·

Originated a $257.9 million first mortgage for the development of a 194-acre coastal residential community in Orange County, California. 

·

Originated a $175.0 million first mortgage and mezzanine loan for the refinancing of a 1,054-room, five-property hotel portfolio located in California.

·

Originated an $83.5 million first mortgage and mezzanine loan for the refinancing and development of a 77-acre retail center located in Albuquerque, New Mexico.

·

Originated an $82.8 million first mortgage and mezzanine loan for the refinancing of a 270-unit luxury condominium tower located in Philadelphia, Pennsylvania. 

Investment

Face
Amount

Carry
Value (1)

Asset Specific
Financing (2)

Net
Investment

Unlevered
Return on
Asset

Current
Leveraged
Return (3)

Optimal
Asset-Level
Return (4)

First mortgages held-for-investment (5)

$

$

$

$

%  

%  

%  

Subordinated mortgages held-for-investment

%  

%  

%  

Mezzanine loans held-for-investment (5)

-

%  

%  

%  

Preferred equity investments held-to-maturity

-

%  

%  

%  

CMBS

%  

%  

%  

Target portfolio of Lending Segment

$

$

$

$

%  

%  

%  

RMBS available-for-sale at fair value

%  

Loans held-for-sale

Loans transferred as secured borrowings 

Equity security

-

Investment in unconsolidated entities

N/A

-

Total investments

$

$

$

$

Weighted Average LTV of Loan Portfolio (5)(6)

First
Mortgages

Subordinated
Mortgages

Mezzanine

Preferred
Equity

Total (7)

Beginning LTV

%  

%  

%  

%  

%  

Ending LTV

%  

%  

%  

%  

%  

Investment

Carry Value

Asset
Specific
Financing

Net
Investment

CMBS (8)

$

$

$

Special servicing intangibles

-

Conduit loans

Loans held-for-investment

-

Investment in unconsolidated entities

-

Properties, net

    Total investments

$

$

$

·

Conduit loan originations of $476.7 million and securitizations of $551.6 million.

·

Purchase of $37.9 million of CMBS, including $17.5 million in new issue B-pieces.

·

Purchase of two multi-family properties and one retail property for a gross purchase price of $33.4 million and a net equity investment of $13.5 million.

·

Net decrease in the fair value of the domestic servicing intangible on a GAAP and Core basis of $8.4 million, resulting from the continued amortization of this asset, net of increases in fair value due to the attainment of new servicing contracts.

Investment

Net Carrying Value

Asset Specific Financing

Net Investment

Net Operating Income (9)

Occupancy Rate

Weighted Average Lease Term

Office (10)

$

$

$

$

%

6.8 years

Multi-family residential (10)

%

0.4 years

Investment in unconsolidated entity - retail

-

(11)

%

9.5 years

$

$

$

$

·

Sold 13.8 million shares of common stock for gross proceeds of $326.1 million.

·

Obtained a financing facility for €294.0 million to fund the acquisition of the Ireland Portfolio.    As of June 30, 2015, €220.5 million ($245.6 million) of this facility was drawn. The remaining balance was drawn in July 2015 upon acquisition of the remaining asset in the Ireland Portfolio.

·

Announced a $200.0 million increase in share and convertible note repurchase authorization, bringing the total size of the program to $450.0 million.

·

Repurchased 400,000 shares of common stock for $8.8 million.

·

Repurchased $14.5 million aggregate principal amount of the Company’s 4.0% Convertible Senior Notes for $16.5 million, resulting in a loss on extinguishment of debt for the quarter of $0.6 million. 

Income (Expense) Subject to Interest Rate

Variable rate
investments and
indebtedness

3.0%
Increase

2.0% 
Increase

1.0%
Increase

Investment income from variable rate investments

$

$

$

$

Interest expense from variable rate debt

Net investment income from variable rate instruments

$

$

$

$

Impact per diluted share

$

$

$

June 30, 2015

March 31, 2015

Fair value per diluted share

$

$

Book value per diluted share

$

$

·

Acquired a 103,000 sq. ft., fully leased office property in Dublin, Ireland, for a gross purchase price of €111.0 million ($121.9 million).

·

Closed $153.7 million of new loan originations in the Lending Segment.

·

Obtained four new special servicer assignments, including assignments relating to three new issue CMBS trusts.

(1)

The difference between the Carry Value and Face Amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs. The difference between the Carry Value and Face Amount of the available-for-sale securities consists of the unrealized gains/(losses) on the fair value of the securities and unamortized purchase discount.

(2)

Current financings are either floating rate or swapped to fixed rate to match the interest rate characteristics of the underlying asset.

(3)

The current leveraged return represents the compounded effective rate of return earned over the life of the investment based on existing leverage levels as of June 30, 2015, and calculated on a weighted average basis.  Leveraged returns include the loan coupon, amortization of premium or discount, and the effects of costs and fees, all recognized on the effective interest method. Leveraged returns are presented solely for informational purposes and will not equal income recognized in prior or future periods due mainly to the fact that (i) interest earned on the Company’s floating rate loans will change in the future when interest rates change, and these leveraged returns assume interest rates remain at current levels and (ii) the leveraged returns assume that the leverage levels existing at June 30, 2015 will be maintained either throughout the remaining term of the applicable credit facilities or the remaining term of the investment, if shorter.  However, leverage levels in future periods will likely fluctuate as the Company manages its day-to-day liquidity.

(4)

The optimal asset-level return assumes (i) maximum available leverage in place or in negotiation for each asset, notwithstanding the amount actually borrowed, and (ii) full syndication of the first mortgage when syndication is deemed probable.

(5)

During the second quarter of 2015, the Company reclassified certain loans previously included in the mezzanine loan category to the first mortgage category.  Previously, first mortgage loans which contained a related contiguous mezzanine loan component were classified by their respective components as first mortgages and mezzanine loans.  These loans are now classified as first mortgage loans in their entirety because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan.  As of June 30, 2015, the application of this methodology resulted in mezzanine loans with an aggregate carrying value of $793.0 million being classified as first mortgages.

(6)

Underlying property values are determined by the Company's management based on its ongoing asset assessments, and loan balances that are the face value of a loan regardless of whether the Company has purchased the loan at a discount or premium to par. Assets characterized as first mortgages include all loan components where the Company owns the senior most interest in the loan, which may include subordinated mortgages and/or mezzanine loans.  Assets characterized as subordinated mortgages are the subordinated components of first mortgages where the Company does not own the senior most interest in the loan. Assets characterized as mezzanine loans are mezzanine loans where the Company does not own the senior most interest in the loan. For any loans collateralized by ground-up construction projects without significant leasing or units with executed sales contracts, the fully funded loan balance is included in the numerator and the fully budgeted construction cost, including costs of acquisition of the property, is included in the denominator. For ground up construction loans which have significant leasing or units under contract for sale, the fully funded loan balance is included in the numerator with an estimate of the stabilized value upon completion of construction included in the denominator.  Includes loans held for investment and preferred equity.

(7)

Represents the Company’s entire investment, which includes all components of the capital stack that it owns (i.e., first mortgages, subordinated mortgages, mezzanine loans and preferred equity).

(8)

Face amount is $4.4 billion. Differences between face amount and carry value are principally attributable to purchase discounts and changes in fair value.

(9)

Includes net operating income for the current quarter, which includes net operating income subsequent to the May 8, 2015 and May 18, 2015 acquisition dates for those Ireland Portfolio properties acquired during the quarter.

(10)

Net carrying value includes all components of the related asset, including properties and intangibles.

(11)

Represents the Company’s earnings from unconsolidated entities attributable to the Company’s investment in the mall portfolio acquired in the fourth quarter of 2014. 

Investing

Investing

Lending

and Servicing

Property

and Servicing

Segment

Segment

Segment

Corporate

Subtotal

VIEs

Total

Revenues:

Interest income from loans

$

$

$

 —

$

 —

$

$

 —

$

Interest income from investment securities

 —

 —

Servicing fees

 —

 —

Rental income

 —

 —

 —

Other revenues

 —

 —

Total revenues 

 —

Costs and expenses:

Management fees

 —

Interest expense

 —

General and administrative

Acquisition and investment pursuit costs

 —

Costs of rental operations

 —

 —

 —

Depreciation and amortization

 —

 —

 —

Loan loss allowance, net

 —

 —

 —

 —

Total costs and expenses 

Income (loss) before other income, income taxes and non-controlling interests

Other income:

Change in net assets related to consolidated VIEs

 —

 —

 —

 —

 —

Change in fair value of servicing rights

 —

 —

 —

Change in fair value of investment securities, net

 —

 —

Change in fair value of mortgage loans held-for-sale, net

 —

 —

 —

 —

Earnings from unconsolidated entities

 —

Gain on sale of investments and other assets, net

 —

 —

 —

 —

(Loss) gain on derivative financial instruments, net

 —

 —

Foreign currency gain (loss), net

 —

 —

Loss on extinguishment of debt

 —

 —

 —

 —

Other income, net

 —

 —

 —

 —

Total other (loss) income 

Income (loss) before income taxes 

Income tax provision

 —

 —

 —

 —

Net income (loss) 

Net income attributable to non-controlling interests

 —

 —

 —

Net income (loss) attributable to Starwood Property Trust, Inc.  

$

$

$

$

$

$

 —

$

Investing

Lending

and Servicing

Property

Segment

Segment

Segment

Corporate

Total

Net income (loss) attributable to Starwood Property Trust, Inc.

 $

 $

 $

$

 $

Add / (Deduct):

Non-cash equity compensation expense

 —

Management incentive fee

 —

 —

 —

Depreciation and amortization

 —

 —

Loan loss allowance, net

 —

 —

 —

Interest income adjustment for securities

 —

 —

Other non-cash items

 —

 —

 —

 —

 —

Reversal of unrealized (gains) / losses on:

Loans held-for-sale

 —

 —

 —

Securities

 —

 —

Derivatives

 —

Foreign currency

 —

Earnings from unconsolidated entities

 —

 —

 —

Recognition of realized gains / (losses) on:

Loans held-for-sale

 —

 —

 —

Securities

 —

 —

 —

Derivatives

 —

 —

Foreign currency

 —

Earnings from unconsolidated entities

 —

 —

 —

Core Earnings (Loss)

$

$

$

$

$

Core Earnings (Loss) per Weighted Average Diluted Share

$

$

$

 —

$

$

Investing

Investing

Lending

and Servicing

Property

and Servicing

Segment

Segment

Segment

Corporate

Subtotal

VIEs

Total

Revenues:

Interest income from loans

$

$

$

 —

$

 —

$

$

 —

$

Interest income from investment securities

 —

 —

Servicing fees

 —

 —

Rental income

 —

 —

 —

Other revenues

 —

 —

Total revenues 

 —

Costs and expenses:

Management fees

 —

Interest expense

 —

General and administrative

Acquisition and investment pursuit costs

 —

Costs of rental operations

 —

 —

 —

Depreciation and amortization

 —

 —

 —

Loan loss allowance, net

 —

 —

 —

 —

Other expense

 —

 —

 —

 —

Total costs and expenses 

Income (loss) before other income, income taxes and non-controlling interests

Other income:

Change in net assets related to consolidated VIEs

 —

 —

 —

 —

 —

Change in fair value of servicing rights

 —

 —

 —

Change in fair value of investment securities, net

 —

 —

Change in fair value of mortgage loans held-for-sale, net

 —

 —

 —

 —

Earnings from unconsolidated entities

 —

Gain on sale of investments and other assets, net

 —

 —

 —

Gain (loss) on derivative financial instruments, net

 —

 —

Foreign currency loss, net

 —

 —

Loss on extinguishment of debt

 —

 —

 —

 —

Other income, net

 —

 —

 —

Total other income (loss) 

Income (loss) before income taxes 

Income tax benefit (provision)

 —

 —

 —

Net income (loss) 

Net income attributable to non-controlling interests

 —

 —

 —

Net income (loss) attributable to Starwood Property Trust, Inc.  

$

$

$

$

$

$

 —

$

Investing

Lending

and Servicing

Property

Segment

Segment

Segment

Corporate

Total

Net income (loss) attributable to Starwood Property Trust, Inc.

 $

 $

$

$

 $

Add / (Deduct):

Non-cash equity compensation expense

 —

Management incentive fee

 —

 —

 —

Depreciation and amortization

 —

 —

Loan loss allowance, net

 —

 —

 —

Interest income adjustment for securities

 —

 —

Other non-cash items

 —

 —

 —

Reversal of unrealized (gains) / losses on:

Loans held-for-sale

 —

 —

 —

Securities

 —

 —

Derivatives

 —

Foreign currency

 —

Earnings from unconsolidated entities