Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — FY2022 Earnings Presentation
47 slides from Starwood Property Trust's earnings presentation, Mar 1, 2023
Slide 1: Q4 2022 Supplemental Reporting Information
Q4 SUPPLEMENTAL REPORTING 2022 INFORMATION
Slide 2: Table of Contents
Table of Contents Press Release Page 1 Highlights Page 9 Commercial and Residential Lending Segment Page 11 Infrastructure Lending Segment Page 18 Property Segment Page 19 Investing and Servicing Segment Page 22 Capitalization Page 24 Appendix Page 31 Cover photo: Industrial Build-to-Suit for Invest
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2022
For Immediate Release Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2022 – Quarterly GAAP Earnings of $0.44 and Distributable Earnings (DE) of $0.50 per Diluted Share – – Undepreciated Book Value Per Share Increased $0.96 Year-over-Year to $21.70 – – $10.7 Billi
Slide 5: Webcast and Conference Call Information
Webcast and Conference Call Information The Company will host a live webcast and conference call on Wednesday, March 1, 2023, at 10:00 a.m. Eastern Time. To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register, download and install an
Slide 6: Contact: Zachary Tanenbaum
Contact: Zachary Tanenbaum Starwood Property Trust Phone: 203-422-7788 Email: ztanenbaum@starwood.com 3
Slide 7: Condensed Consolidated Statement of Operations by Segment, Q4 2022
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended December 31, 2022 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segme
Slide 8: 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 9: Condensed Consolidated Statement of Operations by Segment, Year 2022
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the year ended December 31, 2022 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segme
Slide 10: Reconciliation of Net Income to Distributable Earnings
Reconciliation of Net Income to Distributable Earnings For the year ended December 31, 2022 (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 11: Condensed Consolidated Balance Sheet by Segment
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of December 31, 2022 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segment Segment Corporate Subtotal V
Slide 12: Highlights
HIGHLIGHTS
Slide 13: STWD Highlights
STWD Highlights Leading diverse global multi-cylinder platform, built to thrive in all market environments $10.7B of new investments across Robust Capital Deployment business lines in 2022, including $1.2B in Q4 Record $28.3B of total assets with an Strong Balance Sheet adjusted debt-to-equity ratio
Slide 14: Q4 and 2022 Highlights
Q4 and 2022 Highlights • GAAP book value per share of $20.80 and undepreciated book value of $21.70 ◦ Reflects $0.35 per share of CECL reserves as of December 31 • GAAP earnings of $0.44 (FY $2.74) and Distributable Earnings ("DE") of $0.50 (FY $2.28) per diluted share ◦ GAAP earnings per share incl
Slide 15: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 16: Commercial Lending Portfolio
Commercial Lending Portfolio • $84M funded on new investments Q4 Activity • $395M follow on fundings • $301M repayments and sales • $245M loan foreclosure $16.8B Total Portfolio 60% W.A. LTV 4 5 Industrial Residential (3 loans) 1 6% 2% (6 loans) (2 loans) Mixed Use 3 2 10% Multifamily Property Type
Slide 17: Commercial Portfolio Collateral Mix Transformation
Commercial Portfolio Collateral Mix Transformation Ø 69% of our portfolio represents post-COVID originations, with an evolving collateral mix that has more multifamily and industrial and less retail and office December 31, 2019 POST-COVID TRANSFORMATION December 31, 2022 1% 8% 6% 2% 13% 13% Post-COV
Slide 18: Top Loans by Largest Property Types
Top 10 Loans by Largest Property Types Multifamily Office Hotel International Characteristics 1% 15% 15% U.S. 11% Property 27% 7% $5.6B $0.9B $2.8B 20% 13% 26% 59% $2.9B 89% 26% 11% 80% Southeast Southwest West Northeast Leisure Extended Stay Mid-Atlantic Midwest International Class A Class B Busine
Slide 19: Commercial Portfolio Geographic Diversification
(3) Commercial Portfolio Geographic Diversification 2% Manhattan U.S. Northeast 16 % Southeast 17 % Southwest 16 % West 10 % Mid-Atlantic 9% Midwest 3% Europe Australia Bahamas / Bermuda Europe: International UK 14 % Ireland 3% Italy 1% Other Europe 2% Australia 7% Bahamas/Bermuda 2% NOTE: Amounts a
Slide 20: Commercial Lending Metrics
Commercial Lending Metrics (4) Mezzanine Subordinated First Mortgages Lending CMBS (4) Preferred Equity Total CRE ($ millions) Loans Mortgages Carrying $15,553 $675 $445 $71 $30 $16,774 Value Unlevered (5) 8.2% 8.6% 14.1% 14.6% 23.6% 8.4% Return (6) First Mortgages Lending CMBS Mezzanine Loans Subor
Slide 21: 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 Senior Jun 2022 Jun 2029 Various, Australia Other $ 938.2 $ 938.2 58% Senior/Mezz Dec 2021 Dec 2025 Various, Ireland Industrial 512.1 134.8 66% Seni
Slide 22: Residential Portfolio
Residential Portfolio $ millions Significant Activity During the Quarter: Ø Acquired $745M of loans Ø $33M of unrealized fair value decreases related to this loan portfolio, inclusive of hedges, due to widening credit spreads and interest rate increases Ø Recognized $11M in DE and GAAP losses relate
Slide 23: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 24: Infrastructure Portfolio Metrics and Activity
Portfolio Metrics and Activity • $60M funded on new loans Q4 Activity • $7M follow on fundings • $48M repayments $2.4B • $27M sale Total • $16M conversion to equity interest Portfolio Other Thermal 1% Northeast Midstream / Downstream 39% 38% Geographic Location Southwest 22% (8) Sector Int'l 1% West
Slide 25: Property Segment
PROPERTY SEGMENT 25
Slide 26: Property Segment Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Unrealized fair value increases of $86M (or $68M, net of 20.6% non-controlling interests) in the Woodstar Fund investments, driven by increased net operating income (see next page for more details) Ø 10.6% rent increase in Ma
Slide 27: Woodstar Fund
Woodstar Fund (the "Fund") $ millions Ø The Fund, which was formed in Q4 2021, holds the 15,057 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 consolidated balance sheet at
Slide 28: Portfolio Snapshot
Portfolio Snapshot $ millions, sq. ft. in thousands Woodstar Fund Medical Office Master Lease Gross Gross Region % Occupancy Units Region % Occupancy Sq. Ft. Region % Occupancy Sq. Ft. investment investment North 7% 91% 1,230 Northeast 30% $ 228 100% 430 Midwest 36% $ 123 100% 757 Central 77% 98% 11
Slide 29: Investing and Servicing Segment
INVESTING AND SERVICING SEGMENT 21
Slide 30: Investing and Servicing Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Securitized $93M of conduit loans Ø Obtained 4 new servicing assignments with a UPB of $4.0B, bringing our named portfolio to $108.9B Ø Sold a property for gross proceeds of $38M, a net DE gain of $23M, and a net GAAP gain of
Slide 31: CMBS and Special Servicing
CMBS and Special Servicing (11) Owned CMBS by Vintage LNR Special Servicer $ millions $ billions Named SS: 182 $108.9B $250 CMBS Trusts Loan Balance $200 $150 Named SS Balance $150 $100 $100 $50 $50 '18 '19 '14 '20 '15 '21 '16 '22 '17 '18 '19 '13 '20 '14 '21 '15 '22 '16 '17 Q4 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q
Slide 32: Capitalization
CAPITALIZATION 27
Slide 33: Capitalization Overview
Capitalization Overview Credit Metrics Adjusted Debt-to-Equity Ratios 3.8x Ba2 / BB / BB+ Current Corporate Issuer Rating Off-Balance Sheet $3.9B 2.5x Unencumbered Assets 1.6x On-Balance Interest Coverage Ratio Sheet 1.7x Unencumbered Assets to Unsecured Debt (12) Adjusted On Balance Sheet Leverage
Slide 34: Capitalization Overview, continued
Capitalization Overview, continued $ billions Ø 88% of our outstanding debt does not permit valuation adjustments based on capital market events Total Debt Outstanding Margin Call Provisions (including off-balance sheet) (including off-balance sheet) Secured Debt Spread and Credit $14.6 $3.3 Unsecur
Slide 35: Book Value and Fair Value per Share Bridge
Book Value and Fair Value per Share Bridge $0.42 $22.12 $0.90 $21.70 $20.80 Q4'22 Q4'22 Q4'22 Current Current GAAP Accumulated Undepreciated FMV Adjustment* FMV Book Value Depreciation Book Value • Represents the difference between our cost basis and our estimate of fair value. The determination of
Slide 36: Interest Rate Sensitivity
Interest Rate Sensitivity Ø Our balance sheet is positively correlated to rising rates, driven by our Commercial and Infrastructure Lending portfolios, which are 99% and 97% floating rate, respectively Annual Net Interest Income $ millions $80 $60 $60 $39 $40 $19 $20 $0 $(9) $(20) 0.25% Decrease 0.5
Slide 37: Financing Facilities
Financing Facilities $ millions $25.4B $8.4B 25 Max Facility Size Available Capacity Counterparties Debt Obligations Maximum Facility (14) Available Type (14) Drawn Size Capacity Asset Specific Financing: Large Loans, Commercial $ 13,188 $ 8,059 $ 5,129 Infrastructure Lending Segment 2,200 1,056 1,1
Slide 38: Financial Capacity
Financial Capacity $ millions Total Available Capital $ 733 (15) + Available On-BS Financing $ 7,236 $1,800 Total Potential Liquidity $ 7,969 $1,500 $289 $(250) $(209) $1,200 $983 $1,128 $(225) $900 $733 $600 $300 $145 $0 Cash & Approved and Current liquidity 90-day Repayment of 90-day Working capit
Slide 39: Share Count
Share Count shares in thousands 2022 2022 Q4 Q3 Q2 Q1 YTD Number of Shares, GAAP EPS: Basic — Average shares outstanding 307,352 306,704 305,035 302,944 305,524 Effect of dilutive securities — Convertible Notes 9,649 9,649 9,649 9,649 9,649 Effect of dilutive securities — Other 587 222 278 736 555 D
Slide 40: Appendix
APPENDIX 34
Slide 41: 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 42: Footnotes
Footnotes 1. Excludes $705M of the commercial portfolio which are classified as CMBS or preferred equity investments. 2. Includes other property types not specifically identified in the applicable table, including gaming resorts, exhibition centers, land development, and car wash. 3. Excludes <0.6%
Slide 43: Footnotes, continued
Footnotes, continued 13. Includes our share of the Woodstar portfolio debt with a UPB of $1,002M. 14. Excludes non-recourse CLOs, SASB, residential lending securitizations, commercial lending A-note sales, third party securitizations and our share of the Woodstar portfolio debt. Drawn amounts also e
Slide 44: Calculation Methodologies
Calculation Methodologies Ø Commercial Loan LTVs ▪ In order to determine LTV, the Company utilizes 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 of values, foll
Slide 45: 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 46: 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 47: NYSE: STWD
PROPERTY TRUST
Starwood Property Trust — FY2022 Earnings Presentation on 6ix