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8-K - FORM 8-K - STARWOOD PROPERTY TRUST, INC. | c97465e8vk.htm |
Exhibit 99.1
STARWOOD PROPERTY TRUST, INC.
ANNOUNCES RESULTS SINCE COMMENCEMENT OF OPERATIONS
AND FOURTH QUARTER 2009
ANNOUNCES RESULTS SINCE COMMENCEMENT OF OPERATIONS
AND FOURTH QUARTER 2009
Greenwich,
CT (March 8, 2010) Starwood Property Trust (NYSE: STWD), a real estate investment trust
focused primarily on originating, investing in, and financing commercial mortgage loans and other
commercial real estate-related debt investments, today announced operating results for the fourth
quarter 2009 and for the period August 17, 2009 (commencement of operations) through December 31,
2009.
The Companys Core Earnings (Loss)1, a non-GAAP financial measure, was ($596) thousand
or ($0.01) per share for the period from August 17, 2009 to December 31, 2009. Net Income (Loss)
attributable to Starwood Property Trust, Inc. for the same period was ($3.0) million or ($0.06) per
common share. Net interest margin generated from investments during the period was approximately
$5.0 million. Additional interest income earned from cash balances during the period was
approximately $1.7 million. The results were affected by the recognition of $2.4 million of
non-cash, stock-based compensation in the period.
Core Earnings for the fourth quarter 2009 were $501 thousand or $0.01 per share. Net Income (Loss)
attributable to Starwood Property Trust, Inc. was ($1.1) million or ($0.02) per common share. Net
interest margin in the quarter and interest income from cash balances were $4.4 million and $1.1
million, respectively. Non-cash, stock-based compensation in the quarter totaled approximately
$1.6 million.
We
are encouraged by the Companys current portfolio, with
investments now approaching $1 billion in assets
in less than 6 months, much of which occurred subsequent to year-end, said Barry Sternlicht,
Chairman and Chief Executive Officer. Our pipeline of transactions has begun to accelerate in
quantity as the markets have evolved, and we believe meaningful opportunities for us will continue
to develop as the credit markets improve. The markets do not yet need to replace the significant
lending capacity that has exited the market, with transaction volume
down in excess of 80% year over year; this normalization process should provide a tremendous opportunity for us. We remain focused on safety and yield
and have built a very solid foundation to deliver both. The TIAA acquisition will be levered as
needed and we expect that this investment will produce a better than 12% levered cash on cash
return with match funded debt on maturities exceeding 12 months. As we invest our remaining cash, we will apply appropriate leverage
to our unlevered portfolio to free additional
investment capital; which, when invested will further enhance our operating results. We are
optimistic that we can translate increased capacity and enhanced returns into strong EBITDA to
support a stable and growing dividend.
1 | Core Earnings, a non-GAAP financial measure, is used to
compute the Companys incentive fees to the Manager and is an appropriate
supplemental disclosure for a mortgage REIT. For the Companys purposes, Core
Earnings is defined as GAAP net income (loss) excluding non-cash equity
compensation expense, the incentive fee, depreciation and amortization (to the
extent that we foreclose on any properties underlying our target assets), any
unrealized gains, losses or other non-cash items recorded in net income for the
period, regardless of whether such items are included in other comprehensive
income or loss, or in net income. The amount will be adjusted to exclude
one-time events pursuant to changes in GAAP and certain other non-cash charges
as determined by the Manager and approved by a majority of the Companys
independent directors. |
Book Value
The Companys GAAP book value per share at December 31, 2009 was $18.66 and is net of the Companys
contingent underwriters fee of $27.2 million. On a fully diluted basis, the Companys GAAP book
value at December 31, 2009 was $18.26 per share.
Investment Portfolio and Subsequent Events
Net investment during the fourth quarter totaled approximately $258 million; the investments
included purchases of loans totaling approximately $110 million, newly originated first mortgages
of $105 million, and purchases of single borrower CMBS totaling $43 million. Net investments made since the
commencement of operations through December 31, 2009 totaled approximately $288 million (including
a minority interest of $8 million) and, as shown in the table below, are expected to generate net returns
of between 11% and 16%. The Companys only leverage as of December 31, 2009 was the
$171 million of non-recourse borrowings via the
Term Asset-Backed Securities Loan Facility (TALF), which have an average rate of 3.82%.
A summary of the Companys investments as of December 31, 2009 are as follows:
Starwood Property Trust, Inc. Activity through December 31, 2009 (amounts in thousands):
Weighted | ||||||||||||||||||||||||||||
Book | Face | % | Net | Expected | Average | |||||||||||||||||||||||
Investment | Value | Amount | Owned | Financing | Investment | Return | Life | |||||||||||||||||||||
Multi-Asset CMBS |
$ | 202,646 | $ | 202,699 | 75 | % | $ | 171,394 | $ | 31,252 | 16 | % | 1.9 | |||||||||||||||
Single Borrower CMBS |
43,250 | 53,712 | 100 | % | | 43,250 | 12 | % | 5.3 | |||||||||||||||||||
Loan originations |
104,702 | 107,722 | 100 | % | | 104,702 | 11 | % | 3.5 | |||||||||||||||||||
Loan acquisitions |
109,819 | 147,262 | 100 | % | | 109,819 | 13 | % | 9.8 | |||||||||||||||||||
$ | 460,417 | $ | 511,395 | $ | 171,394 | $ | 289,023 | |||||||||||||||||||||
Subsequent to year-end, the Company invested approximately $536 million (including minority interest of $2 million).
The investments included the purchase of a portfolio of 20 performing
commercial mortgage loans and B-Notes from Teachers
Insurance and Annuity Association of America (TIAA) for $510 million and other investments
totaling approximately $26 million.
The loans purchased from TIAA (the TIAA Portfolio) are secured by retail and office assets
totaling 4.5 million square feet across 10 states which are approximately 96% occupied. The TIAA
Portfolio has a weighted average debt yield of 17.7%, a debt
service coverage ratio of approximately 1.8x, and a weighted average coupon of 7.75%.
The TIAA Portfolio, excluding the $112 million of
loans that have a maturity within the next 12 months,
has a weighted average remaining term of 2 years.
With
these new investments, the Company has invested approximately
$825 million (including minority interest of $10 million),
comprised of $735 million in first mortgages and B-Notes,
$31 million in AAA-rated CMBS and $59 million in single
borrower CMBS, RMBS and other investments.
Dividend
On
March 4, 2010, the Company declared a dividend of $0.22 per share for the quarter ending March
31, 2010, which is payable on April 15, 2010 to common shareholders of record as of March 31, 2010.
Conference Call and Webcast Information
Starwood
Property Trust will host a webcast and conference call on Tuesday, March 9, 2010 at 10:00
a.m. Eastern Time to discuss fourth quarter and 2009 results and recent events. A webcast will be
available on the Companys website at www.starwoodpropertytrust.com. To listen to a live broadcast,
access the site at least 15 minutes prior to the scheduled start time in order to register and
download and install any necessary software.
To Participate in the Telephone Conference Call:
Dial in at least five minutes prior to start time.
Domestic: 877-407-0784
International: 201-689-8560
Conference ID: 345422
International: 201-689-8560
Conference ID: 345422
Conference Call Playback:
Domestic: 877-660-6853
International: 201-612-7415
Account #: 3055
Conference ID: 335992
International: 201-612-7415
Account #: 3055
Conference ID: 335992
The playback can be accessed through March 23, 2010.
About Starwood Property Trust, Inc.
Starwood Property Trust, Inc. (NYSE:STWD) is a newly formed company that is focused primarily on
originating, investing in, financing and managing commercial mortgage loans and other commercial
real estate-related debt investments. Starwood Property Trust, Inc. is externally managed and
advised by SPT Management, LLC, an affiliate of Starwood Capital Group, and intends to elect to be
taxed as a real estate investment trust for U.S. federal income tax purposes.
Forward Looking Statements
Statements in this press release which are not historical fact may be deemed forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although Starwood Property Trust, Inc. believes the expectations
reflected in any forward-looking statements are based on reasonable assumptions, it can give no
assurance that its expectations will be attained. Factors that could cause actual results to
differ materially from the Companys expectations include completion of pending investments,
continued ability to acquire additional investments, competition within the finance and real estate
industries, economic conditions, and other risks detailed from time to time in the Companys
reports filed with the SEC.
SOURCE Starwood Property Trust, Inc.
Additional information can be found on the Companys website at www.starwoodpropertytrust.com.
Starwood Property Trust, Inc. and Subsidiaries
Consolidated Statement of Operations (Amounts in
thousands, except share and per share data)
Consolidated Statement of Operations (Amounts in
thousands, except share and per share data)
For the Period | ||||||||
from August 17, | ||||||||
2009 | ||||||||
(Commencement | ||||||||
For the Three | of Operations) | |||||||
Months ended | Through | |||||||
December 31, | December 31, | |||||||
2009 | 2009 | |||||||
Net interest margin: |
||||||||
Interest income from mortgage backed securities |
$ | 3,603 | $ | 4,468 | ||||
Interest income from loans |
2,459 | 2,459 | ||||||
Interest expense |
(1,651 | ) | (1,904 | ) | ||||
Net interest margin |
4,411 | 5,023 | ||||||
Expenses: |
||||||||
Management fees (including $1,582 and $2,393,
respectively, of non-cash stock-based compensation) |
5,006 | 7,471 | ||||||
General and administrative (including $17 and $28,
respectively, of non-cash stock-based compensation) |
1,314 | 1,815 | ||||||
Total operating expenses |
6,320 | 9,286 | ||||||
Interest income from cash balances |
1,100 | 1,683 | ||||||
Net loss |
$ | (809 | ) | $ | (2,580 | ) | ||
Net income attributable to noncontrolling interests |
289 | 437 | ||||||
Net loss attributable to Starwood Property Trust, Inc. |
$ | (1,098 | ) | $ | (3,017 | ) | ||
Net loss per share of common stock: |
||||||||
Basic |
$ | (0.02 | ) | $ | (0.06 | ) | ||
Diluted |
$ | (0.02 | ) | $ | (0.06 | ) | ||
Weighted average shares of common stock outstanding: |
||||||||
Basic |
47,575,955 | 47,575,634 | ||||||
Diluted |
47,575,955 | 47,575,634 | ||||||
Reconcilation of Net Income (Loss) to Core Earnings
(Amounts in Thousands, except per share)
4th Quarter | Year * | |||||||
2009 | 2009 | |||||||
Net loss attributable to Starwood Property Trust, Inc. |
$ | (1,098 | ) | $ | (3,017 | ) | ||
Add back for noncash Stock-Based Compensation |
1,599 | 2,421 | ||||||
Core Earnings |
$ | 501 | $ | (596 | ) | |||
Per Share |
$ | 0.01 | $ | (0.01 | ) |
* Represents period from August 17, 2009, Commencement of Operations.
Investment Portfolio Collateral and Geographic Diversification
Total Investment Portfolio as of 12/31/09
Collateral Property Type | Geographic Location | |||||||||
Hospitality |
32.7 | % | Northeast | 14.1 | % | |||||
Industrial |
26.5 | % | Mid-Atlantic | 14.8 | % | |||||
Office |
18.0 | % | Southeast | 35.9 | % | |||||
Retail |
16.2 | % | Southwest | 5.3 | % | |||||
Multifamily |
5.1 | % | Midwest | 8.7 | % | |||||
Other |
1.2 | % | West | 17.2 | % | |||||
Mixed Use |
0.3 | % | Other | 4.0 | % | |||||
100.0 | % | 100.0 | % | |||||||