0001558370-18-001214.txt : 20180228 0001558370-18-001214.hdr.sgml : 20180228 20180228070025 ACCESSION NUMBER: 0001558370-18-001214 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20180228 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20180228 DATE AS OF CHANGE: 20180228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARWOOD PROPERTY TRUST, INC. CENTRAL INDEX KEY: 0001465128 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 270247747 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-34436 FILM NUMBER: 18648034 BUSINESS ADDRESS: STREET 1: C/O STARWOOD CAPITAL GROUP STREET 2: 591 WEST PUTNAM AVENUE CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: (203) 422-7700 MAIL ADDRESS: STREET 1: C/O STARWOOD CAPITAL GROUP STREET 2: 591 WEST PUTNAM AVENUE CITY: GREENWICH STATE: CT ZIP: 06830 8-K 1 f8-k.htm 8-K stwd_Current folio_8K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

FORM 8-K

 

CURRENT REPORT


Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 

 

Date of Report (Date of earliest event reported): February 28, 2018

 

Starwood Property Trust, Inc.

(Exact name of registrant as specified in its charter)

 

Maryland
(State or other jurisdiction
of incorporation)

 

001-34436
(Commission
File Number)

 

27-0247747
(IRS Employer
Identification No.)

 

 

591 West Putnam Avenue

Greenwich, CT 

 

06830

(Address of principal

 

(Zip Code)

executive offices)

 

 

Registrant’s telephone number,
including area code:
(203) 422-7700

 

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐Written communications pursuant to Rule 425 under the Securities Act (17 CAR 230.425)

 

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CAR 240.14a-12)

 

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CAR 240.14d-2(b))

 

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CAR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On February 28, 2018, Starwood Property Trust, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 2017. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

 

Item 9.01.  Financial Statements and Exhibits.

 

(d)Exhibits

 

 

 

 

Exhibit

Number

 

Description

 

 

99.1

Press Release, dated February 28, 2018

 

2

 

 

EXHIBIT INDEX

 

 

 

Exhibit
Number

Description

 

 

99.1

Press Release, dated February 28, 2018

 

3

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

Dated: February 28, 2018

STARWOOD PROPERTY TRUST, INC.

 

 

 

By:

/s/ ANDREW J. SOSSEN

 

Name:

Andrew J. Sossen

 

Title:

Chief Operating Officer

 

4

 

EX-99.1 2 ex-99d1.htm EX-99.1 stwd_Current folio_Press Release

Exhibit 99.1

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

For Immediate Release

Starwood Property Trust Reports Results for the

Quarter and Year Ended December 31, 2017

 

– Quarterly GAAP Earnings of $0.35 and Core Earnings of $0.55 per Diluted Common Share –

 

–  Deploys $7.3 Billion of Capital During 2017, up 15% from Prior Year –

 

–  Deploys $2.3 Billion of Capital During Fourth Quarter of 2017 –

 

–  Closes $156 Million of $595 Million Affordable Housing Portfolio –

 

–  Subsequent to Year End, Issues $500 Million of Three-Year Unsecured Notes at L+128 bps –

 

– Declares Dividend of $0.48 per share for the First Quarter of 2018 –

 

GREENWICH, Conn., February 28, 2018 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter and year ended December 31, 2017.  The Company’s fourth quarter 2017 GAAP net income was $92.6 million, or $0.35 per diluted share, and $400.8 million, or $1.52 per diluted share, for the full year.  Core Earnings (a non-GAAP financial measure) for the fourth quarter was $144.7 million, or $0.55 per diluted share and $584.2 million, or $2.23 per diluted share, for the full year.

“We are very pleased with our performance in 2017.  Each of our business lines continued to perform exceedingly well, demonstrating the strength of our multi-cylinder platform. We grew our diversified portfolio with the deployment of $7.3 billion of capital during the year, including $4.2 billion of originations in our large loan business, an increase of 29% from prior year,” commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

“Our large loan business continues to be our primary line of business, and we ended the quarter with the highest loan balance on the books in the over eight year history of our firm.  As we expand our originations team, we have maintained credit quality while reducing the cost of our liabilities to create returns that are at or above historical levels, despite changes in the lending environment. Leveraging our diversified platform, our relationship with Starwood Capital Group, and ample liquidity, we expect to close on a record pipeline of over $2.5 billion of investments in the first quarter.”

Dividend

On February 28, 2018, the Company’s Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending March 31, 2018. The dividend is payable on April 13, 2018 to common stockholders of record as of March 30, 2018.

2018 Outlook

Given its current outlook, the Company is confident that it will generate Core Earnings in excess of the dividend and expects to maintain a $1.92 per share distribution for the full year.

 

 

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 at the Company’s website in the Investor Relations section under “Quarterly Results” at www.starwoodpropertytrust.com.  

Conference Call and Webcast Information 

The Company will host a webcast and conference call on Wednesday, February 28, 2018, at 10:00 a.m. Eastern Time to discuss the quarter’s 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 15 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:  1-800-289-0517 

International:  1-323-994-2083

 

Conference Call Playback:

Domestic:  1-844-512-2921

International:  1-412-317-6671

Passcode:  1496293 

 

The playback can be accessed through March 14, 2018.

 

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. With total capital deployed since inception of over $39 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.

 

2

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the three months ended December 31, 2017

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

   

Investing

   

 

   

 

   

Investing

   

 

 

 

Lending

 

Property

 

and Servicing

 

 

 

 

 

and Servicing

 

 

 

 

Segment

 

Segment

 

Segment

 

Corporate

 

Subtotal

 

VIEs

 

Total

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income from loans

  

$
139,618

  

$

 —

  

$
3,102

  

$

 —

  

$
142,720

  

$

 —

  

$
142,720

Interest income from investment securities

 

 
10,840

  

 

 —

 

 
29,975

 

 

 —

 

 
40,815

 

 
(28,047)

 

 
12,768

Servicing fees

 

 
143

  

 

 —

 

 
24,321

 

 

 —

 

 
24,464

 

 
(10,590)

 

 
13,874

Rental income

 

 

 —

 

 
59,671

 

 
13,168

 

 

 —

 

 
72,839

 

 

 —

 

 
72,839

Other revenues

 

 
133

 

 
215

 

 
344

 

 

 —

 

 
692

 

 
(61)

 

 
631

Total revenues 

 

 
150,734

 

 
59,886

 

 
70,910

 

 

 —

 

 
281,530

 

 
(38,698)

 

 
242,832

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

 
528

 

 

 —

 

 
18

 

 
42,059

 

 
42,605

 

 
97

 

 
42,702

Interest expense

 

 
34,795

 

 
14,086

 

 
4,916

 

 
28,534

 

 
82,331

 

 
(273)

 

 
82,058

General and administrative

 

 
5,109

 

 
1,263

 

 
25,089

 

 
2,192

 

 
33,653

 

 
93

 

 
33,746

Acquisition and investment pursuit costs

 

 
1,533

 

 
(141)

 

 
(152)

 

 

 —

 

 
1,240

 

 

 —

 

 
1,240

Costs of rental operations

 

 

 —

 

 
20,365

 

 
6,192

 

 

 —

 

 
26,557

 

 

 —

 

 
26,557

Depreciation and amortization

 

 
16

 

 
21,250

 

 
5,206

 

 

 —

 

 
26,472

 

 

 —

 

 
26,472

Loan loss allowance, net

 

 
(2,288)

 

 

 —

 

 

 —

 

 

 —

 

 
(2,288)

 

 

 —

 

 
(2,288)

Other expense

 

 
77

 

 
47

 

 
22

 

 

 —

 

 
146

 

 

 —

 

 
146

Total costs and expenses 

 

 
39,770

 

 
56,870

 

 
41,291

 

 
72,785

 

 
210,716

 

 
(83)

 

 
210,633

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

 

 
110,964

 

 
3,016

 

 
29,619

 

 
(72,785)

 

 
70,814

 

 
(38,615)

 

 
32,199

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in net assets related to consolidated VIEs

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 
49,326

 

 
49,326

Change in fair value of servicing rights

 

 

 —

 

 

 —

 

 
(1,359)

 

 

 —

 

 
(1,359)

 

 
(1,663)

 

 
(3,022)

Change in fair value of investment securities, net

 

 
(124)

 

 

 —

 

 
9,070

 

 

 —

 

 
8,946

 

 
(8,696)

 

 
250

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

 

 
2,873

 

 

 —

 

 
18,630

 

 

 —

 

 
21,503

 

 

 —

 

 
21,503

Earnings from unconsolidated entities

 

 
817

 

 
1,097

 

 
1,058

 

 

 —

 

 
2,972

 

 
(230)

 

 
2,742

Gain on sale of investments and other assets, net

 

 

 —

 

 

 —

 

 
3,495

 

 

 —

 

 
3,495

 

 

 —

 

 
3,495

(Loss) gain on derivative financial instruments, net

 

 
(4,988)

 

 
(65)

 

 
1,120

 

 
(2,440)

 

 
(6,373)

 

 

 —

 

 
(6,373)

Foreign currency gain (loss), net

 

 
5,249

 

 
(2)

 

 
(10)

 

 

 —

 

 
5,237

 

 

 —

 

 
5,237

Gain on extinguishment of debt

 

 

 —

 

 

 —

 

 

 —

 

 
1

 

 
1

 

 

 —

 

 
1

Other income, net

 

 

 —

 

 
7

 

 
8

 

 
1,745

 

 
1,760

 

 

 —

 

 
1,760

Total other income (loss)

 

 
3,827

 

 
1,037

 

 
32,012

 

 
(694)

 

 
36,182

 

 
38,737

 

 
74,919

Income (loss) before income taxes 

 

 
114,791

 

 
4,053

 

 
61,631

 

 
(73,479)

 

 
106,996

 

 
122

 

 
107,118

Income tax benefit (provision)

 

 
188

 

 
(249)

 

 
(13,176)

 

 

 —

 

 
(13,237)

 

 

 —

 

 
(13,237)

Net income (loss) 

 

 
114,979

 

 
3,804

 

 
48,455

 

 
(73,479)

 

 
93,759

 

 
122

 

 
93,881

Net income attributable to non-controlling interests

 

 
(355)

 

 

 —

 

 
(800)

 

 

 —

 

 
(1,155)

 

 
(122)

 

 
(1,277)

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

 

$
114,624

 

$
3,804

 

$
47,655

 

$
(73,479)

 

$
92,604

 

$

 —

 

$
92,604

Definition of Core Earnings

 

3

 

 

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 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 December 31, 2017

(Amounts in thousands except per share data) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

    

Investing

    

 

    

 

 

 

Lending

 

Property

 

and Servicing

 

 

 

 

 

 

Segment

 

Segment

 

Segment

 

Corporate

 

Total

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

 

$
114,624

 

$
3,804

 

$
47,655

 

$
(73,479)

 

$
92,604

Add / (Deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash equity compensation expense

 

 
663

 

 
27

 

 
915

 

 
3,255

 

 
4,860

Management incentive fee

 

 

 —

 

 

 —

 

 

 —

 

 
21,961

 

 
21,961

Acquisition and investment pursuit costs

 

 
1,035

 

 
(232)

 

 
46

 

 

 —

 

 
849

Depreciation and amortization

 

 
16

 

 
21,528

 

 
4,804

 

 

 —

 

 
26,348

Loan loss allowance, net

 

 
(2,288)

 

 

 —

 

 

 —

 

 

 —

 

 
(2,288)

Interest income adjustment for securities

 

 
(208)

 

 

 —

 

 
4,261

 

 

 —

 

 
4,053

Extinguishment of debt, net

 

 

 —

 

 

 —

 

 

 —

 

 
15,213

 

 
15,213

Other non-cash items

 

 

 —

 

 
(549)

 

 
112

 

 

 —

 

 
(437)

Reversal of unrealized (gains) / losses on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

 

 
(2,873)

 

 

 —

 

 
(18,630)

 

 

 —

 

 
(21,503)

Securities

 

 
123

 

 

 —

 

 
(9,070)

 

 

 —

 

 
(8,947)

Derivatives

 

 
4,609

 

 
166

 

 
(1,595)

 

 
2,666

 

 
5,846

Foreign currency

 

 
(5,249)

 

 
2

 

 
10

 

 

 —

 

 
(5,237)

Earnings from unconsolidated entities

 

 
(817)

 

 
(1,097)

 

 
(1,058)

 

 

 —

 

 
(2,972)

Purchases and sales of properties

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Recognition of realized gains / (losses) on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

 

 
(543)

 

 

 —

 

 
15,864

 

 

 —

 

 
15,321

Securities

 

 

 —

 

 

 —

 

 
(4,095)

 

 

 —

 

 
(4,095)

Derivatives

 

 
2,297

 

 
(666)

 

 
3,060

 

 
(246)

 

 
4,445

Foreign currency

 

 
(1,765)

 

 
(2)

 

 
(208)

 

 

 —

 

 
(1,975)

Earnings from unconsolidated entities

 

 
816

 

 

 —

 

 
1,292

 

 

 —

 

 
2,108

Purchases and sales of properties

 

 

 —

 

 

 —

 

 
(1,451)

 

 

 —

 

 
(1,451)

Core Earnings (Loss)

 

$
110,440

 

$
22,981

 

$
41,912

 

$
(30,630)

 

$
144,703

Core Earnings (Loss) per Weighted Average Diluted Share

 

$
0.42

 

$
0.09

 

$
0.16

 

$
(0.12)

 

$
0.55

 

 

4

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations by Segment

For the year ended December 31, 2017

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

   

Investing

   

 

   

 

   

Investing

   

 

 

 

Lending

 

Property

 

and Servicing

 

 

 

 

 

and Servicing

 

 

 

 

Segment

 

Segment

 

Segment

 

Corporate

 

Subtotal

 

VIEs

 

Total

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income from loans

  

$

499,806

  

$

 —

  

$

14,008

  

$

 —

  

$

513,814

  

$

 —

  

$

513,814

Interest income from investment securities

 

 

46,710

  

 

 —

 

 

134,743

 

 

 —

 

 

181,453

 

 

(128,640)

 

 

52,813

Servicing fees

 

 

711

  

 

 —

 

 

111,158

 

 

 —

 

 

111,869

 

 

(50,423)

 

 

61,446

Rental income

 

 

 —

 

 

198,466

 

 

50,534

 

 

 —

 

 

249,000

 

 

 —

 

 

249,000

Other revenues

 

 

686

 

 

645

 

 

1,794

 

 

 —

 

 

3,125

 

 

(310)

 

 

2,815

Total revenues 

 

 

547,913

 

 

199,111

 

 

312,237

 

 

 —

 

 
1,059,261

 

 

(179,373)

 

 

879,888

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

 

1,933

 

 

 —

 

 

72

 

 

120,387

 

 

122,392

 

 

307

 

 

122,699

Interest expense

 

 

107,167

 

 

46,552

 

 

19,840

 

 

123,201

 

 

296,760

 

 

(1,094)

 

 

295,666

General and administrative

 

 

19,981

 

 

4,734

 

 

94,625

 

 

9,911

 

 

129,251

 

 

336

 

 

129,587

Acquisition and investment pursuit costs

 

 

3,240

 

 

375

 

 

(143)

 

 

 —

 

 

3,472

 

 

 —

 

 

3,472

Costs of rental operations

 

 

 —

 

 

72,208

 

 

22,050

 

 

 —

 

 

94,258

 

 

 —

 

 

94,258

Depreciation and amortization

 

 

66

 

 

73,538

 

 

19,999

 

 

 —

 

 

93,603

 

 

 —

 

 

93,603

Loan loss allowance, net

 

 

(5,458)

 

 

 —

 

 

 —

 

 

 —

 

 

(5,458)

 

 

 —

 

 

(5,458)

Other expense

 

 

149

 

 

110

 

 

1,163

 

 

 —

 

 

1,422

 

 

 —

 

 

1,422

Total costs and expenses 

 

 

127,078

 

 

197,517

 

 

157,606

 

 

253,499

 

 

735,700

 

 

(451)

 

 

735,249

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

 

 

420,835

 

 

1,594

 

 

154,631

 

 

(253,499)

 

 

323,561

 

 

(178,922)

 

 

144,639

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in net assets related to consolidated VIEs

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

252,434

 

 

252,434

Change in fair value of servicing rights

 

 

 —

 

 

 —

 

 

(30,315)

 

 

 —

 

 

(30,315)

 

 

5,992

 

 

(24,323)

Change in fair value of investment securities, net

 

 

175

 

 

 —

 

 

54,333

 

 

 —

 

 

54,508

 

 

(58,319)

 

 

(3,811)

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

 

 

2,324

 

 

 —

 

 

64,663

 

 

 —

 

 

66,987

 

 

 —

 

 

66,987

Earnings (loss) from unconsolidated entities

 

 

3,365

 

 

(27,685)

 

 

68,192

 

 

 —

 

 

43,872

 

 

(13,367)

 

 

30,505

(Loss) gain on sale of investments and other assets, net

 

 

(59)

 

 

77

 

 

20,481

 

 

 —

 

 

20,499

 

 

 —

 

 

20,499

Loss on derivative financial instruments, net

 

 

(35,262)

 

 

(32,333)

 

 

(2,497)

 

 

(2,440)

 

 

(72,532)

 

 

 —

 

 

(72,532)

Foreign currency gain, net

 

 

33,651

 

 

14

 

 

 6

 

 

 —

 

 

33,671

 

 

 —

 

 

33,671

OTTI

 

 

(109)

 

 

 —

 

 

 —

 

 

 —

 

 

(109)

 

 

 —

 

 

(109)

Loss on extinguishment of debt

 

 

 —

 

 

 —

 

 

 —

 

 

(5,915)

 

 

(5,915)

 

 

 —

 

 

(5,915)

Other income, net

 

 

 —

 

 

 7

 

 

1,105

 

 

1,745

 

 

2,857

 

 

(613)

 

 

2,244

Total other income (loss)

 

 

4,085

 

 

(59,920)

 

 

175,968

 

 

(6,610)

 

 

113,523

 

 

186,127

 

 

299,650

Income (loss) before income taxes 

 

 

424,920

 

 

(58,326)

 

 

330,599

 

 

(260,109)

 

 

437,084

 

 

7,205

 

 

444,289

Income tax provision

 

 

(143)

 

 

(249)

 

 

(31,130)

 

 

 —

 

 

(31,522)

 

 

 —

 

 

(31,522)

Net income (loss) 

 

 

424,777

 

 

(58,575)

 

 

299,469

 

 

(260,109)

 

 

405,562

 

 

7,205

 

 

412,767

Net income attributable to non-controlling interests

 

 

(1,419)

 

 

 —

 

 

(3,373)

 

 

 —

 

 

(4,792)

 

 

(7,205)

 

 

(11,997)

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

 

$

423,358

 

$

(58,575)

 

$

296,096

 

$

(260,109)

 

$

400,770

 

$

 —

 

$

400,770

 

5

 

 

Reconciliation of Net Income to Core Earnings

For the year ended December 31, 2017

(Amounts in thousands except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

    

Investing

    

 

    

 

 

 

Lending

 

Property

 

and Servicing

 

 

 

 

 

 

Segment

 

Segment

 

Segment

 

Corporate

 

Total

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

 

$

423,358

 

$

(58,575)

 

$

296,096

 

$

(260,109)

 

$

400,770

Add / (Deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash equity compensation expense

 

 

3,016

 

 

109

 

 

3,406

 

 

11,595

 

 

18,126

Management incentive fee

 

 

 —

 

 

 —

 

 

 —

 

 

42,144

 

 

42,144

Acquisition and investment pursuit costs

 

 

1,109

 

 

(70)

 

 

137

 

 

 —

 

 

1,176

Depreciation and amortization

 

 

66

 

 

74,510

 

 

18,245

 

 

 —

 

 

92,821

Loan loss allowance, net

 

 

(5,458)

 

 

 —

 

 

 —

 

 

 —

 

 

(5,458)

Interest income adjustment for securities

 

 

(905)

 

 

 —

 

 

13,697

 

 

 —

 

 

12,792

Extinguishment of debt, net

 

 

 —

 

 

 —

 

 

 —

 

 

21,129

 

 

21,129

Other non-cash items

 

 

 —

 

 

(2,214)

 

 

1,672

 

 

 —

 

 

(542)

Reversal of unrealized (gains) / losses on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

 

 

(2,324)

 

 

 —

 

 

(64,663)

 

 

 —

 

 

(66,987)

Securities

 

 

(66)

 

 

 —

 

 

(54,333)

 

 

 —

 

 

(54,399)

Derivatives

 

 

33,506

 

 

31,676

 

 

461

 

 

2,666

 

 

68,309

Foreign currency

 

 

(33,651)

 

 

(14)

 

 

(6)

 

 

 —

 

 

(33,671)

Earnings from unconsolidated entities

 

 

(3,365)

 

 

27,685

 

 

(68,192)

 

 

 —

 

 

(43,872)

Purchases and sales of properties

 

 

 —

 

 

 —

 

 

(613)

 

 

 —

 

 

(613)

Recognition of realized gains / (losses) on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held-for-sale

 

 

(1,092)

 

 

 —

 

 

64,814

 

 

 —

 

 

63,722

Securities

 

 

 —

 

 

 —

 

 

4,237

 

 

 —

 

 

4,237

Derivatives

 

 

16,864

 

 

(684)

 

 

1,809

 

 

(739)

 

 

17,250

Foreign currency

 

 

(14,420)

 

 

14

 

 

(1,346)

 

 

 —

 

 

(15,752)

Earnings from unconsolidated entities

 

 

3,345

 

 

3,563

 

 

57,066

 

 

 —

 

 

63,974

Purchases and sales of properties

 

 

 —

 

 

(153)

 

 

(840)

 

 

 —

 

 

(993)

Core Earnings (Loss)

 

$

419,983

 

$

75,847

 

$

271,647

 

$

(183,314)

 

$

584,163

Core Earnings (Loss) per Weighted Average Diluted Share

 

$

1.60

 

$

0.29

 

$

1.04

 

$

(0.70)

 

$

2.23

 

 

6

 

 

Starwood Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet by Segment

As of December 31, 2017

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

    

Investing

    

 

    

 

    

Investing

    

 

 

 

Lending

 

Property

 

and Servicing

 

 

 

 

 

and Servicing

 

 

 

 

Segment

 

Segment

 

Segment

 

Corporate

 

Subtotal

 

VIEs

 

Total

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

14,580

 

$

10,388

 

$

39,446

 

$

299,308

 

$

363,722

 

$

5,726

 

$

369,448

Restricted cash

 

 

21,555

 

 

12,491

 

 

10,289

 

 

4,490

 

 

48,825

 

 

 —

 

 

48,825

Loans held-for-investment, net

 

 

6,558,699

 

 

 —

 

 

3,796

 

 

 —

 

 

6,562,495

 

 

 —

 

 

6,562,495

Loans held-for-sale

 

 

613,287

 

 

 —

 

 

132,456

 

 

 —

 

 

745,743

 

 

 —

 

 

745,743

Loans transferred as secured borrowings

 

 

74,403

 

 

 —

 

 

 —

 

 

 —

 

 

74,403

 

 

 —

 

 

74,403

Investment securities

 

 

694,012

 

 

 —

 

 

1,024,143

 

 

 —

 

 

1,718,155

 

 

(999,952)

 

 

718,203

Properties, net

 

 

 —

 

 

2,364,806

 

 

282,675

 

 

 —

 

 

2,647,481

 

 

 —

 

 

2,647,481

Intangible assets

 

 

 —

 

 

116,081

 

 

95,257

 

 

 —

 

 

211,338

 

 

(28,246)

 

 

183,092

Investment in unconsolidated entities

 

 

45,028

 

 

110,704

 

 

50,759

 

 

 —

 

 

206,491

 

 

(20,988)

 

 

185,503

Goodwill

 

 

 —

 

 

 —

 

 

140,437

 

 

 —

 

 

140,437

 

 

 —

 

 

140,437

Derivative assets

 

 

6,487

 

 

26,775

 

 

636

 

 

 —

 

 

33,898

 

 

 —

 

 

33,898

Accrued interest receivable

 

 

46,650

 

 

68

 

 

243

 

 

786

 

 

47,747

 

 

 —

 

 

47,747

Other assets

 

 

5,648

 

 

71,929

 

 

59,676

 

 

3,755

 

 

141,008

 

 

(2,868)

 

 

138,140

VIE assets, at fair value

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

51,045,874

 

 
51,045,874

Total Assets

 

$

8,080,349

 

$

2,713,242

 

$

1,839,813

 

$

308,339

 

$

12,941,743

 

$

49,999,546

 

$
62,941,289

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable, accrued expenses and other liabilities

 

$

23,054

 

$

62,890

 

$

74,426

 

$

23,536

 

$

183,906

 

$

1,211

 

$

185,117

Related-party payable

 

 

20

 

 

 —

 

 

31

 

 

42,318

 

 

42,369

 

 

 —

 

 

42,369

Dividends payable

 

 

 —

 

 

 —

 

 

 —

 

 

125,916

 

 

125,916

 

 

 —

 

 

125,916

Derivative liabilities

 

 

20,386

 

 

13,063

 

 

85

 

 

2,666

 

 

36,200

 

 

 —

 

 

36,200

Secured financing agreements, net

 

 

3,466,487

 

 

1,621,885

 

 

411,526

 

 

296,858

 

 

5,796,756

 

 

(23,700)

 

 

5,773,056

Unsecured senior notes, net

 

 

 —

 

 

 —

 

 

 —

 

 

2,125,235

 

 

2,125,235

 

 

 —

 

 

2,125,235

Secured borrowings on transferred loans, net

 

 

74,185

 

 

 —

 

 

 —

 

 

 —

 

 

74,185

 

 

 —

 

 

74,185

VIE liabilities, at fair value

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

50,000,010

 

 
50,000,010

Total Liabilities

 

 

3,584,132

 

 

1,697,838

 

 

486,068

 

 

2,616,529

 

 

8,384,567

 

 

49,977,521

 

 
58,362,088

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Starwood Property Trust, Inc. Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 —

 

 

 —

 

 

 —

 

 

2,660

 

 

2,660

 

 

 —

 

 

2,660

Additional paid-in capital

 

 

1,818,559

 

 

957,329

 

 

659,062

 

 

1,280,296

 

 

4,715,246

 

 

 —

 

 

4,715,246

Treasury stock

 

 

 —

 

 

 —

 

 

 —

 

 

(92,104)

 

 

(92,104)

 

 

 —

 

 

(92,104)

Accumulated other comprehensive income (loss)

 

 

57,914

 

 

12,076

 

 

(66)

 

 

 —

 

 

69,924

 

 

 —

 

 

69,924

Retained earnings (accumulated deficit)

 

 

2,609,050

 

 

(14,335)

 

 

687,015

 

 

(3,499,042)

 

 

(217,312)

 

 

 —

 

 

(217,312)

Total Starwood Property Trust, Inc. Stockholders’ Equity

 

 

4,485,523

 

 

955,070

 

 

1,346,011

 

 

(2,308,190)

 

 

4,478,414

 

 

 —

 

 

4,478,414

Non-controlling interests in consolidated subsidiaries

 

 

10,694

 

 

60,334

 

 

7,734

 

 

 —

 

 

78,762

 

 

22,025

 

 

100,787

Total Equity

 

 

4,496,217

 

 

1,015,404

 

 

1,353,745

 

 

(2,308,190)

 

 

4,557,176

 

 

22,025

 

 

4,579,201

Total Liabilities and Equity

 

$

8,080,349

 

$

2,713,242

 

$

1,839,813

 

$

308,339

 

$

12,941,743

 

$

49,999,546

 

$
62,941,289

 

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

 

7

 

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