Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q3 2024 Earnings Presentation
48 slides from Starwood Property Trust's earnings presentation, Nov 6, 2024
Slide 1: Q3 2024 Supplemental Reporting Information
SUPPLEMENTAL Q3 REPORTING 2024 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 20 Property Segment Page 21 Investing and Servicing Segment Page 24 Capitalization Page 26 Appendix Page 32 Cover photo: $110M first mortgage and mezzanine
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for Quarter Ended September 30, 2024
For Immediate Release Starwood Property Trust Reports Results for Quarter Ended September 30, 2024 – Quarterly GAAP Earnings of $0.23 and Distributable Earnings (DE) of $0.48 per Diluted Share – – Originated or Acquired $2.1 Billion of Assets in the Quarter and $3.5 Billion Year-To-Date – – Received
Slide 5: Supplemental Schedules and Webcast Information
Supplemental Schedules The Company has published supplemental earnings schedules on its website in order to provide additional disclosure and financial information for the benefit of the Company’s stakeholders. Specifically, these materials can be found on the Company’s website in the Investor Relat
Slide 6: Forward-looking statements and contact
In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward- looking statements contained herein will in fact occur. Except to the extent required by applicable law or regulation, we undertake no obligation to, and expressly disclaim any such obl
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, 2024 (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
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, 2024 (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, 2024 (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, 2024 (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 $25.9B of total assets with an adjusted debt- Strong Balance Sheet to-equity ratio of 2.14x and undepreciated book value per share of $20.22 Consistent Dividend Paid quarterly dividend of $0.48
Slide 14: Q3 2024 Highlights
Q3 2024 Highlights • GAAP book value per share of $19.39 and undepreciated book value per share of $20.22 ◦ GAAP book value reflects $1.92 per share cumulative reduction for CECL reserves and property impairments • GAAP earnings of $0.23 and Distributable Earnings ("DE") of $0.48 per diluted share Q
Slide 15: Total Assets $25.9B
Total Assets Ø U.S. office represents only 10% of our diversified $25.9B asset base Int'l Offic Commercial Multifamily Loans e 2% U.S. Office 10% 20% 56% In ta ng Ot ib le he s1 r2 % Ca % sh &A /R 3% Hotel REIS CM 8% BS 5% Infrastructure Lending $25.9B Mixe d Use 5% 9% Ind ust 2% ria l 4% e R ff ic
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 • $848M originations ($635M funded) • $134M follow on fundings • $1.1B repayments Not 5 Rated 1 (Investment 4 (7 loans) Securities) (1 loan) (12 loans) 2 $0.5B $0.6B $1 (23 loans) 3 .9 B (92 loans) $3.2B $14.6B (1) 3.0 W.A. Risk Total Portfol
Slide 18: Characteristics of Top Loans by Largest Property Types
Top 10 Loans by Largest Property Types Multifamily Office Hotel International 11% Characteristics 6% U.S. 20% 28% 17% Property 16% $5.1B 15% $0.5B $2.0B 21% 59% $2.5B 83% 11% 28% 85% Southeast Southwest West Leisure Extended Stay Mid-Atlantic Northeast International Class A Class B Business / Group
Slide 19: Collateral Diversification
Collateral Diversification Ø Commercial loan portfolio transformed over time, with multifamily being our largest property type Multifamily Office Hotel Mixed Use Industrial Residential Retail Other 100% 80% 60% 40% 20% —% 0 1 3 0 2 4 1 2 4 9 1 3 0 2 3 0 2 4 9 1 3 1'2 4'2 3'2 3'2 2'2 1'2 1'2 4'2 3'2
Slide 20: Commercial Portfolio Geographic Diversification
(2) Commercial Portfolio Geographic Diversification 2% Manhattan U.S. Northeast 18 % Southeast 17 % Southwest 16 % Mid-Atlantic 9% West 9% Midwest 2% Europe Australia Bahamas / Bermuda Europe: International UK 13 % Ireland 1% Italy 2% Other Europe 4% Australia 7% Bahamas/Bermuda 2% NOTE: Amounts are
Slide 21: Commercial Lending Metrics
Commercial Lending Metrics (3) Mezzanine Subordinated First Mortgages Lending CMBS (3) Preferred Equity Total CRE ($ millions) Loans Mortgages $13,693 $559 $331 $37 $23 $14,643 Carrying Value Carrying Value $13,024 $559 $331 $32 $0 $13,946 on Accrual Unlevered Return for Assets on 9.0% 9.7% 14.1% 16
Slide 22: Top Commercial Lending Commitments
Top 10 Commercial Lending Commitments(5) $ millions Origination Fully Extended Loan Loan Type Location Property Type UPB Date Maturity Date Commitment Senior Jun 2022 Jun 2029 Various, Australia Casino Hotel* $ 951.9 $ 951.9 Senior Feb 2021 Feb 2028 Various, UK Mixed Use 705.9 705.9 Senior/Mezz Dec
Slide 23: Foreclosed Loans
Foreclosed Loans Ø $603M net carrying value of commercial loans previously foreclosed Location Property Type Carrying Value ($ millions) (per sq ft) Los Angeles, California Mixed Use $ 150 $ 131 Washington, DC* Multifamily (Conversion) 115 306 New York City, New York Residential (Luxury Co-Op) 108 1
Slide 24: Residential Portfolio
Residential Portfolio $ millions Ø During the quarter, recorded $24M net unrealized fair value increase: – Loans: $97M increase – RMBS: $3M increase – Interest Rate Hedges: $76M decrease to FMV of $43M Asset Carrying Values Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Loans, held
Slide 25: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 26: Portfolio Metrics and Activity
Portfolio Metrics and Activity Q3 Activity • $527M new commitments ($440M funded) $2.5B • $8M follow on fundings Total • $410M repayments Portfolio (6) Geographic Location Sector Power Southwest 56% Northeast 29% 29% Midwest Upstream Int'l 2% West 21% 1% Midstream Mid-Atlantic 2% 4% Southeast 36% 13
Slide 27: Property Segment
PROPERTY SEGMENT 25
Slide 28: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Unrealized fair value decreases of $25M (or $20M, net of 20.6% non-controlling interests) in the Woodstar Fund investments Net Asset Q3'24 Net Net Operating Occupancy Investment Carrying Specific (7) Investment (8) Rate Value
Slide 29: 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 30: Portfolio Snapshot
Portfolio Snapshot $ millions, sq. ft. in thousands Medical Office Woodstar Fund D.C. Multifamily Conversion Gross Gross Region % Occupancy Sq. Ft. Region % Occupancy Units Region Sq. Ft. investment investment Northeast 30% $ 229 100% 430 North Florida 7% 93% 1,230 Mid Atlantic $ 115 375 Texas 20% 1
Slide 31: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 32: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Securitized $398M of conduit loans in four transactions (not including $225M which priced last quarter) Ø Acquired CMBS for a net purchase price of $122M Ø Sold a retail asset for proceeds of $18M, a net GAAP gain of $6M and
Slide 33: CMBS and Special Servicing
CMBS and Special Servicing (9) Owned CMBS by Vintage LNR Special Servicer $ millions $ billions Named SS: 194 $107.3B $250 CMBS Trusts Loan Balance $200 $150 Named SS Balance $150 $100 $100 $50 $50 '20 '21 '16 '22 '17 '23 '18 '24 '19 '20 '21 '15 '22 '16 '23 '17 '24 '18 '19 Q3 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
Slide 34: Capitalization
CAPITALIZATION 27
Slide 35: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios Ba2 / BB / BB+ Current Corporate Issuer Rating $4.6B Total Unencumbered Assets 2.61x Off-Balance 1.59x 2.14x Sheet Fixed Charge Coverage Ratio On-Balance Sheet 1.66x Unencumbered Assets to Unsecured Debt $25.9B Total Capitalizatio
Slide 36: Capitalization Overview, continued
Capitalization Overview, continued $ billions Ø 95% 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 Spread and Credit $11.9
Slide 37: Book Value per Share Bridge
Book Value per Share Bridge $0.83 $20.22 $19.39 Q3'24 Q3'24 Q3'24 GAAP Accumulated Undepreciated Book Value Depreciation & Amortization Book Value 23 28
Slide 38: Financing Facilities
Financing Facilities $ millions $24.6B $9.8B 23 Max Facility Size Available Capacity Counterparties Debt Obligations Maximum Facility (12) Available Type (12) Drawn Size Capacity Asset Specific Financing: Large Loans, Commercial $ 12,750 $ 6,055 $ 6,695 Infrastructure Lending Segment 1,980 803 1,177
Slide 39: Financial Capacity
Financial Capacity Total Available Capital + Available On-BS Financing (13) $ $ 1,523 8,513 $ millions Total Potential Liquidity $ 10,036 $631 $(650) $2,400 $2,100 $1,548 $1,809 $(42) $1,800 $(225) $1,523 $1,500 $1,200 $900 $600 $300 $261 $0 Cash & Approved and Current liquidity 90-day Repayment of
Slide 40: Share Count
Share Count shares in thousands 2024 2024 Q3 Q2 Q1 YTD Number of Shares, GAAP EPS: Basic — Average shares outstanding 319,690 313,493 311,827 315,021 Effect of dilutive securities — Convertible Notes — — 18,344 — Effect of dilutive securities — Other 89 121 669 281 Diluted — Average shares outstandi
Slide 41: Appendix
APPENDIX 34
Slide 42: 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 43: Footnotes
Footnotes 1. Excludes $582M 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 $964M are included in the first mortgage balance
Slide 44: Footnotes, continued
Footnotes, continued 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 potential proceeds from future A-note sales or CLO securitizations and is as of quar
Slide 45: 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 46: 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 47: 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 48: NYSE: STWD
NYSE: STWD
Starwood Property Trust — Q3 2024 Earnings Presentation on 6ix