Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q1 2021 Earnings Presentation
43 slides from Starwood Property Trust's earnings presentation, May 6, 2021
Slide 1: Supplemental Information Q1 2021 Reporting
SUPPLEMENTAL Q1 REPORTING 2021 INFORMATION
Slide 2: Table of Contents
Table of Contents Press Release Page 1 Highlights Page 6 Commercial and Residential Lending Segment Page 8 Infrastructure Lending Segment Page 16 Property Segment Page 17 Investing and Servicing Segment Page 20 Capitalization Page 22 Appendix Page 27 Cover photo: Hope and Flower - First Mortgage and
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter Ended March 31, 2021
For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended March 31, 2021 – Quarterly GAAP Earnings of $0.38 and Distributable Earnings of $0.50 per Diluted Share – – Originated or Acquired $2.7 Billion of Assets, Including $2.2 Billion in Commercial Lending – – Paid Dividen
Slide 5: Conference call details and About Starwood Property Trust
www.starwoodpropertytrust.com in the Investor Relations section of the website. The Company encourages use of the webcast due to potential extended wait times to access the conference call via dial-in. To Participate via Telephone Conference Call: Dial in at least 15 minutes prior to start time. Dom
Slide 6: Condensed Consolidated Statement of Operations by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended March 31, 2021 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment
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 Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of March 31, 2021 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal VIEs
Slide 9: Highlights
HIGHLIGHTS
Slide 10: STWD Highlights
STWD Highlights Strong diverse multi-cylinder platform Consistent Credit Strong Balance Attractive Returns Performance Sheet Strong ROE achieved Q1 2021 Collections: 2.3x on-balance sheet across business lines Commercial (100%) leverage with access to Infrastructure (100%) varied capital sources Pro
Slide 11: Q1'21 Highlights
Q1’21 Highlights Distributable earnings of $0.50 and GAAP earnings of $0.38 per diluted share; dividend of $0.48 Originated or acquired $2.7B of assets across business lines Originated $2.2B in Commercial Lending, 45% of which is secured by multifamily properties Q1 Performance Funded of $2.
Slide 12: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 13: Commercial Lending Activity
Commercial Lending Activity Originated or acquired $2.2B of loans, including: £360M ($505M) first mortgage loan to finance the acquisition of a portfolio of vacation cottages, caravan homes and resorts across the United Kingdom £228M ($318M) first mortgage loan for the refinancing of 14 assist
Slide 14: Commercial Portfolio Metrics
Commercial Portfolio Metrics $ millions March 31, Dec 31, Sept 30, June 30, March 31, Asset Carrying Values 2021 2020 2020 2020 2020 First mortgage loans held-for-inv estment (1) $ 9,955 $ 8,931 $ 8,524 $ 8,094 $ 8,290 Subordinated mortgages 70 71 70 69 68 Mezzanine loans (1) 603 620 588 594 524 CMB
Slide 15: Weighted Average Ending LTV / LTC of Loan Portfolio
Commercial Portfolio LTV (2) $ billions First mortgages Subordinated mortgages Mezzanine loans Preferred Equity Weighted Average Ending LTV / LTC of Loan Portfolio 80.0% 12.0 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% 62.4% 64.1% 60.0% 61.
Slide 16: Commercial Portfolio Snapshot
Commercial Portfolio Snapshot $ millions Geographic Diversification Collateral Diversification West Northeast Other (5) Industrial 6% Midwest 2% 20% 21% Retail Office 3% 32% 4% Mid-Atlantic Mixed-Use 12% Southwest 10% 5% Residential 12% 10% Southeast 6% Manhattan 1% San Francisco 7% Other (4) Multif
Slide 17: Commercial Portfolio Snapshot, continued
Commercial Portfolio Snapshot, continued $3.6B of our commercial portfolio is Office (19% of total assets) and $2.2B is Hotel (12% of total assets) Of our Office and Hotel exposure, 0.5% total asset exposure is to CBD San Francisco and 3.0% total asset exposure is to CBD Manhattan Office: 59.5%
Slide 18: 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 2/19/2021 2/25/2028 Various, UK Mixed Use $496.0 $496.0 59.0% 2 Senior 1/8/2019 1/11/2026 Birmingham, UK Other 344.3 344.3 68.8% 3 Senior/M
Slide 19: Commercial Portfolio Risk Ratings
Commercial Portfolio Risk Ratings $ millions Below are the risk ratings on our commercial loan portfolio as of March 31, 2021: 45.7% 37.2% 9.2% 6.2% 1.7% 1 2 3 4 5 Number of loans: 10 36 59 11 1 Weighted average risk rating of 2.6, improved from last quarter’s 2.7 NOTE: See the Ratings Criteria
Slide 20: Residential Portfolio
Residential Portfolio $ millions Significant Activity During the Quarter: Securitized $384M UPB of non-QM loans in our 10th securitization Sold $87M of high LTV non-QM loans at a gain to our cost basis Acquired $209M of non-QM loans Executed a new $1.0B financing facility, bringing our total
Slide 21: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 22: Portfolio Metrics and Activity During the Quarter
Portfolio Metrics and Activity During the Quarter Total portfolio carrying amount of $1.7B Funded or acquired $100M of loans, of which $86M related to Q1 investments Received $19M from principal repayments 100% interest collections during the quarter Subsequent to quarter end, completed in
Slide 23: Property Segment
PROPERTY SEGMENT 25
Slide 24: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Upsized Woodstar II Portfolio financing by $83M at a blended fixed rate of 4.36% Q1'21 Net Net Carrying Asset Specific Net Occupancy Investment (8) Operating Value Financing Investment Rate Income Wholly-Owned: Medical Office
Slide 25: Portfolio Snapshot
Portfolio Snapshot $ millions, square footage in thousands Medical Office Portfolio Northeast Gross West Occupancy Sq. Ft. Midwest Investment 17% 30% Midwest $ 109 91% 325 15% Northeast 228 100% 430 Southeast 139 94% 366 Texas Southeast Texas 154 93% 457 West 130 89% 372 20% 18% Total $ 760 94% 1,95
Slide 26: 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 963 99% 11,879 South 208 99% 1,948 Total $ 1,248 99% 15,057 North 6% Central 77% South 17% NOTE: Amounts are as of and for the per
Slide 27: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 28: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Securitized $85M of conduit loans in one transaction Asset Carrying Values Mar 31, 2021 Dec 31, 2020 Sept 30, 2020 Jun 30, 2020 Mar 31, 2020 Owned CMBS, non-VRR $ 486 $ 496 $ 512 $ 517 $ 520 Owned CMBS, VRR 256 256 225 225 22
Slide 29: CMBS and Special Servicing
CMBS and Special Servicing $ millions Owned CMBS by Vintage (11) LNR Special Servicer CMBS 1.0 CMBS 2.0/3.0 Portfolio Statistics 1% 99% $250 Named SS: # of CMBS Trusts 160 $200 Unpaid Balance $ 80,100 Active SS: SS Loan Balance 5,465 $150 REO Loan Balance 3,293 Total Active SS Balance 8,758 (10) $10
Slide 30: Capitalization
CAPITALIZATION 27
Slide 31: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios Total capitalization: $20.7B 3.7x Interest coverage ratio: 2.4x Current corporate issuer rating: 2.3x Ba2/BB- Total unencumbered assets: $2.8B Unencumbered assets to unsecured debt: 1.6x 1 2 Adjusted on-balance sheet lev
Slide 32: Book Value and Fair Value per Share Bridge
Book Value and Fair Value per Share Bridge $20.84 $3.77 $17.07 $1.46 $15.61 Q1’21 Q1’21 Q1’21 Current Current GAAP Accumulated Undepreciated Fair Market FMV Book Value Depreciation Book Value Value (FMV) Adjustment* * Represents management’s current estimate of fair market value of our property asse
Slide 33: Financing Facilities
Financing Facilities $ millions $20B of available financing across 29 diverse counterparties, not including capacity that would result from selling A-notes or issuing CLOs or securitizations Debt Obligations Maximum Available (13) (13) Type Facility Size Drawn Capacity Asset Specific Financing: La
Slide 34: Financial Capacity
Financial Capacity ($ millions) Total Av ailable Capital $1,058 (14) + Av ailable On-BS Financing $6,158 Total Potential Liquidity $7,216 $1,500 $683 ($95) ($225) $1,250 $1,058 $1,000 $750 $53 $392 $500 $250 $250 $0 Cash and 90-day Cash Approved Net equity 90-day Total equivalents but invested expec
Slide 35: Share Count
Share Count (shares in thousands) 2021 2020 2020 Q1 Q1 Q2 Q3 Q4 FY Number of Shares, GAAP EPS: Basic — Av erage shares outstanding 283,319 280,990 281,461 282,596 282,848 281,978 Effect of dilutiv e securities — Conv ertible Notes 9,649 - 9,649 9,649 9,649 - Effect of dilutiv e securities — Other 26
Slide 36: Appendix
APPENDIX 34
Slide 37: 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 38: 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 39: Footnotes, continued
Footnotes, continued 10. Although the trustee reflects $9.4B and $10.0B in active special servicing as of 3/31/2021 and 12/31/2020, respectively, these amounts were revised to reflect only those assets where management believes a typical servicing fee will be earned. Assets which formally transferre
Slide 40: 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 41: 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 42: 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 43: NYSE: STWD
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Starwood Property Trust — Q1 2021 Earnings Presentation on 6ix