Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q4 2020 Earnings Presentation
45 slides from Starwood Property Trust's earnings presentation, Feb 25, 2021
Slide 1: Supplemental Information Q4 2020 Reporting
SUPPLEMENTAL Q4 REPORTING 2020 INFORMATION
Slide 2: Table of Contents
Table of Contents Press Release Page 1 Highlights Page 8 Commercial and Residential Lending Segment Page 10 Infrastructure Lending Segment Page 18 Property Segment Page 19 Investing and Servicing Segment Page 22 Capitalization Page 24 Appendix Page 29 Cover photo: Park Fifth - First Mortgage Loan (i
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2020
For Immediate Release Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2020 – Quarterly GAAP Earnings of $0.37 and Distributable Earnings of $0.50 per Diluted Share – – Originated or Acquired $1.2 Billion of Assets in Q4 – – Originated or Acquired $4.6 Billion of A
Slide 5: To Participate via Telephone Conference Call
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: 13715683 The playback can be accessed through March 4, 2021
Slide 6: Condensed Consolidated Statement of Operations by Segment (Quarter)
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended December 31, 2020 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segme
Slide 7: Definition of Distributable Earnings
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 8: Condensed Consolidated Statement of Operations by Segment (Year)
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the year ended December 31, 2020 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segme
Slide 9: Reconciliation of Net Income to Distributable Earnings
Reconciliation of Net Income to Distributable Earnings For the year ended December 31, 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) attrib
Slide 10: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of December 31, 2020 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal V
Slide 11: Highlights
HIGHLIGHTS
Slide 12: STWD Highlights
STWD Highlights Strong diverse multi-cylinder platform Consistent Credit Strong Balance Attractive Returns Performance Sheet Strong ROE achieved 2020 Collections: 2.2x on-balance sheet across business lines Commercial (98%) leverage with access to Infrastructure (100%) varied capital sources Propert
Slide 13: Q4 and 2020 Highlights
Q4 and 2020 Highlights ➢ Distributable earnings of $0.50 (FY $1.98) and GAAP earnings of $0.37 (FY $1.16) per diluted share; dividend of $0.48 (FY $1.92) ➢ Originated or acquired $1.2B of assets across business lines, bringing FY to $4.6B ➢ Fundings of $1.4B across business lines, bringing FY to $5.
Slide 14: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 15: Commercial Lending Activity
Commercial Lending Activity ➢ Originated or acquired $454M of loans, including: ▪ £89M ($120M) first mortgage loan for an office portfolio located in Ireland ▪ $110M first mortgage and mezzanine loan for the construction of a waterfront residential building located in Florida ▪ $105M first mortgage
Slide 16: Commercial Portfolio Metrics
Commercial Portfolio Metrics $ millions Dec 31, Sept 30, June 30, March 31, Dec 31, Asset Carrying Values 2020 2020 2020 2020 2019 First mortgage loans held-for-inv estment (1) $ 8,931 $ 8,524 $ 8,094 $ 8,290 $ 7,927 Subordinated mortgages 71 70 69 68 75 Mezzanine loans (1) 620 588 594 524 484 CMBS
Slide 17: Weighted Average Ending LTV / LTC of Loan Portfolio
Commercial Portfolio LTV (2) $ billions First mortgages Subordinated mortgages Mezzanine loans Preferred Equity 80.0% 12.0 Weighted Average Ending LTV / LTC of Loan Portfolio 75.0% 10.0 Dollar (Carrying values in billions) 70.0% 8.0 64.3% 64.6% 64.9% 65.0% 64.2% 6.0 62.1% 62.5% 62.1% 62.4% 64.1% 60.
Slide 18: Commercial Portfolio Snapshot
Commercial Portfolio Snapshot $ millions Geographic Diversification Collateral Diversification West Northeast (5) Other Industrial 6% Midwest 3% 19% 23% Retail 3% Office 4% 35% Mid-Atlantic Mixed-Use 8% Southwest 9% Residential 7% 6% 12% 11% Southeast 1% Manhattan San Fran 7% Multifamily Other (4) 1
Slide 19: Commercial Portfolio Snapshot, continued
Commercial Portfolio Snapshot, continued ➢ $3.6B of our portfolio is Office (20% of total assets) and $2.2B is Hotel (12% of total assets) ▪ Of our Office and Hotel exposure, less than 0.5% total asset exposure is to CBD San Francisco and less than 2.0% total asset exposure is to CBD Manhattan Offic
Slide 20: Top 10 Commercial Lending Commitments
Top 10 Commercial Lending Commitments $ millions Origination Fully Extended Loan Loan Type Location Property Type UPB LTV Date Maturity Date Commitment 1 Senior 1/8/2019 1/11/2026 Birmingham, UK Other $341.7 $341.7 68.8% 2 Senior/Mezz 12/23/2019 1/9/2022 Washington, DC Office 324.3 283.8 72.1% 3 Sen
Slide 21: Commercial Portfolio Risk Ratings
Commercial Portfolio Risk Ratings $ millions ➢ Below are the risk ratings on our commercial loan portfolio as of December 31, 2020: 47.5% 28.2% 13.8% 8.2% 2.3% 1 2 3 4 5 Number of loans: 10 31 54 15 2 ➢ Weighted average risk rating of 2.7 NOTE: See the Ratings Criteria section included in the Append
Slide 22: Residential Portfolio Metrics
Residential Portfolio Metrics $ millions Significant Activity During the Quarter: ➢ Acquired $323M of loans, including $177M of loans acquired via redemption of a consolidated RMBS trust ➢ Securitized $327M UPB of loans in our 9th securitization ➢ Executed two new financing facilities totaling $725M
Slide 23: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 24: Portfolio Metrics and Activity During the Quarter
Portfolio Metrics and Activity During the Quarter ➢ Total portfolio carrying amount of $1.6B ▪ Funded $102M of loans, of which $81M related to Q4 investments ▪ Received $103M from principal repayments and $22M from sales ➢ CECL: General reserve declined by $7M in the quarter to $9M ➢ 100% interest c
Slide 25: Property Segment
PROPERTY SEGMENT 25
Slide 26: Investment Portfolio
Investment Portfolio $ millions Q4'20 Net Net Carrying Asset Specific Net Occupancy Investment (8) Operating Value Financing Investment Rate Income Wholly-Owned: Medical Office Portfolio $ 760 $ 592 $ 168 $ 11.2 93% Woodstar I Portfolio 635 573 62 10.6 99% Woodstar II Portfolio 610 437 173 10.0 99%
Slide 27: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Medical Office Portfolio Northeast Gross West Occupancy Sq. Ft. Investment Midwest 30% Midwest $ 109 90% 325 17% 15% Northeast 228 100% 430 Southeast 139 94% 366 Texas Southeast Texas 154 93% 457 West 130 89% 372 20% 18% Total $ 760 93% 1,95
Slide 28: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Woodstar I and II Multifamily Portfolios Gross Florida Occupancy Units Investment North $ 77 97% 1,230 Central 960 99% 11,879 South 208 98% 1,948 Total $ 1,245 99% 15,057 North 6% Central 77% South 17% NOTE: Amounts are as of and for the per
Slide 29: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 30: Investment Portfolio
Investment Portfolio $ millions ➢ SMC was the largest non-bank contributor to CMBS conduit deals in 2020 ▪ Securitized $455M of conduit loans in two transactions in Q4, bringing FY volume to $942M in five transactions ➢ Active servicing portfolio was $8.8B (10) at December 31, bringing the year-to-d
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 2% 98% $250 Named SS: # of CMBS Trusts 162 Unpaid Balance $ 81,080 $200 Active SS: SS Loan Balance 5,600 $150 REO Loan Balance 3,161 (10) Total Active SS Balance 8,761 $10
Slide 32: Capitalization
CAPITALIZATION 27
Slide 33: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios ▪ Total capitalization: $18.3B 3.5x ▪ Interest coverage ratio: 2.4x ▪ Current corporate issuer rating: 2.2x Ba2/BB- ▪ Total unencumbered assets: $3.0B ▪ Unencumbered assets to unsecured debt: 1.7x 1 2 Adjusted on-balance sheet lev
Slide 34: Book Value and Fair Value per Share Bridge
Book Value and Fair Value per Share Bridge $3.07 $20.24 $1.40 $17.17 $15.77 Q4’20 Q4’20 Undeprec. Fair Market FMV BV Accum. BV Value Adj* Deprec. * Represents management’s current estimate of fair market value of our property assets and does not include contingent or other obligations that might be
Slide 35: Financing Facilities
Financing Facilities $ millions Debt Obligations Maximum Available Type Facility Size (13) Drawn (13) Capacity Asset Specific Financing: Large Loans, Commercial $ 9,502 $ 5,003 $ 4,499 I nfrastructure Lending Segment 2,335 1,239 1,096 Property Segment 1,816 1,816 - Residential Loans 1,400 634 766 Co
Slide 36: Financial Capacity
Financial Capacity ($ millions) Total Av ailable Capital $1,074 (14) + Av ailable On-BS Financing $6,482 $1,500 Total Potential Liquidity $7,556 $717 ($122) ($225) $1,250 $1,074 $1,000 $750 $55 $422 $500 $227 $250 $0 90-day Cash and Approved Net equity 90-day Cash Total equivalents but invested expe
Slide 37: Share Count
Share Count (shares in thousands) 2020 2020 Q1 Q2 Q3 Q4 FY Number of Shares, GAAP EPS: Basic — Av erage shares outstanding 280,990 281,461 282,596 282,848 281,978 Effect of dilutiv e securities — Conv ertible Notes - 9,649 9,649 9,649 - Effect of dilutiv e securities — Other - 183 213 403 505 Dilute
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 10. Although the trustee reflects $10.0B and $10.1B in active special servicing as of 12/31/2020 and 9/30/20, respectively, these amounts were revised to reflect only those assets where management believes a typical servicing fee will be earned. Assets which formally transferred
Slide 42: 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 43: 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 44: 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 45: NYSE: STWD
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