Starwood Property Trust Inc. · NYSE:STWD
Starwood Property Trust — Q3 2024 Earnings Presentation
47 slides from Starwood Property Trust's earnings presentation, Nov 6, 2024
Slide 1: Starwood Property Trust
/ PROPERTY TRUST
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: Architectural Rendering of Property
Slide 3: Press Release
PRESS RELEASE
Slide 4: Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2024
For Immediate Release Starwood Property Trust Reports Results for the Quarter and Year Ended December 31, 2024 – GAAP EPS of $0.15 for the Quarter and $1.10 for the Year and Distributable EPS for the Quarter of $0.48 and $2.02 for the Year – – Invested $1.6 Billion in the Quarter, $5.1 Billion for t
Slide 5: Webcast and Conference Call Information
Webcast and Conference Call Information The Company will host a live webcast and conference call on Thursday, February 27, 2025, 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
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, Quarter
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended December 31, 2024 (Amounts in thousands) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Securitization Segment Segment Segme
Slide 8: Definition of Distributable Earnings and Reconciliation, Quarter
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
Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the year ended December 31, 2024 (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, Year
Reconciliation of Net Income to Distributable Earnings For the year ended December 31, 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) 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, 2024 (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 $25.3B of total assets with an adjusted debt- Strong Balance Sheet to-equity ratio of 2.10x and undepreciated book value per share of $19.94 Paid quarterly dividend of $0.48 for over a Consiste
Slide 14: Q4 and 2024 Highlights
Q4 and 2024 Highlights • GAAP book value per share of $19.08 and undepreciated book value of $19.94 ◦ GAAP book value reflects $2.07 per share cumulative reduction for CECL reserves and property impairments as of December 31 • GAAP earnings of $0.15 (FY $1.10) and Distributable Earnings ("DE") of $0
Slide 15: Total Assets $25.3B
Total Assets Ø U.S. office loans represent only 10% of our diversified $25.3B asset base Int'l O Commercial ffice 2 Loans U.S. Office 10% Multifamily 19% 54% % In ta ng ib Ot le he s1 r3 % % Cas h& A/R % 3% Hotel 7 REIS CMB $25.3B S 5% Mixed Use 5% Ind Infrastructure ust rial Lending 5 % 10% Re Re s
Slide 16: Commercial and Residential Lending Segment
COMMERCIAL AND RESIDENTIAL LENDING SEGMENT
Slide 17: Commercial Lending Portfolio
Commercial Lending Portfolio Q4 Activity Loan Risk Rating • $477M originations ($340M funded) • $172M follow on fundings • $1.0B repayments Not 5 Rated • $174M foreclosures on three previously 5-rated loans • $61M sale of foreclosed asset at DE basis (Investment 1 4 (7 loans) Securities) (1 loan) (1
Slide 18: Characteristics and Top Loans by Largest Property Types
Top 10 Loans by Largest Property Types Multifamily Office Hotel International 10% Characteristics 12% U.S. 29% 17% Property 6% 15% $4.7B 15% $0.5B 26% $1.7B 64% 12% $2.5B 83% 26% 85% Southeast Southwest West Leisure Extended Stay Mid-Atlantic Northeast International Class A Class B Business / Group
Slide 19: Collateral Diversification
Collateral Diversification Ø Our commercial loan portfolio has transformed over time, with multifamily now our largest property type Multifamily Office Hotel Mixed Use Industrial Residential Retail Other 100% 80% 60% 40% 20% —% 0 1 2 3 0 1 2 4 0 1 3 4 0 2 3 4 1 2 3 4 1'2 2'2 3'2 4'2 2'2 3'2 4'2 1'2
Slide 20: Commercial Portfolio Geographic Diversification
Commercial Portfolio Geographic Diversification 2% Manhattan U.S. Northeast 18 % Southeast 16 % Southwest 15 % West 11 % Mid-Atlantic 9% Midwest 2% Europe Australia Bahamas / Bermuda Europe: International UK 13 % Ireland 2% Germany 2% Other Europe 3% Australia 7% Bahamas/Bermuda 2% NOTE: Amounts are
Slide 21: Commercial Lending Metrics
Commercial Lending Metrics (2) Mezzanine Subordinated First Mortgages Lending CMBS (2) Preferred Equity Total CRE ($ millions) Loans Mortgages $12,932 $357 $323 $31 $47 $13,690 Carrying Value Carrying Value on $12,083 $357 $216 $26 $18 $12,700 Accrual Unlevered Return for Assets on 8.3% 8.8% 11.3% 1
Slide 22: Top 10 Commercial Lending Commitments
(4) Top 10 Commercial Lending Commitments $ millions Fully Extended Loan Loan Type Origination Date Location Property Type UPB Maturity Date Commitment Senior Jun 2022 Jun 2029 Various, Australia Casino Hotel* $ 851.9 $ 851.9 Senior Feb 2021 Feb 2028 Various, UK Mixed Use 641.8 641.8 Senior/Mezz Dec
Slide 23: Foreclosed Loans
Foreclosed Loans Ø $601M net carrying value of commercial loans previously foreclosed Location Property Type Carrying Value ($ millions) (per sq ft) Los Angeles, California Mixed Use $ 150 $ 131 New York City, New York Residential (Luxury Co-Op) 110 1,985 Dallas, Texas Multifamily 88 182 Houston, Te
Slide 24: Residential Portfolio
Residential Portfolio $ millions Ø During the quarter, recorded $37M net unrealized fair value decrease: – Loans: $99M decrease – RMBS: $5M increase – Interest Rate Hedges: $57M increase to FMV of $101M Asset Carrying Values Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Loans, hel
Slide 25: Infrastructure Lending Segment
INFRASTRUCTURE LENDING SEGMENT 25
Slide 26: Portfolio Metrics and Activity
Portfolio Metrics and Activity Q4 Activity • $532M new commitments ($472M funded) • $26M follow on fundings $2.6B • $366M repayments Total Portfolio (5) Geographic Location Sector Power Southwest 57% 21% Northeast 32% Midwest 20% Other - U.S. 1% Upstream West 1% Mid-Atlantic 1% Midstream 6% 34% Sout
Slide 27: Property Segment
PROPERTY SEGMENT 25
Slide 28: Investment Portfolio
Investment Portfolio $ millions Significant Activity During the Quarter: Ø Unrealized fair value increases of $76M (or $60M, net of 20.6% non-controlling interests) in the Woodstar Fund investments Net Asset Q4'24 Net Net Operating Occupancy Investment Carrying Specific (6) Investment (7) 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% $ 228 100% 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 $595M of conduit loans in five transactions, making SMC the largest non-bank CMBS loan contributor in 2024 Ø Active servicing portfolio increased from $8.8B to $9.2B Ø LNR regained position as largest special serv
Slide 33: CMBS and Special Servicing
CMBS and Special Servicing (8) Owned CMBS by Vintage LNR Special Servicer $ millions $ billions Named SS: 197 $109.6B 250 CMBS Trusts Loan Balance 200 150 Named SS Balance 150 100 100 50 50 '18 '21 '17 '21 '24 '17 '20 '24 '16 '20 '23 '16 '19 '23 '15 '19 '22 '18 '22 Q2 Q4 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q
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 $4.9B Total Unencumbered Assets 2.56x Off-Balance 1.63x 2.10x Sheet Fixed Charge Coverage Ratio On-Balance Sheet 1.60x Unencumbered Assets to Unsecured Debt $24.9B Total Capitalizatio
Slide 36: Capitalization Overview, continued
Capitalization Overview, continued $ billions Ø 95% of commercial lending debt and 83% of consolidated debt has no markets mark-to-market provisions Total Debt Outstanding Margin Call Provisions (including off-balance sheet) (including off-balance sheet) Secured Debt $11.3 Spread and Credit $3.1 $18
Slide 37: Book Value per Share Bridge
Book Value per Share Bridge $0.86 $19.94 $19.08 Q4'24 Q4'24 Q4'24 GAAP Accumulated Undepreciated Book Value Depreciation & Amortization Book Value 23 28
Slide 38: Financing Facilities
Financing Facilities $ millions $24.7B $10.5B 23 Max Facility Size Available Capacity Counterparties Debt Obligations Maximum Facility (11) Available Type (11) Drawn Size Capacity Asset Specific Financing: Large Loans, Commercial $ 12,602 $ 5,467 $ 7,135 Infrastructure Lending Segment 1,952 766 1,18
Slide 39: Financial Capacity
Financial Capacity $ millions Total Available Capital $ 1,543 (12) + Available On-BS Financing $ 8,913 Total Potential Liquidity $ 10,456 $2,400 $295 $(250) $2,100 $(100) $1,625 $1,823 $1,800 $(225) $1,543 $1,500 $1,200 $900 $600 $300 $198 $0 Cash & Approved and Current liquidity 90-day Repayment of
Slide 40: Share Count
Share Count shares in thousands 2024 2024 Q4 Q3 Q2 Q1 YTD Number of Shares, GAAP EPS: Basic — Average shares outstanding 334,517 319,690 313,493 311,827 319,921 Effect of dilutive securities — Convertible Notes — — — 18,344 — Effect of dilutive securities — Other 453 89 121 669 648 Diluted — Average
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 $404M of the commercial portfolio which are classified as CMBS or preferred equity investments and are not risk rated. 2. Contiguous mezzanine loans of $918M are included in the first mortgage balance as of December 31, 2024. 3. Unlevered returns are calculated using applicable
Slide 44: 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 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
NYSE : STWD
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