Starwood Property Trust Reports Results for the Quarter Ended March 31, 2021

-- Quarterly GAAP Earnings of $0.38 and Distributable Earnings of $0.50 per Diluted Share --

-- Originated or Acquired $2.7 Billion of Assets, Including $2.2 Billion in Commercial Lending --

-- Paid Dividend of $0.48 per Share for 29th Straight Quarter --

-- Completed $500 Million Inaugural Infrastructure CLO and $1.3 Billion CRE CLO --

-- LNR Upgraded by Fitch to CSS1, Only Special Servicer Carrying Highest Rating --

News provided by

May 06, 2021, 07:00 ET

GREENWICH, Conn., May 6, 2021 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, 2021. The Company's first quarter 2021 GAAP net income was $111.4 million, or $0.38 per diluted share, and Distributable Earnings (a non-GAAP financial measure) was $150.8 million, or $0.50 per diluted share.

"We benefited from a strong start to the year with $2.7 billion of capital deployed in the first quarter across our business cylinders, including $2.2 billion in Commercial Lending, bringing our post-COVID capital deployment to $5.7 billion. The credit performance of our diversified business lines coupled with our robust liquidity position gave us the confidence to continue our strong pace of investment activity. Eleven years into our journey, the LTV of our loan book remains low at 60.1%, and we continue to provide an attractive yield in a low rate world," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

"After quarter end, we closed two CLOs totaling $1.8 billion: our inaugural Infrastructure CLO for $500 million and our second CRE CLO for $1.3 billion. These financings allowed us to further de-risk our balance sheet and diversify our funding sources.

"After a year of unprecedented distress which led to record volume in our special servicer, LNR was upgraded by Fitch to its highest servicer rating and is the only CMBS special servicer at this level globally. We are extremely proud of this achievement which recognizes the strength and tenure of our team, years of operating at the highest level, our commitment to technology and our exemplary performance," commented Jeff DiModica, President of Starwood Property Trust.

Supplemental Schedules

The Company has published supplemental earnings schedules on its website in order to provide additional disclosure and financial information for the benefit of the Company's stakeholders. Specifically, these materials can be found on the Company's website in the Investor Relations section under "Quarterly Results" at www.starwoodpropertytrust.com.

Webcast and Conference Call Information

The Company will host a live webcast and conference call on Thursday, May 6, 2021, 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 any necessary audio software. The webcast is available at www.starwoodpropertytrust.com in the Investor Relations section of the website. The Company encourages use of the webcast due to potential extended wait times to access the conference call via dial-in.

To Participate via Telephone Conference Call:

Dial in at least 15 minutes prior to start time.
Domestic: 1-877-407-9039
International: 1-201-689-8470

Conference Call Playback:
Domestic: 1-844-512-2921
International: 1-412-317-6671
Passcode: 13718432
The playback can be accessed through May 13, 2021.

About Starwood Property Trust, Inc.

Starwood Property Trust (NYSE: STWD) is a leading diversified finance company with a core focus on the real estate and infrastructure sectors. An affiliate of global private investment firm Starwood Capital Group, the Company has successfully deployed over $69 billion of capital since inception and manages a portfolio of over $18 billion across debt and equity investments. Starwood Property Trust's investment objective is to generate attractive and stable returns for shareholders, primarily through dividends, by leveraging a premiere global organization to identify and execute on the best risk adjusted returning investments across its target assets. Additional information can be found at www.starwoodpropertytrust.com.

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. Forward-looking statements are developed by combining currently available information with our beliefs and assumptions and are generally identified by the words "believe," "expect," "anticipate" and other similar expressions. 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, but are not limited to, the severity and duration of economic disruption caused by the COVID-19 global pandemic, completion of pending investments and financings, continued ability to acquire additional investments, competition within the finance and real estate industries, availability of financing and other risks detailed under the heading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as well as other risks and uncertainties set forth from time to time in the Company's reports filed with the SEC.

In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained herein will in fact occur. Except to the extent required by applicable law or regulation, we undertake no obligation to, and expressly disclaim any such obligation to, update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, changes to future results over time or otherwise.

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: [email protected]

Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended March 31, 2021 (Amounts in thousands)

	Commercial and
	Residential		Infrastructure				Investing
	Lending		Lending		Property		and Servicing						Securitization
	Segment		Segment		Segment		Segment		Corporate		Subtotal		VIEs		Total
Revenues:
Interest income from loans	$	170,593	$	18,808	$	—	$	1,174	$	—	$	190,575	$	—	$	190,575
Interest income from investment securities		18,385		564		—		20,940		—		39,889		(28,279)		11,610
Servicing fees		124		—		—		12,456		—		12,580		(4,178)		8,402
Rental income		1,339		—		65,104		9,895		—		76,338		—		76,338
Other revenues		90		93		40		82		—		305		—		305
Total revenues		190,531		19,465		65,144		44,547		—		319,687		(32,457)		287,230
Costs and expenses:
Management fees		315		—		—		222		38,188		38,725		11		38,736
Interest expense		44,295		8,841		15,832		5,449		29,148		103,565		(191)		103,374
General and administrative		11,333		3,442		1,023		18,440		4,311		38,549		87		38,636
Acquisition and investment pursuit costs		185		—		—		—		—		185		—		185
Costs of rental operations		477		—		23,960		4,308		—		28,745		—		28,745
Depreciation and amortization		307		100		18,100		3,967		—		22,474		—		22,474
Credit loss (reversal) provision, net		(529)		573		—		—		—		44		—		44
Other expense		31		—		583		71		—		685		—		685
Total costs and expenses		56,414		12,956		59,498		32,457		71,647		232,972		(93)		232,879
Other income (loss):
Change in net assets related to consolidated VIEs		—		—		—		—		—		—		39,745		39,745
Change in fair value of servicing rights		—		—		—		745		—		745		(1,541)		(796)
Change in fair value of investment securities, net		(2,050)		—		—		7,170		—		5,120		(5,426)		(306)
Change in fair value of mortgage loans, net		(10,714)		—		—		1,236		—		(9,478)		—		(9,478)
Earnings (loss) from unconsolidated entities		1,753		(254)		—		589		—		2,088		(354)		1,734
Gain on sale of investments and other assets, net		17,693		—		—		—		—		17,693		—		17,693
Gain (loss) on derivative financial instruments, net		26,141		684		4,724		9,283		(6,843)		33,989		—		33,989
Foreign currency (loss) gain, net		(11,594)		(49)		25		(63)		—		(11,681)		—		(11,681)
Loss on extinguishment of debt		(68)		(307)		(141)		—		—		(516)		—		(516)
Other income, net		—		21		—		—		—		21		—		21
Total other income (loss)		21,161		95		4,608		18,960		(6,843)		37,981		32,424		70,405
Income (loss) before income taxes		155,278		6,604		10,254		31,050		(78,490)		124,696		60		124,756
Income tax provision		(1,505)		(92)		—		(633)		—		(2,230)		—		(2,230)
Net income (loss)		153,773		6,512		10,254		30,417		(78,490)		122,466		60		122,526
Net income attributable to non-controlling interests		(3)		—		(5,077)		(6,008)		—		(11,088)		(60)		(11,148)
Net income (loss) attributable to Starwood Property Trust, Inc.	$	153,770	$	6,512	$	5,177	$	24,409	$	(78,490)	$	111,378	$	—	$	111,378

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 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 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 and, to the extent deducted from net income (loss), distributions payable with respect to equity securities of subsidiaries issued in exchange for properties or interests therein. 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 Distributable Earnings For the three months ended March 31, 2021 (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) attributable to Starwood Property Trust, Inc.	$	153,770	$	6,512	$	5,177	$	24,409	$	(78,490)	$	111,378
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units		—		—		5,077		—		—		5,077
Non-cash equity compensation expense		1,781		300		31		881		7,317		10,310
Management incentive fee		—		—		—		—		13,123		13,123
Acquisition and investment pursuit costs		(164)		—		(89)		—		—		(253)
Depreciation and amortization		247		91		18,161		3,603		—		22,102
Credit loss (reversal) provision, net		(529)		573		—		—		—		44
Interest income adjustment for securities		(1,300)		—		—		3,995		—		2,695
Extinguishment of debt, net		—		—		—		—		(246)		(246)
Income tax (provision) benefit associated with realized (gains) losses		(6,495)		—		—		405		—		(6,090)
Other non-cash items		3		—		(337)		207		415		288
Reversal of GAAP unrealized (gains) / losses on:
Loans		10,714		—		—		(1,236)		—		9,478
Securities		2,050		—		—		(7,170)		—		(5,120)
Derivatives		(27,171)		(745)		(6,446)		(9,719)		9,313		(34,768)
Foreign currency		11,594		49		(25)		63		—		11,681
(Earnings) loss from unconsolidated entities		(1,753)		254		—		(589)		—		(2,088)
Sales of properties		(17,693)		—		—		—		—		(17,693)
Recognition of Distributable realized gains / (losses) on:
Loans		14,553		—		—		4,672		—		19,225
Realized credit loss		(7,757)		—		—		—		—		(7,757)
Securities		(2,861)		—		—		1,776		—		(1,085)
Derivatives		1,950		—		(35)		1,595		—		3,510
Foreign currency		4,784		(10)		25		(63)		—		4,736
Earnings (loss) from unconsolidated entities		3,218		(254)		—		964		—		3,928
Sales of properties		8,298		—		—		—		—		8,298
Distributable Earnings (Loss)	$	147,239	$	6,770	$	21,539	$	23,793	$	(48,568)	$	150,773
Distributable Earnings (Loss) per Weighted Average Diluted Share	$	0.49	$	0.02	$	0.07	$	0.08	$	(0.16)	$	0.50

Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of March 31, 2021 (Amounts in thousands)

	Commercial and
	Residential		Infrastructure				Investing
	Lending		Lending		Property		and Servicing						Securitization
	Segment		Segment		Segment		Segment		Corporate		Subtotal		VIEs		Total
Assets:
Cash and cash equivalents	$	56,629	$	7,873	$	39,791	$	29,064	$	217,049	$	350,406	$	784	$	351,190
Restricted cash		69,882		27,973		6,672		14,197		—		118,724		—		118,724
Loans held-for-investment, net		10,733,752		1,586,808		—		933		—		12,321,493		—		12,321,493
Loans held-for-sale		587,037		89,368		—		168,226		—		844,631		—		844,631
Investment securities		969,968		34,951		—		1,106,000		—		2,110,919		(1,432,632)		678,287
Properties, net		93,718		—		1,954,880		196,150		—		2,244,748		—		2,244,748
Intangible assets		—		—		38,833		70,857		—		109,690		(42,918)		66,772
Investment in unconsolidated entities		47,514		24,840		—		44,435		—		116,789		(15,882)		100,907
Goodwill		—		119,409		—		140,437		—		259,846		—		259,846
Derivative assets		13,088		—		162		320		24,459		38,029		—		38,029
Accrued interest receivable		97,853		3,310		—		274		408		101,845		(132)		101,713
Other assets		61,677		7,107		85,740		44,719		9,646		208,889		(16)		208,873
VIE assets, at fair value		—		—		—		—		—		—		62,367,110		62,367,110
Total Assets	$	12,731,118	$	1,901,639	$	2,126,078	$	1,815,612	$	251,562	$	18,826,009	$	60,876,314	$	79,702,323
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	37,206	$	16,010	$	44,184	$	24,110	$	56,614	$	178,124	$	91	$	178,215
Related-party payable		—		—		—		—		36,135		36,135		—		36,135
Dividends payable		—		—		—		—		138,906		138,906		—		138,906
Derivative liabilities		33,190		1,310		—		305		—		34,805		—		34,805
Secured financing agreements, net		6,502,059		1,259,813		1,871,026		653,222		631,655		10,917,775		(21,843)		10,895,932
Collateralized loan obligations, net		931,178		—		—		—		—		931,178		—		931,178
Unsecured senior notes, net		—		—		—		—		1,735,658		1,735,658		—		1,735,658
VIE liabilities, at fair value		—		—		—		—		—		—		60,896,709		60,896,709
Total Liabilities		7,503,633		1,277,133		1,915,210		677,637		2,598,968		13,972,581		60,874,957		74,847,538
Equity:
Starwood Property Trust, Inc. Stockholders' Equity:
Common stock		—		—		—		—		2,943		2,943		—		2,943
Additional paid-in capital		1,074,553		599,666		25,905		(298,098)		3,823,011		5,225,037		—		5,225,037
Treasury stock		—		—		—		—		(138,022)		(138,022)		—		(138,022)
Accumulated other comprehensive income		41,654		—		—		—		—		41,654		—		41,654
Retained earnings (accumulated deficit)		4,111,160		24,840		(40,641)		1,285,229		(6,035,338)		(654,750)		—		(654,750)
Total Starwood Property Trust, Inc. Stockholders' Equity		5,227,367		624,506		(14,736)		987,131		(2,347,406)		4,476,862		—		4,476,862
Non-controlling interests in consolidated subsidiaries		118		—		225,604		150,844		—		376,566		1,357		377,923
Total Equity		5,227,485		624,506		210,868		1,137,975		(2,347,406)		4,853,428		1,357		4,854,785
Total Liabilities and Equity	$	12,731,118	$	1,901,639	$	2,126,078	$	1,815,612	$	251,562	$	18,826,009	$	60,876,314	$	79,702,323