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of September 30, 2019 (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: Business Highlights
Business Highlights Third Quarter: Core earnings of $0.52 and GAAP earnings of $0.49 per diluted share Capital deployed of $2.5B across all segments, including $1.2B in Commercial Lending Completed fourth and largest non-agency residential securitization, selling $546M of loans Completed the
Slide 14: Business Highlights, continued
Business Highlights, continued Subsequent to Quarter End: Securitized $370M of non-agency residential loans Closed on another $500M financing facility for our Infrastructure Lending segment 3-year revolving period with two one-year extensions Priced at L + 175 Closed on a $600M refinancing
Slide 15: Segment Highlights – Third Quarter 2019
Segment Highlights – Third Quarter 2019 Commercial: Originated or acquired $1.2B of loans, 44% of which were international Funded $627M, including $276M under pre-existing loan commitments Commercial & Repayments of $745M and sales of $80M Residential Replaced available and outstanding rep
Slide 16: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 17: Commercial Lending Activity During the Quarter
Commercial Lending Activity During the Quarter Property Type Originations and acquisitions of $1.2B $351M funded Office 36% Weighted average LTV of 65.8% Mixed Use 44% $138M average loan size 100% of domestic loans contain LIBOR floors Hotel 9% Fundings under previously originated Multif
Slide 18: Significant Activity During the Quarter
Significant Activity During the Quarter Commercial lending investment activity of $1.2B, including: $300M first mortgage loan for the construction of the final phase of a 3.4 million square foot mixed use, waterfront property located in Washington D.C £203M ($250M) first mortgage loan for the
Slide 19: Commercial Portfolio Metrics
Commercial Portfolio Metrics $ millions Sept 30, June 30, March 31, Dec 31, Sept 30, Asset Carrying Values 2019 2019 2019 2018 2018 First mortgage loans held-for-inv estment (1), (2) $ 6,506 $ 6,853 $ 6,828 $ 6,572 $ 6,447 Subordinated mortgages (2) 45 45 45 45 180 Mezzanine loans (1) 545 446 579 39
Slide 20: Weighted Average Ending LTV / LTC of Loan Portfolio
Commercial Weighted Average LTV or LTC (3) $ billions 80.0% 9.0 Weighted Average Ending LTV / LTC of Loan Portfolio 8.0 Preferred Equity 75.0% Dollar (Carrying values in billions) 7.0 70.0% 6.0 Mezzanine loans 5.0 64.9% 64.6% 65.0% 63.8% 64.2% 64.3% Subordinated 63.4% 63.3% 62.9% 62.8% 62.1% 62.1% 6
Slide 21: Commercial Portfolio Snapshot
Commercial Portfolio Snapshot $ millions Geographic Diversification Collateral Diversification PROPERTY TYPE West Northeast Carrying Value as of: Sept 30, 2019 December 31, 2018 Midwest 29% Office $ 2,687 34% $ 2,720 35% 19% 28% Hotel 1,806 23% 1,822 23% Mixed-Use 1,073 14% 921 12% 6% 7% Multifamily
Slide 22: Residential Portfolio Metrics
Residential Portfolio Metrics $ millions Non-agency residential lending investment activity: Purchased loans of $618M and securitized $546M UPB, bringing the total loan portfolio to $1.2B with an average FICO of 731 and LTV of 67.7% In connection with our fourth and largest securitization, ret
Slide 23: Infrastructure Lending
INFRASTRUCTURE LENDING 25
Slide 24: Portfolio Metrics and Activity During the Quarter
Portfolio Metrics and Activity During the Quarter Acquired $125M of loans, 100% of which were floating rate Received $284M, of which $237M was from maturities and prepayments and $47M from sales Total portfolio carrying amount of $1.5B Portfolio by Geographic Location Portfolio by Sector (7) U
Slide 25: Property Segment
PROPERTY SEGMENT 25
Slide 26: Investment Portfolio
Investment Portfolio $ millions Net Carrying Q3 2019 Net Asset Specific Net Occupancy Investment (8) Operating Value Financing Investment Rate Income Wholly-Owned: Medical Office Portfolio $ 759 $ 489 $ 270 11.4 92.2% Ireland Portfolio 498 343 155 7.3 97.7% Woodstar I Portfolio 628 406 222 11.4 98.3
Slide 27: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Medical Office Portfolio Northeast Gross Occupancy Sq. Ft. West Investment Midwest Midwest $ 108 88% 325 17% 30% Northeast 228 100% 430 15% Southeast 139 93% 366 Texas 154 91% 457 Texas Southeast West 130 88% 372 Total $ 759 92% 1,950 20% 18
Slide 28: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Woodstar I and II Multifamily Portfolios Ireland Office and Multifamily Portfolio Gross Gross Florida Occupancy Units Occupancy Sq. Ft. Investment Investment North $ 77 94% 1,230 Total $ 498 97.7% 608 Central 949 99% 11,879 South 206 99% 1,9
Slide 29: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 30: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Securitized or priced $479M of conduit loans in three transactions Obtained five new servicing assignments for CMBS trusts with a total unpaid principal balance of $3.2B Asset Carrying Values Sep 30, 2019 Jun 30, 2019 Mar 3
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 Named SS: 5% 95% # of CMBS Trusts 180 $250 Unpaid Balance $ 88,660 Active SS: $200 SS Loan Balance 1,900 REO Loan Balance 3,260 $150 Total Active SS Balance 5,160 $100 $15
Slide 32: Capitalization
CAPITALIZATION 27
Slide 33: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios 2.9x Total capitalization of $17.9B Interest coverage ratio of 2.3x 1.9x Current corporate issuer rating of Ba2/BB Total unencumbered assets of $3.0B Unencumbered assets to unsecured debt ratio of 1.5x 1 2 Adjusted on-ba
Slide 34: Financing Facilities
Financing Facilities $ millions Debt Obligations Maximum Available Type Facility Size (13) Drawn (13) Capacity Asset Specific Financing: Large Loans, Commercial $ 8,492 $ 2,946 $ 5,546 I nfrastructure Lending Segment 2,123 1,184 939 Property Segment 1,913 1,883 30 Residential Loans 2,400 794 1,606 C
Slide 35: Interest Rate Sensitivity
Interest Rate Sensitivity 93% of the commercial loan portfolio is variable rate 100% of the infrastructure loan portfolio is variable rate Annual Net Interest Income Per Share Sensitivity to Variable Rates $0.20 $0.17 $0.10 $0.08 $0.05 $0.03 $0.00 2.0% Decrease 1.0% Decrease 1.0% Increase 2.0% I
Slide 36: Financial Capacity
Financial Capacity ($ millions) Capacity to originate or acquire up to an additional $8.0B of new investments $9,000 $7,365 $8,025 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 ($678) $2,000 $789 $468 ($225) $1,000 $660 $234 $72 $0 Cash and Net equity Approved 90-day 90-day Cash Total Available on- To
Slide 37: Share Count
Share Count (shares in thousands) 2019 2019 2018 2018 Q3 Q2 Q1 Full Year Q4 Q3 Q2 Q1 Full Year Number of Shares, GAAP: Basic — Av erage shares outstanding 279,992 279,239 277,544 278,934 273,949 265,355 260,998 260,664 265,279 Effect of dilutiv e securities — Conv ertible Notes 9,649 9,649 - 9,857 1
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 9. Net operating income represents rental income less costs of rental operations and excludes interest, depreciation and amortization. It also excludes an allowance for recurring capital expenditures at multifamily properties and any other adjustments that would be made in the c
Slide 42: Calculation Methodologies
Calculation Methodologies Commercial and Residential Lending Segment LTV & LTC For loans which utilize property value as the denominator, value is determined by reference to either appraisals, desk underwriting, discussions with brokers and other experts, or any combination thereof. To the exten
Slide 43: 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 44: NYSE: STWD
NYSE : STWD
Starwood Property Trust — Q3 2019 Earnings Presentation on 6ix