STARWOOD PROPERTY TRUST, INC. - FORM 8-K - EX-99.1

Attached files

file	filename
8-K - 8-K - STARWOOD PROPERTY TRUST, INC.	stwd_currentfolio8k.htm

Exhibit 99.1

$C:\Users\105621\Desktop\Starwood_Logo.jpg$

For Immediate Release

Starwood Property Trust Reports Results for the

Quarter Ended September 30, 2016

– Quarterly GAAP Earnings of $0.44 and Core Earnings of $0.59 per Diluted Common Share –

– Deploys $1.3 Billion of Capital During the Quarter –

– Declares Dividend of $0.48 per Share for the Fourth Quarter of 2016 –

– Commits to Acquire Medical Office Portfolio for $837.9 Million with Expected Close by Year-End –

GREENWICH, Conn., November 2, 2016 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended September 30, 2016. The Company’s third quarter 2016 GAAP net income was $105.8 million, or $0.44 per diluted share, and Core Earnings (a non-GAAP financial measure) was $141.1 million, or $0.59 per diluted share.

“Our results this quarter were driven by contributions from across our businesses, demonstrating the strength of our multi-cylinder platform,” stated Barry Sternlicht, Chairman and Chief Executive Officer of Starwood Property Trust. “We deployed over $1.3 billion of capital this quarter and $3.8 billion year-to-date through volatile market conditions. The credit quality of our $9.1 billion portfolio remains strong, with an LTV on our loan book of just 63%. Since our move into long duration equity assets, we have reviewed countless property investments. This quarter, we identified an investment that met our objectives of long-term stable and rising cash flows, with attractive current cash-on-cash yields. We are under contract to close this investment, an exceptionally high quality medical office portfolio consisting of 38 buildings throughout the U.S. The portfolio is positioned to benefit from growth in the medical sector, high industry-wide tenant retention rates, minimal new supply and favorable demographic trends. By adding a resilient income stream that extends the duration of our overall book, we continue to build a portfolio that can withstand various market cycles.”

Mr. Sternlicht continued, “We continue to utilize our global scale and the deep industry relationships of both Starwood Property Trust and its manager, Starwood Capital Group, to identify unique investment opportunities. In doing so, we have developed a portfolio of both debt and equity investments with attractive in-place cash flows, strong underlying fundamentals and moderate risk profiles, which continues to drive the best risk-adjusted returns for our shareholders.”

Dividend

On November 2, 2016, the Company’s Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending December 31, 2016. The dividend is payable on January 13, 2017 to common stockholders of record as of December 30, 2016.

Supplemental Schedules

Starting this quarter, all of the quarterly disclosure by business segment that was previously contained in the Company’s earnings press release can be found in the Company’s supplemental earnings schedules, which the Company has published in order to provide additional disclosure and financial information for the benefit of the Company’s stakeholders. Specifically, these materials can be found at the Company’s website in the Investor Relations section under “Financial Information” at www.starwoodpropertytrust.com.

Conference Call and Webcast Information

The Company will host a webcast and conference call on Wednesday, November 2, 2016 at 10:00 a.m. Eastern Time to discuss third quarter financial results and recent events. A webcast will be available on the Company’s website at www.starwoodpropertytrust.com. To listen to a live broadcast, access the site at least five minutes prior to the scheduled start time in order to register and download and install any necessary audio software.

To Participate in the Telephone Conference Call:

Dial in at least five minutes prior to start time.

Domestic: 1-888-891-7634

International: 1-719-325-2201

Conference Call Playback:

Domestic: 1-877-870-5176

International: 1-858-384-5517

Passcode: 8035266

The playback can be accessed through November 16, 2016.

About Starwood Property Trust, Inc.

Starwood Property Trust (NYSE: STWD), an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the United States. The Company’s core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt and equity investments. Through its subsidiary LNR Property, LLC, Starwood Property Trust also operates as the largest commercial mortgage special servicer in the United States. With total capital deployed since inception of over $29 billion, Starwood Property Trust continues to solidify its position as one of the premier real estate finance companies in the country.

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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 Company’s expectations include completion of pending investments, continued ability to acquire additional investments, competition within the finance and real estate industries, economic conditions, availability of financing and other risks detailed from time to time in the Company's reports filed with the SEC.

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the three months ended September 30, 2016

(Amounts in thousands)

			Investing								Investing
	Lending		and Servicing		Property						and Servicing
	Segment		Segment		Segment		Corporate		Subtotal		VIEs		Total
Revenues:
Interest income from loans	$	114,506	$	6,719	$	—	$	—	$	121,225	$	—	$	121,225
Interest income from investment securities		13,301		35,274		—		—		48,575		(29,400)		19,175
Servicing fees		195		37,678		—		—		37,873		(14,955)		22,918
Rental income		—		10,516		29,226		—		39,742		—		39,742
Other revenues		99		1,692		11		—		1,802		(157)		1,645
Total revenues		128,101		91,879		29,237		—		249,217		(44,512)		204,705
Costs and expenses:
Management fees		525		24		—		27,183		27,732		48		27,780
Interest expense		22,678		4,877		5,536		26,181		59,272		(190)		59,082
General and administrative		5,067		43,711		867		1,651		51,296		174		51,470
Acquisition and investment pursuit costs		322		416		759		12		1,509		—		1,509
Costs of rental operations		—		4,872		13,139		—		18,011		—		18,011
Depreciation and amortization		—		4,482		10,870		—		15,352		—		15,352
Loan loss allowance, net		2,127		—		—		—		2,127		—		2,127
Total costs and expenses		30,719		58,382		31,171		55,027		175,299		32		175,331
Income (loss) before other income (loss), income taxes and non-controlling interests		97,382		33,497		(1,934)		(55,027)		73,918		(44,544)		29,374
Other income (loss):
Change in net assets related to consolidated VIEs		—		—		—		—		—		47,848		47,848
Change in fair value of servicing rights		—		(14,006)		—		—		(14,006)		(277)		(14,283)
Change in fair value of investment securities, net		207		620		—		—		827		(3,613)		(2,786)
Change in fair value of mortgage loans held-for-sale, net		—		49,996		—		—		49,996		—		49,996
Earnings from unconsolidated entities		852		617		2,455		—		3,924		381		4,305
Gain on sale of investments and other assets, net		10		—		—		—		10		—		10
Gain (loss) on derivative financial instruments, net		4,982		(2,590)		(4,720)		—		(2,328)		—		(2,328)
Foreign currency (loss) gain, net		(3,839)		632		(7)		—		(3,214)		—		(3,214)
OTTI		—		(198)		(513)		—		(711)		—		(711)
Other income, net		—		35		—		234		269		—		269
Total other income (loss)		2,212		35,106		(2,785)		234		34,767		44,339		79,106
Income (loss) before income taxes		99,594		68,603		(4,719)		(54,793)		108,685		(205)		108,480
Income tax provision		—		(2,667)		—		—		(2,667)		—		(2,667)
Net income (loss)		99,594		65,936		(4,719)		(54,793)		106,018		(205)		105,813
Net (income) loss attributable to non-controlling interests		(352)		100		—		—		(252)		205		(47)
Net income (loss) attributable to Starwood Property Trust, Inc.	$	99,242	$	66,036	$	(4,719)	$	(54,793)	$	105,766	$	—	$	105,766

Definition of Core Earnings

Core 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, Core Earnings is defined as GAAP net income (loss) excluding non-cash equity compensation expense, the incentive fee due to the Company’s external manager, acquisition costs from successful acquisitions, depreciation and amortization of real estate and associated intangibles, losses on debt extinguishment and 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 is adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash adjustments as determined by the Company’s external manager and approved by a majority of the Company’s independent directors.

Reconciliation of Net Income to Core Earnings

For the three months ended September 30, 2016

(Amounts in thousands except per share data)

			Investing
	Lending		and Servicing		Property
	Segment		Segment		Segment		Corporate		Total
Net income (loss) attributable to Starwood Property Trust, Inc.	$	99,242	$	66,036	$	(4,719)	$	(54,793)	$	105,766
Add / (Deduct):
Non-cash equity compensation expense		824		1,298		27		5,986		8,135
Management incentive fee		—		—		—		6,303		6,303
Acquisition and investment pursuit costs		—		89		727		12		828
Depreciation and amortization		—		3,791		10,908		—		14,699
Loan loss allowance, net		2,127		—		—		—		2,127
Interest income adjustment for securities		(236)		3,874		—		—		3,638
Other non-cash items		—		230		(108)		—		122
Reversal of unrealized (gains) / losses on:
Loans held-for-sale		—		(49,996)		—		—		(49,996)
Securities		(207)		(620)		—		—		(827)
Derivatives		(5,624)		1,932		4,720		—		1,028
Foreign currency		3,839		(632)		7		—		3,214
Earnings from unconsolidated entities		(852)		(617)		(2,455)		—		(3,924)
Recognition of realized gains / (losses) on:
Loans held-for-sale		—		52,919		—		—		52,919
Securities		—		(3,259)		—		—		(3,259)
Derivatives		7,436		(6,042)		44		—		1,438
Foreign currency		(6,145)		632		(7)		—		(5,520)
Earnings from unconsolidated entities		852		1,100		2,487		—		4,439
Core Earnings (Loss)	$	101,256	$	70,735	$	11,631	$	(42,492)	$	141,130
Core Earnings (Loss) per Weighted Average Diluted Share	$	0.42	$	0.30	$	0.05	$	(0.18)	$	0.59

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the nine months ended September 30, 2016

(Amounts in thousands)

			Investing								Investing
	Lending		and Servicing		Property						and Servicing
	Segment		Segment		Segment		Corporate		Subtotal		VIEs		Total
Revenues:
Interest income from loans	$	348,460	$	12,854	$	—	$	—	$	361,314	$	—	$	361,314
Interest income from investment securities		33,975		115,335		—		—		149,310		(95,431)		53,879
Servicing fees		560		111,145		—		—		111,705		(40,784)		70,921
Rental income		—		25,214		85,048		—		110,262		—		110,262
Other revenues		180		4,110		35		—		4,325		(511)		3,814
Total revenues		383,175		268,658		85,083		—		736,916		(136,726)		600,190
Costs and expenses:
Management fees		1,295		54		—		75,015		76,364		146		76,510
Interest expense		67,585		11,443		16,163		78,236		173,427		(190)		173,237
General and administrative		13,529		95,726		2,259		7,631		119,145		532		119,677
Acquisition and investment pursuit costs		1,602		1,551		1,517		1,012		5,682		—		5,682
Costs of rental operations		—		11,595		34,923		—		46,518		—		46,518
Depreciation and amortization		—		11,263		41,922		—		53,185		—		53,185
Loan loss allowance, net		3,395		—		—		—		3,395		—		3,395
Other expense		—		100		—		—		100		—		100
Total costs and expenses		87,406		131,732		96,784		161,894		477,816		488		478,304
Income (loss) before other (loss) income, income taxes and non-controlling interests		295,769		136,926		(11,701)		(161,894)		259,100		(137,214)		121,886
Other (loss) income:
Change in net assets related to consolidated VIEs		—		—		—		—		—		94,388		94,388
Change in fair value of servicing rights		—		(33,710)		—		—		(33,710)		497		(33,213)
Change in fair value of investment securities, net		(37)		(43,449)		—		—		(43,486)		42,772		(714)
Change in fair value of mortgage loans held-for-sale, net		—		70,122		—		—		70,122		—		70,122
Earnings from unconsolidated entities		2,544		3,280		7,313		—		13,137		(288)		12,849
Gain on sale of investments and other assets, net		165		—		—		—		165		—		165
Gain (loss) on derivative financial instruments, net		17,824		(17,780)		(6,837)		—		(6,793)		—		(6,793)
Foreign currency (loss) gain, net		(23,501)		2,962		(41)		—		(20,580)		—		(20,580)
OTTI		—		(198)		(513)		—		(711)		—		(711)
Other income, net		—		112		9,102		1,784		10,998		—		10,998
Total other (loss) income		(3,005)		(18,661)		9,024		1,784		(10,858)		137,369		126,511
Income (loss) before income taxes		292,764		118,265		(2,677)		(160,110)		248,242		155		248,397
Income tax provision		(75)		(3,392)		—		—		(3,467)		—		(3,467)
Net income (loss)		292,689		114,873		(2,677)		(160,110)		244,775		155		244,930
Net (income) loss attributable to non-controlling interests		(1,050)		171		—		—		(879)		(155)		(1,034)
Net income (loss) attributable to Starwood Property Trust, Inc.	$	291,639	$	115,044	$	(2,677)	$	(160,110)	$	243,896	$	—	$	243,896

Reconciliation of Net Income to Core Earnings

For the nine months ended September 30, 2016

(Amounts in thousands except per share data)

			Investing
	Lending		and Servicing		Property
	Segment		Segment		Segment		Corporate		Total
Net income (loss) attributable to Starwood Property Trust, Inc.	$	291,639	$	115,044	$	(2,677)	$	(160,110)	$	243,896
Add / (Deduct):
Non-cash equity compensation expense		2,110		3,785		89		16,893		22,877
Management incentive fee		—		—		—		13,770		13,770
Acquisition and investment pursuit costs		—		904		1,421		12		2,337
Depreciation and amortization		—		8,918		41,997		—		50,915
Loan loss allowance, net		3,395		—		—		—		3,395
Interest income adjustment for securities		(740)		10,620		—		—		9,880
Other non-cash items		—		247		(10,922)		—		(10,675)
Reversal of unrealized (gains) / losses on:
Loans held-for-sale		—		(70,122)		—		—		(70,122)
Securities		37		43,449		—		—		43,486
Derivatives		(19,807)		16,330		6,837		—		3,360
Foreign currency		23,501		(2,962)		41		—		20,580
Earnings from unconsolidated entities		(2,544)		(3,280)		(7,313)		—		(13,137)
Recognition of realized gains / (losses) on:
Loans held-for-sale		—		71,390		—		—		71,390
Securities		—		(11,136)		—		—		(11,136)
Derivatives		33,311		(15,858)		(26)		—		17,427
Foreign currency		(31,916)		2,825		(41)		—		(29,132)
Earnings from unconsolidated entities		3,148		2,855		4,820		—		10,823
Core Earnings (Loss)	$	302,134	$	173,009	$	34,226	$	(129,435)	$	379,934
Core Earnings (Loss) per Weighted Average Diluted Share	$	1.26	$	0.73	$	0.14	$	(0.54)	$	1.59

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of September 30, 2016

(Amounts in thousands)

			Investing								Investing
	Lending		and Servicing		Property						and Servicing
	Segment		Segment		Segment		Corporate		Subtotal		VIEs		Total
Assets:
Cash and cash equivalents	$	136,096	$	73,779	$	6,222	$	284,325	$	500,422	$	1,135	$	501,557
Restricted cash		26,963		16,301		8,471		—		51,735		—		51,735
Loans held-for-investment, net		5,207,092		25,139		—		—		5,232,231		—		5,232,231
Loans held-for-sale		—		347,490		—		—		347,490		—		347,490
Loans transferred as secured borrowings		100,978		—		—		—		100,978		—		100,978
Investment securities		795,882		1,029,205		—		—		1,825,087		(970,420)		854,667
Properties, net		—		225,608		1,012,271		—		1,237,879		—		1,237,879
Intangible assets		—		137,746		47,495		—		185,241		(29,849)		155,392
Investment in unconsolidated entities		30,838		41,453		120,970		—		193,261		(7,513)		185,748
Goodwill		—		140,437		—		—		140,437		—		140,437
Derivative assets		29,818		1,399		3,092		—		34,309		—		34,309
Accrued interest receivable		25,771		973		—		—		26,744		—		26,744
Other assets		6,947		89,097		32,250		2,519		130,813		(2,521)		128,292
VIE assets, at fair value		—		—		—		—		—		73,923,699		73,923,699
Total Assets	$	6,360,385	$	2,128,627	$	1,230,771	$	286,844	$	10,006,627	$	72,914,531	$	82,921,158
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	21,410	$	87,324	$	46,530	$	18,025	$	173,289	$	835	$	174,124
Related-party payable		—		279		—		23,622		23,901		—		23,901
Dividends payable		—		—		—		115,190		115,190		—		115,190
Derivative liabilities		12,002		455		296		—		12,753		—		12,753
Secured financing agreements, net		2,269,960		494,213		737,796		644,570		4,146,539		(23,700)		4,122,839
Convertible senior notes, net		—		—		—		1,339,853		1,339,853		—		1,339,853
Secured borrowings on transferred loans		102,365		—		—		—		102,365		—		102,365
VIE liabilities, at fair value		—		—		—		—		—		72,924,751		72,924,751
Total Liabilities		2,405,737		582,271		784,622		2,141,260		5,913,890		72,901,886		78,815,776
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock		—		—		—		2,430		2,430		—		2,430
Additional paid-in capital		1,814,902		1,205,686		438,512		771,477		4,230,577		—		4,230,577
Treasury stock		—		—		—		(92,104)		(92,104)		—		(92,104)
Accumulated other comprehensive income (loss)		45,762		(7,696)		2,182		—		40,248		—		40,248
Retained earnings (accumulated deficit)		2,082,734		335,727		5,455		(2,536,219)		(112,303)		—		(112,303)
Total Starwood Property Trust, Inc. Stockholders’ Equity		3,943,398		1,533,717		446,149		(1,854,416)		4,068,848		—		4,068,848
Non-controlling interests in consolidated subsidiaries		11,250		12,639		—		—		23,889		12,645		36,534
Total Equity		3,954,648		1,546,356		446,149		(1,854,416)		4,092,737		12,645		4,105,382
Total Liabilities and Equity	$	6,360,385	$	2,128,627	$	1,230,771	$	286,844	$	10,006,627	$	72,914,531	$	82,921,158

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

Attached files

STARWOOD PROPERTY TRUST, INC. Reports

Also read