10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 001-34436

Starwood Property Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland (State or other jurisdiction of incorporation or organization)	27-0247747 (I.R.S. Employer Identification Number)
591 West Putnam Avenue Greenwich, Connecticut (Address of Principal Executive Offices)	06830 (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	STWD	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ⌧ No ◻

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ◻ No ⌧

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ⌧	Accelerated filer ◻
Non-accelerated filer ◻	Smaller reporting company ☐
	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. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ⌧

As of June 28, 2019, the aggregate market value of the voting stock held by non-affiliates was $6,183,846,104 based on the reported last sale price of our common stock on June 28, 2019. Shares of our common stock held by affiliates, which includes officers and directors of the registrant, have been excluded from this calculation. This calculation does not reflect a determination that persons are affiliates for any other purposes.

The number of shares of the issuer’s common stock, $0.01 par value, outstanding as of February 18, 2020 was 282,613,156.

DOCUMENTS INCORPORATED BY REFERENCE

Documents Incorporated By Reference: The information required by Part III of this Form 10-K, to the extent not set forth herein or by amendment, is incorporated by reference from the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A on or prior to April 29, 2020.

TABLE OF CONTENTS

		Page
Part I		4
Item 1.	Business	4
Item 1A.	Risk Factors	16
Item 1B.	Unresolved Staff Comments	56
Item 2.	Properties	56
Item 3.	Legal Proceedings	56
Item 4.	Mine Safety Disclosures	56
Part II		57
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	57
Item 6.	Selected Financial Data	59
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	60
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	94
Item 8.	Financial Statements and Supplementary Data	98
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	189
Item 9A.	Controls and Procedures	189
Item 9B.	Other Information	189
Part III		190
Item 10.	Directors, Executive Officers and Corporate Governance	190
Item 11.	Executive Compensation	190
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	190
Item 13.	Certain Relationships and Related Transactions, and Director Independence	190
Item 14.	Principal Accountant Fees and Services	191
Part IV		191
Item 15.	Exhibits and Financial Statement Schedules	191
Item 16.	Form 10-K Summary	195
Signatures		196

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Special Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K (this “Form 10-K”) contains certain forward-looking statements, including without limitation, statements concerning our operations, economic performance and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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. Forward-looking statements do not guarantee future performance, which may be materially different from that expressed in, or implied by, any such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates.

These forward-looking statements are based largely on our current beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors that may cause actual results to vary from our forward-looking statements are set forth under the caption “Risk Factors” in this report and include, but are not limited to:

● defaults by borrowers in paying debt service on outstanding indebtedness;

● impairment in the value of real estate property securing our loans or in which we invest;

● availability of mortgage origination and acquisition opportunities acceptable to us;

● potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements;

● our ability to integrate our prior acquisition of the project finance origination, underwriting and capital markets business of GE Capital Global Holdings, LLC into our business and to achieve the benefits that we anticipate from the acquisition;

● national and local economic and business conditions;

● general and local commercial and residential real estate property conditions;

● changes in federal government policies;

● changes in federal, state and local governmental laws and regulations;

● increased competition from entities engaged in mortgage lending and securities investing activities;

● changes in interest rates; and

● the availability of, and costs associated with, sources of liquidity.

In light of these risks and uncertainties, there can be no assurances that the results referred to in the forward-looking statements contained in this Form 10-K 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.

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PART I

Item 1. Business.

The following description of our business should be read in conjunction with the information included elsewhere in this Form 10-K for the year ended December 31, 2019. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements due to the factors set forth in “Risk Factors” and elsewhere in this Form 10-K. References in this Form 10-K to “we,” “our,” “us,” or the “Company” refer to Starwood Property Trust, Inc. and its subsidiaries.

General

Starwood Property Trust, Inc. (“STWD” and, together with its subsidiaries, “we” or the “Company”) is a Maryland corporation that commenced operations in August 2009, upon the completion of our initial public offering (“IPO”). We are focused primarily on originating, acquiring, financing and managing mortgage loans and other real estate investments in both the United States (“U.S.”) and Europe. As market conditions change over time, we may adjust our strategy to take advantage of changes in interest rates and credit spreads as well as economic and credit conditions.

We have four reportable business segments as of December 31, 2019 and we refer to the investments within these segments as our target assets:

● Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial and residential first mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in both the U.S. and Europe (including distressed or non-performing loans).

● Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments.

● Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that are held for investment.

● Real estate investing and servicing (the “Investing and Servicing Segment”)—includes (i) a servicing business in the U.S. that manages and works out problem assets, (ii) an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, including subordinated interests of securitization and resecuritization transactions, (iii) a mortgage loan business which originates conduit loans for the primary purpose of selling these loans into securitization transactions and (iv) an investment business that selectively acquires commercial real estate assets, including properties acquired from CMBS trusts.

Our segments exclude the consolidation of securitization variable interest entities (“VIEs”).

On September 19, 2018 and October 15, 2018, we acquired the equity of GE Capital Global Holdings, LLC (“GE Capital”) for approximately $2.2 billion (the “Infrastructure Lending Segment”).

On January 31, 2014, we completed the spin-off of our former single family residential (“SFR”) segment to our stockholders.

On April 19, 2013, we acquired the equity of LNR Property LLC (“LNR”) and certain of its subsidiaries for $730.5 million. LNR represents our Investing and Servicing Segment.

We are organized and conduct our operations to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). As such, we will generally not be subject to U.S. federal corporate income tax on that portion of our net income that is distributed to stockholders if we distribute at least 90% of our taxable income to our stockholders by prescribed dates and comply with various other requirements. We also operate

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our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act of 1940 as amended (the “Investment Company Act” or “1940 Act”).

We are organized as a holding company and conduct our business primarily through our various wholly-owned subsidiaries. We are externally managed and advised by SPT Management, LLC (our “Manager”) pursuant to the terms of a management agreement. Our Manager is controlled by Barry Sternlicht, our Chairman and Chief Executive Officer. Our Manager is an affiliate of Starwood Capital Group, a privately-held private equity firm founded by Mr. Sternlicht.

Our corporate headquarters office is located at 591 West Putnam Avenue, Greenwich, Connecticut 06830, and our telephone number is (203) 422-7700.

Investment Strategy

We seek to attain attractive risk-adjusted returns for our investors over the long term by sourcing and managing a diversified portfolio of target assets, financed in a manner that is designed to deliver attractive returns across a variety of market conditions and economic cycles. Our investment strategy focuses on a few fundamental themes:

● origination and acquisition of real estate debt assets with an implied basis sufficiently low to weather declines in asset values;

● acquisition of equity interests in commercial real estate properties that generate stable current returns, increase the duration of our investment portfolio and provide potential for capital appreciation;

● focus on real estate markets and asset classes with strong supply and demand fundamentals and/or barriers to entry;

● structuring and financing each transaction in a manner that reflects the risk of the underlying asset’s cash flow stream and credit risk profile, and efficiently managing and maintaining the transaction’s interest rate and currency exposures at levels consistent with management’s risk objectives;

● seeking situations where our size, scale, speed and sophistication allow us to position ourselves as a “one-stop” lending solution for real estate owner/operators;

● utilizing the skills, expertise, and contacts developed by our Manager over the past 20 plus years as one of the premier global real estate investment managers to (i) correctly anticipate trends and identify attractive risk-adjusted investment opportunities in U.S. and European real estate markets; and (ii) expand and diversify our presence in various asset classes, including:

● origination and acquisition of residential mortgage loans, including residential mortgage loans sometimes referred to as “non-qualified mortgages” or “non-QMs”; and

● origination and acquisition of corporate and asset-backed loans;

● utilizing the skills, expertise and infrastructure we acquired through our acquisition of LNR, a market leading diversified real estate investment management and loan servicing company, to expand and diversify our presence in various segments of real estate, including:

● origination of small and medium sized loan transactions ($10 million to $50 million) for both investment and securitization/gain-on-sale;

● investment in CMBS;

● investment in commercial real estate;

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● special servicing of commercial real estate loans in commercial real estate securitization transactions; and

● utilizing the skills and expertise we acquired through our acquisition of the Infrastructure Lending Segment to expand our originations and acquisitions of infrastructure debt investments.

In order to capitalize on the changing sets of investment opportunities that may be present in the various points of an economic cycle, we may expand or refocus our investment strategy by emphasizing investments in different parts of the capital structure and different sectors of real estate. Our investment strategy may be amended from time to time, if recommended by our Manager and approved by our board of directors, without the approval of our stockholders. In addition to our Manager making direct investments on our behalf, we may enter into joint venture, management or other agreements with persons that have special expertise or sourcing capabilities.

Investment Guidelines

Our board of directors has adopted the following investment guidelines:

● our investments will be in our target assets unless otherwise approved by our board of directors;

● no investment shall be made that would cause us to fail to qualify as a REIT for federal income tax purposes;

● no investment shall be made that would cause us or any of our subsidiaries to be required to be registered as an investment company under the 1940 Act;

● not more than 25% of our equity will be invested in any individual asset without the consent of a majority of our independent directors; and

● (a) any investment that is less than $150 million will require approval of our Chief Executive Officer; (b) any investment that is equal to or in excess of $150 million but less than $250 million will require approval of our Manager’s investment committee; (c) any investment that is equal to or in excess of $250 million but less than $400 million will require approval of each of the investment committee of our board of directors and our Manager’s investment committee; and (d) any investment that is equal to or in excess of $400 million will require approval of each of our board of directors and our Manager’s investment committee.

These investment guidelines may be changed from time to time by our board of directors without the approval of our stockholders. In addition, both our Manager and our board of directors must approve any change in our investment guidelines that would modify or expand the types of assets in which we invest.

Investment Process

Our investment process includes sourcing and screening of investment opportunities, assessing investment suitability, conducting interest rate and prepayment analysis, evaluating cash flow and collateral performance, and reviewing legal structure and servicer and originator information and investment structuring, as appropriate, to seek an attractive return commensurate with the risk we are bearing. Upon identification of an investment opportunity, the investment will be screened and monitored by us to determine its impact on maintaining our REIT qualification and our exemption from registration under the 1940 Act. We will seek to make investments in sectors where we have strong core competencies and believe market risk and expected performance can be reasonably quantified.

We evaluate each one of our investment opportunities based on its expected risk-adjusted return relative to the returns available from other, comparable investments. In addition, we evaluate new opportunities based on their relative expected returns compared to comparable positions held in our portfolio. The terms of any leverage available to us for use in funding an investment purchase are also taken into consideration, as are any risks posed by illiquidity or correlations with other securities in the portfolio. We also develop a macro outlook with respect to each target asset class by examining factors in the broader economy such as gross domestic product, interest rates, unemployment rates and

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availability of credit, among other things. We also analyze fundamental trends in the relevant target asset class sector to adjust/maintain our outlook for that particular target asset class.

Financing Strategy

Subject to maintaining our qualification as a REIT for U.S. federal income tax purposes and our exemption from registering under the 1940 Act, we may finance the acquisition of our target assets, to the extent available to us, through the following methods:

● sources of private and government sponsored financing, including long and short-term repurchase agreements, warehouse and bank credit facilities, and mortgage loans on equity interests in commercial real estate properties;

● loan sales, syndications and/or securitizations; and

● public or private offerings of our equity and/or debt securities.

We may also utilize other sources of financing to the extent available to us.

Our Target Assets

We invest in target assets secured primarily by U.S. or European collateral. We focus primarily on originating or opportunistically acquiring commercial mortgage whole loans, B-Notes, mezzanine loans, preferred equity and mortgage-backed securities (“MBS”). We may invest in performing and non-performing mortgage loans and other real estate-related loans and debt investments. We may acquire target assets through portfolio acquisitions or other types of acquisitions. Our Manager targets desirable markets where it has expertise in the real estate collateral underlying the assets being acquired. Our target assets include the following types of loans and other investments:

● Whole mortgage loans: loans secured by a first mortgage lien on a commercial property that provide mortgage financing to commercial property developers or owners generally having maturity dates ranging from three to ten years;

● B-Notes: typically a privately negotiated loan that is secured by a first mortgage on a single large commercial property or group of related properties and subordinated to an A Note secured by the same first mortgage on the same property or group;

● Mezzanine loans: loans made to commercial property owners that are secured by pledges of the borrower’s ownership interests in the property and/or the property owner, subordinate to whole mortgage loans secured by first or second mortgage liens on the property and senior to the borrower’s equity in the property;

● Construction or rehabilitation loans: mortgage loans and mezzanine loans to finance the cost of construction or rehabilitation of a commercial property;

● CMBS: securities that are collateralized by commercial mortgage loans, including:

● senior and subordinated investment grade CMBS,

● below investment grade CMBS, and

● unrated CMBS;

● Corporate bank debt: term loans and revolving credit facilities of commercial real estate operating or finance companies, each of which are generally secured by such companies’ assets;

● Equity: equity interests in commercial real estate properties, including commercial properties purchased from CMBS trusts;

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● Corporate bonds: debt securities issued by commercial real estate operating or finance companies that may or may not be secured by such companies’ assets, including:

● investment grade corporate bonds,

● below investment grade corporate bonds, and

● unrated corporate bonds;

● Non-Agency RMBS: securities collateralized by residential mortgage loans that are not guaranteed by any U.S. Government agency or federally chartered corporation;

● Residential mortgage loans: loans secured by a first mortgage lien on residential property;

● Infrastructure loans: senior secured project finance loans and senior secured project finance investment securities secured by power generation facilities and midstream and downstream oil and gas assets; and

● Net leases: commercial properties subject to net leases, which leases typically have longer terms than gross leases, require tenants to pay substantially all of the operating costs associated with the properties and often have contractually specified rent increases throughout their terms.

In addition, we may invest in the following real estate-related investments:

● Agency RMBS: RMBS for which a U.S. government agency or a federally chartered corporation guarantees payments of principal and interest on the securities.

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Business Segments

We currently operate our business in four reportable segments: the Commercial and Residential Lending Segment, the Infrastructure Lending Segment, the Property Segment and the Investing and Servicing Segment. Refer to Note 23 to the consolidated financial statements included herein (the “Consolidated Financial Statements”) for our results of operations and financial position by business segment.

Commercial and Residential Lending Segment

The following table sets forth the amount of each category of investments we owned across various property types within our Commercial and Residential Lending Segment as of December 31, 2019 and 2018 (dollars in thousands):

											Unlevered
	Face		Carrying			Asset Specific		Net			Return on
	Amount		Value			Financing		Investment		Vintage	Asset
December 31, 2019
First mortgages (1)	$	7,961,494	$	7,926,732		$	4,715,244	$	3,211,488	1998-2019	6.4	%
Subordinated mortgages		77,055		75,724			—		75,724	1998-2019	9.5	%
Mezzanine loans (1)		484,408		484,164			—		484,164	2013-2019	12.2	%
Residential loans, fair value option		654,925		671,572			425,423		246,149	2013-2019	5.9	%
Other loans		66,525		62,555			—		62,555	1999-2018	8.9	%
Loans held-for-sale, fair value option, residential		587,144		605,384			454,223		151,161	2015-2019	5.9	%
Loan loss allowance		—		(33,415)			—		(33,415)	N/A
RMBS, available-for-sale		278,853		189,576			102,073		87,503	2003-2007	12.3	%
RMBS, fair value option		87,397		147,034	(2)		32,292		114,742	2018-2019	10.2	%
CMBS, fair value option		118,249		118,215	(2)		58,801		59,414	2018	5.5	%
HTM debt securities (3)		527,338		525,485			178,880		346,605	2014-2019	7.1	%
Equity security		12,119		12,664			—		12,664	N/A
Investment in unconsolidated entities		N/A		46,921			—		46,921	N/A
Properties, net		N/A		26,834			—		26,834	N/A
	$	10,855,507	$	10,859,445		$	5,966,936	$	4,892,509
December 31, 2018
First mortgages (1)	$	6,627,879	$	6,603,760		$	3,542,214	$	3,061,546	1997-2018	7.0	%
Subordinated mortgages		53,996		52,778			—		52,778	1998-2018	9.4	%
Mezzanine loans (1)		394,739		393,832			—		393,832	2005-2018	11.6	%
Other loans		64,658		61,001			—		61,001	1999-2018	9.1	%
Loans held-for-sale, fair value option, residential		609,571		623,660			499,756		123,904	2013-2018	6.1	%
Loans held-for-sale, commercial		48,667		46,495			30,525		15,970	2018	6.3	%
Loans transferred as secured borrowings		74,692		74,346			74,239		107	N/A
Loan loss allowance		—		(39,151)			—		(39,151)	N/A
RMBS, available-for-sale		309,497		209,079			44,070		165,009	2003-2007	11.7	%
RMBS, fair value option		62,397		87,879	(2)		13,179		74,700	2018	8.0	%
CMBS, fair value option		160,198		158,688	(2)		83,864		74,824	2018	6.7	%
HTM debt securities (3)		585,017		583,381			191,991		391,390	2014-2018	7.5	%
Equity security		11,660		11,893			—		11,893	N/A
Investment in unconsolidated entities		N/A		35,274			—		35,274	N/A
	$	9,002,971	$	8,902,915		$	4,479,838	$	4,423,077

(1) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. The

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application of this methodology resulted in mezzanine loans with carrying values of $967.0 million and $1.0 billion being classified as first mortgages as of December 31, 2019 and 2018, respectively.

(2) Eliminated in consolidation against VIE liabilities pursuant to Accounting Standards Codification (“ASC”) 810.

(3) CMBS held-to-maturity (“HTM”) and mandatorily redeemable preferred equity interests in commercial real estate entities.

As of December 31, 2019 and 2018, our Commercial and Residential Lending Segment’s investment portfolio, excluding residential loans, RMBS, properties and other investments, had the following characteristics based on carrying values:

	As of December 31,
Collateral Property Type	2019		2018
Office	37.8	%	35.0	%
Hotel	20.9	%	23.5	%
Mixed Use	13.0	%	11.9	%
Multifamily	12.6	%	15.4	%
Residential	8.5	%	4.9	%
Retail	3.3	%	2.4	%
Industrial	0.7	%	1.7	%
Other	3.2	%	5.2	%
	100.0	%	100.0	%

	As of December 31,
Geographic Location	2019		2018
U.S. Regions:
North East	27.5	%	28.7	%
West	22.2	%	22.7	%
South West	10.7	%	14.0	%
Mid Atlantic	8.3	%	6.8	%
South East	7.9	%	9.9	%
Midwest	4.1	%	6.9	%
International:
Europe/Australia	16.2	%	7.8	%
Bahamas/Bermuda	3.1	%	3.2	%
	100.0	%	100.0	%

Our primary focus has been to build a portfolio of commercial mortgage and mezzanine loans with attractive risk-adjusted returns by focusing on the underlying real estate fundamentals and credit analysis of the borrowers. We continually monitor borrower performance and complete a detailed, loan-by-loan formal credit review on a quarterly basis. The results of this review are incorporated into our quarterly assessment of the adequacy of the allowance for loan losses.

As of December 31, 2019, commercial loans held-for-investment and HTM securities had a weighted-average expected maturity of 2.0 years, inclusive of extension options that management believes are probable of exercise.

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Infrastructure Lending Segment

The following table sets forth the amount of each category of investments we owned within our Infrastructure Lending Segment as of December 31, 2019 and 2018 (dollars in thousands):

									Unlevered
	Face		Carrying		Asset Specific		Net		Return on
	Amount		Value		Financing		Investment		Asset
December 31, 2019
First priority infrastructure loans and HTM securities	$	1,474,052	$	1,442,601	$	1,121,065	$	321,536	6.4	%
Loans held-for-sale, infrastructure		121,271		119,724		96,001		23,723	5.1	%
Loan loss allowance		N/A		(196)		—		(196)
Investment in unconsolidated entities		N/A		25,862		—		25,862
	$	1,595,323	$	1,587,991	$	1,217,066	$	370,925
December 31, 2018
First priority infrastructure loans and HTM securities	$	1,537,412	$	1,517,547	$	1,130,567	$	386,980	5.9	%
Loans held-for-sale, infrastructure		486,909		469,775		393,984		75,791	3.6	%
	$	2,024,321	$	1,987,322	$	1,524,551	$	462,771

As of December 31, 2019 and 2018, our Infrastructure Lending Segment’s investment portfolio had the following characteristics based on carrying values:

	As of December 31,
Collateral Type	2019		2018
Natural gas power	72.6	%	54.3	%
Midstream/downstream oil & gas	12.8	%	9.3	%
Renewable power	10.6	%	30.8	%
Other thermal power	4.0	%	5.1	%
Upstream oil & gas	—	%	0.5	%
	100.0	%	100.0	%

	As of December 31,
Geographic Location	2019		2018
U.S. Regions:
North East	43.9	%	32.8	%
Midwest	25.5	%	15.9	%
South West	12.6	%	12.9	%
South East	4.8	%	3.4	%
West	4.2	%	4.7	%
Mid-Atlantic	4.0	%	4.6	%
International:
Mexico	2.9	%	12.5	%
United Kingdom	—	%	4.7	%
Ireland	—	%	2.4	%
Other	2.1	%	6.1	%
	100.0	%	100.0	%

As of December 31, 2019, the Infrastructure Lending Segment’s first priority infrastructure loans and HTM securities had a weighted-average contractual maturity of 5.2 years.

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Property Segment

The following table sets forth the amount of each category of investments, which are comprised of properties, intangible lease assets and liabilities and our equity investment in four regional shopping malls (the “Retail Fund”) held within our Property Segment as of December 31, 2019 and 2018 (amounts in thousands):

	December 31, 2019		December 31, 2018
Properties, net	$	2,029,024	$	2,512,847
Lease intangibles, net		44,986		87,729
Investment in unconsolidated entities		—		114,362
	$	2,074,010	$	2,714,938

The following table sets forth our net investment and other information regarding the Property Segment’s properties and intangible lease assets and liabilities as of December 31, 2019 (dollars in thousands):

			Asset						Weighted Average
	Carrying		Specific		Net		Occupancy		Remaining
	Value		Financing		Investment		Rate		Lease Term
Office—Medical Office Portfolio	$	759,879	$	590,858	$	169,021	91.6	%	6.4 years
Multifamily residential—Woodstar I Portfolio		629,503		478,194		151,309	98.3	%	0.5 years
Multifamily residential—Woodstar II Portfolio		605,527		436,885		168,642	99.2	%	0.5 years
Retail—Master Lease Portfolio		343,790		192,397		151,393	100.0	%	22.3 years
Subtotal—undepreciated carrying value		2,338,699		1,698,334		640,365
Accumulated depreciation and amortization		(264,689)		—		(264,689)
Net carrying value	$	2,074,010	$	1,698,334	$	375,676

See Note 7 to the Consolidated Financial Statements for a description of the above-referenced Property Segment Portfolios.

As of December 31, 2019 and 2018, our Property Segment’s investment portfolio had the following geographic characteristics based on carrying values:

	As of December 31,
Geographic Location	2019		2018
U.S. Regions:
South East	62.0	%	50.8	%
South West	10.3	%	8.6	%
Midwest	10.1	%	8.3	%
North East	9.7	%	8.1	%
West	7.9	%	6.5	%
Ireland	—	%	17.7	%
	100.0	%	100.0	%

Refer to Schedule III included in Item 8 of this Form 10-K for a detailed listing of the properties held by the Company, including their respective geographic locations.

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Investing and Servicing Segment

The following table sets forth the amount of each category of investments we owned within our Investing and Servicing Segment as of December 31, 2019 and 2018 (amounts in thousands):

						Asset
	Face		Carrying			Specific		Net
	Amount		Value			Financing		Investment
December 31, 2019
CMBS, fair value option	$	2,897,654	$	1,177,148	(1)	$	300,705	$	876,443
Intangible assets - servicing rights		N/A		43,164	(2)		—		43,164
Lease intangibles, net		N/A		20,060			—		20,060
Loans held-for-sale, fair value option, commercial		160,635		159,238			85,873		73,365
Loans held-for-investment		1,294		1,294			—		1,294
Investment in unconsolidated entities		N/A		32,183	(3)		—		32,183
Properties, net		N/A		210,582			187,929		22,653
	$	3,059,583	$	1,643,669		$	574,507	$	1,069,162
December 31, 2018
CMBS, fair value option	$	2,872,381	$	998,820	(1)	$	320,158	$	678,662
Intangible assets - servicing rights		N/A		44,632	(2)		—		44,632
Lease intangibles, net		N/A		29,327			—		29,327
Loans held-for-sale, fair value option, commercial		46,249		47,622			34,105		13,517
Loans held-for-investment		3,357		3,357			—		3,357
Investment in unconsolidated entities		N/A		44,129	(3)		—		44,129
Properties, net		N/A		272,043			230,995		41,048
	$	2,921,987	$	1,439,930		$	585,258	$	854,672

(1) Includes $1.1 billion and $957.5 million of CMBS eliminated in consolidation against VIE liabilities pursuant to ASC 810 as of December 31, 2019 and 2018, respectively. Also includes $186.6 million and $8.4 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of December 31, 2019 and 2018, respectively.

(2) Includes $26.2 million and $24.1 million of servicing rights intangibles eliminated in consolidation against VIE assets pursuant to ASC 810 as of December 31, 2019 and 2018, respectively.

(3) Includes $20.6 million and $22.0 million of investment in unconsolidated entities eliminated in consolidation against VIE assets pursuant to ASC 810 as of December 31, 2019 and 2018, respectively

As of December 31, 2019, the Investing and Servicing Segment’s CMBS had a weighted-average expected maturity of 7.8 years.

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Our Investing and Servicing Segment Property Portfolio (the “REIS Equity Portfolio”), as described in Note 3 to the Consolidated Financial Statements, had the following characteristics based on carrying values of $214.9 million and $284.7 million as of December 31, 2019 and 2018, respectively:

	As of December 31,
Property Type	2019		2018
Office	52.7	%	56.5	%
Retail	28.8	%	24.1	%
Multifamily	6.5	%	7.8	%
Mixed Use	5.8	%	5.1	%
Self-storage	3.9	%	4.5	%
Hotel	2.3	%	2.0	%
	100.0	%	100.0	%

	As of December 31,
Geographic Location	2019		2018
South East	22.6	%	37.9	%
North East	22.6	%	22.4	%
South West	22.0	%	18.0	%
West	13.5	%	9.8	%
Midwest	10.9	%	6.8	%
Mid Atlantic	8.4	%	5.1	%
	100.0	%	100.0	%

Regulation

Our operations are subject, in certain instances, to supervision and regulation by state and federal governmental authorities and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions, which, among other things: (1) regulate credit granting activities; (2) establish maximum interest rates, finance charges and other charges; (3) require disclosures to customers; (4) govern secured transactions; (5) set collection, foreclosure, repossession and claims handling procedures and other trade practices; and (6) regulate affordable housing rental activities. Although most states do not regulate commercial finance, certain states impose limitations on interest rates and other charges and on certain collection practices and creditor remedies, and require licensing of lenders and financiers and adequate disclosure of certain contract terms. We are also required to comply with certain provisions of the Equal Credit Opportunity Act that are applicable to commercial loans and the Fair Housing Act. We intend to conduct our business so that neither we nor any of our subsidiaries are required to register as an investment company under the 1940 Act.

Competition

We are engaged in a competitive business. In our investment activities, we compete for opportunities with numerous public and private investment vehicles, including financial institutions, specialty finance companies, mortgage banks, pension funds, opportunity funds, hedge funds, insurance companies, REITs and other institutional investors, as well as individuals. Many competitors are significantly larger than we are, have well established operating histories and may have greater access to capital, more resources and other advantages over us. These competitors may be willing to accept lower returns on their investments or to compromise underwriting standards and, as a result, our origination volume and profit margins could be adversely affected.

Our Manager

We are externally managed and advised by our Manager and benefit from the personnel, relationships and experience of our Manager’s executive team and other personnel of Starwood Capital Group. Pursuant to the terms of a management agreement between our Manager and us, our Manager provides us with our management team and appropriate support personnel. Pursuant to an investment advisory agreement between our Manager and Starwood Capital Group Management, LLC, our Manager has access to the personnel and resources of Starwood Capital Group necessary for the implementation and execution of our business strategy.

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Our Manager is an affiliate of Starwood Capital Group, a privately-held private equity firm founded and controlled by Mr. Sternlicht. Starwood Capital Group has invested in most major classes of real estate, directly and indirectly, through operating companies, portfolios of properties and single assets, including multifamily, office, retail, hotel, residential entitled land and communities, senior housing, mixed-use and golf courses. Starwood Capital Group invests at different levels of the capital structure, including equity, preferred equity, mezzanine debt and senior debt, depending on the asset risk profile and return expectation.

Our Manager draws upon the experience and expertise of Starwood Capital Group’s team of professionals and support personnel operating in 16 cities across seven countries. Our Manager also benefits from Starwood Capital Group’s dedicated asset management group operating in offices located in the U.S. and abroad. We also benefit from Starwood Capital Group’s portfolio management, finance and administration functions, which address legal, compliance, investor relations and operational matters, asset valuation, risk management and information technologies in connection with the performance of our Manager’s duties.

Employees

As of December 31, 2019, the Company had 296 full-time employees, the majority of which are real estate professionals located throughout the U.S.

Taxation of the Company

We have elected to be taxed as a REIT under the Code for federal income tax purposes. We generally must distribute annually at least 90% of our taxable income, subject to certain adjustments and excluding any net capital gain, in order for federal corporate income tax not to apply to our earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under federal tax laws. Our qualification as a REIT also depends on our ability to meet various other requirements imposed by the Code, which relate to organizational structure, diversity of stock ownership and certain restrictions with regard to owned assets and categories of income. If we qualify for taxation as a REIT, we will generally not be subject to U.S. federal corporate income tax on our taxable income that is currently distributed to stockholders.

Even if we qualify as a REIT, we may be subject to certain federal excise taxes and state and local taxes on our income and property. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and will not be able to qualify as a REIT for four subsequent taxable years.

We utilize taxable REIT subsidiaries (“TRSs”) to conduct certain activities that would generate non-qualifying income or income subject to the prohibited transaction tax if earned directly by the REIT, and to hold certain assets that would represent non-qualifying assets if held directly by the REIT. In most cases, income associated with a TRS is fully taxable because a TRS is classified as a regular corporation for income tax purposes.

See Item 1A—“Risk Factors—Risks Related to Our Taxation as a REIT” for additional tax status information.

Leverage Policies

Refer to Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Leverage Policies.”

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Available Information

Our website address is www.starwoodpropertytrust.com. We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports and other filings as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”), and also make available on our website the charters for the Audit, Compensation and Nominating and Corporate Governance Committees of our board of directors and our Code of Business Conduct and Ethics and Code of Ethics for Principal Executive Officer and Senior Financial Officers, as well as our corporate governance guidelines. Copies in print of these documents are available upon request to our Corporate Secretary at the address indicated on the cover of this report. The information on our website is not a part of, nor is it incorporated by reference into, this Form 10-K. Any material we file with or furnish to the SEC is also maintained on the SEC website (http://www.sec.gov).

We intend to post on our website any amendment to, or waiver of, a provision of our Code of Business Conduct and Ethics or Code of Ethics for Principal Executive Officer and Senior Financial Officers that applies to our Chief Executive Officer, Chief Financial Officer or persons performing similar functions and that relates to any element of the code of ethics definition set forth in Item 406 of Regulation S-K of the Securities Act of 1933, as amended.

To communicate with our board of directors electronically, we have established an e-mail address, BoardofDirectors@stwdreit.com, to which stockholders may send correspondence to our board of directors or any such individual directors or group or committee of directors.

Item 1A. Risk Factors.

Risks Related to Our Relationship with Our Manager

We are dependent on Starwood Capital Group, including our Manager and their key personnel, who provide services to us through the management agreement, and we may not find a suitable replacement for our Manager and Starwood Capital Group if the management agreement is terminated, or for these key personnel if they leave Starwood Capital Group or otherwise become unavailable to us.

Our Manager has significant discretion as to the implementation of our investment and operating policies and strategies. Accordingly, we believe that our success depends to a significant extent upon the efforts, experience, diligence, skill and network of business contacts of the officers and key personnel of our Manager. The officers and key personnel of our Manager evaluate, negotiate, close and monitor a substantial portion of our investments; therefore, our success depends on their continued service. The departure of any of the officers or key personnel of our Manager could have a material adverse effect on our performance.

We offer no assurance that our Manager will remain our investment manager or that we will continue to have access to our Manager’s officers and key personnel. The initial term of our management agreement with our Manager, and the initial term of the investment advisory agreement between our Manager and Starwood Capital Group Management, LLC, expired on August 17, 2012, with automatic one-year renewals thereafter; provided, however, that our Manager may terminate the management agreement annually upon 180 days prior notice. If the management agreement and the investment advisory agreement are terminated and no suitable replacement is found to manage us, we may not be able to continue to execute our business plan.

There are various conflicts of interest in our relationship with Starwood Capital Group, including our Manager, which could result in decisions that are not in the best interests of our stockholders.

We are subject to conflicts of interest arising out of our relationship with Starwood Capital Group, including our Manager. Specifically, Mr. Sternlicht, our Chairman and Chief Executive Officer, Jeffrey G. Dishner, one of our directors, and certain of our executive officers are executives of Starwood Capital Group.

Our Manager and executive officers may have conflicts between their duties to us and their duties to, and interests in, Starwood Capital Group and its other investment funds. From time to time, one or more private investment funds sponsored by Starwood Capital Group (collectively, “Starwood Private Real Estate Funds”) may be subject to exclusivity provisions that require all or a portion of investment opportunities related to real estate to be allocated to such Starwood Private Real Estate Funds rather than to us. Subject to the provisions of the co-investment and allocation agreement as described in the next paragraph, there can be no assurance that future Starwood Private Real Estate Funds would not be subject to such exclusivity requirements and, as a result, they may acquire investment opportunities that

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would not be available to us. Our independent directors do not approve each co-investment made by the Starwood Private Real Estate Funds and us unless the amount of capital we invest in the proposed co-investment otherwise requires the review and approval of our independent directors pursuant to our investment guidelines. Pursuant to the exclusivity provisions of the Starwood Private Real Estate Funds, our investment strategy may not include either (i) equity interests in real estate or (ii) “near-to-medium-term loan to own” investments, in each case (of both (i) and (ii)) if such investments are expected, at the time such investment is made, to produce an internal rate of return (“IRR”) within the target return threshold specified in the governing documents of one or more Starwood Private Real Estate Funds. Therefore, our board of directors does not have the flexibility to expand our investment strategy to include equity interests in real estate or “near-term loan to own” investments with such an IRR expectation.

Our Manager, Starwood Capital Group and their respective affiliates may sponsor or manage a U.S. publicly traded investment vehicle that invests generally in real estate assets but not primarily in our “target assets” (as defined in our co-investment and allocation agreement) (a “potential competing vehicle”). Our Manager and Starwood Capital Group have also agreed in our co-investment and allocation agreement that for so long as the management agreement is in effect and our Manager and Starwood Capital Group are under common control, no entity controlled by Starwood Capital Group will sponsor or manage a potential competing vehicle unless Starwood Capital Group adopts a policy that either (i) provides for the fair and equitable allocation of investment opportunities in our “target assets” (as defined in our co-investment and allocation agreement) among all such vehicles and us or (ii) provides us the right to co-invest with respect to any “target assets” (as defined in our co-investment and allocation agreement) with such vehicles, in each case subject to the suitability of each investment opportunity for the particular vehicle and us and each such vehicle’s and our availability of cash for investment. To the extent that there is overlap between our investment program and that of a Starwood Private Real Estate Fund, a fair and equitable allocation policy may involve a co-investment between us and such Starwood Private Real Estate Fund or a chronological rotation between us and such Starwood Private Real Estate Fund. Although Starwood Capital Group has adopted such an investment allocation policy, Starwood Capital Group has some discretion as to how investment opportunities are allocated. As a result, we may either not be presented with the opportunity to participate in these investments or may be limited in our ability to invest.

Our board of directors has adopted a policy with respect to any proposed investments by our directors or officers or the officers of our Manager, which we refer to as the covered persons, in any of our target asset classes. This policy provides that any proposed investment by a covered person for his or her own account in any of our target asset classes will be permitted if the capital required for the investment does not exceed the personal investment limit. To the extent that a proposed investment exceeds the personal investment limit, we expect that our board of directors will only permit the covered person to make the investment (i) upon the approval of the disinterested directors or (ii) if the proposed investment otherwise complies with terms of any other related party transaction policy our board of directors has adopted. Subject to compliance with all applicable laws, these individuals may make investments for their own account in our target assets which may present certain conflicts of interest not addressed by our current policies.

We pay our Manager substantial base management fees regardless of the performance of our portfolio. Our Manager’s entitlement to a base management fee, which is not based upon performance metrics or goals, might reduce its incentive to devote its time and effort to seeking investments that provide attractive risk-adjusted returns for our portfolio. This in turn could hurt both our ability to make distributions to our stockholders and the market price of our common stock.

Excluding our operating subsidiaries, we do not have any employees except for Andrew Sossen, our Chief Operating Officer, Executive Vice President, General Counsel and Chief Compliance Officer, and Rina Paniry, our Chief Financial Officer, Treasurer and Chief Accounting Officer, whom Starwood Capital Group has seconded to us exclusively. Mr. Sossen and Ms. Paniry are also employees of other entities affiliated with our Manager and, as a result, are subject to potential conflicts of interest in service as our employees and as employees of such entities.

The management agreement with our Manager was not negotiated on an arm’s-length basis and may not be as favorable to us as if it had been negotiated with an unaffiliated third party and may be costly and difficult to terminate.

Certain of our executive officers and two of our seven directors are executives of Starwood Capital Group. Our management agreement with our Manager was negotiated between related parties and its terms, including fees payable, may not be as favorable to us as if it had been negotiated with an unaffiliated third party.

Termination of the management agreement with our Manager without cause is difficult and costly. Our independent directors will review our Manager’s performance and the management fees annually and the management agreement may be terminated annually upon the affirmative vote of at least two-thirds of our independent directors based

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upon: (i) our Manager’s unsatisfactory performance that is materially detrimental to us or (ii) a determination that the management fees payable to our Manager are not fair, subject to our Manager’s right to prevent termination based on unfair fees by accepting a reduction of management fees agreed to by at least two-thirds of our independent directors. Our Manager will be provided 180 days prior notice of any such a termination. Additionally, upon such a termination, the management agreement provides that we will pay our Manager a termination fee equal to three times the sum of the average annual base management fee and incentive fee received by our Manager during the prior 24-month period before such termination, calculated as of the end of the most recently completed fiscal quarter. These provisions may increase the cost to us of terminating the management agreement and adversely affect our ability to terminate our Manager without cause.

The initial term of our management agreement with our Manager, and the initial term of the investment advisory agreement between our Manager and Starwood Capital Group Management, LLC, expired on August 17, 2012, with automatic one-year renewals thereafter; provided, however, that our Manager may terminate the management agreement annually upon 180 days prior notice. If the management agreement is terminated and no suitable replacement is found to manage us, we may not be able to continue to execute our business plan.

Pursuant to the management agreement, our Manager does not assume any responsibility other than to render the services called for thereunder and is not responsible for any action of our board of directors in following or declining to follow its advice or recommendations. Our Manager maintains a contractual, as opposed to a fiduciary, relationship with us. Under the terms of the management agreement, our Manager, its officers, members, personnel, any person controlling or controlled by our Manager and any person providing sub-advisory services to our Manager will not be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the management agreement, except because of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of their duties under the management agreement. In addition, we have agreed to indemnify our Manager, its officers, stockholders, members, managers, directors, personnel, any person controlling or controlled by our Manager and any person providing sub-advisory services to our Manager with respect to all expenses, losses, damages, liabilities, demands, charges and claims arising from acts or omissions of our Manager not constituting bad faith, willful misconduct, gross negligence or reckless disregard of duties, performed in good faith in accordance with and pursuant to the management agreement.

The incentive fee payable to our Manager under the management agreement is payable quarterly and is based on our Core Earnings and, therefore, may cause our Manager to select investments in more risky assets to increase its incentive compensation.

Our Manager is entitled to receive incentive compensation based upon our achievement of targeted levels of Core Earnings. In evaluating investments and other management strategies, the opportunity to earn incentive compensation based on Core Earnings may lead our Manager to place undue emphasis on the maximization of Core Earnings at the expense of other criteria, such as preservation of capital, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative. This could result in increased risk to the value of our investment portfolio.

Core Earnings is not a measure calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and is defined within Item 7 – Non-GAAP Financial Measures in this Form 10-K.

Our conflicts of interest policy may not adequately address all of the conflicts of interest that may arise with respect to our investment activities and also may limit the allocation of investments to us.

In order to avoid any actual or perceived conflicts of interest with our Manager, Starwood Capital Group, any of their affiliates or any investment vehicle sponsored or managed by Starwood Capital Group or any of its affiliates, which we refer to as the Starwood parties, we have adopted a conflicts of interest policy to specifically address some of the conflicts relating to our investment opportunities. Although under this policy the approval of a majority of our independent directors is required to approve (i) any purchase of our assets by any of the Starwood parties and (ii) any purchase by us of any assets of any of the Starwood parties, this policy may not be adequate to address all of the conflicts that may arise or may not address such conflicts in a manner that results in the allocation of a particular investment opportunity to us or is otherwise favorable to us. In addition, the Starwood Private Real Estate Funds currently, and additional competing vehicles may in the future, participate in some of our investments, possibly at a more senior level in the capital structure of the underlying borrower and related real estate than our investment. Our interests in such investments may also conflict with the interests of these entities in the event of a default or restructuring of the investment. Participating investments will not be the result of arm’s length negotiations and will involve potential conflicts between our interests and those of the other participating entities in obtaining favorable terms. Since certain of

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our executives are also executives of Starwood Capital Group, the same personnel may determine the price and terms for the investments for both us and these entities and any procedural protections, such as obtaining market prices or other reliable indicators of fair value, may not prevent the consideration we pay for these investments from exceeding their fair value or ensure that we receive terms for a particular investment opportunity that are as favorable as those available from an independent third party.

Our board of directors has approved very broad investment guidelines for our Manager and does not approve each investment and financing decision made by our Manager unless required by our investment guidelines.

Our Manager is authorized to follow very broad investment guidelines which enable our Manager to make investments on our behalf in a wide array of assets. Our board of directors will periodically review our investment guidelines and our investment portfolio but will not, and will not be required to, review all of our proposed investments, except that any investment that is equal to or in excess of $250 million but less than $400 million will require approval of the investment committee of our board of directors and any investment that is equal to or in excess of $400 million will require approval of our board of directors. In addition, in conducting periodic reviews, our board of directors may rely and may make investments through affiliates primarily on information provided to them by our Manager. Furthermore, our Manager may use complex strategies, and transactions entered into by our Manager may be costly, difficult or impossible to unwind by the time they are reviewed by our board of directors. Our Manager (or such affiliates) has great latitude within the broad parameters of our investment guidelines in determining the types and amounts of target assets it decides are attractive investments for us, which could result in investment returns that are substantially below expectations or that result in losses, which would materially and adversely affect our business operations and results. Further, decisions made and investments and financing arrangements entered into by our Manager may not fully reflect the best interests of our stockholders.

New investments may not be profitable (or as profitable as we expect), may increase our exposure to certain industries, may increase our exposure to interest rate, foreign currency, real estate market or credit market fluctuations, may divert managerial attention from more profitable opportunities and may require significant financial resources. A change in our investment strategy may also increase any guarantee obligations we agree to incur or increase the number of transactions we enter into with affiliates. Moreover, new investments may present risks that are difficult for us to adequately assess, given our lack of familiarity with a particular type of investment. The risks related to new investments or the financing risks associated with such investments could adversely affect our results of operations, financial condition and liquidity, and could impair our ability to make distributions to our stockholders.

Risks Related to Our Company

Our board of directors has in the past and may in the future at any time change one or more of our investment strategy or guidelines, financing strategy or leverage policies without stockholder consent.

Our board of directors has in the past and may in the future at any time change one or more of our investment strategy or guidelines, financing strategy or leverage policies with respect to investments, acquisitions, growth, operations, indebtedness, capitalization and distributions without the consent of our stockholders, which could result in an investment portfolio with a different risk profile. Any change in our investment strategy may increase our exposure to interest rate risk, default risk and real estate market fluctuations. These changes could adversely affect our financial condition, results of operations, the market price of our common stock and our ability to make distributions to our stockholders.

We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to make distributions to our stockholders.

Our network systems and storage applications, and those systems and storage and other business applications maintained by our third party providers, may be subject to attempts to gain unauthorized access, breach, malfeasance or other system disruptions. In some cases, it is difficult to anticipate or to detect immediately such incidents and the damage caused thereby. While we continually work to safeguard our internal network systems and validate the security of our third party providers, including through information security policies and employee awareness and training, such actions may not be sufficient to prevent cyber-attacks or security breaches. The loss, disclosure or misappropriation of, or unauthorized access to, information or the Company’s failure to meet its obligations could result in legal claims or proceedings, penalties and remediation costs. A significant data breach or the Company’s failure to meet its obligations may adversely affect the Company’s reputation, business, results of operations and financial condition.

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In particular, our business is highly dependent on the communications and information systems of Starwood Capital Group. Any failure or interruption of Starwood Capital Group’s systems could cause delays or other problems, which could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to make distributions to our stockholders.

Terrorist attacks and other acts of violence or war may affect the real estate industry and our business, financial condition and results of operations.

Any terrorist attacks, the anticipation of any such attacks, the consequences of any military or other response by the U.S. and its allies and other armed conflicts could disrupt the U.S. financial markets, including the real estate capital markets, and negatively impact the U.S. and global economy in general, including a decrease in consumer confidence and spending. The economic impact of these events could also adversely affect the credit quality of some of our loans and investments and the properties underlying our interests.

We may suffer losses as a result of the adverse impact of any future attacks and these losses may adversely impact our performance and may cause the market value of our common stock to decline or be more volatile. A prolonged economic slowdown, a recession or declining real estate values as a result of any such attack could impair the performance of our investments and harm our financial condition and results of operations, increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. We cannot predict the severity of the effect that potential future terrorist attacks would have on us. Although we carry liability insurance, losses resulting from these types of events may not be fully insurable.

We have not established a minimum distribution payment level and we may not be able to make distributions to our stockholders in the future at current levels or at all.

We are generally required to distribute to our stockholders at least 90% of our taxable income each year for us to qualify as a REIT under the Code, which requirement we currently intend to satisfy through quarterly distributions of all or substantially all of our REIT taxable income in such year, subject to certain adjustments. We have not established a minimum distribution payment level, and our ability to pay distributions may be adversely affected by a number of factors, including the risk factors contained in this Form 10-K. Although we have made, and anticipate continuing to make, quarterly distributions to our stockholders, our board of directors has the sole discretion to determine the timing, form and amount of any future distributions to our stockholders, and such determination will depend on our earnings, our financial condition, debt covenants, maintenance of our REIT qualification and other factors as our board of directors may deem relevant from time to time. We believe that a change in any one of the following factors could adversely affect our results of operations and impair our ability to continue to pay distributions to our stockholders:

• the profitability of the investment of the net proceeds from our equity offerings;

• our ability to make profitable investments;

• margin calls or other expenses that reduce our cash flow;

• defaults in our asset portfolio or decreases in the value of our portfolio; and

• the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.

As a result, distributions to our stockholders in the future may not continue or the level of any future distributions we do make to our stockholders may not achieve a market yield or increase or even be maintained over time, any of which could materially and adversely affect our stockholders’ return on investment.

In addition, distributions that we make to our stockholders are generally taxable to our stockholders as ordinary income. However, a portion of our distributions may be designated by us as long-term capital gains to the extent that they are attributable to capital gain income recognized by us or may constitute a return of capital to the extent that they exceed our earnings and profits as determined for tax purposes. A return of capital is not taxable, but has the effect of reducing the basis of a stockholder’s investment in our common stock.

Changes in accounting rules could occur at any time and could impact us in significantly negative ways that we are unable to predict or protect against.

As has been widely publicized, the SEC, the Financial Accounting Standards Board and other regulatory bodies that establish the accounting rules applicable to us have proposed or enacted a wide array of changes to accounting rules over the last several years. Moreover, in the future these regulators may propose additional changes that we do not currently anticipate. Changes to accounting rules that apply to us could significantly impact our business or our reported

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financial performance in negative ways that we cannot predict or protect against. We cannot predict whether any changes to current accounting rules will occur or what impact any codified changes will have on our business, results of operations, liquidity or financial condition.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

As a public company, we are required to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business or changes in applicable accounting rules. We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we believe that internal controls were effective. If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm may not be able to certify as to the effectiveness of our internal control over financial reporting as of the required dates. Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis, or may cause us to restate previously issued financial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements is also likely to suffer if we or our independent registered public accounting firm reports a material weakness in our internal control over financial reporting. This could materially and adversely affect us by, for example, leading to a decline in our stock price and impairing our ability to raise capital.

Risks Related to Sources of Financing

Our access to sources of financing may be limited and thus our ability to maximize our returns may be adversely affected.

Our financing sources currently include our credit agreements, our master repurchase agreements, our collateralized loan obligation (“CLO”), our convertible senior notes, our senior notes, our mortgage debt on certain investment properties and common stock and debt offerings. Subject to market conditions and availability, we may seek additional sources of financing in the form of bank credit facilities (including term loans and revolving facilities), repurchase agreements, warehouse facilities, structured financing arrangements, public and private equity and debt issuances and derivative instruments, in addition to transaction or asset-specific funding arrangements.

Our access to additional sources of financing will depend upon a number of factors, over which we have little or no control, including:

• general market conditions;

• the market’s view of the quality of our assets;

• the market’s perception of our growth potential;

• our current and potential future earnings and cash distributions; and

• the market price of the shares of our common stock.

A dislocation and/or weakness in the capital and credit markets could adversely affect one or more private lenders and could cause one or more of our private lenders to be unwilling or unable to provide us with financing or to increase the costs of that financing. In addition, if regulatory capital requirements imposed on our private lenders change, they may be required to limit, or increase the cost of, financing they provide to us. In general, this could potentially increase our financing costs and reduce our liquidity or require us to sell assets at an inopportune time or price.

To the extent structured financing arrangements are unavailable, we may have to rely more heavily on additional equity issuances, which may be dilutive to our stockholders, or on less efficient forms of debt financing that require a larger portion of our cash flow from operations, thereby reducing funds available for our operations, future business opportunities, cash distributions to our stockholders and other purposes. We cannot assure you that we will have access to such equity or debt capital on favorable terms (including, without limitation, cost and term) at the desired times, or at all, which may cause us to curtail our asset acquisition activities and/or dispose of assets, which could negatively affect our results of operations.

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Our significant indebtedness subjects us to increased risk of loss and may reduce cash available for distributions to our stockholders.

We currently have a significant amount of indebtedness outstanding. As of December 31, 2019, our total consolidated indebtedness was approximately $11.8 billion (excluding accounts payable, accrued expenses, other liabilities, VIE liabilities and unfunded commitments). Our outstanding indebtedness currently includes our credit agreements, our repurchase agreements, our CLO, our convertible senior notes, our senior notes and mortgage debt on certain investment properties. Subject to market conditions and availability, we may incur additional debt through bank credit facilities (including term loans and revolving facilities), repurchase agreements, warehouse facilities, structured financing arrangements, public and private debt issuances and derivative instruments, in addition to transaction or asset-specific funding arrangements. The percentage of leverage we employ varies depending on our available capital, our ability to obtain and access financing arrangements with lenders and the lenders’ and rating agencies’ estimate of the stability of our investment portfolio’s cash flow. Our governing documents contain no limitation on the amount of debt we may incur. We may significantly increase the amount of leverage we utilize at any time without approval of our board of directors. However, under our current repurchase agreements and bank credit facilities, our total leverage may not exceed 80% of total assets (as defined therein), as adjusted to remove the impact of bona-fide loan sales that are accounted for as financings and the consolidation of VIEs pursuant to GAAP. Moreover, the respective indentures governing our senior notes contain covenants that, subject to a number of exceptions and adjustments, among other things,  limit our ability to incur additional indebtedness and require that we maintain total unencumbered assets (as defined therein) of not less than 120% of the aggregate principal amount of our outstanding unsecured indebtedness (as defined therein). In addition, we may leverage individual assets at substantially higher levels. Incurring substantial debt subjects us to many risks that, if realized, would materially and adversely affect us, including the risk that:

• our cash flow from operations may be insufficient to make required payments of principal of and interest on the debt or we may fail to comply with all of the other covenants contained in the debt, which is likely to result in (i) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision) that we may be unable to repay from internal funds or to refinance on favorable terms, or at all, (ii) our inability to borrow unused amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements and/or (iii) the loss of some or all of our assets to foreclosure or sale;

• our debt may increase our vulnerability to adverse economic and industry conditions, and investment yields may not increase with higher financing costs;

• we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; and

• we may not be able to refinance debt that matures prior to the investment it was used to finance on favorable terms, or at all.

In addition, subject to certain conditions, the lenders under our credit facilities retain the sole discretion over the market value of loans and/or securities that serve as collateral for the borrowings under our credit facilities for purposes of determining whether we are required to pay margin to such lenders.

Interest rate fluctuations could significantly decrease our results of operations and cash flows and the market value of our investments.

Our primary interest rate exposures relate to the following:

• changes in interest rates may affect the yield on our investments and the financing cost of our debt, as well as the performance of our interest rate swaps that we utilize for hedging purposes, which could result in operating losses for us should interest expense exceed interest income;

• declines in interest rates may reduce the yield on existing floating rate assets and/or the yield on prospective investments;

• changes in the level of interest rates may affect our ability to source investments;

• increases in the level of interest rates may negatively impact the value of our investments and our ability to realize gains from the disposition of assets;

• increases in the level of interest rates may (x) increase the credit risk of our assets by negatively impacting the ability of our borrowers to pay debt service on our floating rate loan assets or our ability to refinance our assets

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upon maturity and (y) negatively impact the value of the real estate supporting our investments (or that we own directly) through the impact such increases can have on property valuation capitalization rates; and

• changes in interest rates and/or the differential between U.S. dollar interest rates and those of non-dollar currencies in which we invest can adversely affect the value of our non-dollar assets and/or associated currency hedging transactions.

In addition, our variable rate indebtedness may use LIBOR as a benchmark for establishing the rate. As was announced in July 2017, LIBOR is anticipated to be phased out by the end of 2021. Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR may adversely impact the availability and cost of borrowings.

Our warehouse facilities may limit our ability to acquire assets, and we may incur losses if the collateral is liquidated.

We utilize warehouse facilities pursuant to which we accumulate mortgage loans in anticipation of a securitization financing, which assets are pledged as collateral for such facilities until the securitization transaction is consummated. In order to borrow funds to acquire assets under any additional warehouse facilities, we expect that our lenders thereunder would have the right to review the potential assets for which we are seeking financing. We may be unable to obtain the consent of a lender to acquire assets that we believe would be beneficial to us and we may be unable to obtain alternate financing for such assets. In addition, a securitization transaction may not be consummated with respect to the assets being warehoused. If the securitization is not consummated, the lender could liquidate the warehoused collateral and we would then have to pay any amount by which the original purchase price of the collateral assets exceeds its sale price, subject to negotiated caps, if any, on our exposure. In addition, regardless of whether the securitization is consummated, if any of the warehoused collateral is sold before the consummation, we would have to bear any resulting loss on the sale. We may not be able to obtain additional warehouse facilities on favorable terms, or at all.

The utilization of any of our repurchase agreements is subject to the pre-approval of the lender.

We utilize repurchase agreements to finance the purchase of certain investments. In order for us to borrow funds under a repurchase agreement, our lender must have the right to review the potential assets for which we are seeking financing and approve such assets in its sole discretion. Accordingly, we may be unable to obtain the consent of a lender to finance an investment and alternate sources of financing for such asset may not exist.

A failure to comply with restrictive covenants in our financing arrangements would have a material adverse effect on us, and any future financings may require us to provide additional collateral or pay down debt.

We are subject to various restrictive covenants contained in our existing financing arrangements and may become subject to additional covenants in connection with future financings. Our credit agreements contain covenants that restrict our ability to incur additional debt or liens, make certain investments or acquisitions, merge, consolidate or transfer or dispose of substantially all of our assets or otherwise dispose of property and assets, pay dividends and make certain other restricted payments, change the nature of our business or enter into transactions with affiliates. Our credit agreements, as well as our master repurchase agreements, each requires us to maintain compliance with various financial covenants, including, as applicable, a minimum tangible net worth and cash liquidity, and specified financial ratios, such as total debt to total assets and EBITDA to fixed charges or loan-to-value ratios. In addition, the respective indentures governing our respective senior notes contain covenants that, subject to a number of exceptions, adjustments and, in certain circumstances, termination provisions, among other things: limit our ability to incur additional indebtedness; require that we maintain total unencumbered assets (as defined therein) of not less than 120% of the aggregate principal amount of our outstanding unsecured indebtedness (as defined therein); and impose certain requirements in order for us to merge or consolidate with another person.

These covenants may limit our flexibility to pursue certain investments or incur additional debt. If we fail to meet or satisfy any of these covenants, we would be in default under these agreements and our indebtedness could be declared due and payable. In addition, our lenders could terminate their commitments, require the posting of additional collateral and enforce their interests against existing collateral. We may also be subject to cross-default and acceleration rights and, with respect to collateralized debt, the posting of additional collateral and foreclosure rights upon default. Further, such limitations on our liquidity could also make it difficult for us to satisfy the distribution requirements necessary to maintain our status as a REIT for U.S. federal income tax purposes.

Our credit agreements and master repurchase agreements also involve the risk that the market value of the loans pledged or sold by us to the repurchase agreement counterparty or provider of the bank credit facility may decline in value, in which case the lender may require us to provide additional collateral or to repay all or a portion of the funds

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advanced. We may not have the funds available to repay our debt at that time, which would likely result in defaults unless we are able to raise the funds from alternative sources, which we may not be able to achieve on favorable terms or at all. Posting additional collateral would reduce our liquidity and limit our ability to leverage our assets. If we cannot meet these requirements, the lender could accelerate our indebtedness, increase the interest rate on advanced funds and terminate our ability to borrow funds from them, which could materially and adversely affect our financial condition and ability to continue to implement our business plan. In addition, in the event that the lender files for bankruptcy or becomes insolvent, our loans may become subject to bankruptcy or insolvency proceedings, thus depriving us, at least temporarily, of the benefit of these assets. Such an event could restrict our access to bank credit facilities and increase our cost of capital.

If one or more of our Manager’s executive officers are no longer employed by our Manager, the financial institutions providing us financing may not provide future financing to us, which could materially and adversely affect us.

If financial institutions with whom we seek to finance our investments require that one or more of our Manager’s executives continue to serve in such capacity and if one or more of our Manager’s executives are no longer employed by our Manager, it may constitute an event of default and the financial institution providing the arrangement may have acceleration rights with respect to outstanding borrowings and termination rights with respect to our ability to finance our future investments with that institution. If we are unable to obtain financing for our accelerated borrowings and for our future investments under such circumstances, we could be materially and adversely affected.

We directly or indirectly utilize non-recourse securitizations, and such structures expose us to risks that could result in losses to us.

We utilize non-recourse securitizations of our investments in mortgage loans to the extent consistent with the maintenance of our REIT qualification and exemption from the Investment Company Act in order to generate cash for funding new investments and/or to leverage existing assets. In most instances, this involves us transferring our loans to a special purpose securitization entity in exchange for cash. In some sale transactions, we also retain a subordinated interest in the loans sold. The securitization of our portfolio investments might magnify our exposure to losses on those portfolio investments because the subordinated interest we retain in the loans sold would be subordinate to the senior interest in the loans sold, and we would, therefore, absorb all of the losses sustained with respect to a loan sold before the owners of the senior interest experience any losses. Moreover, we cannot be assured that we will be able to access the securitization market in the future or be able to do so at favorable rates. The inability to consummate securitizations of our portfolio investments to finance our investments on a long-term basis could require us to seek other forms of potentially less attractive financing or to liquidate assets at an inopportune time or price, which could adversely affect our performance and our ability to continue to grow our business.

We may not have the ability to raise funds on acceptable terms necessary to settle conversions of our outstanding convertible senior notes or to purchase our outstanding convertible senior notes upon a fundamental change.

As of December 31, 2019, we had $250.0 million in principal amount of convertible senior notes outstanding. If a fundamental change within the meaning of our outstanding convertible senior notes occurs, holders of those notes will have the right to require us to purchase for cash any or all of their notes. The fundamental change purchase price will equal 100% of the principal amount of the notes to be purchased, plus accrued and unpaid interest thereon. In addition, upon conversion of the convertible senior notes, we will be required to make cash payments in respect of the notes being converted, unless we elect to settle the conversion entirely in shares of our common stock. However, we may not have sufficient funds at the time we are required to purchase the notes surrendered therefor or to make cash payments on the notes being converted, and we may not be able to arrange necessary financing on acceptable terms. If we were unable to raise necessary funding on acceptable terms, our operating results and financial position could be negatively impacted if we were required to repurchase the notes or to pay cash upon conversion.

Amendments to the Federal Home Loan Bank (“FHLB”) membership regulations could adversely affect our business and financial results.

In July 2017, we acquired a captive insurance company that is a member of the FHLB of Chicago (the “FHLBC”).  Our subsidiary’s membership in the FHLBC provides us with access to attractive long-term collateralized financing for residential mortgage loans.  In January 2016, the Federal Housing Finance Agency (“FHFA”) amended its regulations governing FHLB membership, providing that captive insurance companies will no longer be eligible for membership in the FHLB system.  Our subsidiary was admitted as a member of the FHLBC prior to September 2014 and, as a result, is eligible under the amended regulations to remain a member through February 2021.  Following the termination of our subsidiary’s membership in the FHLBC in February 2021, we may not be able to replace the

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borrowing capacity provided by the FHLBC on terms as favorable as those received from such institution or at all, which could adversely affect our business and financial results.

Risks Related to Hedging

We enter into hedging transactions that could expose us to contingent liabilities in the future.

Subject to maintaining our qualification as a REIT, part of our investment strategy involves entering into hedging transactions that require us to fund cash payments in certain circumstances (such as the early termination of the hedging instrument caused by an event of default or other early termination event, or the decision by a counterparty to request margin securities it is contractually owed under the terms of the hedging instrument). The amount due would be equal to the unrealized loss of the open swap positions with the respective counterparty and could also include other fees and charges. These economic losses will be reflected in our results of operations, and our ability to fund these obligations will depend on the liquidity of our assets and access to capital at the time, and the need to fund these obligations could adversely impact our financial condition.

Hedging may adversely affect our earnings, which could reduce our cash available for distribution to our stockholders.

Subject to maintaining our qualification as a REIT, we pursue various hedging strategies to seek to reduce our exposure to adverse changes in interest and foreign currency rates. Our hedging activity varies in scope based on the level and volatility of interest rates, exchange rates, the types of assets held and other changing market conditions. Hedging may fail to protect or could adversely affect us because, among other things:

• interest rate, currency and/or credit hedging can be expensive and may result in us receiving less interest income;

• available interest rate hedges may not correspond directly with the interest rate risk for which protection is sought;

• due to a credit loss, prepayment or asset sale, the duration of the hedge may not match the duration of the related asset or liability;

• the amount of income that a REIT may earn from hedging transactions (other than hedging transactions that satisfy certain requirements of the Code or that are done through a TRS) to offset losses is limited by U.S. federal tax provisions governing REITs;

• the credit quality of the hedging counterparty owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; and

• the hedging counterparty owing money in the hedging transaction may default on its obligation to pay.

In addition, we may fail to recalculate, readjust or execute hedges in an efficient manner.

Any hedging activity in which we engage may materially and adversely affect our results of operations and cash flows. Therefore, while we may enter into such transactions seeking to reduce risks, unanticipated changes in interest rates, credit spreads or currencies may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions or liabilities being hedged may vary materially. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the portfolio positions or liabilities being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss.

Hedging instruments often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house, or regulated by any U.S. or foreign governmental authorities and involve risks and costs that could result in material losses.

The cost of using hedging instruments increases as the period covered by the instrument increases and during periods of rising and volatile interest rates. In addition, some hedging instruments involve risk because they often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house or regulated by any U.S. or foreign governmental authorities. Consequently, in many cases, there are no requirements with respect to record keeping, financial responsibility or segregation of customer funds and positions. Furthermore, the enforceability of agreements underlying hedging transactions may depend on compliance with applicable securities, commodity and other regulatory requirements and, depending on the identity of the counterparty, applicable international requirements. The business

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failure of a hedging counterparty with whom we enter into a hedging transaction that is not cleared on a regulated centralized clearing house will most likely result in its default. Default by a party with whom we enter into a hedging transaction may result in the loss of unrealized profits and force us to cover our commitments, if any, at the then current market price. Although generally we will seek to reserve the right to terminate our hedging positions, it may not always be possible to dispose of or close out a hedging position without the consent of the hedging counterparty and we may not be able to enter into an offsetting contract in order to cover our risk. We cannot assure you that a liquid secondary market will exist for hedging instruments purchased or sold, and we may be required to maintain a position until exercise or expiration, which could result in significant losses.

We may fail to qualify for, or choose not to elect, hedge accounting treatment.

We record derivative and hedging transactions in accordance with GAAP. Under these standards, we may fail to qualify for, or choose not to elect, hedge accounting treatment for a number of reasons, including if we use instruments that do not meet the definition of a derivative (such as short sales), we fail to satisfy hedge documentation and hedge effectiveness assessment requirements or our instruments are not highly effective. If we fail to qualify for, or choose not to elect, hedge accounting treatment, our operating results may be volatile because changes in the fair value of the derivatives that we enter into may not be offset by a change in the fair value of the related hedged transaction or item.

We enter into derivative contracts that could expose us to contingent liabilities in the future.

Subject to maintaining our qualification as a REIT, we enter into derivative contracts that could require us to fund cash payments in the future under certain circumstances (e.g., the early termination of the derivative agreement caused by an event of default or other early termination event, or the decision by a counterparty to request margin securities it is contractually owed under the terms of the derivative contract). The amount due would be equal to the unrealized loss of the open swap positions with the respective counterparty and could also include other fees and charges. These economic losses may materially and adversely affect our results of operations and cash flows.

Risks Related to Our Real Estate-Related Investments

We may not be able to identify additional assets that meet our investment objective.

We cannot assure you that we will be able to identify additional assets that meet our investment objective, that we will be successful in consummating any investment opportunities we identify or that one or more investments we may make will yield attractive risk-adjusted returns. Our inability to do any of the foregoing likely would materially and adversely affect our results of operations and cash flows and our ability to make distributions to our stockholders.

The lack of liquidity in our investments may adversely affect our business.

The lack of liquidity of our investments in real estate loans and investments, other than certain of our investments in MBS, may make it difficult for us to sell such investments if the need or desire arises. Many of the securities we purchase are not registered under the relevant securities laws, resulting in a prohibition against their transfer, sale, pledge or their disposition, except in a transaction that is exempt from the registration requirements of, or otherwise in accordance with, those laws. In addition, certain investments such as B-Notes, mezzanine loans and bridge and other loans are also particularly illiquid investments due to their short life, their potential unsuitability for securitization and/or the greater difficulty of recovery in the event of a borrower default. As a result, many of our current investments are, and our future investments will be, illiquid and if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. Further, we may face other restrictions on our ability to liquidate an investment in a business entity to the extent that we or our Manager has or could be attributed with material non-public information regarding such business entity. As a result, our ability to vary our portfolio in response to changes in economic and other conditions may be relatively limited, which could adversely affect our results of operations and financial condition.

In connection with certain contributions of properties to our subsidiary, SPT Dolphin Intermediate LLC (“SPT Dolphin”), we have entered into a tax protection agreement with the contributors of such properties, pursuant to which SPT Dolphin is generally restricted from transferring the applicable properties during a specified period unless such contributors are indemnified against the tax liability on their shares of any gain recognized in such transfers (as well as any such tax liability arising due to SPT Dolphin not maintaining a specified level of nonrecourse debt on those properties during the specified period).  This tax protection agreement, and any additional tax protection agreements that a subsidiary of ours may enter into in the future, will limit our flexibility to sell or otherwise dispose of, or to reduce the amount of indebtedness encumbering, the relevant properties even if it would otherwise be economically advantageous to us to do so.

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Our investments may be concentrated and are subject to risk of default.

While we seek to diversify our portfolio of investments, we are not required to observe specific diversification criteria, except as may be set forth in the investment guidelines adopted by our board of directors. Therefore, our investments in our target assets may at times be concentrated in certain property types that are subject to higher risk of foreclosure or secured by properties concentrated in a limited number of geographic locations. To the extent that our portfolio is concentrated in any one region or type of asset, downturns relating generally to such region or type of asset may result in defaults on a number of our investments within a short time period, which may reduce our net income and the value of our common stock and accordingly reduce our ability to make distributions to our stockholders.

Difficult conditions in the mortgage, commercial and residential real estate markets may cause us to experience market losses related to our holdings.

Our results of operations are materially affected by conditions in the real estate markets, the financial markets and the economy generally. Concerns about the real estate market, as well as inflation, energy costs, geopolitical issues and the availability and cost of credit, have contributed to increased volatility and diminished expectations for the economy and markets going forward. The residential mortgage market has been affected by changes in the lending landscape, and there is no assurance that these conditions have stabilized or that they will not worsen. The disruption in the residential mortgage market has an impact on new demand for homes, which weigh on future home price performance. There is a strong inverse correlation between home price growth rates and mortgage loan delinquencies. Deterioration in the real estate market may cause us to experience losses related to our assets and to sell assets at a loss. Declines in the market values of our investments may adversely affect our results of operations and credit availability, which may reduce earnings and, in turn, cash available for distribution to our stockholders.

Our preferred equity investments involve a greater risk of loss than conventional debt financing.

We make preferred equity investments. These investments involve a higher degree of risk than conventional debt financing due to a variety of factors, including their non-collateralized nature and subordinated ranking to other loans and liabilities of the entity in which such preferred equity is held. Accordingly, if the issuer defaults on our investment, we would only be able to proceed against such entity in accordance with the terms of the preferred security and not against any property owned by such entity. Furthermore, in the event of bankruptcy or foreclosure, we would only be able to recoup our investment after all lenders to, and other creditors of, such entity are paid in full. As a result, we may lose all or a significant part of our investment, which could result in significant losses.

Our commercial construction lending may expose us to increased lending risks.

Our commercial construction lending may expose us to increased lending risks. As of December 31, 2019, our loan portfolio consisted of $1.5 billion of commercial real estate construction loans. Construction loans generally expose a lender to greater risk of non-payment and loss than permanent commercial mortgage loans because repayment of the loans often depends on the borrower’s ability to secure permanent “take-out” financing, which requires the successful completion of construction and stabilization of the project, or operation of the property with an income stream sufficient to meet operating expenses, including debt service on such replacement financing. For construction loans, increased risks include the accuracy of the estimate of the property’s value at completion of construction and the estimated cost of construction—all of which may be affected by unanticipated construction delays and cost over-runs. Such loans typically involve an expectation that the borrower’s sponsors will contribute sufficient equity funds in order to keep the loan “in balance,” and the sponsors’ failure or inability to meet this obligation could result in delays in construction or an inability to complete construction. Commercial construction loans also expose the lender to additional risks of contractor non-performance or borrower disputes with contractors resulting in mechanic’s or materialmen’s liens on the property and possible further delay in construction. In addition, since such loans generally entail greater risk than mortgage loans on income producing property, we may need to increase our allowance for loan losses in the future to account for the likely increase in probable incurred credit losses associated with such loans. Further, as the lender under a construction loan, we may be obligated to fund all or a significant portion of the loan at one or more future dates. We may not have the funds available at such future date(s) to meet our funding obligations under the loan. In that event, we would likely be in breach of the loan unless we are able to raise the funds from alternative sources, which we may not be able to achieve on favorable terms or at all. In addition, many of our construction loans have multiple lenders and if another lender fails to fund, we could be faced with the choice of either funding for that defaulting lender or suffering a delay or protracted interruption in the progress of construction.

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We operate in a highly competitive market for investment opportunities and competition may limit our ability to acquire desirable investments in our target assets and could also affect the pricing of these investment opportunities.

We operate in a highly competitive market for investment opportunities. Our profitability depends, in large part, on our ability to acquire our target assets at attractive prices. In acquiring our target assets, we compete with a variety of institutional investors, including other REITs, commercial and investment banks, specialty finance companies, public and private funds (including other funds managed by Starwood Capital Group), commercial finance and insurance companies and other financial institutions. Many of our competitors are substantially larger and have considerably greater financial, technical, marketing and other resources than we do. Several other REITs have raised significant amounts of capital and may have investment objectives that overlap with ours, which may create additional competition for investment opportunities. Some competitors may have a lower cost of funds and access to funding sources that may not be available to us, such as funding from the U.S. government, if we are not eligible to participate in programs established by the U.S. government. Many of our competitors are not subject to the operating constraints associated with REIT tax compliance or maintenance of an exemption from the Investment Company Act. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than we do. Furthermore, competition for investments in our target assets may lead to the price of such assets increasing, which may further limit our ability to generate desired returns. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, desirable investments in our target assets may be limited in the future and we may not be able to continue to take advantage of attractive investment opportunities from time to time, as we may not be able to identify and make additional investments that are consistent with our investment objectives.

The commercial mortgage loans we originate or acquire and the mortgage loans underlying our CMBS investments are subject to the ability of the commercial property owner to generate net income from operating the property, as well as the risks of delinquency and foreclosure.

Commercial mortgage loans are secured by multifamily or commercial property and are subject to risks of delinquency and foreclosure, and risks of loss may be greater than similar risks associated with loans made on the security of single-family residential property. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of such property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be adversely affected by, among other things,

• tenant mix;

• success of tenant businesses;

• property management decisions;

• property location, condition and design;

• competition from comparable types of properties;

• changes in laws that increase operating expenses or limit rents that may be charged;

• changes in national, regional or local economic conditions and/or specific industry segments, including the credit and securitization markets;

• declines in regional or local real estate values;

• declines in regional or local rental or occupancy rates;

• increases in interest rates, real estate tax rates and other operating expenses;

• costs of remediation and liabilities associated with environmental conditions;

• the potential for uninsured or underinsured property losses;

• changes in governmental laws and regulations, including fiscal policies, zoning ordinances and environmental legislation and the related costs of compliance; and

• acts of God, terrorist attacks, social unrest and civil disturbances.

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In the event of any default under a mortgage loan held directly by us, we will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the mortgage loan, which could have a material adverse effect on our cash flow from operations and limit amounts available for distribution to our stockholders. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law. Foreclosure of a mortgage loan can be an expensive and lengthy process, which could have a substantial negative effect on our anticipated return on the foreclosed mortgage loan.

Our investments in CMBS are generally subject to losses.

Our investments in CMBS are subject to losses. In general, losses on a mortgaged property securing a mortgage loan included in a securitization will be borne first by the equity holder of the property, then by a cash reserve fund or letter of credit, if any, then by the holder of a mezzanine loan or B-Note, if any, then by the “first loss” subordinated security holder (generally, the “B-Piece” buyer) and then by the holder of a higher-rated security. In the event of default and the exhaustion of any equity support, reserve fund, letter of credit, mezzanine loans or B-Notes, and any classes of securities junior to those in which we invest, we will not be able to recover all of our investment in the securities we purchase. In addition, if the underlying mortgage portfolio has been overvalued by the originator, or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related CMBS, there would be an increased risk of loss. The prices of lower credit quality securities are generally less sensitive to interest rate changes than more highly rated investments, but more sensitive to adverse economic downturns or individual issuer developments.

Dislocations, illiquidity and volatility in the market for commercial real estate as well as the broader financial markets could adversely affect the performance and value of commercial mortgage loans, the demand for CMBS and the value of CMBS investments.

Any significant dislocations, illiquidity or volatility in the real estate and securitization markets, including the market for CMBS, as well as global financial markets and the economy generally, could adversely affect our business and financial results. We cannot assure you that dislocations in the commercial mortgage loan market will not occur in the future.

Challenging economic conditions affect the financial strength of many commercial, multifamily and other tenants and result in increased rent delinquencies and decreased occupancy. Economic challenges may lead to decreased occupancy, decreased rents or other declines in income from, or the value of, commercial, multifamily and manufactured housing community real estate.

During the last economic recession, declining commercial real estate values, coupled with tighter underwriting standards for commercial real estate loans, prevented many commercial borrowers from refinancing their mortgages, which resulted in increased delinquencies and defaults on commercial, multifamily and other mortgage loans. Past declines in commercial real estate values also resulted in reduced borrower equity, further hindering borrowers’ ability to refinance in an environment of increasingly restrictive lending standards and giving them less incentive to cure delinquencies and avoid foreclosure. The lack of refinancing opportunities in past years has impacted and could impact in the future, in particular, mortgage loans that do not fully amortize and on which there is a substantial balloon payment due at maturity, because borrowers generally expect to refinance these types of loans on or prior to their maturity date. Finally, declining commercial real estate values and the associated increases in loan-to-value ratios would result in lower recoveries on foreclosure and an increase in losses above those that would have been realized had commercial property values remained the same or increased. Continuing defaults, delinquencies and losses would further decrease property values, thereby resulting in additional defaults by commercial mortgage borrowers, further credit constraints and further declines in property values.

If our Manager overestimates the yields or incorrectly prices the risks of our investments, we may experience losses.

Our Manager values our investments based on yields and risks, taking into account estimated future losses on the mortgage loans and the underlying collateral included in the securitization’s pools, and the estimated impact of these losses on expected future cash flows and returns. Our Manager’s loss estimates may not prove accurate, as actual results may vary from estimates. In the event that our Manager underestimates the asset level losses relative to the price we pay for a particular investment, we may experience losses with respect to such investment.

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Real estate valuation is inherently subjective and uncertain.

The valuation of real estate and therefore the valuation of any underlying security relating to loans made by us is inherently subjective due to, among other factors, the individual nature of each property, its location, the expected future rental revenues from that particular property and the valuation methodology adopted. In addition, where we invest in construction loans, initial valuations will assume completion of the project. As a result, the valuations of the real estate assets against which we make loans are subject to a degree of uncertainty and are made on the basis of assumptions and methodologies that may not prove to be accurate, particularly in periods of volatility, low transaction flow or restricted debt availability in the commercial or residential real estate markets.

Any investments in corporate bank debt and debt securities of commercial real estate operating or finance companies are subject to the specific risks relating to the particular companies and to the general risks of investing in real estate-related loans and securities, which may result in significant losses.

We may invest in corporate bank debt and in debt securities of commercial real estate operating or finance companies. These investments involve special risks relating to the particular company, including its financial condition, liquidity, results of operations, business and prospects. In particular, the debt securities are often non-collateralized and may also be subordinated to its other obligations. We also invest in debt securities of companies that are not rated or are rated non-investment grade by one or more rating agencies. Investments that are not rated or are rated non-investment grade have a higher risk of default than investment grade rated assets and therefore may result in losses to us. We have not adopted any limit on such investments.

These investments also subject us to the risks inherent with real estate-related investments, including:

• risks of delinquency and foreclosure, and risks of loss in the event thereof;

• the dependence upon the successful operation of, and net income from, real property;

• risks generally incident to interests in real property; and

• risks specific to the type and use of a particular property.

These risks may adversely affect the value of our investments in commercial real estate operating and finance companies and the ability of the issuers thereof to make principal and interest payments in a timely manner, or at all, and could result in significant losses.

Investments in non-conforming and non-investment grade rated loans or securities involve increased risk of loss.

Many of our investments do not conform to conventional loan standards applied by traditional lenders and either are not rated or rated as non-investment grade by the rating agencies. The non-investment grade credit ratings for these assets typically result from the overall leverage of the loans, the lack of a strong operating history for the properties underlying the loans, the borrowers’ credit history, the properties’ underlying cash flow or other factors. As a result, these investments have a higher risk of default and loss than investment grade rated assets. Any loss we incur may be significant and may reduce distributions to our stockholders and adversely affect the market value of our common stock. There are no limits on the percentage of unrated or non-investment grade rated assets we may hold in our investment portfolio.

Any credit ratings assigned to our investments are subject to ongoing evaluations and revisions and we cannot assure you that those ratings will not be downgraded.

Some of our investments are rated by Moody’s Investors Service, Inc., Fitch Ratings, Inc., Standard & Poor’s Ratings Services, DBRS, Inc., Kroll Bond Rating Agency, Inc. or Morningstar Credit Ratings, LLC. Any credit ratings on our investments are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that any such ratings will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of our investments in the future, the value of these investments could significantly decline, which would adversely affect the value of our investment portfolio and could result in losses upon disposition or the failure of borrowers to satisfy their debt service obligations to us.

The B-Notes that we acquire may be subject to additional risks related to the privately negotiated structure and terms of the transaction, which may result in losses to us.

We invest in B-Notes. A B-Note is a mortgage loan typically (i) secured by a first mortgage on a single large commercial property or group of related properties and (ii) subordinated to an A-Note secured by the same first

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mortgage on the same collateral. As a result, if a borrower defaults, there may not be sufficient funds remaining for a B-Note holder after payment to the A-Note holder. However, because each transaction is privately negotiated, B-Notes can vary in their structural characteristics and risks. For example, the rights of holders of B-Notes to control the process following a borrower default may vary from transaction to transaction. Further, B-Notes typically are secured by a single property and so reflect the risks associated with significant concentration. Significant losses related to our B-Notes would result in operating losses for us and may limit our ability to make distributions to our stockholders.

Our mezzanine loans involve greater risks of loss than senior loans secured by income-producing properties.

We invest in mezzanine loans, which sometimes take the form of subordinated loans secured by second mortgages on the underlying property or more commonly take the form of loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. These types of assets involve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property because the loan may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. As a result, we may not recover some or all of our investment. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal. Significant losses related to our mezzanine loans would result in operating losses for us and may limit our ability to make distributions to our stockholders.

Bridge loans involve a greater risk of loss than traditional investment-grade mortgage loans with fully insured borrowers.

We may acquire bridge loans secured by first lien mortgages on a property to borrowers who are typically seeking short-term capital to be used in an acquisition, construction or rehabilitation of a property, or other short-term liquidity needs. The typical borrower under a bridge loan has usually identified an undervalued asset that has been under-managed and/or is located in a recovering market. If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management and/or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the bridge loan, and we bear the risk that we may not recover some or all of our initial expenditure.

In addition, borrowers usually use the proceeds of a conventional mortgage to repay a bridge loan. A bridge loan therefore is subject to the risk of a borrower’s inability to obtain permanent financing to repay the bridge loan. Bridge loans are also subject to risks of borrower defaults, bankruptcies, fraud, losses and special hazard losses that are not covered by standard hazard insurance. In the event of any default under bridge loans held by us, we bear the risk of loss of principal and non-payment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount and unpaid interest of the bridge loan. To the extent we suffer such losses with respect to our bridge loans, the value of our company and the price of our shares of common stock may be adversely affected.

We purchase securities backed by subprime or alternative documentation residential mortgage loans, which are subject to increased risks.

We own non-agency RMBS backed by collateral pools of mortgage loans that have been originated using underwriting standards that are less restrictive than those used in underwriting “prime” mortgage loans. These lower standards include mortgage loans made to borrowers having imperfect or impaired credit histories, mortgage loans where the amount of the loan at origination is 80% or more of the value of the mortgaged property, mortgage loans made to borrowers with low credit scores, mortgage loans made to borrowers who have other debt that represents a large portion of their income and mortgage loans made to borrowers whose income is not required to be disclosed or verified. Due to economic conditions, including increased interest rates and lower home prices, as well as aggressive lending practices, subprime mortgage loans have in recent periods experienced increased rates of delinquency, foreclosure, bankruptcy and loss, and they are likely to continue to experience delinquency, foreclosure, bankruptcy and loss rates that are higher, and that may be substantially higher, than those experienced by mortgage loans underwritten in a more traditional manner. Thus, because of the higher delinquency rates and losses associated with subprime mortgage loans and alternative documentation (“Alt-A”) mortgage loans, the performance of non-agency RMBS backed by subprime mortgage loans and Alt-A mortgage loans that we acquire could be correspondingly adversely affected, which could adversely impact our results of operations, financial condition and business.

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We may acquire and sell from time to time residential mortgage loans, including “non-QM” loans, which may subject us to legal, regulatory and other risks, which could adversely impact our business and financial results.

We may from time to time acquire residential mortgage loans, including residential mortgage loans sometimes referred to as “non-qualified mortgages” or “non-QMs” that will not have the benefit of enhanced legal protections otherwise available in connection with the origination of residential mortgage loans to a more restrictive credit standard than just determining a borrower’s ability to repay, as further described below.

The ownership of residential mortgage loans, including non-QMs, will subject us to legal, regulatory and other risks, including those arising under federal consumer protection laws and regulations designed to regulate residential mortgage loan underwriting and originators’ lending processes, standards and disclosures to borrowers. These laws and regulations include the Consumer Financial Protection Bureau’s (“CFPB”) TILA-RESPA Integrated Disclosure rule (also referred to as “TRID”), the “ability-to-repay” rules (“ATR Rules”) under the Truth-in-Lending Act and “qualified mortgage” regulations, in addition to various federal, state and local laws and regulations intended to discourage predatory lending practices by residential mortgage loan originators. The ATR Rules specify the characteristics of a “qualified mortgage” and two levels of presumption of compliance with the ATR Rules: a safe harbor and a rebuttable presumption for higher priced loans. The “safe harbor” under the ATR Rules applies to a covered transaction that meets the definition of “qualified mortgage” and is not a “higher-priced covered transaction.” For any covered transaction that meets the definition of a “qualified mortgage” and is not a “higher-priced covered transaction,” the creditor or assignee will be deemed to have complied with the ability-to-repay requirement and, accordingly, will be conclusively presumed to have made a good faith and reasonable determination of the consumer’s ability to repay. Creditors or assignees will have the benefit of a rebuttable presumption of compliance with the applicable ATR Rules if they have complied with the qualified mortgage characteristics of the ATR Rules other than the residential mortgage loan being higher-priced in excess of certain thresholds. Non-QMs, such as residential mortgage loans with a debt-to-income ratio exceeding 43%, are among the loan products that we may acquire that do not constitute qualified mortgages and, accordingly, do not have the benefit of either a safe harbor from liability under the ATR Rules or a rebuttable presumption of compliance with the ATR Rules. Application of certain standards set forth in the ATR Rules is highly subjective and subject to interpretive uncertainties. As a result, a court may determine that a residential mortgage loan did not meet the standard or test even if the originator reasonably believed such standard or test had been satisfied. Failure of residential mortgage loan originators or servicers to comply with these laws and regulations could subject us, as an assignee or purchaser of these loans (or as an investor in securities backed by these loans), to monetary penalties assessed by the CFPB through its administrative enforcement authority and by mortgagors through a private right of action against lenders or as a defense to foreclosure, including by recoupment or setoff of finance charges and fees collected, and could result in rescission of the affected residential mortgage loans, which could adversely impact our business and financial results. Such risks may be higher in connection with the acquisition of non-QMs. Borrowers under non-QMs may be more likely to challenge the analysis conducted under the ATR Rules by lenders. Even if a borrower does not succeed in the challenge, additional costs may be incurred in connection with challenging and defending such claims, which may be more costly in judicial foreclosure jurisdictions than in non-judicial foreclosure jurisdictions, and there may be more of a likelihood such claims are made since the borrower is already exposed to the judicial system to process the foreclosure.

In addition, when certain of our wholly-owned subsidiaries sell, finance or sponsor securitizations of residential mortgage loans, such subsidiaries may make representations and warranties to the purchaser, the financing provider or to other third parties regarding, among other things, certain characteristics of those assets, including characteristics sought to be verified through underwriting and due diligence efforts. In the event of breaches of representations and warranties with respect to any asset, such subsidiaries may be obligated to repurchase that asset or pay damages or remove that asset from the borrowing base, as applicable, which may result in a loss. Even if representations and warranties are made by counterparties from whom we acquired the loans, they may not parallel the representations and warranties our subsidiaries make or may otherwise not protect us from losses, including, for example, due to the fact that the counterparty may be insolvent or otherwise unable to make a payment at the time of a claim against such counterparty for damages for a breach of a representation or warranty.

The residential mortgage loans that we may acquire, and that underlie the RMBS we acquire, are subject to risks particular to investments secured by mortgage loans on residential property. These risks are heightened because we may purchase non-performing loans.

Residential mortgage loans are secured by single-family residential property and are subject to risks of delinquency and foreclosure and risks of loss. The ability of a borrower to repay a loan secured by a residential property typically is dependent upon the income and/or assets of the borrower. A number of factors may impair borrowers’ abilities to repay their loans, including:

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• changes in the borrowers’ income or assets;

• acts of God, which may result in uninsured losses;

• acts of war or terrorism, including the consequences of such events;

• adverse changes in national and local economic and market conditions;

• changes in governmental laws and regulations, including fiscal policies, zoning ordinances and environmental legislation and the related costs of compliance;

• costs of remediation and liabilities associated with environmental conditions; and

• the potential for uninsured or under-insured property losses.

In the event of any default under a residential mortgage loan held directly by us, we will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and the price we paid for the loan and any accrued interest of the mortgage loan plus advances made, which could have a material adverse effect on our cash flow from operations. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law. Additionally, foreclosure on a mortgage loan could subject us to greater concentration of the risks of the residential real estate markets and risks related to the ownership and management of real property.

We may acquire non-agency RMBS, which are backed by residential property but, in contrast to agency RMBS, their principal and interest are not guaranteed by federally chartered entities such as the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation and, in the case of the Government National Mortgage Association, the U.S. government. Our investments in RMBS are subject to the risks of default, foreclosure timeline extension, fraud, home price depreciation and unfavorable modification of loan principal amount, interest rate and amortization of principal accompanying the underlying residential mortgage loans. To the extent that assets underlying our investments are concentrated geographically, by property type or in certain other respects, we may be subject to certain of the foregoing risks to a greater extent. In the event of defaults on the residential mortgage loans that underlie our investments in agency RMBS and the exhaustion of any underlying or any additional credit support, we may not realize our anticipated return on our investments and we may incur a loss on these investments.

Our inability to promptly foreclose upon defaulted residential mortgage loans could increase our cost of doing business and/or diminish our expected return on investments. Our ability to promptly foreclose upon defaulted residential mortgage loans and liquidate the underlying real property plays a critical role in our valuation of, and expected return on, those investments. There are a variety of factors that may inhibit our ability to foreclose upon a residential mortgage loan and liquidate the real property within the time frames we model as part of our valuation process. These factors include, without limitation: federal, state or local legislative action or initiatives designed to provide homeowners with assistance in avoiding residential mortgage loan foreclosures and that serve to delay the foreclosure process; Home Affordable Modification Program and other programs that require specific procedures to be followed to explore the refinancing of a mortgage loan prior to the commencement of a foreclosure proceeding; and continued declines in real estate values and sustained high levels of unemployment that increase the number of foreclosures and place additional pressure on the already overburdened judicial and administrative systems.

Prepayment rates may adversely affect the value of our investment portfolio.

The value of our investment portfolio is affected by prepayment rates on our mortgage assets. In many cases, borrowers are not prohibited from making prepayments on their mortgage loans. Prepayment rates are influenced by changes in interest rates and a variety of economic, geographic and other factors beyond our control, including, without limitation, housing and financial markets and relative interest rates on fixed rate mortgage loans and adjustable rate mortgage loans (“ARMs”). Consequently, prepayment rates cannot be predicted.

We generally receive principal payments that are made on our mortgage assets, including residential mortgage loans underlying the agency RMBS or the non-agency RMBS that we acquire. When borrowers prepay their mortgage loans faster than expected, it results in prepayments that are faster than expected. Faster than expected prepayments could adversely affect our profitability and our ability to recoup our cost of certain investments purchased at a premium over par value, including in the following ways:

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• We may purchase RMBS that have a higher interest rate than the prevailing market interest rate at the time. In exchange for this higher interest rate, we may pay a premium over the par value to acquire our mortgage asset. In accordance with GAAP, we may amortize this premium over the estimated term of our mortgage asset. If our mortgage asset is prepaid in whole or in part prior to its maturity date, however, we may be required to expense the allocable portion of the premium at the time of the prepayment.

• Prepayment rates generally increase when interest rates fall and decrease when interest rates rise, making it unlikely that we would be able to reinvest the proceeds of any prepayment in mortgage assets of similar quality and terms (including yield). If we are unable to invest in similar mortgage assets, we would be adversely affected.

While we seek to minimize prepayment risk to the extent practical, in selecting investments we must balance prepayment risk against other risks and the potential returns of each investment. No strategy can completely insulate us from prepayment risk.

Interest rate mismatches between our agency RMBS backed by ARMs and our borrowings used to fund our purchases of these assets may reduce our net interest income and cause us to suffer a loss during periods of rising interest rates.

To the extent that we invest in agency RMBS backed by ARMs, we may finance these investments with borrowings that have interest rates that adjust more frequently than the interest rates of those agency RMBS or the ARMs that back those RMBS. Accordingly, if short-term interest rates increase, our borrowing costs may increase faster than the interest rates on agency RMBS backed by ARMs adjust. As a result, in a period of rising interest rates, we could experience a decrease in net income or a net loss. In most cases, the interest rates on our agency RMBS and on our borrowings will not be identical, thereby potentially creating an interest rate mismatch between our investments and our borrowings. While the historical spread between relevant short-term interest rate indices has been relatively stable, there have been periods when the spread between these indices was volatile. During periods of changing interest rates, these interest rate index mismatches could reduce our net income or produce a net loss, and adversely affect our ability to make distributions and the market price of our common stock.

In addition, agency RMBS backed by ARMs are typically subject to lifetime interest rate caps which limit the amount that interest rates can increase through the maturity of the agency RMBS. However, our borrowings under repurchase agreements typically are not subject to similar restrictions. Accordingly, in a period of rapidly increasing interest rates, the interest rates paid on our borrowings could increase without limitation while caps could limit the interest rates on these types of agency RMBS. This problem is magnified for agency RMBS backed by ARMs that are not fully indexed. Further, some agency RMBS backed by ARMs may be subject to periodic payment caps that result in a portion of the interest being deferred and added to the principal outstanding. As a result, we may receive less cash income on these types of agency RMBS than we need to pay interest on our related borrowings. These factors could reduce our net interest income and cause us to suffer a loss during periods of rising interest rates.

Risks of cost overruns and noncompletion of renovation of the properties underlying rehabilitation loans may result in significant losses.

The renovation, refurbishment or expansion by a borrower under a mortgaged property involves risks of cost overruns and noncompletion. Estimates of the costs of improvements to bring an acquired property up to standards established for the market position intended for that property may prove inaccurate. Other risks may include rehabilitation costs exceeding original estimates, possibly making a project uneconomical, environmental risks and rehabilitation and subsequent leasing of the property not being completed on schedule. If such renovation is not completed in a timely manner, or if it costs more than expected, the borrower may experience a prolonged impairment of net operating income and may not be able to make payments on our investment, which could result in significant losses.

Interest rate fluctuations could reduce our ability to generate income on our investments and may cause losses.

Changes in interest rates affect our net interest income, which is the difference between the interest income we earn on our interest-earning investments and the interest expense we incur in financing these investments. Changes in the level of interest rates also may affect our ability to originate and acquire assets, the value of our assets and our ability to realize gains from the disposition of assets. Changes in interest rates may also affect borrower default rates. In a period of rising interest rates, our interest expense could increase, while the interest we earn on our fixed-rate debt investments would not change, adversely affecting our profitability. Our operating results depend in large part on differences between the income from our assets, net of credit losses, and our financing costs. We anticipate that for any period during which our assets are not match-funded, the income from such assets will respond more slowly to interest rate

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fluctuations than the cost of our borrowings. Consequently, changes in interest rates may significantly influence our net income. Interest rate fluctuations resulting in our interest expense exceeding interest income would result in operating losses for us.

We may invest in distressed and non-performing commercial loans which could subject us to increased risks relative to performing loans, which may result in losses to us.

We may invest in distressed and non-performing commercial mortgage loans, which are subject to increased risks of loss. Such loans may be or become non-performing for a variety of reasons, including, without limitation, because the underlying property is too highly leveraged or the borrower falls upon financial distress, in either case, resulting in the borrower being unable to meet its debt service obligations. Such loans may require a substantial amount of workout negotiations and/or restructuring, which may divert the attention of our Manager from other activities and may entail, among other things, a substantial reduction in the interest rate and a substantial write-down of the principal of the loan. Moreover, the ability to implement a successful restructuring entails a high degree of uncertainty, and our Manager may not be able to implement any such restructuring on favorable terms or at all.

The financial or operating difficulties relating to the distressed or non-performing loan may never be overcome and may cause the borrower to become subject to bankruptcy or other similar administrative proceedings. In connection with any such proceeding, we may incur substantial or total losses on our investments and may become subject to certain additional potential liabilities that may exceed the value of our original investment therein. For example, under certain circumstances, a lender that has inappropriately exercised control over the management and policies of a debtor may have its claims subordinated or disallowed or may be found liable for damages suffered by parties as a result of such actions. In addition, under certain circumstances, payments to us may be reclaimed if any such payment is later determined to have been a fraudulent conveyance, preferential payment or similar transaction under applicable bankruptcy and insolvency laws.

Alternatively, we may find it necessary or desirable to foreclose on one of these loans, and the foreclosure process may be lengthy and expensive. Borrowers or junior lenders may resist mortgage foreclosure actions by asserting numerous claims, counterclaims and defenses against us. Any costs or delays involved in the effectuation of a foreclosure of the loan or a liquidation of the underlying property, or defending challenges brought after the completion of a foreclosure, will further reduce the proceeds and thus increase our loss.

We may experience a decline in the fair value of our assets.

A decline in the fair value of our assets would require us to recognize an unrealized loss against earnings for those assets that are recorded at fair value through earnings, or may trigger an impairment, credit loss or other charge against earnings under applicable GAAP for those assets that are not recorded at fair value through earnings if we expect that the carrying value of those assets will not be recoverable. Subsequent disposition or sale of such assets could further affect our future losses or gains depending on the actual proceeds received.

Some of our portfolio investments are recorded at fair value and, as a result, there is uncertainty as to the value of these investments.

Some of our portfolio investments are in the form of positions or securities that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. We value these investments quarterly at fair value, as determined in accordance with GAAP, which include consideration of unobservable inputs. Because such valuations are subjective, the fair value of certain of our assets may fluctuate over short periods of time and our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. The value of our common stock could be adversely affected if our determinations regarding the fair value of these investments were materially higher than the values that we ultimately realize upon their disposal.

Liability relating to environmental matters may impact the value of properties that we may purchase or acquire.

We may be subject to environmental liabilities arising from properties we own. Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.

The presence of hazardous substances may adversely affect an owner’s ability to sell real estate or borrow using real estate as collateral. To the extent that an owner of a property underlying one of our debt investments becomes liable

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for removal costs, the ability of the owner to make payments to us may be reduced, which in turn may adversely affect the value of the relevant mortgage asset held by us and our ability to make distributions to our stockholders.

The presence of hazardous substances on a property we own may adversely affect our ability to sell the property and we may incur substantial remediation costs, thus harming our financial condition. The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to our stockholders.

We invest in commercial properties subject to net leases, which could subject us to losses.

We invest in commercial properties subject to net leases. Typically, net leases require the tenants to pay substantially all of the operating costs associated with the properties. As a result, the value of, and income from, investments in commercial properties subject to net leases will depend, in part, upon the ability of the applicable tenant to meet its obligations to maintain the property under the terms of the net lease. If a tenant fails or becomes unable to so maintain a property, we will be subject to all risks associated with owning the underlying real estate. Under many net leases, however, the owner of the property retains certain obligations with respect to the property, including, among other things, the responsibility for maintenance and repair of the property, to provide adequate parking, maintenance of common areas and compliance with other affirmative covenants in the lease. If we were to fail to meet any such obligations, the applicable tenant could abate rent or terminate the applicable lease, which could result in a loss of our capital invested in, and anticipated profits from, the property.

We expect that some commercial properties subject to net leases in which we invest generally will be occupied by a single tenant and, therefore, the success of these investments will be materially dependent on the financial stability of each such tenant. A default of any such tenant on its lease payments to us would cause us to lose the revenue from the property and cause us to have to find an alternative source of revenue to meet any mortgage payment and prevent a foreclosure if the property is subject to a mortgage. In the event of a default, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-letting our property. If a lease is terminated, we may also incur significant losses to make the leased premises ready for another tenant and experience difficulty or a significant delay in re-leasing such property.

In addition, net leases typically have longer lease terms and, thus, there is an increased risk that contractual rental increases in future years will fail to result in fair market rental rates during those years.

We may acquire these investments through sale-leaseback transactions, which involve the purchase of a property and the leasing of such property back to the seller thereof. If we enter into a sale-leaseback transaction, our Manager will seek to structure any such sale-leaseback transaction such that the lease will be characterized as a “true lease” for U.S. federal income tax purposes, thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes. However, we cannot assure you that the Internal Revenue Service (the “IRS”) will not challenge such characterization. In the event that any such sale-leaseback transaction is challenged and recharacterized as a financing transaction or loan for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed. If a sale-leaseback transaction were so recharacterized, we might fail to satisfy the REIT qualification “asset tests” or “income tests” and, consequently, lose our REIT status effective with the year of recharacterization. Alternatively, the amount of our REIT taxable income could be recalculated, which might also cause us to fail to meet the REIT distribution requirement for a taxable year.

Investments outside the U.S. that are denominated in foreign currencies subject us to foreign currency risks and to the uncertainty of foreign laws and markets, which may adversely affect our distributions and our REIT status.

Our investments outside the U.S. denominated in foreign currencies subject us to foreign currency risk due to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar. As a result, changes in exchange rates of any such foreign currency to U.S. dollars may affect our income and distributions and may also affect the book value of our assets and the amount of stockholders’ equity. In addition, these investments subject us to risks of multiple and conflicting tax laws and regulations, and other laws and regulations that may make foreclosure and the exercise of other remedies in the case of default more difficult or costly compared to U.S. assets, and political and economic instability abroad, any of which factors could adversely affect our receipt of returns on and distributions from these investments.

Changes in foreign currency exchange rates used to value a REIT’s foreign assets may be considered changes in the value of the REIT’s assets. These changes may adversely affect our status as a REIT. Further, bank accounts in foreign currency which are not considered cash or cash equivalents may adversely affect our status as a REIT.

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Conditions in Europe and the pending departure of the United Kingdom from the European Union, the exit of any other member state or the break-up of the European Union entirely, would create uncertainty and could affect our investments directly.

We currently hold, and may acquire additional, investments that are denominated in Pounds Sterling (“GBP”) and EURs (including loans secured by assets located in the United Kingdom or Europe), as well as equity interests in real estate properties located in Europe. European financial markets have experienced volatility and have been adversely affected by concerns about rising government debt levels, credit rating downgrades and possible default on or restructuring of government debt. These events have caused bond yield spreads (the cost of borrowing debt in the capital markets) and credit default spreads (the cost of purchasing credit protection) to increase, most notably in relation to certain Eurozone countries. The governments of several member countries of the European Union have experienced large public budget deficits, which have adversely affected the sovereign debt issued by those countries and may ultimately lead to declines in the value of the Euro.

On January 31, 2020, the United Kingdom officially withdrew from the European Union (such withdrawal commonly being referred to as “Brexit”).  On October 17, 2019, previous to the official withdrawal of the United Kingdom from the European Union, the European Union and the United Kingdom agreed to a negotiated withdrawal agreement (the “Withdrawal Agreement”).  The Withdrawal Agreement provides for an implementation period ending on December 31, 2020 (which may be extended for up to two years) during which, except as otherwise provided for in the Withdrawal Agreement, European Union law will be applicable to, and in, the United Kingdom while the European Union and the United Kingdom negotiate their future relationship. 

The Withdrawal Agreement was ratified by the United Kingdom Parliament in January 2020. There is, however, uncertainty as to the scope, nature and terms of any future relationship to be negotiated between the United Kingdom and the European Union after Brexit.

Any further deterioration in the global or Eurozone economy, or Brexit and the uncertainty associated with it, could have a material adverse effect on our business, the value of our properties and investments and our potential growth in Europe, and could amplify the currency risks faced by us.

We invest in equity interests in commercial real estate assets, which subjects us to the general risks of owning commercial real estate.

We acquire and manage equity interests in commercial real estate assets. The economic performance and value of these investments can be adversely affected by many factors that are generally applicable to most real estate, including the following:

● changes in the national, regional, local and international economic climate;

● local conditions, such as oversupply of space or a reduction in demand for real estate in the areas in which they are located;

● competition from other available space;

● the attractiveness of the real estate to tenants;

● increases in operating costs if these costs cannot be passed through to tenants;

● the financial condition of tenants and the ability to collect rent from tenants;

● vacancies, changes in market rental rates and the need to periodically renovate, repair and re-let space;

● changes in interest rates and the availability of financing;

● changes in zoning laws and taxation, government regulation and potential liability under environmental or other laws or regulations;

● acts of God, including, without limitation, earthquakes, hurricanes and other natural disasters, or acts of war or terrorism, in each case which may result in uninsured or underinsured losses; and

● decreases in the underlying value of real estate.

Certain significant expenditures associated with an investment in commercial real estate assets (such as mortgage payments, real estate taxes and maintenance costs) generally do not decline when circumstances cause a reduction in income from the asset. Because real estate investments are relatively illiquid, our ability to vary any

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investments in commercial real estate assets promptly in response to economic or other conditions would be limited. This relative illiquidity could impede our ability to respond to adverse changes in the performance of such investments. The value of our equity investments in commercial real estate assets could decrease in the future.

We face risks associated with acquisitions of commercial real estate assets.

Our acquisition of equity interests in commercial real estate assets is subject to, and the success of those assets may be adversely affected by, various risks, including those described below:

● we and our Manager may be unable to meet required closing conditions;

● we may be unable to finance acquisitions on favorable terms or at all;

● acquired assets may fail to perform as expected;

● our Manager’s estimates of the costs of repositioning or renovating acquired commercial real estate assets may be inaccurate;

● we may not be able to obtain adequate insurance coverage for acquired commercial real estate assets;

● acquisitions may be located in markets where we and our Manager have a lack of market knowledge or understanding of the local economy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures;

● our Manager may be unable to quickly and efficiently integrate new acquisitions of commercial real estate assets into our existing operations and, therefore, our results of operations and financial condition could be adversely affected; and

● we may acquire equity interests in commercial real estate assets through a joint venture, and such investments could be adversely affected by our lack of sole decision-making authority and reliance upon a co-venturer’s financial condition. In addition, if we co-invest with affiliates of our Manager, we may be obligated to pay fees to such affiliates and would be subject to a variety of conflicts of interest with such affiliates, including conflicts similar to those described under the section captioned “—Risks Related to Our Relationship with Our Manager.”

We make equity investments in commercial real estate assets subject to both known and unknown liabilities and without any recourse, or with only limited recourse to the seller thereof. As a result, if a liability were asserted against us arising from our ownership of those assets, we might have to pay substantial sums to settle it, which could adversely affect us. Unknown liabilities with respect to commercial real estate assets may include:

● claims by tenants, vendors or other persons arising from dealing with the former owners of the assets;

● liabilities incurred in the ordinary course of business;

● claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the assets; and

● liabilities for clean-up of undisclosed environmental contamination.

Government housing regulations may limit the opportunities at the affordable housing communities in which we invest, and failure to comply with resident qualification requirements may result in financial penalties or loss of benefits.

We own, and may acquire additional, equity interests in affordable housing communities and other properties that benefit from governmental programs intended to provide housing to individuals with low or moderate incomes. These programs, which are typically administered by the United States Department of Housing and Urban Development (“HUD”) or state housing finance agencies, typically provide mortgage insurance, favorable financing terms, tax credits or rental assistance payments to property owners. As a condition of the receipt of assistance under these programs, the properties must comply with various requirements, which typically limit rents to pre-approved amounts and impose restrictions on resident incomes. Failure to comply with these requirements and restrictions may result in financial penalties or loss of benefits. In addition, we will typically need to obtain the approval of HUD in order to acquire or dispose of a significant interest in or manage a HUD-assisted property. We may not always receive such approval.

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We are subject to the general risks of owning properties relating to the healthcare industry.

We own, and may acquire additional, equity interests in properties relating to the healthcare industry. The economic performance and value of these properties and of some or all of the tenants/operators of such properties could be adversely affected by many factors that are generally applicable to properties relating to the healthcare industry, including the following:

● adverse trends in healthcare provider operations, such as changes in the demand for and methods of delivering healthcare services, changes in third party reimbursement policies, significant unused capacity in certain areas, which has created substantial competition for patients among healthcare providers in those areas, increased expense for uninsured patients, increased competition among healthcare providers, increased liability insurance expense, continued pressure by private and governmental payors to reduce payments to providers of services and increased scrutiny of billing, referral and other practices by federal and state authorities and private insurers;

● extensive healthcare regulation, changes in enforcement policies with respect to such regulation and potential changes in the regulatory framework of the healthcare industry; and

● significant legal actions brought against tenants/operators that could subject them to increased operating costs and substantial uninsured liabilities.

We may sponsor, or purchase the more junior securities of, CLOs and such instruments involve significant risks, including that these securities receive distributions from the CLO only if the CLO generates enough income to first pay all the investors holding senior tranches and all CLO expenses.

In August 2019, we entered into a CLO, and in the future we may enter into additional CLOs. In CLOs, investors purchase specific tranches, or slices, of debt instruments that are secured or backed by a pool of loans. The CLO debt classes have a specific seniority structure and priority of payments. The most junior securities of a CLO are generally retained by the sponsor of the CLO and are usually entitled to all of the income generated by the pool of loans after the payment of debt service on all the more senior classes of debt and the payment of all expenses. Defaults on the pool of loans therefore first affect the most junior tranches. The subordinate tranches of CLO debt may also experience a lower recovery and greater risk of loss, including risk of deferral or non-payment of interest than more senior tranches of the CLO debt because they bear the bulk of defaults from the loans held in the CLO and serve to protect the other, more senior tranches from default in all but the most severe circumstances. Despite the protection provided by the subordinate tranches, even more senior CLO tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, decline in market value due to market anticipation of defaults and aversion to CLO securities as a class. Further, the transaction documents relating to the issuance of CLO securities may impose eligibility criteria on the assets of the CLO, restrict the ability of the CLO’s sponsor to trade investments and impose certain portfolio-wide asset quality requirements. Finally, the credit risk retention rules of the SEC impose a retention requirement of 5% of the issued debt classes by the sponsor of the CLO. These criteria, restrictions and requirements may limit the ability of the CLO’s sponsor (or collateral manager) to maximize returns on the CLO securities.

In addition, CLOs are not actively traded and are relatively illiquid investments and volatility in CLO trading markets may cause the value of these investments to decline. The market value of CLO securities may be affected by, among other things, changes in the market value of the underlying loans held by the CLO, changes in the distributions on the underlying loans, defaults and recoveries on the underlying loans, capital gains and losses on the underlying losses (or foreclosure assets), prepayments on the underlying loans and the availability, prices and interest rate of underlying loans. Furthermore, the leveraged nature of each subordinated tranche may magnify the adverse impact on such class of changes in the value of the loans, changes in the distributions on the loans, defaults and recoveries on the loans, capital gains and losses on the loans (or foreclosure assets), prepayment on loans and availability, price and interest rates of the loans.

A CLO may include certain interest coverage tests, overcollateralization coverage tests or other tests that, if not met, may result in a change in the priority of distributions, which may result in the reduction or elimination of distributions to the subordinate debt and equity tranches until the tests have been met or certain senior classes of securities have been paid in full. Accordingly, if we hold subordinate debt interests in a CLO that contains such tests and such tests are not satisfied, we may experience a significant reduction in our cash flow from those interests.

Furthermore, if any CLO that we sponsor or in which we hold interests fails to meet certain tests relevant to the most senior debt issued and outstanding by the CLO issuer, an event of default may occur under that CLO. If that occurs,

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(i) if we were serving as manager of the CLO, our ability to manage the CLO may be terminated and (ii) our ability to attempt to cure any defaults in the CLO may be limited, which would increase the likelihood of a reduction or elimination of cash flow and returns to us in the CLOs for an indefinite time.

Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on joint venture partners’ financial condition and liquidity and disputes between us and our joint venture partners.

We may make investments through joint ventures. Such joint venture investments may involve risks not otherwise present when we make investments without partners, including the following:

● we may not have exclusive control over the investment or the joint venture, which may prevent us from taking actions that are in our best interest and could create the potential risk of creating impasses on decisions, such as with respect to acquisitions or dispositions;

● joint venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms;

● joint venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring the other partner to choose between buying the other partner’s interest or selling its interest to that partner;

● a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals;

● a partner may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT and our exemption from registration under the Investment Company Act;

● a partner may fail to fund its share of required capital contributions or may become bankrupt, which may mean that we and any other remaining partners generally would remain liable for the joint venture’s liabilities;

● our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the applicable joint venture agreements and, in such event, we may not continue to own or operate the interests or investments underlying such relationship or may need to purchase such interests or investments at a premium to the market price to continue ownership;

● disputes between us and a partner may result in litigation or arbitration that could increase our expenses and prevent our Manager and our officers and directors from focusing their time and efforts on our business and could result in subjecting the investments owned by the joint venture to additional risk; or

● we may, in certain circumstances, be liable for the actions of a partner, and the activities of a partner could adversely affect our ability to qualify as a REIT or maintain our exclusion from registration under the Investment Company Act, even though we do not control the joint venture.

Any of the above may subject us to liabilities in excess of those contemplated and adversely affect the value of our joint venture investments.

We are subject to risks from natural disasters such as earthquakes and severe weather, which may result in damage to our properties.

Natural disasters and severe weather such as earthquakes, tornadoes, hurricanes or floods may result in significant damage to our properties. The extent of our casualty losses and loss in operating income in connection with such events is a function of the severity of the event and the total amount of exposure in the affected area. When we have geographic concentration of exposures, a single catastrophe (such as an earthquake) or destructive weather event (such as a hurricane) affecting a region may have a significant negative effect on our financial condition and results of operations. We may be materially and adversely affected by our exposure to losses arising from natural disasters or severe weather.

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Risks Related to Our Infrastructure Lending Segment

We may not realize all of the anticipated benefits of our prior acquisition of the Infrastructure Lending Segment or such benefits may take longer to realize than expected.

The success of our prior acquisition of the Infrastructure Lending Segment depends, in part, on our ability to realize the anticipated benefits from successfully integrating the Infrastructure Lending Segment with our company. The combination of this business with ours is a complex, costly and time-consuming process. As a result, we are required to devote significant management attention and resources to integrating the Infrastructure Lending Segment with the rest of our company.  The integration process may disrupt our business and, if implemented ineffectively, could preclude us from realizing all of the potential benefits we expect to realize with respect to the acquisition. Our failure to meet the challenges involved in the integration could cause an interruption of, or a loss of momentum in, our business and could harm our results of operations.  In addition, the integration may result in material unanticipated problems, expenses, liabilities, loss of business relationships and diversion of management’s attention, and may cause our stock price to decline. The difficulties relating to the integration process include, among others:

● managing a new area of business;

● the potential diversion of management focus and resources from other strategic opportunities and from operational matters and potential disruption associated with the acquisition;

● maintaining employee morale and retaining key management and other employees;

● integrating two unique business cultures;

● the possibility of faulty assumptions underlying expectations regarding the integration process;

● consolidating corporate and administrative infrastructures;

● coordinating geographically separate organizations;

● unanticipated issues in integrating information technology, communications and other systems;

● unanticipated changes in applicable laws and regulations;

● managing tax costs or inefficiencies associated with the integration process; and

● suffering losses if we do not experience the anticipated benefits of the transaction.

For our prior acquisition of the Infrastructure Lending Segment to be successful, we must retain and motivate key employees, and failure to do so could seriously harm our business and financial results.  In addition, the success of our acquisition of the Infrastructure Lending Segment depends, in part, on our ability to leverage the capabilities of Starwood Energy Group.

The success of our prior acquisition of the Infrastructure Lending Segment largely depends on the skills, experience, industry contacts and continued efforts of management and other key personnel. As a result, for our prior acquisition of the Infrastructure Lending Segment to be successful, we must retain and motivate executives and other key employees.  Employees from the Infrastructure Lending Segment may experience uncertainty about their future roles with us until or after strategies relating to the Infrastructure Lending Segment are executed. In addition, the marketplace for infrastructure debt professionals is highly competitive and other infrastructure debt providers may seek to recruit our executives and other key employees. These circumstances may adversely affect our ability to retain executives of the Infrastructure Lending Segment and other key personnel. We also must continue to motivate employees and keep them focused on our strategies and goals, which effort may be adversely affected as a result of the uncertainty and difficulties with integrating the Infrastructure Lending Segment with the rest of our company. If we are unable to retain executives and other key employees, the roles and responsibilities of such executive officers and employees will need to be filled either by existing or new officers and employees, which may require us to devote time and resources to identifying, hiring and integrating replacements for the departed executives and employees that could otherwise be used to integrate the Infrastructure Lending Segment with the rest of our company or otherwise pursue business opportunities. Moreover, because the marketplace for infrastructure debt professionals is highly competitive, we may not be able to replace departing employees on a timely basis or at all without incurring significant expense.

In addition, we intend to leverage the existing capabilities of Starwood Energy Group, an affiliate of our Manager, with respect to our existing and future infrastructure debt investments, and our success depends, in part, on our ability to do so.  Starwood Energy Group has no obligation to provide any services to us, and so our ability to access

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Starwood Energy Group’s existing capabilities is dependent on our ongoing relationship with our Manager and Starwood Capital Group.  See “—Risks Related to Our Relationship with Our Manager.” Accordingly, we may not continue to have access to Starwood Energy Group and its officers and key personnel.

We are subject to the risks of investing in project finance, many of which are outside our control, and that may negatively impact our business and financial results.

We are subject to the risks of investing in project finance. Infrastructure loans are subject to the risk of default, foreclosure and loss, and the risk of loss may be greater than similar risks associated with loans made on other types of assets.  The loan structure for project finance relies primarily on the underlying project’s cash flows for repayment, with the project’s assets, rights and interests, together with the equity in the project company, typically pledged as collateral.  Accordingly, the ability of the project company to repay a project finance loan is dependent upon the successful development, construction and/or operation of such project rather than upon the existence of independent income or assets of the project company.  Moreover, the loans are typically non-recourse or limited recourse to the project sponsor, and the project company, as a special purpose entity, typically has no assets other than the project.  Accordingly, if the project’s cash flows are reduced or are otherwise less than projected, the project company’s ability to repay the loan will likely be impaired.  The Infrastructure Lending Segment has made and will continue to make certain estimates regarding project cash flows during the underwriting of its investments. These estimates may not prove accurate, as actual results may vary from estimates. A project’s cash flows can be adversely affected by, among other things:

● if the project involves new construction,

◾ cost overruns,

◾ delays in completion,

◾ availability of land, building materials, energy, raw materials and transportation,

◾ availability of work force, management personnel and reliable contractors, and

◾ natural disasters (fire, drought, flood, earthquake) and war, civil unrest and strikes affecting contractors, suppliers or markets;

● shortfalls in expected capacity, output or efficiency;

● the terms of the power purchase or other offtake agreements used in the project;

● the creditworthiness of the project company and the project sponsor;

● competition;

● volatility in commodity prices;

● technology deployed, and the failure or degradation of equipment;

● inflation and fluctuations in exchange rates or interest rates;

● operation and maintenance costs;

● sufficiency of gas and electric transmission capabilities;

● licensing and permit requirements;

● increased environmental or other applicable regulations; and

● changes in national, international, regional, state or local economic conditions, laws and regulations.

In the event of any default under a project finance loan, we bear the risk of loss of principal to the extent of any deficiency between the value of the collateral, if any, and the principal and accrued interest of the loan, which could have a material adverse effect on our business, financial condition and results of operations.  In the event of the bankruptcy of a project company, our investment will be deemed to be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession and our contractual rights may be unenforceable under state or other applicable law. Foreclosure proceedings against a project can be an expensive and lengthy process, which could have a substantial negative effect on our anticipated return on the foreclosed investment.

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The investment portfolio of our Infrastructure Lending Segment is concentrated in the power industry, which subjects the portfolio to more risks than if the investments were more diversified.

Many of the investments in the portfolio of our Infrastructure Lending Segment are focused in the power industry, including thermal power and renewable power. If there is a downturn in the U.S. or global power industry generally, the applicable infrastructure investments may default or not perform in accordance with expectations.  In addition to the factors described above regarding the general risks of investing in project finance, the power industry and its subsectors can be adversely affected by, among other factors:

● market pricing for electricity;

● change in creditworthiness of the offtaker;

● unforeseen capital expenditures;

● government regulation and policy change; and

● world and regional events, politics and economic conditions.

In addition to investments focused in the power industry, our portfolio also contains investments related to projects in the midstream oil and gas industry, which also subjects us to certain risks inherent in the midstream oil and gas industry.

Loans to power projects or midstream oil and gas projects may be adversely affected if production from the projects declines. Such declines may be caused by various factors, including, as applicable, decreased access to capital or loss of economic incentive to complete a project or continue to operate a project, depletion of resources, catastrophic events affecting production, labor difficulties, political events, environmental proceedings, increased regulations, equipment failures and unexpected maintenance problems, failure to obtain necessary permits, unscheduled outages, unanticipated expenses, inability to successfully carry out new construction or acquisitions, import or export supply and demand disruptions or increased competition from alternative energy sources.

The default of one or more of the infrastructure loans as a result of a downturn within the energy industry generally, could have a material adverse effect on our business, financial condition and results of operations.

We may have difficulty meeting our obligations on the unfunded commitments of the infrastructure loans, which could have a material adverse effect on us.

Under certain circumstances, we may find it difficult to meet our remaining funding obligations with the existing infrastructure loans, or with respect to future infrastructure loans, from our ordinary operations.  In such situations, in order to meet our then-existing funding obligations, we may be required to: (i) sell assets in adverse market conditions; (ii) borrow on unfavorable terms; or (iii) fund the infrastructure loans with amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. These alternatives could increase our costs or reduce our equity. Thus, compliance with the funding obligations with respect to the infrastructure loans may hinder our ability to grow, which could have a material adverse effect on our business, financial condition and results of operations.  In the event that we are unable to meet our funding obligations with respect to one or more infrastructure loans, we would be in breach of such loan(s), which could damage our reputation and could result in a lawsuit being brought by the project company or others, which could result in substantial costs and divert our attention and resources.

The power industry is subject to extensive regulation, which could adversely impact the business and financial performance of the projects to which our infrastructure loans relate.

The projects to which our infrastructure loans relate, which are focused in the power industry, are subject to significant and extensive federal, international, state and local governmental regulation, including how facilities are constructed, maintained and operated, environmental and safety controls, and the prices they may charge for the products and services they provide. Various governmental authorities have the power to enforce compliance with these regulations and the permits issued under them, and violators are subject to administrative, civil and criminal penalties, including civil fines, injunctions or both. Stricter laws, regulations or enforcement policies could be enacted in the future that likely would increase compliance costs, which could adversely affect the business and financial performance of the projects.  Any of the foregoing could result in a default on one or more of our investments, which could have a material adverse effect on our business, financial condition and results of operations.

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We generally are not able to control the projects underlying our infrastructure loans.

Although the covenants in the financing documentation relating to the infrastructure loans generally restrict certain actions that may be taken by project companies (including restrictions on making equity distributions and incurring additional indebtedness), we generally are not able to control the projects underlying our infrastructure loans.  As a result, we are subject to the risk that the project company may make business decisions with which we disagree or that the project company may take risks or otherwise act in ways that do not serve our interests.

Operation of a project underlying an infrastructure loan involves significant risks and hazards that may impair the project company’s ability to repay the loan, resulting in its default, which could have a material adverse effect on our business and financial results.

The ongoing operation of a project underlying any of our infrastructure loans involves risks that include, among other things, the breakdown or failure of equipment or processes or performance below expected levels of output or efficiency due to wear and tear, latent defect, design error or operator error or force majeure events. In addition to natural risks such as earthquake, flood, drought, lightning, wildfire, hurricane and wind, other hazards, such as fire, explosion, structural collapse and machinery failure, acts of terrorism or related acts of war, hostile cyber intrusions or other catastrophic events are inherent risks in the operation of a project. These and other hazards can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment and contamination of, or damage to, the environment and suspension of operations. Operation of a project also involves risks that the operator will be unable to transport its product to its customers in an efficient manner due to a lack of transmission capacity. Unplanned outages of a project, including extensions of scheduled outages due to mechanical failures or other problems, occur from time to time. Unplanned outages typically increase operation and maintenance expenses and may reduce revenues. While a project typically maintains insurance, obtains warranties from vendors and obligates contractors to meet certain performance levels, the proceeds of such insurance, warranties or performance guarantees may not cover the lost revenues, increased expenses or liquidated damages payments should the project experience equipment breakdown or non-performance by contractors or vendors.  A project’s inability to operate its assets efficiently, manage capital expenditures and costs and generate earnings and cash flow could have a material adverse effect on the project company’s ability to repay the loan, which could result in its default.  A default on one or more of the infrastructure loans could have a material adverse effect on our business, financial condition and results of operations.

Tax considerations relating to our prior acquisition of the Infrastructure Lending Segment may reduce our net proceeds received from interest payments.

The Infrastructure Lending Segment was acquired by, and is held in, one or more domestic or foreign subsidiaries in order to facilitate our financing of the acquisition of that portfolio and aid in the maintenance of our status as a REIT under the Code.  The domestic subsidiary that initially acquired a significant portion of the pre-existing investment portfolio of the Infrastructure Lending Segment is disregarded as to our company for U.S. federal income tax purposes and we have elected to have other foreign and domestic subsidiaries that hold or will hold a portion of the pre-existing portfolio each treated as a TRS.  With respect to newly originated infrastructure loans, we will hold such loans either in a subsidiary that is disregarded as to our company for U.S. federal income tax purposes or in foreign or domestic TRSs that are subject to U.S. taxation under the general rules applicable to such corporations.  See “—Risks Related to Taxation as a REIT.”

Certain interest payments to us or to any such domestic or foreign subsidiary made by the underlying borrowers with respect to the infrastructure loans may be subject to withholding taxes in the jurisdictions in which the related facilities or borrowers are located, which would reduce the net proceeds from such payments that are received by us.

Risks Related to Our Investing and Servicing Segment

The business activities of our Investing and Servicing Segment, particularly our special servicing business, expose us to certain risks.

In our Investing and Servicing Segment, we derive a substantial portion of our cash flows from the special servicing of pools of commercial mortgage loans. As special servicer, we typically receive fees based upon the outstanding balance of the loans that are being specially serviced by us. The balance of loans in special servicing where we act as special servicer could decline significantly and as such our servicing fees could likewise decline materially. The special servicing industry is highly competitive, and our inability to compete successfully with other firms to maintain our existing servicing portfolio and obtain future servicing opportunities could have a material and adverse impact on our future cash flows and results of operations. Because the right to appoint the special servicer for securitized mortgage loans generally resides with the holder of the “controlling class” position in the relevant trust and may migrate

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to holders of different classes of securities as additional losses are realized, our ability to maintain our existing servicing rights and obtain future servicing opportunities may require, in many cases, the acquisition of additional CMBS. Accordingly, our ability to compete effectively may depend, in part, on the availability of additional debt or equity capital to fund these purchases. Additionally, our existing servicing portfolio is subject to “run off,” meaning that mortgage loans serviced by us may be prepaid prior to maturity, refinanced with a mortgage not serviced by us, liquidated through foreclosure, deed-in-lieu of foreclosure or other liquidation processes or repaid through standard amortization of principal, resulting in lower servicing fees and/or lower returns on the subordinated securities owned by us. Improving economic conditions and property prices and declines in interest rates and greater availability of mortgage financing could reduce the incidence of assets going into special servicing and reduce our revenues from special servicing, including as a result of lower fees under new arrangements. The fair value of our servicing rights may decrease under the foregoing circumstances, resulting in losses.

In connection with the special servicing of mortgage loans, a special servicer may, at the direction of the directing certificateholder, generally take actions with respect to the specially serviced mortgage loans that could adversely affect the holders of some or all of the more senior classes of CMBS. We may hold subordinated CMBS and we may or may not be the directing holder in any CMBS transaction in which we also act as special servicer. We may have conflicts of interest in exercising our rights as holder of subordinated classes of CMBS and in owning the entity that also acts as the special servicer for such transactions. It is possible that we, acting as the directing certificateholder for a CMBS transaction, may direct special servicer actions that conflict with the interests of certain other classes of the CMBS issued in that transaction. The special servicer is not permitted to take actions that are prohibited by law or that violate the applicable servicing standard or the terms of the applicable CMBS documentation or the applicable mortgage loan documentation, and we are subject to the risk of claims asserted by mortgage loan borrowers and the holders of other classes of CMBS that we have violated applicable law or, if applicable, the servicing standard and our other obligations under such CMBS documentation or mortgage loan documentation, as a result of actions we may take.

The conduit operations in our Investing and Servicing Segment are subject to volatile market conditions and significant competition. In addition, the conduit business may suffer losses as a result of ineffective or inadequate hedges and credit issues.

The business activities in our Investing and Servicing Segment are subject to an evolving regulatory environment that may affect certain aspects of these activities.

In our Investing and Servicing Segment, we acquire subordinated securities issued by and act as special servicer for securitizations. As a result of the dislocation of the credit markets, the securitization industry has become subject to additional regulation. In particular, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), various federal agencies have promulgated a rule that generally requires issuers in securitizations to retain 5% of the risk associated with the securities. While the rule as adopted generally allows the purchase of the CMBS B-Piece by a party not affiliated with the issuer to satisfy the risk retention requirement, current CMBS B-Pieces are generally not large enough to fully satisfy the 5% requirement. Accordingly, buyers of B-Pieces such as us may be required to purchase larger B-Pieces, potentially reducing returns on such investments. Furthermore, any such B-Pieces purchased by a party (such as us) unaffiliated with the issuer generally cannot be transferred for a period of five years following the closing date of the securitization or hedged against credit risk. These restrictions would reduce our liquidity and could potentially reduce our returns on such investments.

The mortgage loan servicing activities of our Investing and Servicing Segment are subject to a still evolving set of regulations, including regulations being promulgated under the Dodd-Frank Act. In addition, various governmental authorities have increased their investigative focus on the activities of mortgage loan servicers. As a result, we may have to spend additional resources and devote additional management time to address any regulatory concerns, which may reduce the resources available to grow our business. In addition, if we fail to operate the servicing activities of our Investing and Servicing Segment in compliance with existing and future regulations, our business, reputation, financial condition or results of operations could be materially and adversely affected.

The risks of investment in subordinated CMBS are magnified in the case of our Investing and Servicing Segment, where the principal payments received by the CMBS trust are made in priority to the higher rated securities.

CMBS are subject to the various risks that relate to the pool of underlying commercial mortgage loans and any other assets in which the CMBS represents an interest. In addition, CMBS are subject to additional risks arising from the geographic, property type and other types of concentrations in the pool of underlying commercial mortgage loans, which risks are magnified by the subordinated nature of the CMBS in which we invest in our Investing and Servicing Segment. In the event of defaults on the mortgage loans in the CMBS trusts, we bear a risk of loss on our related subordinated

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CMBS to the extent of deficiencies between the value of the collateral and the principal, accrued interest and unpaid fees and expenses on the mortgage loans, which may be offset to some extent by the special servicing fees received by us on those mortgage loans. The yield to maturity on the CMBS depends largely upon the price paid for the CMBS, which are generally sold at a discount at issuance and trade at even steeper discounts in the secondary markets. Further, the yield to maturity on CMBS depends, in significant part, upon the rate and timing of principal payments on the underlying mortgage loans, including both voluntary prepayments, if permitted, and involuntary prepayments, such as prepayments resulting from casualty or condemnation, defaults and liquidations or repurchases upon breaches of representations and warranties or document defects. Any changes in the weighted average lives of CMBS may adversely affect yield on the CMBS. Prepayments resulting in a shortening of weighted average lives of CMBS may be made at a time of low interest rates when we may be unable to reinvest the resulting payment of principal on the CMBS at a rate comparable to that being earned on the CMBS, while delays and extensions resulting in a lengthening of those weighted average lives may occur at a time of high interest rates when we may have been able to reinvest scheduled principal payments at higher rates.

The exercise of remedies and successful realization of liquidation proceeds relating to commercial mortgage loans underlying CMBS may be highly dependent on our performance as special servicer. We attempt to underwrite investments on a “loss-adjusted” basis, which projects a certain level of performance. However, this underwriting may not accurately predict the timing or magnitude of such losses. To the extent that this underwriting has incorrectly anticipated the timing or magnitude of losses, our business may be adversely affected. Some of the mortgage loans underlying the CMBS are already in default and additional loans may default in the future. In the case of such defaults, cash flows of CMBS investments held by us may be adversely affected as any reduction in the mortgage payments or principal losses on liquidation of any mortgage loan may be applied to the class of CMBS securities relating to such defaulted loans that we hold.

The market value of CMBS could fluctuate materially as a result of various risks that are out of our control and may result in significant losses.

The market value of CMBS investments could fluctuate materially over time as the result of changes in mortgage spreads, treasury bond interest rates, capital market supply and demand factors, and many other factors that affect high-yield fixed income products. These factors are out of our control and could impair our ability to obtain short-term financing on the CMBS. CMBS investments, especially subordinated classes of CMBS, may have no, or only a limited, trading market. The financial markets in the past have experienced and could in the future experience a period of volatility and reduced liquidity, which may reoccur or continue and reduce the market value of CMBS. Some or all of the CMBS, especially subordinated classes of CMBS, may be subject to restrictions on transfer and may be considered illiquid.

Most of the assets in our Investing and Servicing Segment are held through, or are ownership interests in, entities subject to entity level or foreign taxes, which cannot be passed through to, or used by, our stockholders to reduce taxes they owe.

Most of the assets in our Investing and Servicing Segment are held through a TRS, which is subject to entity level taxes on income that it earns. Such taxes have materially increased the taxes paid by our TRSs. In addition, certain of the assets in our Investing and Servicing Segment include entities organized or assets located in foreign jurisdictions. Taxes that we or such entities pay in foreign jurisdictions may not be passed through to, or used by, our stockholders as a foreign tax credit or otherwise.

Our Consolidated Financial Statements changed materially following our acquisition of LNR, as we became required to consolidate the assets and liabilities of CMBS pools in which we own the controlling class of subordinated securities and are considered the “primary beneficiary.”

Following our acquisition of LNR, we became required to consolidate the assets and liabilities of certain CMBS pools in which we own the controlling class of subordinated securities into our financial statements, even though the value of the subordinated securities may represent a small interest relative to the size of the pool. Under GAAP, companies are required to consolidate VIEs in which they are determined to be the primary beneficiary. A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents, has a potentially significant interest in the entity and controls the entity’s significant decisions. As a result of the foregoing, our financial statements are more complex and may be more difficult to understand than if we did not consolidate the CMBS pools.

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Risks Related to Our Organization and Structure

Certain provisions of Maryland law could inhibit changes in control.

Certain provisions of the Maryland General Corporation Law (the “MGCL”) may have the effect of deterring a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock. We are subject to the “business combination” provisions of the MGCL that, subject to limitations, prohibit certain business combinations (including a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities) between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of our then outstanding voting capital stock or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of our then outstanding voting capital stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder. After the five-year prohibition, any business combination between us and an interested stockholder generally must be recommended by our board of directors and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding shares of our voting capital stock and (ii) two-thirds of the votes entitled to be cast by holders of voting capital stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These super-majority voting requirements do not apply if our common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares. These provisions of the MGCL also do not apply to business combinations that are approved or exempted by a board of directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our board of directors has by resolution exempted business combinations between us and any other person, provided that such business combination is first approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person).

The “control share” provisions of the MGCL provide that “control shares” of a Maryland corporation (defined as shares which, when aggregated with other shares controlled by the stockholder (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our personnel who are also our directors. Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock, but this provision could be amended or eliminated at any time in the future.

The “unsolicited takeover” provisions of the MGCL permit our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement takeover defenses, some of which (for example, a classified board) we do not yet have. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in control of us under the circumstances that otherwise could provide the holders of shares of common stock with the opportunity to realize a premium over the then current market price.

Our authorized but unissued shares of common and preferred stock may prevent a change in control.

Our charter authorizes us to issue additional authorized but unissued shares of common or preferred stock. In addition, our board of directors may, without stockholder approval, amend our charter to increase the aggregate number of our shares of stock or the number of shares of stock of any class or series that we have authority to issue and classify or reclassify any unissued shares of common or preferred stock and set the preferences, rights and other terms of the classified or reclassified shares. As a result, our board of directors may establish a series of shares of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for our shares of common stock or otherwise be in the best interest of our stockholders.

Maintenance of our exemption from registration under the Investment Company Act imposes significant limits on our operations.

We intend to continue to conduct our operations so that neither we nor any of our subsidiaries are required to register as an investment company under the Investment Company Act. Because we are a holding company that conducts our businesses primarily through wholly-owned subsidiaries, the securities issued by these subsidiaries that are excepted from the definition of “investment company” under Section 3(c)(1) or Section 3(c)(7) of the Investment

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Company Act, together with any other investment securities we own, may not have a combined value in excess of 40% of the value of our adjusted total assets on an unconsolidated basis. This requirement limits the types of businesses in which we may engage through our subsidiaries. In addition, the assets we and our subsidiaries may acquire are limited by the provisions of the Investment Company Act and the rules and regulations promulgated under the Investment Company Act, which may adversely affect our performance.

If the value of securities issued by our subsidiaries that are excepted from the definition of “investment company” by Section 3(c)(1) or 3(c)(7) of the Investment Company Act, together with any other investment securities we own, exceeds 40% of our adjusted total assets on an unconsolidated basis, or if one or more of such subsidiaries fail to maintain an exception or exemption from the Investment Company Act, we could, among other things, be required either (i) to substantially change the manner in which we conduct our operations to avoid being required to register as an investment company or (ii) to register as an investment company under the Investment Company Act, either of which could have an adverse effect on us and the market price of our securities. If we were required to register as an investment company under the Investment Company Act, we would become subject to substantial regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration, and other matters.

Many of our subsidiaries rely on the exclusion from the definition of an investment company under Section 3(c)(5)(C) of the Investment Company Act, which is available for entities “primarily engaged in [the business of] . . . purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” This exclusion, as interpreted by the SEC staff, generally requires that at least 55% of a subsidiary’s portfolio must be comprised of qualifying real estate assets and at least 80% of its portfolio must be comprised of qualifying real estate assets and real estate-related assets (and no more than 20% comprised of miscellaneous assets). In addition, certain of our subsidiaries in our Infrastructure Lending Segment may seek to rely, among other things, on the exceptions from the definition of “investment company” contained in Section 3(c)(5)(A) or Section 3(c)(5)(B) of the Investment Company Act.  Section 3(c)(5)(A) provides an exception from the definition of “investment company” for entities that are primarily engaged in the business of purchasing or otherwise acquiring notes, drafts, acceptances, open accounts receivable, and other obligations representing part or all of the sales price of merchandise, insurance, and services.  Section 3(c)(5)(B) excepts from the definition of “investment company” entities that are primarily engaged in the business of making loans to manufacturers, wholesalers, retailers and prospective purchasers of specified merchandise, insurance or services.

As with other provisions of the Investment Company Act, including Section 3(c)(5)(C), reliance on Sections 3(c)(5)(A) and/or 3(c)(5)(B) is based in large part on the nature of the assets held by the relevant entities, and we have analyzed the availability of Section 3(c)(5)(A) and/or 3(c)(5)(B) to certain of our subsidiaries in the Infrastructure Lending Segment based on guidance from the SEC staff on the types of assets that qualify an entity to rely on either exception.  However, the SEC guidance is somewhat limited in this area and the SEC may in the future issue additional guidance through no action letters or otherwise and there can be no assurance that the assets of our subsidiaries in the Infrastructure Lending Segment will conform to such guidance.

In that regard, to the extent that any of such subsidiaries can no longer rely on the above Sections, such subsidiaries may be required to rely on other exceptions from the definition of “investment company”, such as Section 3(c)(1) or 3(c)(7), in which case we will need to treat our holdings therein as investment securities for purposes of the 40% test described above, or otherwise change the manner in which they conduct operations. Any such change could have an adverse effect on the performance of such subsidiaries and their ability to conduct their operations as currently contemplated.

In August 2011, the SEC solicited public comment on a wide range of issues relating to Section 3(c)(5)(C) of the Investment Company Act, including the nature of the assets that qualify for purposes of the exemption and whether mortgage REITs should be regulated in a manner similar to investment companies. The laws and regulations governing the Investment Company Act status of REITs, including the Division of Investment Management of the SEC providing more specific or different guidance regarding these exemptions, could change in a manner that adversely affects our operations. If we or our subsidiaries fail to maintain an exception or exemption from the Investment Company Act, we could, among other things, be required to (i) change the manner in which we conduct our operations to avoid being required to register as an investment company, (ii) effect sales of our assets in a manner that, or at a time when, we would not otherwise choose to do so, or (iii) register as an investment company (which, among other things, would require us to comply with the leverage constraints applicable to investment companies), any of which could negatively

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affect the value of our common stock, the sustainability of our business model and our ability to make distributions to our stockholders, which could, in turn, materially and adversely affect the market price of our common stock.

Rapid changes in the values of our real estate-related and other investments may make it more difficult for us to maintain our qualification as a REIT or exemption from the Investment Company Act.

If the market value or income potential of real estate-related or other investments declines as a result of increased interest rates, prepayment rates or other factors, we may need to increase our real estate investments and income and/or liquidate our non-qualifying assets in order to maintain our REIT qualification or exemption from the Investment Company Act. Moreover, we may have to take similar action if the market value or income potential of any investment securities that we own increases. If the change in real estate or other asset values and/or income occurs quickly, this may be especially difficult to accomplish. This difficulty may be exacerbated by the illiquid nature of any non-qualifying assets that we may own. We may have to make investment decisions that we otherwise would not make absent the REIT and Investment Company Act considerations.

Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interests.

Under Maryland law generally, a director’s actions will be upheld if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.

Our charter authorizes us to indemnify our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. Our bylaws require us to indemnify each director or officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we may be obligated to fund the defense costs incurred by our directors and officers. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist absent the current provisions in our charter and bylaws or that might exist with other companies.

Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our stockholders to effect changes to our management.

Our charter provides that a director may only be removed for cause upon the affirmative vote of holders of two-thirds of the votes entitled to be cast in the election of directors. Vacancies may be filled only by a majority of the remaining directors in office, even if less than a quorum. These requirements make it more difficult to change our management by removing and replacing directors and may prevent a change in control of our company that is in the best interests of our stockholders.

Ownership limitations may restrict change of control or business combination opportunities in which our stockholders might receive a premium for their shares.

In order for us to qualify as a REIT, no more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals during the last half of any calendar year. “Individuals” for this purpose include natural persons, private foundations, some employee benefit plans and trusts, and some charitable trusts. To preserve our REIT qualification, our charter generally prohibits any person from directly or indirectly owning more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our capital stock or more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock. This ownership limitation could have the effect of discouraging a takeover or other transaction in which holders of our common stock might receive a premium for their shares over the then prevailing market price or which holders might believe to be otherwise in their best interests.

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Risks Related to Taxation as a REIT

If we do not qualify as a REIT or fail to remain qualified as a REIT, we will be subject to tax as a regular corporation and could face a substantial tax liability, which would reduce the amount of cash available for distribution to our stockholders.

We intend to continue to operate in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes. We have not requested nor obtained a ruling from the IRS as to our REIT qualification. Qualification as a REIT involves the application of highly technical and complex Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our qualification as a REIT depends on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. Our ability to satisfy the asset tests depends upon our analysis of the characterization and fair values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT income and quarterly asset requirements also depends upon our analysis of the character of our income and our ability to successfully manage the composition of our income and assets on an ongoing basis. Moreover, the proper classification of an instrument as debt or equity for U.S. federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT qualification requirements as described below. In addition, our ability to satisfy the requirements to qualify as a REIT depends in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes. Accordingly, there can be no assurance that the IRS will not contend that our interests in subsidiaries or in securities of other issuers will not cause a violation of the REIT requirements.

If we were to fail to qualify as a REIT in any taxable year, we would be subject to U.S. federal income tax and applicable state and local taxes, on our taxable income at regular corporate rates, and distributions made to our stockholders would not be deductible by us in computing our taxable income. Any resulting corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our stockholders, which in turn could have an adverse impact on the value of our common stock. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year in which we failed to qualify as a REIT.

Ordinary dividends payable by REITs do not qualify for the reduced tax rates available for some corporate dividends.

The maximum tax rate applicable to “qualified dividends” payable by regular U.S. corporations to domestic stockholders that are individuals, trusts or estates is currently 20%. Dividends payable by REITs generally are not eligible for that reduced rate. However, pursuant to the 2017 Tax Cuts and Jobs Act, such domestic stockholders may generally be allowed to deduct from their taxable income one-fifth of the ordinary dividends payable to them by REITs for taxable years beginning after December 31, 2017 and before January 1, 2026. This would amount to a reduction in the effective tax rate on REIT dividends as compared to prior law.

However, the more favorable rates that will nevertheless continue to apply to regular corporate qualified dividends could cause investors who are individuals, trusts or estates to perceive investments in REITs to be relatively less attractive as a federal income tax matter than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including ours.

REIT distribution requirements could adversely affect our ability to continue to execute our business plan.

We generally must distribute annually at least 90% of our taxable income, subject to certain adjustments and excluding any net capital gain, in order for U.S. federal corporate income tax not to apply to earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. We intend to continue to make distributions to our stockholders to comply with the REIT requirements of the Code.

From time to time, we may generate taxable income greater than our income for financial reporting purposes prepared in accordance with GAAP, or differences in timing between the recognition of taxable income and the actual receipt of cash may occur. For example, we may be required to accrue income from mortgage loans, MBS and other types of debt securities or interests in debt securities before we receive any payments of interest or principal on such assets. We may also acquire distressed debt investments that are subsequently modified by agreement with the borrower. If the amendments to the outstanding debt are “significant modifications” under the applicable U.S. Treasury regulations, the modified debt may be considered to have been reissued to us at a gain in a debt-for-debt exchange with the borrower, with gain recognized by us to the extent that the principal amount of the modified debt exceeds our cost of purchasing it prior to modification. In addition, pursuant to the 2017 Tax Cuts and Jobs Act, we are generally required to recognize certain amounts in income no later than the time such amounts are reflected on our financial statements filed with the SEC.

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We may also be required under the terms of indebtedness that we incur to use cash received from interest payments to make principal payments on that indebtedness, with the effect of recognizing income but not having a corresponding amount of cash available for distribution to our stockholders.

As a result, we may find it difficult or impossible to meet distribution requirements from our ordinary operations in certain circumstances. In particular, where we experience differences in timing between the recognition of taxable income and the actual receipt of cash, the requirement to distribute a substantial portion of our taxable income could cause us to: (i) sell assets in adverse market conditions, (ii) borrow on unfavorable terms, (iii) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt or (iv) make a taxable distribution of our shares, as part of a distribution in which stockholders may elect to receive shares (subject to a limit measured as a percentage of the total distribution), in order to comply with REIT requirements. These alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our common stock.

We may choose to make distributions to our stockholders in our own stock, or make a distribution of a subsidiary’s common stock, in which case our stockholders could be required to pay income taxes in excess of the cash dividends they receive.

We may in the future distribute taxable dividends that are payable in cash and shares of our common stock at the election of each stockholder. We may also determine to distribute a taxable dividend in the stock of a subsidiary in connection with a spin-off or other transaction. Taxable stockholders receiving such distributions will be required to include the full amount of the distribution as ordinary income to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, stockholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the stock that it receives as a dividend in order to pay this tax, the sale proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of that stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.

The stock ownership limit imposed by the Code for REITs and our charter may restrict our business combination opportunities.

In order for us to maintain our qualification as a REIT under the Code, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year following our first year. Our charter, with certain exceptions, authorizes our board of directors to take the actions that are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of directors, no person may own more than 9.8% of the aggregate value of our outstanding capital stock. Our board may grant an exemption in its sole discretion, subject to such conditions, representations and undertakings as it may determine. The ownership limits imposed by the tax law are based upon direct or indirect ownership by “individuals,” but only during the last half of a tax year. The ownership limits contained in our charter key off the ownership at any time by any “person,” which term includes entities. These ownership limitations in our charter are common in REIT charters and are intended to provide added assurance of compliance with the tax law requirements, and to minimize administrative burdens. However, these ownership limits might also delay or prevent a transaction or a change in our control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

Even as a REIT, we may face tax liabilities that reduce our cash flow.

Even if we remain qualified for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes, such as mortgage recording taxes. In addition, in order to continue to meet the REIT qualification requirements, prevent the recognition of certain types of non-cash income, or to avert the imposition of a 100% tax that applies to certain gains derived by a REIT from dealer property or inventory, we may hold a significant amount of our assets through our TRSs or other subsidiary corporations that will be subject to corporate-level income tax at regular rates. In addition, if we lend money to a TRS, the TRS may be unable to deduct all or a portion of the interest paid to us, which could result in an even higher corporate-level tax liability. Any of these taxes would decrease cash available for distribution to our stockholders.

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Complying with REIT requirements may cause us to forgo otherwise attractive opportunities.

To qualify as a REIT for U.S. federal income tax purposes, we must satisfy ongoing tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts that we distribute to our stockholders and the ownership of our stock. We may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution, and may be unable to pursue investments that would be otherwise advantageous to us in order to satisfy the source-of-income or asset-diversification requirements for qualifying as a REIT. In addition, in certain cases, the modification of a debt instrument could result in the conversion of the instrument from a qualifying real estate asset to a wholly or partially non-qualifying asset that must be contributed to a TRS or disposed of in order for us to maintain our REIT status. Compliance with the source-of-income requirements may also limit our ability to acquire debt instruments at a discount from their face amount. Thus, compliance with the REIT requirements may hinder our ability to make, and in certain cases to maintain ownership of, certain attractive investments.

Complying with REIT requirements may force us to liquidate otherwise attractive investments.

To qualify as a REIT, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and certain kinds of MBS. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 20% of the value of our total securities can be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate from our portfolio otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

The failure of assets subject to repurchase agreements to qualify as real estate assets could adversely affect our ability to qualify as a REIT.

We have entered into financing arrangements that are structured as sale and repurchase agreements pursuant to which we would nominally sell certain of our assets to a counterparty and simultaneously enter into an agreement to repurchase these assets at a later date in exchange for a purchase price. Economically, these agreements are financings which are secured by the assets sold pursuant thereto. We believe that we would be treated for REIT asset and income test purposes as the owner of the assets that are the subject of any such sale and repurchase agreement notwithstanding that such agreement may transfer record ownership of the assets to the counterparty during the term of the agreement. It is possible, however, that the IRS could assert that we did not own the assets during the term of the sale and repurchase agreement, in which case we could fail to qualify as a REIT.

We may be required to report taxable income for certain investments in excess of the economic income we ultimately realize from them.

We may acquire debt instruments in the secondary market for less than their face amount. The discount at which such debt instruments are acquired may reflect doubts about their ultimate collectability rather than current market interest rates. The amount of such discount will nevertheless generally be treated as “market discount” for U.S. federal income tax purposes. Under the rules applicable in reporting market discount as income, such market discount may have to be included in income as if the debt instruments were assured of being collected in full. If we ultimately collect less on the debt instruments than our purchase price plus the market discount we had previously reported as income, we may not be able to benefit from any offsetting loss deductions. In addition, we may acquire distressed debt investments that are subsequently modified by agreement with the borrower. If the amendments to the outstanding debt are “significant modifications” under applicable U.S. Treasury regulations, the modified debt may be considered to have been reissued to us at a gain in a debt-for-debt exchange with the borrower. In that event, we may be required to recognize taxable gain to the extent the principal amount of the modified debt exceeds our adjusted tax basis in the unmodified debt, even if the value of the debt or the payment expectations have not changed.

Moreover, some of the MBS that we acquire may have been issued with original issue discount. We will be required to report such original issue discount based on a constant yield method and will be taxed based on the assumption that all future projected payments due on such MBS will be made. If such MBS turns out not to be fully collectible, an offsetting loss deduction will become available only in the later year that uncollectability is provable.

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Finally, in the event that any debt instruments or MBS acquired by us are delinquent as to mandatory principal and interest payments, or in the event payments with respect to a particular debt instrument are not made when due, we may nonetheless be required to continue to recognize the unpaid interest as taxable income as it accrues, despite doubt as to its ultimate collectability. Similarly, we may be required to accrue interest income with respect to subordinate MBS at its stated rate regardless of whether corresponding cash payments are received or are ultimately collectible. In each case, while we would in general ultimately have an offsetting loss deduction available to us when such interest was determined to be uncollectible, the utility of that deduction could depend on our having taxable income in that later year or thereafter.

The “taxable mortgage pool” rules will increase the taxes that we or our stockholders may incur, and limit our actions with respect to our taxable mortgage pool.

Securitizations in the form of bonds or notes secured principally by mortgage loans generally result in the creation of taxable mortgage pools (“TMPs”) for U.S. federal income tax purposes.  The debt securities issued by TMPs are sometimes referred to as “collateralized mortgage obligations” (“CMOs”).  We have issued CMOs through a TMP.  Unless a TMP is wholly-owned by a REIT, it is subject to taxation as a corporation.  However, so long as a REIT owns 100% of the equity interests in a TMP, the TMP will not be taxed as a corporation.  Instead, certain categories of the REIT’s stockholders, such as foreign stockholders eligible for treaty or sovereign benefits, stockholders with net operating losses, and generally tax-exempt stockholders that are subject to unrelated business income tax, may be subject to taxation, or to increased taxes, on any portion, known as “excess inclusions”, of their dividend income from the REIT that is attributable to the TMP, but only to the extent that the REIT actually distributes “excess inclusions” to them.   We intend not to distribute “excess inclusions”, but to pay the tax on “excess inclusions” ourselves. Notwithstanding our intention to try to avoid distributions to our stockholders of “excess inclusions”, it is possible that some portion of our dividends to our stockholders may be so characterized.

In order to control better, and to attempt to avoid, the distribution of “excess inclusions” to our stockholders, our TMP is wholly-owned by a subsidiary REIT that intends to elect to be treated as a REIT commencing with its taxable year ending December 31, 2019. Our subsidiary REIT will be required to satisfy, on a stand-alone basis, the REIT asset, income, organizational, distribution, stockholder ownership and other requirements described above, and if it were to fail to qualify as a REIT, then (i) our subsidiary REIT would face adverse tax consequences similar to those described above with respect to our qualification as a REIT and (ii) such failure could have an adverse effect on our ability to comply with the REIT income and asset tests and thus could impair our ability to qualify as a REIT unless we could avail ourselves of certain relief provisions.  

Because our TMP must at all times be owned by a REIT, we are restricted from selling equity interests in it, or selling any notes or bonds issued by it that might be considered to be equity for tax purposes, to other investors if doing so would subject it to taxation. These restrictions limit the liquidity of our investment in our TMP and may prevent us from incurring greater leverage on that investment in order to maximize our returns from it.

The tax on prohibited transactions may limit our ability to engage in transactions, including certain methods of securitizing mortgage loans, which would be treated as sales for U.S. federal income tax purposes.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, but including mortgage loans, held primarily for sale to customers in the ordinary course of business. We might be subject to this tax if we were to dispose of or securitize loans in a manner that was treated as a sale of the loans for U.S. federal income tax purposes. Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales of loans at the REIT level, and may limit the structures we utilize for our securitization transactions, even though the sales or structures might otherwise be beneficial to us.

Our investments in construction loans require us to make estimates about the fair value of land improvements that may be challenged by the IRS.

We invest in construction loans, the interest from which is qualifying income for purposes of the REIT income tests, provided that the loan value of the real property securing the construction loan is equal to or greater than the highest outstanding principal amount of the construction loan during any taxable year. For purposes of construction loans, the loan value of the real property is the fair value of the land plus the reasonably estimated cost of the improvements or developments (other than personal property) that secure the loan and that are to be constructed from the

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proceeds of the loan. There can be no assurance that the IRS would not challenge our estimate of the loan value of the real property.

The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to qualify as a REIT.

We invest in mezzanine loans, for which the IRS has provided a safe harbor but not rules of substantive law. Pursuant to the safe harbor, if a mezzanine loan meets certain requirements, it will be treated by the IRS as a real estate asset for purposes of the REIT asset tests, and interest derived from the mezzanine loan will be treated as qualifying mortgage interest for purposes of the REIT 75% income test. We may acquire mezzanine loans that do not meet all of the requirements of this safe harbor. In the event we own a mezzanine loan that does not meet the safe harbor, the IRS could challenge such loan’s treatment as a real estate asset for purposes of the REIT asset and income tests and, if such a challenge were sustained, we could fail to qualify as a REIT.

Liquidation of assets may jeopardize our REIT qualification.

To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code substantially limit our ability to hedge our assets and liabilities. Any income from a hedging transaction we enter into either (i) to manage risk of interest rate or price changes with respect to borrowings made or to be made to acquire or carry real estate assets, (ii) to manage risk of currency fluctuations with respect to items of income that qualify for purposes of the REIT 75% or 95% gross income tests or assets that generate such income or (iii) to hedge another instrument that hedges risks described in clause (i) or (ii) for a period following the extinguishment of the liability or the disposition of the asset that was previously hedged by the instrument, and, in each case, such instrument is properly identified under applicable U.S. Treasury regulations, does not constitute “gross income” for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules, we intend to limit our use of advantageous hedging techniques or implement those hedges through a domestic TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRS will not directly reduce our REIT taxable income but may reduce current or future taxable income in the TRS.

Partnership tax audits could increase the tax liability borne by us in the event of a U.S. federal income tax audit of a subsidiary partnership. 

In connection with U.S. federal income tax audits of partnerships (such as certain of our subsidiaries) and the collection of any tax resulting from any such audits or other tax proceedings, generally for taxable years beginning after December 31, 2017, the partnership itself may be liable for partner-level taxes (including interest and penalties) resulting from an adjustment of partnership tax items on audit, regardless of changes in the composition of the partners (or their relative ownership) between the year under audit and the year of the adjustment.  The rules also include an elective alternative method under which the additional taxes resulting from the adjustment are assessed from the affected partners, subject to a higher rate of interest than otherwise would apply.  Although regulations have been issued and address some aspects of these rules, questions remain as to how they will apply.  However, these rules could increase the U.S. federal income tax, interest, and/or penalties economically borne by us in the event of a U.S. federal income tax audit of a subsidiary partnership in comparison to prior law.

Legislative or other actions affecting REITs could materially and adversely affect us and our stockholders.

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive application, could materially and adversely affect us and our stockholders. We cannot predict how changes in the tax laws might affect us or our stockholders. New legislation, U.S. Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT or the U.S. federal income tax consequences of such qualification.

In addition, the 2017 Tax Cuts and Jobs Act made substantial changes to the Code. Among those changes are a significant permanent reduction in the generally applicable corporate tax rate, changes in the taxation of individuals and

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other non-corporate taxpayers that generally but not universally reduce their taxes on a temporary basis subject to “sunset” provisions, the elimination or modification of various currently allowed deductions (including additional limitations on the deductibility of business interest and substantial limitation of the deduction for personal, state and local taxes imposed on individuals), and preferential taxation of income (including REIT dividends) derived by non-corporate taxpayers from “pass-through” entities. The Tax Cuts and Jobs Act also imposes certain additional limitations on the deduction of net operating losses, which may in the future cause us to make distributions that will be taxable to our stockholders to the extent of our current or accumulated earnings and profits in order to comply with the annual REIT distribution requirements. Finally, the Tax Cuts and Jobs Act also makes significant changes in the international tax rules, which generally require corporations to include in their taxable income, and consequently in the case of REITs to distribute, certain amounts with respect to the current earnings of foreign subsidiaries. The effect of these, and the many other, changes made in the Tax Cuts and Jobs Act is highly uncertain, both in terms of their direct effect on the taxation of an investment in our common stock and their indirect effect on the value of our assets. Furthermore, many of the provisions of the Tax Cuts and Jobs Act will require guidance through the issuance of U.S. Treasury regulations in order to assess their effect. There may be a substantial delay before such regulations are promulgated, increasing the uncertainty as to the ultimate effect of the statutory amendments on us. It is also likely that there will be technical corrections legislation proposed with respect to the Tax Cuts and Jobs Act, the timing and effect of which cannot be predicted and may be adverse to us or our stockholders.

Risks Related to Our Common Stock

The market price and trading volume of our common stock could be volatile and the market price of our common stock could decline, resulting in a substantial or complete loss of your investment.

The stock markets, including the NYSE, which is the exchange on which our common stock is listed, have experienced significant price and volume fluctuations. In the past, overall weakness in the economy and other factors have contributed to extreme volatility of the equity markets generally, including the market price of our common stock. As a result, the market price of our common stock has been and may continue to be volatile, and investors in our common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. Some of the factors that could negatively affect our stock price or result in fluctuations in the price or trading volume of our common stock include:

• our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects;

• actual or perceived conflicts of interest with our Manager or Starwood Capital Group and individuals, including our executives;

• equity issuances by us or share resales by our stockholders, or the perception that such issuances or resales may occur;

• actual or anticipated accounting problems;

• publication of research reports about us or the real estate industry;

• changes in market valuations of similar companies;

• adverse market reaction to the level of leverage we employ;

• additions to or departures of our Manager’s or Starwood Capital Group’s key personnel;

• speculation in the press or investment community;

• our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts;

• increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock and would result in increased interest expenses on our debt;

• failure to maintain our REIT qualification;

• uncertainty regarding our exemption from the Investment Company Act;

• price and volume fluctuations in the stock market generally; and

• general market and economic conditions, including the current state of the credit and capital markets.

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In the past, securities class action litigation has often been instituted against companies following periods of volatility in their share price. This type of litigation could result in substantial costs and divert our Manager’s attention and resources.

There may be future dilution of our common stock as a result of additional issuances of our securities, which could adversely impact our stock price.

Our board of directors is authorized under our charter to, among other things, authorize the issuance of additional shares of our common stock or the issuance of shares of preferred stock or additional securities convertible or exchangeable into equity securities, without stockholder approval. Future issuances of our common stock or shares of preferred stock or securities convertible or exchangeable into equity securities may dilute the ownership interest of our existing stockholders. Because our decision to issue additional equity or convertible or exchangeable securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future issuances. Additionally, any convertible or exchangeable securities that we issue may have rights, preferences and privileges more favorable than those of our common stock. Also, we cannot predict the effect, if any, of future sales of our common stock, or the availability of shares for future sales, on the market price of our common stock. Sales of substantial amounts of common stock or the perception that such sales could occur may adversely affect the prevailing market price for our common stock.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The Company leases office space in Greenwich, CT; Miami Beach, FL; San Francisco, CA; New York, NY; Atlanta, GA; Los Angeles, CA; Charlotte, NC and Stamford, CT. Our headquarters is located in Greenwich, CT in office space leased by our Manager. Refer to Schedule III included in Item 8 of this Form 10-K for a listing of investment properties owned as of December 31, 2019.

Item 3. Legal Proceedings.

Currently, no material legal proceedings are pending against us that could have a material adverse effect on our business, financial position or results of operations.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information and Dividends

The Company’s common stock has been listed on the NYSE and is traded under the symbol “STWD” since its IPO in August 2009. On February 18, 2020, the closing price of our common stock, as reported by the NYSE, was $25.81 per share.

We intend to make regular quarterly distributions to holders of our common stock and distribution equivalents to holders of restricted stock units which are settled in shares of common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. We generally intend over time to pay quarterly distributions in an amount at least equal to our taxable income. Refer to Note 17 to the Consolidated Financial Statements for the Company’s dividend history for the three years ended December 31, 2019.

On February 25, 2020, our board of directors declared a dividend of $0.48 per share for the first quarter of 2020, which is payable on April 15, 2020 to common stockholders of record as of March 31, 2020.

Holders

As of February 18, 2020, there were 350 holders of record of the Company’s 282,613,156 shares of common stock outstanding. One of the holders of record is Cede & Co., which holds shares as nominee for The Depository Trust Company which itself holds shares on behalf of other beneficial owners of our common stock.

Securities Authorized for Issuance Under Equity Compensation Plans

The information required by this item is set forth under Item 12 of this Form 10-K and is incorporated herein by reference.

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Stock Performance Graph

CUMULATIVE TOTAL RETURN

Based upon initial investment of $100 on December 31, 2014(1)

	Starwood Property				Bloomberg REIT
	Trust		S&P © 500		Mortgage Index
12/31/2014	$	100.00	$	100.00	$	100.00
12/31/2015	$	96.58	$	101.38	$	90.11
12/31/2016	$	112.92	$	113.51	$	110.18
12/31/2017	$	119.75	$	138.29	$	132.51
12/31/2018	$	121.06	$	132.23	$	128.65
12/31/2019	$	162.25	$	173.86	$	159.04

(1) Dividend reinvestment is assumed.

Sales of Unregistered Equity Securities

During the year ended December 31, 2019, we issued 120,926 Class A Units in connection with the acquisition of the Woodstar II Portfolio as discussed in Note 3 to the Consolidated Financial Statements.

The Class A Unitholders have the right to redeem their Class A Units for cash or, in the sole discretion of the Company, shares of the Company’s common stock on a one-for-one basis, subject to certain anti-dilution adjustments. In connection with the issuance of the Class A Units, the Class A Unitholders received certain registration rights with respect to the shares of the Company’s common stock, if any, issued upon the redemption of Class A Units.

The Class A Units were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

Issuer Purchases of Equity Securities

There were no purchases of common stock during the three months ended December 31, 2019.

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Item 6. Selected Financial Data.

The following selected financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our Consolidated Financial Statements, including the notes thereto, included elsewhere herein. All amounts are in thousands, except per share data.

	For the year ended December 31,
	2019		2018		2017		2016		2015
Operating Data:
Revenues (1)	$	1,196,419	$	1,109,280	$	879,888	$	784,667	$	735,877
Costs and expenses		1,029,824		977,632		735,249		651,127		536,279
Other income (2)		383,572		294,879		299,650		242,455		269,791
Income tax provision		(13,232)		(15,330)		(31,522)		(8,344)		(17,206)
Income from continuing operations		536,935		411,197		412,767		367,651		452,183
Net income		536,935		411,197		412,767		367,651		452,183
Net income attributable to Starwood Property Trust, Inc.		509,664		385,830		400,770		365,186		450,697
Earnings per share:
Basic	$	1.81	$	1.44	$	1.53	$	1.52	$	1.92
Diluted	$	1.79	$	1.42	$	1.52	$	1.50	$	1.91
Dividends declared per share of common stock	$	1.92	$	1.92	$	1.92	$	1.92	$	1.92
Weighted-average basic shares of common stock outstanding		279,337		265,279		259,620		238,529		233,419
Balance Sheet Data:
Investments in loans	$	11,470,224	$	9,794,254	$	7,382,641	$	5,946,274	$	6,263,517
Investments in securities (3)		810,238		906,468		718,203		807,618		724,947
Investments in properties		2,266,440		2,784,890		2,647,481		1,944,720		919,225
Total assets (4)		78,042,336		68,262,453		62,941,289		77,256,266		85,698,354
Total financing arrangements		11,762,730		10,756,635		7,972,476		6,200,670		5,392,494
Total liabilities (4)		72,905,322		63,362,264		58,362,088		72,696,193		81,527,411
Total Starwood Property Trust, Inc. Stockholders’ Equity		4,700,425		4,603,432		4,478,414		4,522,274		4,140,316
Total Equity	$	5,137,014	$	4,900,189	$	4,579,201	$	4,560,073	$	4,170,943

(1) During the years ended December 31, 2019, 2018, 2017, 2016 and 2015, servicing fees and interest income of $144.7 million, $147.1 million, $179.4 million, $180.5 million and $230.8 million, respectively, were eliminated in consolidation pursuant to ASC 810.

(2) During the years ended December 31, 2019, 2018, 2017, 2016 and 2015, other income included $145.0 million, $148.0 million, $186.1 million, $181.2 million and $232.0 million, respectively, of additive net eliminations in consolidation pursuant to ASC 810.

(3) December 31, 2019, 2018, 2017, 2016 and 2015 balances exclude $1.4 billion, $1.2 billion, $1.0 billion, $959.0 million and $825.2 million, respectively, of CMBS and RMBS that were eliminated in consolidation pursuant to ASC 810.

(4) December 31, 2019 balances include $62.2 billion of VIE assets and $60.7 billion of VIE liabilities consolidated pursuant to ASC 810. December 31, 2018 balances include $53.4 billion of VIE assets and $52.2 billion of VIE liabilities consolidated pursuant to ASC 810. December 31, 2017 balances include $51.0 billion of VIE assets and $50.0 billion of VIE liabilities consolidated pursuant to ASC 810. December 31, 2016 balances include $67.1 billion of VIE assets and $66.1 billion of VIE liabilities consolidated pursuant to ASC 810. December 31, 2015 balances include $76.7 billion of VIE assets and $75.8 billion of VIE liabilities consolidated pursuant to ASC 810.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company should be read in conjunction with Item 6, “Selected Financial Data,” and our accompanying Consolidated Financial Statements included in Item 8 of this Form 10-K. Certain statements we make under this Item 7 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements” preceding Part I of this Form 10-K. You should consider our forward-looking statements in light of our Consolidated Financial Statements and other financial information appearing elsewhere in this Form 10-K and our other filings with the SEC.

Business Objectives and Outlook

Our objective is to provide attractive risk-adjusted returns to our investors over the long-term, primarily through dividends and secondarily through capital appreciation. We intend to achieve our objective by originating and acquiring target assets to create a diversified investment portfolio that is financed in a manner that is designed to deliver attractive returns across a variety of market conditions and economic cycles. We are focused on our three core competencies: transaction access, asset analysis and selection, and identification of attractive relative values within the real estate debt and equity markets.

Since our IPO in August 2009, we have evolved from a company focused on opportunistic acquisitions of real estate debt assets from distressed sellers to that of a full-service real estate finance platform that is primarily focused on the origination and acquisition of commercial real estate debt and equity investments across the capital structure, in both the U.S. and Europe. With the Starwood brand, market presence, and lending/asset management platform that we have developed, we are focused primarily on the following opportunities:

(1)Continue to expand our market presence as a leading provider of acquisition, refinance, development and expansion capital to large real estate projects (greater than $75 million) in infill locations, and other attractive market niches where our size and scale give us an advantage to provide a “one-stop” lending solution for real estate developers, owners and operators;

(2)Continue to expand our investment activities in subordinate CMBS and revenues from special servicing;

(3)Continue to expand our capabilities in syndication and securitization, which serve as a source of attractively priced, matched-term financing;

(4)Continue to leverage our Investing and Servicing Segment’s sourcing and credit underwriting capabilities to expand our overall footprint in the commercial real estate debt markets;

(5)Expand our investment activities in both (i) targeted real estate equity investments and (ii) residential mortgage finance; and

(6)Expand our originations and acquisitions of infrastructure debt investments.

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Recent Developments

Developments During the Fourth Quarter of 2019

Commercial and Residential Lending Segment

● Originated or acquired $2.2 billion of commercial loans during the quarter, including the following:

o $525.0 million first mortgage and mezzanine loan to one of the largest real estate managers in the world for the renovation of a 1.8 million square foot mixed-use property located in California, of which the Company funded $240.0 million.

o $324.3 million first mortgage and mezzanine loan to refinance the existing debt on two connected 12-story office buildings located in Washington, D.C., of which the Company funded $237.7 million.

o $287.4 million first mortgage, mezzanine loan and preferred equity investment to finance the construction of a mixed-used development located in Pennsylvania, of which the Company funded $17.3 million.

o $150.0 million first mortgage loan for the acquisition and repositioning of a 201-key five star hotel located in California, which the Company fully funded.

o $147.0 million first mortgage for the refinancing of an in-place construction loan used to convert a vacant office building into a condominium building located in New York, which the Company fully funded.

● Funded $535.9 million of previously originated commercial loan commitments.

● Received gross proceeds of $748.2 million (net proceeds of $461.0 million) from sales, maturities and principal repayments on our commercial loans and single-borrower CMBS, of which $196.5 million related to loan sales.

● Acquired $541.1 million of residential mortgage loans.

● Received proceeds of $383.5 million, including retained RMBS of $41.0 million, from the securitization of $370.3 million of residential mortgage loans.

Infrastructure Lending Segment

● Originated or acquired $640.4 million of infrastructure loans and bonds, of which $15.0 million relates to revolvers, and funded $30.0 million of pre-existing infrastructure loan commitments.

● Received proceeds of $346.9 million from maturities and principal repayments on our infrastructure loans and bonds.

Property Segment

● Sold the U.S. entity which held the net assets related to our Ireland Portfolio. The properties within the entity were sold for a gross purchase price of €530.0 million. After certain adjustments, including a €20.7 million tax withholding which was treated as a reduction of purchase price, the net purchase price was €507.6 million, plus estimated net working capital. In connection with the transaction, the buyer assumed our existing third party debt totaling €316.3 million. Our basis in these assets was €394.7 million, net of €67.5 million of accumulated depreciation. The resulting gain, after selling costs, was €108.0 (or $119.7) million.

● Recognized an impairment charge of $71.9 million against the remainder of our investment in the Retail Fund. In November 2019, the Retail Fund’s secured financing matured and was not repaid.  In light of these events, we commissioned independent appraisals of the underlying assets in order to estimate the fair value of our

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investment in the Retail Fund as of December 31, 2019. The impairment that we recognized was based upon the results of these appraisals.

Investing and Servicing Segment

● Entered into a newly-formed joint venture (the “CMBS JV”). In connection with the formation of this venture, we sold assets totaling $333.0 million to the CMBS JV, including $318.3 million of CMBS, $13.3 million of interests in various existing CMBS joint ventures, and $1.4 million of related interest receivables. We obtained a 51% interest in the venture for cash consideration of $169.9 million, and our joint venture partner obtained a 49% interest for $163.2 million. The $13.3 million of joint venture interests that we contributed into the CMBS JV relate to joint ventures which we consolidate. Refer to Note 17 to the Consolidated Financial Statements for further detail.

● Acquired CMBS for a purchase price of $162.9 million, net of non-controlling interests, and sold CMBS for total gross proceeds of $37.9 million.

● Sold commercial real estate for gross proceeds of $94.4 million and recognized net gains of $37.7 million.

● Originated commercial conduit loans of $683.0 million. Separately, received proceeds of $1.0 billion from sales of previously originated commercial conduit loans.

● Obtained eight new special servicing assignments for CMBS trusts with a total unpaid principal balance of $5.7 billion.

Developments During 2019

Commercial and Residential Lending Segment

● In August 2019, we refinanced a pool of our commercial loans held-for-investment through a collateralized loan obligation (“CLO”), STWD 2019-FL1. The CLO has a contractual maturity of July 2038 and a weighted average cost of financing of LIBOR + 1.65%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $1.1 billion principal amount of notes, of which $936.4 million was purchased by third party investors. We retained $86.6 million of notes, along with preferred shares with a liquidation preference of $77.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO in exchange for cash.

● Originated or acquired $5.5 billion of commercial loans during the year, including the following:

o $525.0 million first mortgage and mezzanine loan to one of the largest real estate managers in the world for the renovation of a 1.8 million square foot mixed-use property located in California, of which the Company funded $240.0 million.

o $379.0 million first mortgage and mezzanine loan for the acquisition and redevelopment of two office buildings located in New York, of which the Company funded $251.3 million.

o $324.3 million first mortgage and mezzanine loan to refinance the existing debt on two connected 12-story office buildings located in Washington, D.C., of which the Company funded $237.7 million.

o £249.9 million ($319.7 million) first mortgage loan to the owner of the United Kingdom’s market leading convention and exhibition center business. The loan is secured by five large conference facilities totaling over two million square feet and was fully funded.

o $300.0 million first mortgage loan for the construction of the final phase of a 3.4 million square foot mixed use, waterfront property located in Washington, D.C., of which the Company funded $5.3 million.

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o $287.4 million first mortgage, mezzanine loan and preferred equity investment to finance the construction of a mixed-used development located in Pennsylvania, of which the Company funded $17.3 million.

o $257.5 million first mortgage loan for the construction of an 800,000 square foot office campus on 18.1 acres located in California that is pre-leased to an investment grade tenant, of which the Company funded $135.9 million.

o £203.1 million ($249.6 million) first mortgage loan for the construction of 79 residential units and a 50-key five star hotel located in London, England, of which the Company funded $105.6 million.

● Funded $1.0 billion of previously originated commercial loan commitments.

● Received gross proceeds of $3.1 billion (net proceeds of $1.7 billion) from sales, maturities and principal repayments on our commercial loans, single-borrower CMBS and preferred equity interests, of which $748.9 million related to sales.

● Acquired $2.1 billion of residential mortgage loans.

● Received proceeds of $1.3 billion, including retained RMBS of $120.1 million, from the securitization of $1.3 billion of residential mortgage loans.

Infrastructure Lending Segment

● Originated or acquired $1.0 billion of infrastructure loans and bonds, of which $15.0 million relates to revolvers, and funded $145.2 million of pre-existing infrastructure loan commitments.

● Received proceeds of $393.3 million from sales of infrastructure loans and $947.7 million from maturities and principal repayments on our infrastructure loans and bonds.

Property Segment

● Sold the Ireland Portfolio as discussed above under “Developments During the Fourth Quarter of 2019”

● Recognized a $116.8 million reduction to our investment in the Retail Fund resulting from unrealized decreases in the fair value of the underlying assets.  See related discussion above under “Developments During the Fourth Quarter of 2019”.

Investing and Servicing Segment

● Entered into the CMBS JV as discussed above under “Developments During the Fourth Quarter of 2019”

● Acquired CMBS for a purchase price of $221.6 million, net of non-controlling interests, and sold CMBS held for total gross proceeds of $123.6 million.

● Sold commercial real estate for gross proceeds of $145.9 million and recognized net gains of $54.4 million.

● Acquired commercial real estate from a CMBS trust for a gross purchase price of $8.8 million.

● Originated commercial conduit loans of $1.9 billion. Separately, received proceeds of $1.8 billion from sales of previously originated commercial conduit loans.

● Obtained 22 new special servicing assignments for CMBS trusts with a total unpaid principal balance of $16.3 billion.

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Corporate Financing

● Settled the remaining $78.0 million of our 4.00% Convertible Senior Notes due 2019 (the “2019 Notes”) through the issuance of 3.6 million shares of common stock and cash payments of $12.0 million.

● Entered into the following credit agreements: (i) a $400.0 million term loan facility that carries a seven-year term and an annual interest rate of LIBOR + 2.50%; and (ii) a $100.0 million revolving credit facility that carries a five-year term and an annual interest rate of LIBOR + 3.00%. A portion of the net proceeds from the term loan was used to repay the amount outstanding under our previous term loan.

Subsequent Events

Refer to Note 25 to the Consolidated Financial Statements for disclosure regarding significant transactions that occurred subsequent to December 31, 2019.

Results of Operations

The discussion below is based on GAAP and therefore reflects the elimination of certain key financial statement line items related to the consolidation of securitization VIEs, particularly within revenues and other income, as discussed in Note 2 to the Consolidated Financial Statements. For a discussion of our results of operations excluding the impact of ASC 810 as it relates to the consolidation of securitization VIEs, refer to the section captioned “Non-GAAP Financial Measures”.

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The following table compares our summarized results of operations for the years ended December 31, 2019, 2018 and 2017 by business segment (amounts in thousands):

	For the Year Ended December 31,						$ Change		$ Change
	2019		2018		2017		2019 vs. 2018		2018 vs. 2017
Revenues:
Commercial and Residential Lending Segment	$	693,032	$	627,950	$	547,913	$	65,082	$	80,037
Infrastructure Lending Segment		106,649		30,709		—		75,940		30,709
Property Segment		287,503		292,897		199,111		(5,394)		93,786
Investing and Servicing Segment		253,931		304,480		312,237		(50,549)		(7,757)
Corporate		26		360		—		(334)		360
Securitization VIE eliminations		(144,722)		(147,116)		(179,373)		2,394		32,257
		1,196,419		1,109,280		879,888		87,139		229,392
Costs and expenses:
Commercial and Residential Lending Segment		261,150		226,625		127,078		34,525		99,547
Infrastructure Lending Segment		85,764		33,386		—		52,378		33,386
Property Segment		272,911		292,548		197,517		(19,637)		95,031
Investing and Servicing Segment		165,094		161,623		157,606		3,471		4,017
Corporate		245,049		263,685		253,499		(18,636)		10,186
Securitization VIE eliminations		(144)		(235)		(451)		91		216
		1,029,824		977,632		735,249		52,192		242,383
Other income (loss):
Commercial and Residential Lending Segment		20,806		8,617		4,085		12,189		4,532
Infrastructure Lending Segment		(11,510)		396		—		(11,906)		396
Property Segment		(708)		52,727		(59,920)		(53,435)		112,647
Investing and Servicing Segment		205,420		94,614		175,968		110,806		(81,354)
Corporate		24,523		(9,429)		(6,610)		33,952		(2,819)
Securitization VIE eliminations		145,041		147,954		186,127		(2,913)		(38,173)
		383,572		294,879		299,650		88,693		(4,771)
Income (loss) before income taxes:
Commercial and Residential Lending Segment		452,688		409,942		424,920		42,746		(14,978)
Infrastructure Lending Segment		9,375		(2,281)		—		11,656		(2,281)
Property Segment		13,884		53,076		(58,326)		(39,192)		111,402
Investing and Servicing Segment		294,257		237,471		330,599		56,786		(93,128)
Corporate		(220,500)		(272,754)		(260,109)		52,254		(12,645)
Securitization VIE eliminations		463		1,073		7,205		(610)		(6,132)
		550,167		426,527		444,289		123,640		(17,762)
Income tax provision		(13,232)		(15,330)		(31,522)		2,098		16,192
Net income attributable to non-controlling interests		(27,271)		(25,367)		(11,997)		(1,904)		(13,370)
Net income attributable to Starwood Property Trust, Inc.	$	509,664	$	385,830	$	400,770	$	123,834	$	(14,940)

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Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Commercial and Residential Lending Segment

Revenues

For the year ended December 31, 2019, revenues of our Commercial and Residential Lending Segment increased $65.1 million to $693.0 million, compared to $627.9 million for the year ended December 31, 2018. This increase was primarily due to increases in interest income from loans of $33.8 million and investment securities of $31.2 million. The increased interest income from loans was principally due to (i) higher average LIBOR rates, (ii) higher average balances of both commercial and residential loans and (iii) higher levels of prepayment related income, partially offset by (iv) the compression of interest rate spreads in credit markets and (v) the recognition in the 2018 period of a $15.1 million profit participation in a mortgage loan that was repaid in 2016. The increase in interest income from investment securities was primarily due to higher average investment balances.

Costs and Expenses

For the year ended December 31, 2019, costs and expenses of our Commercial and Residential Lending Segment increased $34.5 million to $261.1 million, compared to $226.6 million for the year ended December 31, 2018. This increase was primarily due to a $61.3 million increase in interest expense associated with the various secured financing facilities used to fund a portion of our investment portfolio, partially offset by a $32.2 million decrease in loan loss provision relating to impairment charges on certain commercial loans in the 2018 second quarter.

Net Interest Income (amounts in thousands)

	For the Year Ended December 31,
	2019		2018		Change
Interest income from loans	$	610,316	$	576,564	$	33,752
Interest income from investment securities		81,255		50,063		31,192
Interest expense		(222,118)		(160,769)		(61,349)
Net interest income	$	469,453	$	465,858	$	3,595

For the year ended December 31, 2019, net interest income of our Commercial and Residential Lending Segment increased $3.6 million to $469.5 million, compared to $465.9 million for the year ended December 31, 2018. This increase reflects the net increase in interest income explained in the Revenues discussion above, which was partially offset by the increase in interest expense on our secured financing facilities.

During the years ended December 31, 2019 and 2018, the weighted average unlevered yields on the Commercial and Residential Lending Segment’s loans and investment securities were as follows:

	For the Year Ended December 31,
	2019		2018
Commercial	7.3	%	7.8	%
Residential	6.9	%	7.0	%
Overall	7.3	%	7.7	%

The overall weighted average unlevered yield was lower as the compression of interest rate spreads in credit markets and the recognition in the 2018 period of the $15.1 million loan profit participation more than offset the effects of higher average LIBOR rates and higher levels of prepayment related income.

During both the years ended December 31, 2019 and 2018, the Commercial and Residential Lending Segment’s weighted average secured borrowing rates, inclusive of interest rate hedging costs and the amortization of deferred financing fees, was 4.3%.

Other Income

For the year ended December 31, 2019, other income of our Commercial and Residential Lending Segment increased $12.2 million to $20.8 million, compared to $8.6 million for the year ended December 31, 2018. The increase

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was primarily due to (i) a $19.0 million favorable change in fair value of residential mortgage loans and investment securities, (ii) a $25.2 million favorable change in foreign currency gain (loss) and (iii) a $5.6 million increase in earnings from unconsolidated entities, all partially offset by (iv) a $38.0 million unfavorable change in gain (loss) on derivatives. The unfavorable change in derivatives reflects a $22.7 million unfavorable change in foreign currency hedges and a $15.3 million unfavorable change in interest rate swaps. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and investments. The interest rate swaps are used primarily to fix our interest rate payments on certain variable rate borrowings which fund fixed rate investments. The unfavorable change in foreign currency hedges and the favorable change in foreign currency gain (loss) reflect an overall weakening of the U.S. dollar against the pound sterling (“GBP”) in the year ended December 31, 2019 versus a strengthening of the U.S. dollar in the year ended December 31, 2018.

Infrastructure Lending Segment

The Infrastructure Lending Segment was acquired on September 19, 2018. Therefore, its results for the year ended December 31, 2018 reflect only the period from the acquisition date through December 31, 2018. Accordingly, the following discussion attempts no comparison to the prior year results.

Revenues

For the years ended December 31, 2019 and 2018, revenues of our Infrastructure Lending Segment were $106.6 million and $30.7 million, respectively, which includes interest income of $99.6 million and $29.0 million, respectively, from loans and $6.3 million and $1.1 million, respectively, from investment securities.

Costs and Expenses

For the years ended December 31, 2019 and 2018, costs and expenses of our Infrastructure Lending Segment were $85.8 million and $33.4 million, respectively, which includes $62.8 million and $20.9 million, respectively, of interest expense on secured debt facilities used to finance this segment’s investment portfolio and $18.3 million and $5.6 million, respectively, of general and administrative expenses. Also included in the year ended December 31, 2018 were $6.8 million of acquisition costs.

Net Interest Income (amounts in thousands)

	For the Year Ended December 31,
	2019		2018		Change
Interest income from loans	$	99,580	$	28,995	$	70,585
Interest income from investment securities		6,318		1,095		5,223
Interest expense		(62,836)		(20,949)		(41,887)
Net interest income	$	43,062	$	9,141	$	33,921

Interest income from infrastructure loans and investment securities and interest expense on the secured financing facilities reflect primarily variable LIBOR based rates.

During the years ended December 31, 2019 and 2018, the weighted average unlevered yields on the Infrastructure Lending Segment’s investments were as follows:

	For the Year Ended December 31,
	2019		2018
Loans and investment securities held-for-investment	6.4	%	5.9	%
Loans held-for-sale	5.1	%	3.6	%

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During both the years ended December 31, 2019 and 2018, the Infrastructure Lending Segment’s weighted average secured borrowing rate, inclusive of the amortization of deferred financing fees, was 4.7%.

Other Income (Loss)

Other income (loss) of our Infrastructure Lending Segment was a loss of $11.5 million and income of $0.4 million for the years ended December 31, 2019 and 2018, respectively. Other loss for the year ended December 31, 2019 primarily reflects an $11.4 million loss on extinguishment of debt resulting from the write-off of deferred financing fees relating to partial debt prepayments from proceeds of loan repayments and sales. Other income for the year ended December 31, 2018 consisted of a $1.8 million gain on foreign currency hedges, partially offset by $1.4 million in foreign currency losses on principally GBP and Euro-denominated loans.

Property Segment

Change in Results by Portfolio (amounts in thousands)

	$ Change from prior year
			Costs and		Gain (loss) on derivative				Income (loss) before
	Revenues		expenses		financial instruments		Other income (loss)		income taxes
Master Lease Portfolio	$	(19,309)	$	(14,156)	$	—	$	(27,697)	$	(32,850)
Medical Office Portfolio		(1,964)		(2,598)		(24,215)		(5,235)		(28,816)
Ireland Portfolio		(1,935)		(1,910)		(2,422)		121,580		119,133
Woodstar I Portfolio		4,265		2,004		—		—		2,261
Woodstar II Portfolio		13,549		(2,516)		—		(18)		16,047
Investment in unconsolidated entities		—		72		—		(118,020)		(118,092)
Other/Corporate		—		(533)		2,597		(5)		3,125
Total	$	(5,394)	$	(19,637)	$	(24,040)	$	(29,395)	$	(39,192)

See Note 7 to the Consolidated Financial Statements for a description of the above-referenced Property Segment portfolios.

Revenues

For the year ended December 31, 2019, revenues of our Property Segment decreased $5.4 million to $287.5 million, compared to $292.9 million for the year ended December 31, 2018. The decrease in revenues was primarily due to a decrease in rental income from the Master Lease Portfolio due to (i) the sale of seven properties within the Master Lease portfolio during 2018 and (ii) no longer recording as revenues and offsetting expenses property taxes paid directly by lessees, in accordance with the new lease accounting standard effective January 1, 2019 (see Note 2 to the Consolidated Financial Statements) in both the Master Lease and Medical Office Portfolios, partially offset by (iii) the full period inclusion of rental income from the Woodstar II Portfolio, which was acquired over a period between December 2017 and September 2018, and (iv) rental rate increases in both Woodstar Portfolios.

Costs and Expenses

For the year ended December 31, 2019, costs and expenses of our Property Segment decreased $19.6 million to $272.9 million, compared to $292.5 million for the year ended December 31, 2018. The decrease in costs and expenses primarily reflects (i) the sale of seven properties within the Master Lease portfolio during 2018, (ii) no longer recording as revenues and offsetting expenses property taxes paid directly by lessees, as discussed above, and (iii) decreased expenses in the Woodstar II Portfolio primarily due to in-place lease intangibles becoming fully amortized, partially offset by (iv) the full period inclusion of the properties acquired in the Woodstar II Portfolio since January 2018.

Other Income (Loss)

For the year ended December 31, 2019, other income (loss) of our Property Segment decreased $53.4 million to a loss of $0.7 million, compared to income of $52.7 million for the year ended December 31, 2018. The decrease in other income was primarily due to (i) a $118.0 million unfavorable change in earnings (loss) from an unconsolidated entity and (ii) a $24.0 million unfavorable change in gain (loss) on derivatives, both partially offset by (iii) a $91.2

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million increase in gain on sale of properties. The $118.0 million unfavorable change in earnings (loss) from an unconsolidated entity principally reflects the recognition of decreases in fair value of properties held by the Retail Fund, including an impairment we recorded for our remaining investment as of December 31, 2019 (see Note 8 to the Consolidated Financial Statements). The $24.0 million unfavorable change in gain (loss) on derivatives consists of (i) a $21.5 million unfavorable change in interest rate swaps which primarily hedge the variable interest rate risk on borrowings secured by our Medical Office Portfolio and (ii) a $2.5 million unfavorable change in foreign exchange contracts which economically hedged our Euro currency exposure with respect to the Ireland Portfolio. The $91.2 million increased gain on sale of properties is due to a $119.7 million gain on sale of the Ireland Portfolio in December 2019 compared to gains of $28.5 million on the sales of seven properties in the Master Lease Portfolio during the year ended December 31, 2018. Refer to Note 3 to the Consolidated Financial Statements for further detail.

Investing and Servicing Segment

Revenues

For the year ended December 31, 2019, revenues of our Investing and Servicing Segment decreased $50.6 million to $253.9 million, compared to $304.5 million for the year ended December 31, 2018. The decrease in revenues in the year ended December 31, 2019 was primarily due to decreases of (i) $33.9 million in servicing fees, (ii) $9.4 million in CMBS interest income principally due to lower interest recoveries and (iii) $6.4 million in rental income from our REIS Equity Portfolio due to fewer properties held.

Costs and Expenses

For the year ended December 31, 2019, costs and expenses of our Investing and Servicing Segment increased $3.5 million to $165.1 million, compared to $161.6 million for the year ended December 31, 2018. The increase in costs and expenses was primarily due to a $6.2 million increase in interest expense principally related to the financing of our CMBS portfolio, partially offset by decreases of $4.8 million related to our REIS Equity Portfolio due to fewer properties held.

Other Income

For the year ended December 31, 2019, other income of our Investing and Servicing Segment increased $110.8 million to $205.4 million, from $94.6 million for the year ended December 31, 2018. The increase in other income was primarily due to (i) a $56.0 million greater increase in the fair value of CMBS investments, (ii) a $34.1 million increase in gains on sales of operating properties, (iii) a $13.8 million greater increase in the fair value of our conduit loans and (iv) a $12.9 million lesser decrease in fair value of servicing rights primarily reflecting the expected reduction in amortization of this deteriorating asset net of increases in fair value due to the attainment of new servicing contracts, all partially offset by (v) a $7.1 million increased loss on derivatives which primarily hedge our interest rate risk on conduit loans.

Corporate and Other Items

Corporate Costs and Expenses

For the year ended December 31, 2019, corporate expenses decreased $18.6 million to $245.1 million, compared to $263.7 million for the year ended December 31, 2018. The decrease was primarily due to a $10.8 million decrease in interest expense principally on lower average outstanding balances of our unsecured senior notes and a $9.7 million decrease in management fees.

Corporate Other Income (Loss)

For the year ended December 31, 2019, corporate other income (loss) improved $33.9 million to income of $24.5 million, compared to a loss of $9.4 million for the year ended December 31, 2018. The increase in corporate other income was primarily due to a $33.4 million favorable change in gain (loss) on interest rate swaps used to hedge a portion of our unsecured senior notes used to repay variable rate secured financing.

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Securitization VIE Eliminations

Securitization VIE eliminations primarily reclassify interest income and servicing fee revenues to other income for the CMBS and RMBS VIEs that we consolidate as primary beneficiary. Such eliminations have no overall effect on net income attributable to Starwood Property Trust. The reclassified revenues, along with applicable changes in fair value of investment securities and servicing rights, comprise the other income caption “Change in net assets related to consolidated VIEs,” which represents our beneficial interest in those consolidated VIEs. The magnitude of the securitization VIE eliminations is merely a function of the number of CMBS and RMBS trusts consolidated in any given period, and as such, is not a meaningful indicator of operating results. The eliminations primarily relate to CMBS trusts for which the Investing and Servicing Segment is deemed the primary beneficiary and, to a much lesser extent, some CMBS and RMBS trusts for which the Commercial and Residential Lending Segment is deemed the primary beneficiary.

Income Tax Provision

Our consolidated income tax provision principally relates to the taxable nature of our loan servicing and loan conduit businesses and certain other real estate related investing activities which are housed in taxable REIT subsidiaries (“TRSs”). For the year ended December 31, 2019, our income tax provision decreased $2.1 million to $13.2 million, compared to $15.3 million for the year ended December 31, 2018. The decrease primarily reflects a decrease in the taxable income of our TRSs.

Net Income Attributable to Non-controlling Interests

For the year ended December 31, 2019, net income attributable to non-controlling interests increased $1.9 million to $27.3 million, compared to $25.4 million for the year ended December 31, 2018. The increase was primarily due to increased non-controlling interests in our Woodstar II Portfolio, which consists of properties acquired in and after December 2017.

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Commercial and Residential Lending Segment

Revenues

For the year ended December 31, 2018, revenues of our Commercial and Residential Lending Segment increased $80.0 million to $627.9 million, compared to $547.9 million for the year ended December 31, 2017. This increase was primarily due to a $76.8 million increase in interest income from loans and a $3.3 million increase in interest income from investment securities. The increased interest income from loans was principally due to (i) increased LIBOR rates, partially offset by the compression of interest rate spreads in credit markets, (ii) higher average balances of both commercial loans and residential loans held-for-sale and (iii) income of $15.1 million received in 2018 from a profit participation in a mortgage loan that was repaid in 2016 (see Note 5 to the Consolidated Financial Statements), partially offset by (iv) lower levels of prepayment related income.

Costs and Expenses

For the year ended December 31, 2018, costs and expenses of our Commercial and Residential Lending Segment increased $99.5 million to $226.6 million, compared to $127.1 million for the year ended December 31, 2017. This increase was primarily due to (i) a $53.6 million increase in interest expense associated with the various secured financing facilities used to fund a portion of our investment portfolio, (ii) a $40.3 million net increase in our loan loss allowance principally relating to impairment charges on certain commercial loans (see Note 5 to the Consolidated Financial Statements for details regarding these individual loan impairments) and (iii) a $6.3 million increase in general and administrative expenses.

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Net Interest Income (amounts in thousands)

	For the Year Ended December 31,
	2018		2017		Change
Interest income from loans	$	576,564	$	499,806	$	76,758
Interest income from investment securities		50,063		46,710		3,353
Interest expense		(160,769)		(107,167)		(53,602)
Net interest income	$	465,858	$	439,349	$	26,509

For the year ended December 31, 2018, net interest income of our Commercial and Residential Lending Segment increased $26.5 million to $465.9 million, compared to $439.3 million for the year ended December 31, 2017. This increase reflects the increase in interest income explained in the Revenues discussion above, partially offset by the increase in interest expense on our secured financing facilities.

During the years ended December 31, 2018 and 2017, the weighted average unlevered yields on the Commercial and Residential Lending Segment’s loans and investment securities were as follows:

	For the Year Ended December 31,
	2018		2017
Commercial	7.8	%	7.6	%
Residential	7.0	%	7.4	%
Overall	7.7	%	7.5	%

The increase in the overall weighted average unlevered yield is primarily due to increases in LIBOR and the $15.1 million loan profit participation income received in 2018, partially offset by the compression of interest rate spreads in credit markets and lower levels of prepayment related income.

During the years ended December 31, 2018 and 2017, the Commercial and Residential Lending Segment’s weighted average secured borrowing rates, inclusive of interest rate hedging costs and the amortization of deferred financing fees, were 4.3% and 3.8%, respectively. The increase in borrowing rates primarily reflect increases in LIBOR, partially offset by the compression of interest rate spreads in credit markets.

Other Income

For the year ended December 31, 2018, other income of our Commercial and Residential Lending Segment increased $4.5 million to $8.6 million, compared to $4.1 million for the year ended December 31, 2017. The increase was primarily due to a $52.9 million favorable change in gain (loss) on derivatives, partially offset by a $41.5 million unfavorable change in foreign currency gain (loss). The favorable change from derivatives reflects favorable changes of $52.2 million on foreign currency hedges and $0.7 million on interest rate swaps. The foreign currency hedges are used to fix the U.S. dollar amounts of cash flows (both interest and principal payments) we expect to receive from our foreign currency denominated loans and CMBS investments. The favorable change on the foreign currency hedges and the unfavorable change in foreign currency gain (loss) reflect an overall strengthening of the U.S. dollar against the GBP in the year ended December 31, 2018 versus a weakening of the U.S. dollar in the year ended December 31, 2017. The interest rate swaps are used primarily to fix our interest rate payments on certain variable rate borrowings, which fund fixed rate investments.

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Infrastructure Lending Segment

The Infrastructure Lending Segment was initially acquired on September 19, 2018 (see Note 3 to the Consolidated Financial Statements). Accordingly, the following discussion reflects its results for the period from the acquisition date through December 31, 2018 and includes no comparison to the year ended December 31, 2017.

Revenues

Revenues of our Infrastructure Lending Segment were $30.7 million, including interest income of $29.0 million from loans and $1.1 million from investment securities.

Costs and Expenses

Costs and expenses of our Infrastructure Lending Segment were $33.4 million, consisting of $20.9 million of interest expense on the debt facility used to finance a portion of the acquisition price and subsequent loan fundings, $6.8 million of acquisition costs, and $5.6 million of general and administrative expenses. Acquisition costs include a $3.0 million commitment fee related to an unused bridge financing facility and legal and due diligence costs of $3.8 million

Net Interest Income (amounts in thousands)

	For the Year Ended
	December 31, 2018
Interest income from loans	$	28,995
Interest income from investment securities		1,095
Interest expense		(20,949)
Net interest income	$	9,141

Interest income from infrastructure loans and investment securities and interest expense on the term loan reflect primarily variable LIBOR based rates. During the period from the acquisition date through December 31, 2018, the weighted average unlevered yield on the Infrastructure Lending Segment’s loans and investment securities held-for-investment was 5.9% while the weighted average unlevered yield on its loans held-for-sale was 3.6%. The weighted average secured borrowing rate on its debt facility, including amortization of deferred financing fees, was 4.7%.

Other Income

Other income of our Infrastructure Lending Segment was $0.4 million, consisting of a $1.8 million gain on foreign currency hedges, partially offset by $1.4 million in foreign currency losses on principally GBP and Euro-denominated loans.

Property Segment

Change in Results by Portfolio (amounts in thousands)

	$ Change from prior year
			Costs and		Gain (loss) on derivative				Income (loss) before
	Revenues		expenses		financial instruments		Other income (loss)		income taxes
Master Lease Portfolio	$	32,702	$	22,509	$	2,354	$	27,597	$	40,144
Medical Office Portfolio		(951)		2,008		5,450		490		2,981
Ireland Portfolio		4,495		1,524		47,285		(1,884)		48,372
Woodstar I Portfolio		2,241		(116)		—		—		2,357
Woodstar II Portfolio		55,299		66,785		—		12		(11,474)
Investment in unconsolidated entities		—		(4)		—		31,343		31,347
Other/Corporate		—		2,325		—		—		(2,325)
Total	$	93,786	$	95,031	$	55,089	$	57,558	$	111,402

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Revenues

For the year ended December 31, 2018, revenues of our Property Segment increased $93.8 million to $292.9 million, compared to $199.1 million for the year ended December 31, 2017. The increase in revenues in the year ended December 31, 2018 was primarily due to the fuller inclusion of rental income from the Master Lease Portfolio, which was acquired in September 2017, and the Woodstar II Portfolio, which was acquired over a period between December 2017 and September 2018.

Costs and Expenses

For the year ended December 31, 2018, costs and expenses of our Property Segment increased $95.0 million to $292.5 million, compared to $197.5 million for the year ended December 31, 2017. The increase in costs and expenses reflects increases of $37.1 million in depreciation and amortization, $27.4 million in other rental related costs and $28.6 million in interest expense, all primarily due to the fuller inclusion of the Master Lease Portfolio and Woodstar II Portfolio, both of which were acquired after August 2017.

Other Income (Loss)

For the year ended December 31, 2018, other income of our Property Segment increased $112.6 million to $52.7 million, compared to a loss of $59.9 million for the year ended December 31, 2017. The increase in other income was primarily due to (i) a $55.1 million favorable change in gain (loss) on derivatives, (ii) a $31.3 million favorable change in earnings (loss) from unconsolidated entities and (iii) $28.5 million of gains on sales of seven properties from the Master Lease Portfolio. The $55.1 million favorable change in gain (loss) on derivatives reflects a $47.1 million favorable change on foreign exchange contracts which economically hedge our Euro currency exposure with respect to the Ireland Portfolio and an $8.0 million favorable change on interest rate swaps which primarily hedge the variable interest rate risk on borrowings secured by our Medical Office Portfolio. The $31.3 million favorable change in earnings (loss) from unconsolidated entities principally reflects the recognition in 2017 of $34.7 million of unfavorable changes in fair value of our equity investment in the Retail Fund, which is an investment company that measures its assets at fair value.

Investing and Servicing Segment

Revenues

For the year ended December 31, 2018, revenues of our Investing and Servicing Segment decreased $7.7 million to $304.5 million, compared to $312.2 million for the year ended December 31, 2017. The decrease in revenues in the year ended December 31, 2018 was primarily due to decreases of $7.6 million in CMBS interest income and $7.3 million in servicing fees, partially offset by a $6.7 million increase in rental income on our REIS Equity Portfolio.

Costs and Expenses

For the year ended December 31, 2018, costs and expenses of our Investing and Servicing Segment increased $4.0 million to $161.6 million, compared to $157.6 million for the year ended December 31, 2017. The increase in costs and expenses was primarily due to increases of $7.6 million in interest expense and $5.4 million in costs of rental operations associated with our REIS Equity Portfolio, partially offset by a $9.6 million decrease in general and administrative expenses primarily reflecting lower profit-based compensation, headcount and corporate expense allocations.

Other Income

For the year ended December 31, 2018, other income of our Investing and Servicing Segment decreased $81.4 million to $94.6 million, from $176.0 million for the year ended December 31, 2017. The decrease in other income was primarily due to (i) a $64.4 million decrease in earnings from unconsolidated entities, (ii) a $21.1 million lesser increase in the fair value of CMBS investments and (iii) a $17.3 million lesser increase in the fair value of our conduit loans held-for-sale, partially offset by (iv) a $15.9 million lesser decrease in fair value of servicing rights primarily reflecting the expected reduction in amortization of this deteriorating asset net of increases in fair value due to the attainment of new servicing contracts and (v) a $6.1 million increase in gains on sales of operating properties. The decrease in earnings

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from unconsolidated entities primarily reflects $53.9 million of non-recurring income during the year ended December 31, 2017 related to an unconsolidated investor entity which owns equity in an online real estate company.

Corporate and Other Items

Corporate Costs and Expenses

For the year ended December 31, 2018, corporate expenses increased $10.2 million to $263.7 million, compared to $253.5 million for the year ended December 31, 2017. The increase was primarily due to (i) a $6.7 million increase in management fees, (ii) a $1.8 million increase in general and administrative expenses and (iii) a $1.6 million increase in interest expense principally on our unsecured senior notes.

Corporate Other Loss

For the year ended December 31, 2018, corporate other loss increased $2.8 million to $9.4 million, compared to $6.6 million for the year ended December 31, 2017. The increase in corporate other loss was primarily due to a $4.9 million increased loss on interest rate swaps used to hedge a portion of our unsecured senior notes, which are used to repay variable rate secured financing, partially offset by a $3.8 million decrease in loss on extinguishment of debt.

Securitization VIE Eliminations

Refer to the preceding comparison of the year ended December 31, 2019 to the year ended December 31, 2018 for a discussion of the nature of securitization VIE eliminations.

Income Tax Provision

Our consolidated income tax provision principally relates to the taxable nature of our loan servicing and loan conduit businesses and certain other real estate related investing activities which are housed in TRSs. For the year ended December 31, 2018, our income tax provision decreased $16.2 million to $15.3 million, compared to $31.5 million for the year ended December 31, 2017. The decrease primarily reflects (i) the effect of a lower statutory tax rate in 2018 and (ii) the absence of the additional tax expense in 2017 that resulted from a taxable gain on the disposition of an interest in an investee entity, partially offset by (iii) the remeasurement of our net deferred tax assets upon enactment of the Tax Cuts and Jobs Act in December 2017 and (iv) additional tax expense in 2018 as a result of taxable gains in our TRSs from sales of operating properties that had been held in our Master Lease Portfolio and REIS Equity Portfolio.

Net Income Attributable to Non-controlling Interests

For the year ended December 31, 2018, net income attributable to non-controlling interests increased $13.4 million to $25.4 million, compared to $12.0 million for the year ended December 31, 2017. The increase was primarily due to the effect of non-controlling interests in our Woodstar II Portfolio, which consists of properties acquired in and after December 2017, partially offset by the effect of non-controlling interests in a non-recurring gain of a consolidated VIE during the year ended December 31, 2017.

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Non-GAAP Financial Measures

Core Earnings is a non-GAAP financial measure. We calculate Core Earnings as GAAP net income (loss) excluding the following:

(i) non-cash equity compensation expense;

(ii) incentive fees due under our management agreement;

(iii) depreciation and amortization of real estate and associated intangibles;

(iv) acquisition costs associated with successful acquisitions;

(v) 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

(vi) any deductions for distributions payable with respect to equity securities of subsidiaries issued in exchange for properties or interests therein.

We believe that Core Earnings provides an additional measure of our core operating performance by eliminating the impact of certain non-cash expenses and facilitating a comparison of our financial results to those of other comparable REITs with fewer or no non-cash adjustments and comparison of our own operating results from period to period. Our management uses Core Earnings in this way, and also uses Core Earnings to compute the incentive fee due under our management agreement. The Company believes that its investors also use Core Earnings or a comparable supplemental performance measure to evaluate and compare the performance of the Company and its peers, and as such, the Company believes that the disclosure of Core Earnings is useful to (and expected by) its investors.

However, the Company cautions that Core Earnings does not represent cash generated from operating activities in accordance with GAAP and should not be considered as an alternative to net income (determined in accordance with GAAP), or an indication of our cash flows from operating activities (determined in accordance with GAAP), a measure of our liquidity, or an indication of funds available to fund our cash needs, including our ability to make cash distributions. In addition, our methodology for calculating Core Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and accordingly, our reported Core Earnings may not be comparable to the Core Earnings reported by other REITs.

The weighted average diluted share count applied to Core Earnings for purposes of determining Core Earnings per share (“EPS”) is computed using the GAAP diluted share count, adjusted for the following:

(i) Unvested stock awards – Currently, unvested stock awards are excluded from the denominator of GAAP EPS. The related compensation expense is also excluded from Core Earnings. In order to effectuate dilution from these awards in the Core Earnings computation, we adjust the GAAP diluted share count to include these shares.

(ii) Convertible Notes – Conversion of our Convertible Notes is an event that is contingent upon numerous factors, none of which are in our control, and is an event that may or may not occur. Consistent with the treatment of other unrealized adjustments to Core Earnings, we adjust the GAAP diluted share count to exclude the potential shares issuable upon conversion until a conversion occurs.

(iii) Subsidiary equity – The intent of a February 2018 amendment to our management agreement (the “Amendment”) is to treat subsidiary equity in the same manner as if parent equity had been issued. The Class A Units issued in connection with the acquisition of assets in our Woodstar II Portfolio are currently excluded from our GAAP diluted share count, with the subsidiary equity represented as non-controlling interests in consolidated subsidiaries on our GAAP balance sheet. Consistent with the amendment, we adjust GAAP diluted share count to include these subsidiary units.

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The following table presents our diluted weighted average shares used in our GAAP EPS calculation reconciled to our diluted weighted average shares used in our Core EPS calculation (amounts in thousands):

	For the Year Ended December 31,
	2019	2018	2017
Diluted weighted average shares - GAAP	289,712	288,484	262,079
Add: Unvested stock awards	2,271	2,285	1,659
Add: Woodstar II Class A Units	11,365	8,971	—
Less: Convertible Notes dilution	(9,805)	(22,659)	(1,899)
Diluted weighted average shares - Core	293,543	277,081	261,839

The definition of Core Earnings allows management to make adjustments, subject to the approval of a majority of our independent directors, in situations where such adjustments are considered appropriate in order for Core Earnings to be calculated in a manner consistent with its definition and objective. No adjustments to the definition of Core Earnings became effective during the year ended December 31, 2019.

As a reminder, in 2015, we adjusted the calculation of Core Earnings related to the equity component of our Convertible Notes. We previously amortized the equity component of these instruments through interest expense for Core Earnings purposes, consistent with our GAAP treatment. However, for Core Earnings purposes, the amount is not considered realized until the earlier of (a) the entire issuance of the notes has been extinguished; or (b) the equity portion has been fully amortized via repurchases of the notes

In January 2019, our 2019 Notes were fully repaid in shares of common stock and cash. The equity portion of the 2019 Notes had been fully amortized. In March 2018, our 4.55% Convertible Senior Notes due 2018 (the “2018 Notes”) matured and were fully repaid in cash. The equity portion of the 2018 Notes had not been fully amortized. As a result, we reflected $10.0 million as a positive adjustment to Core Earnings, representing the $28.1 million equity balance recognized upon issuance of the 2018 Notes, net of $18.1 million in adjustments related to cumulative repurchases through the maturity date.

The following table summarizes our quarterly Core Earnings per weighted average diluted share for the years ended December 31, 2019, 2018 and 2017:

	Core Earnings For the Three-Month Periods Ended
	March 31		June 30		September 30		December 31
2019	$	0.28	$	0.52	$	0.52	$	0.47
2018		0.58		0.54		0.53		0.54
2017		0.51		0.52		0.65		0.55

Core Earnings per weighted average diluted share for the year ended December 31, 2019 does not equal the sum of the individual quarters due to rounding and other computational factors.

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The following table presents our summarized results of operations and reconciliation to Core Earnings for the year ended December 31, 2019, by business segment (amounts in thousands):

	Commercial
	and
	Residential		Infrastructure				Investing
	Lending		Lending		Property		and Servicing
	Segment		Segment		Segment		Segment		Corporate		Total
Revenues	$	693,032	$	106,649	$	287,503	$	253,931	$	26	$	1,341,141
Costs and expenses		(261,150)		(85,764)		(272,911)		(165,094)		(245,049)		(1,029,968)
Other income (loss)		20,806		(11,510)		(708)		205,420		24,523		238,531
Income (loss) before income taxes		452,688		9,375		13,884		294,257		(220,500)		549,704
Income tax (provision) benefit		(4,818)		89		(393)		(8,110)		—		(13,232)
Income attributable to non-controlling interests		(392)		—		(21,630)		(4,786)		—		(26,808)
Net income (loss) attributable to Starwood Property Trust, Inc.		447,478		9,464		(8,139)		281,361		(220,500)		509,664
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units		—		—		21,630		—		—		21,630
Non-cash equity compensation expense		3,918		2,683		312		6,582		22,697		36,192
Management incentive fee		—		—		—		—		20,165		20,165
Acquisition and investment pursuit costs		(882)		2		(355)		(780)		(356)		(2,371)
Depreciation and amortization		1,091		83		93,864		18,156		—		113,194
Loan loss provision, net		2,616		4,510		—		—		—		7,126
Interest income adjustment for securities		(617)		—		—		15,933		—		15,316
Extinguishment of debt, net		—		—		—		—		(1,950)		(1,950)
Other non-cash items		—		—		(1,798)		(1,067)		623		(2,242)
Reversal of GAAP unrealized (gains) / losses on:
Loans held-for-sale		(10,462)		—		—		(61,139)		—		(71,601)
Securities		1,084		—		—		(89,206)		—		(88,122)
Derivatives		20,680		3,353		6,268		7,536		(26,396)		11,441
Foreign currency		(17,342)		(205)		(37)		2		—		(17,582)
(Earnings) loss from unconsolidated entities		(10,649)		—		114,362		(4,166)		—		99,547
Recognition of Core realized gains / (losses) on:
Loans held-for-sale		9,028		(984)		—		63,908		—		71,952
Securities		970		—		—		14,608		—		15,578
Derivatives		(5,500)		(1,186)		17,238		(10,153)		—		399
Foreign currency		622		(1,081)		37		7		—		(415)
Earnings (loss) from unconsolidated entities		8,851		—		(139,462)		15,812		—		(114,799)
Sales of properties		—		—		(74,878)		(19,359)		—		(94,237)
Core Earnings (Loss)	$	450,886	$	16,639	$	29,042	$	238,035	$	(205,717)	$	528,885
Core Earnings (Loss) per Weighted Average Diluted Share	$	1.54	$	0.05	$	0.10	$	0.81	$	(0.70)	$	1.80

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The following table presents our summarized results of operations and reconciliation to Core Earnings for the year ended December 31, 2018, by business segment (amounts in thousands):

	Commercial
	and
	Residential		Infrastructure				Investing
	Lending		Lending		Property		and Servicing
	Segment		Segment		Segment		Segment		Corporate		Total
Revenues	$	627,950	$	30,709	$	292,897	$	304,480	$	360	$	1,256,396
Costs and expenses		(226,625)		(33,386)		(292,548)		(161,623)		(263,685)		(977,867)
Other income (loss)		8,617		396		52,727		94,614		(9,429)		146,925
Income (loss) before income taxes		409,942		(2,281)		53,076		237,471		(272,754)		425,454
Income tax provision		(2,801)		(292)		(7,549)		(4,688)		—		(15,330)
Income attributable to non-controlling interests		(1,451)		—		(17,623)		(5,220)		—		(24,294)
Net income (loss) attributable to Starwood Property Trust, Inc.		405,690		(2,573)		27,904		227,563		(272,754)		385,830
Add / (Deduct):
Non-controlling interests attributable to Woodstar II Class A Units		—		—		17,623		—		—		17,623
Non-cash equity compensation expense		2,857		477		300		4,934		14,312		22,880
Management incentive fee		—		—		—		—		41,399		41,399
Acquisition and investment pursuit costs		1,391		3,827		(337)		(333)		—		4,548
Depreciation and amortization		76		—		112,007		20,295		—		132,378
Loan loss provision, net		34,821		—		—		—		—		34,821
Interest income adjustment for securities		(736)		—		—		16,754		—		16,018
Extinguishment of debt, net		—		—		—		—		8,199		8,199
Other non-cash items		—		—		(3,031)		2,204		3,057		2,230
Reversal of GAAP unrealized (gains) / losses on:
Loans held-for-sale		6,851		—		—		(47,373)		—		(40,522)
Securities		(763)		—		—		(33,229)		—		(33,992)
Derivatives		(18,439)		(1,821)		(18,854)		(1,235)		9,521		(30,828)
Foreign currency		7,816		1,425		2		2		—		9,245
Earnings from unconsolidated entities		(5,063)		—		(3,658)		(3,809)		—		(12,530)
Recognition of Core realized gains / (losses) on:
Loans held-for-sale		(616)		—		—		46,063		—		45,447
Securities		3,528		—		—		6,209		—		9,737
Derivatives		(7,258)		(105)		(4,076)		2,790		—		(8,649)
Foreign currency		9,913		43		(2)		(73)		—		9,881
Earnings from unconsolidated entities		5,178		—		—		4,242		—		9,420
Sales of properties		—		—		(5,379)		(9,667)		—		(15,046)
Core Earnings (Loss)	$	445,246	$	1,273	$	122,499	$	235,337	$	(196,266)	$	608,089
Core Earnings (Loss) per Weighted Average Diluted Share	$	1.61	$	—	$	0.44	$	0.85	$	(0.71)	$	2.19

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The following table presents our summarized results of operations and reconciliation to Core Earnings for the year ended December 31, 2017, by business segment (amounts in thousands):

	Commercial
	and
	Residential				Investing
	Lending		Property		and Servicing
	Segment		Segment		Segment		Corporate		Total
Revenues	$	547,913	$	199,111	$	312,237	$	—	$	1,059,261
Costs and expenses		(127,078)		(197,517)		(157,606)		(253,499)		(735,700)
Other income (loss)		4,085		(59,920)		175,968		(6,610)		113,523
Income (loss) before income taxes		424,920		(58,326)		330,599		(260,109)		437,084
Income tax provision		(143)		(249)		(31,130)		—		(31,522)
Income attributable to non-controlling interests		(1,419)		—		(3,373)		—		(4,792)
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 provision, 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 GAAP 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 Core 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

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Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Commercial and Residential Lending Segment

The Commercial and Residential Lending Segment’s Core Earnings increased by $5.7 million, from $445.2 million during the year ended December 31, 2018 to $450.9 million during the year ended December 31, 2019. After making adjustments for the calculation of Core Earnings, revenues were $692.4 million, costs and expenses were $254.4 million and other income was $18.1 million.

Core revenues, consisting principally of interest income on loans, increased by $65.2 million during the year ended December 31, 2019, primarily due to increases in interest income from loans of $33.8 million and investment securities of $31.3 million. The increase in interest income from loans was principally due to (i) higher average LIBOR rates, (ii) higher average balances of both commercial and residential loans and (iii) higher levels of prepayment related income, partially offset by (iv) the compression of interest rate spreads in credit markets and (v) the recognition in the 2018 period of a $15.1 million profit participation in a mortgage loan that was repaid in 2016. The increase in interest income from investment securities was primarily due to higher average investment balances.

Core costs and expenses increased by $66.9 million during the year ended December 31, 2019, primarily due to a $61.3 million increase in interest expense associated with the various secured financing facilities used to fund a portion of our investment portfolio.

Core other income increased by $8.3 million, primarily due to a $4.7 million increase in net gains resulting from prepayments and sales of commercial and residential loans and a $3.7 million increase in earnings from unconsolidated entities.

Infrastructure Lending Segment

The Infrastructure Lending Segment had Core Earnings of $16.6 million for the year ended December 31, 2019 compared to $1.3 million during the post-acquisition period from September 19, 2018 through December 31, 2018. After making adjustments for the calculation of Core Earnings, revenues were $106.6 million, costs and expenses were $78.5 million and other loss was $11.6 million.

Core revenues of $106.6 million primarily consisted of interest income of $99.6 million from loans and $6.3 million from investment securities.

Core costs and expenses of $78.5 million primarily consisted of $62.8 million of interest expense on the secured debt facilities used to finance this segment’s investment portfolio and $15.6 million of general and administrative expenses.

Core other loss of $11.6 million principally reflects an $11.4 million loss on extinguishment of debt resulting from the write-off of deferred financing fees relating to partial debt prepayments from proceeds of loan repayments and sales.

Property Segment

Core Earnings by Portfolio (amounts in thousands)

	For the Year Ended
	December 31,
	2019		2018		Change
Master Lease Portfolio	$	16,866	$	40,271	$	(23,405)
Medical Office Portfolio		18,965		25,440		(6,475)
Ireland Portfolio		84,321		18,285		66,036
Woodstar I Portfolio		29,367		26,106		3,261
Woodstar II Portfolio		23,090		17,218		5,872
Investment in unconsolidated entities		(139,534)		—		(139,534)
Other/Corporate		(4,033)		(4,821)		788
Core Earnings	$	29,042	$	122,499	$	(93,457)

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The Property Segment’s Core Earnings decreased by $93.5 million, from $122.5 million during the year ended December 31, 2018 to $29.0 million during the year ended December 31, 2019. After making adjustments for the calculation of Core Earnings, revenues were $286.7 million, costs and expenses were $180.5 million and other loss was $76.8 million.

Core revenues decreased by $4.8 million during the year ended December 31, 2019, primarily due to a decrease in rental income from the Master Lease Portfolio due to (i) the sale of seven properties within the Master Lease portfolio during 2018 and (ii) no longer recording as revenues and offsetting expenses property taxes paid directly by lessees, in accordance with the new lease accounting standard effective January 1, 2019 in both the Master Lease and Medical Office Portfolios, partially offset by (iii) the full period inclusion of rental income from the Woodstar II Portfolio, which was acquired over a period between December 2017 and September 2018, and (iv) rental rate increases in both Woodstar Portfolios.

Core costs and expenses decreased by $2.6 million during the year ended December 31, 2019, primarily due to the sale of seven properties from the Master Lease Portfolio in 2018 and no longer recording property taxes paid directly by lessees, both as discussed above, mostly offset by the full period inclusion of the Woodstar II Portfolio.

Core other income (loss) decreased by $98.4 million during the year ended December 31, 2019, primarily due to a $139.5 million core loss recognized on our investment in the Retail Fund. This loss reflects the full write-off of our investment due to decreases in fair value of properties held by the Retail Fund which management determined to be other than temporary. Partially offsetting this loss was a $37.0 million increase in core gains on property sales, reflecting a $60.1 million gain on sale of the Ireland Portfolio in December 2019 compared to gains of $23.1 million on the sales of seven properties in the Master Lease Portfolio during the year ended December 31, 2018.

The $60.1 million gain on sale of the Ireland Portfolio relates to the sale of the U.S. entity which held the net assets related to our Ireland Portfolio. The properties within the entity were sold for a gross purchase price of €530.0 million. After certain adjustments, including a €20.7 million tax withholding which was treated as a reduction of purchase price, the net purchase price was €507.6 million, plus estimated net working capital. Our undepreciated cost basis in these assets was €462.2 million. The resulting gain, after selling costs, was €40.5 (or $44.9) million. In addition, upon receipt of the net proceeds from the sale, we unwound all of our foreign currency hedges related to this portfolio, realizing a net gain of $15.2 million, bringing the total core gain on sale of this portfolio to $60.1 million.

Investing and Servicing Segment

The Investing and Servicing Segment’s Core Earnings increased by $2.7 million, from $235.3 million during the year ended December 31, 2018 to $238.0 million during the year ended December 31, 2019. After making adjustments for the calculation of Core Earnings, revenues were $270.9 million, costs and expenses were $141.3 million, other income was $121.6 million, income tax provision was $8.1 million and the deduction of income attributable to non-controlling interests was $5.1 million.

Core revenues decreased by $50.8 million during the year ended December 31, 2019, primarily due to decreases of $33.9 million in servicing fees, $10.3 million in interest income from our CMBS portfolio and $5.8 million in rental income from our REIS Equity Portfolio due to fewer properties held. The treatment of CMBS interest income on a GAAP basis is complicated by our application of the ASC 810 consolidation rules. In an attempt to treat these securities similar to the trust’s other investment securities, we compute core interest income pursuant to an effective yield methodology. In doing so, we segregate the portfolio into various categories based on the components of the bonds’ cash flows and the volatility related to each of these components. We then accrete interest income on an effective yield basis using the components of cash flows that are reliably estimable. Other minor adjustments are made to reflect management’s expectations for other components of the projected cash flow stream.

Core costs and expenses increased by $4.8 million during the year ended December 31, 2019, primarily due to a $6.2 million increase in interest expense principally related to the financing of our CMBS portfolio, partially offset by a $2.5 million decrease in costs of rental operations due to fewer properties held.

Core other income includes profit realized upon securitization of loans by our conduit business, gains on sales of CMBS and operating properties, gains and losses on derivatives that were either effectively terminated or novated,

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and earnings from unconsolidated entities. These items are typically offset by a decrease in the fair value of our domestic servicing rights intangible which reflects the expected amortization of this deteriorating asset, net of increases in fair value due to the attainment of new servicing contracts. Derivatives include instruments which hedge interest rate risk and credit risk on our conduit loans. For GAAP purposes, the loans, CMBS and derivatives are accounted for at fair value, with all changes in fair value (realized or unrealized) recognized in earnings. The adjustments to Core Earnings outlined above are also applied to the GAAP earnings of our unconsolidated entities. Core other income increased by $61.6 million principally due to (i) a $23.3 million increase in gains on sales of properties, (ii) a $17.8 million increase in realized gains on conduit loans, (iii) a $12.9 million lesser decrease in fair value of servicing rights, (iv) an $11.6 million increase in earnings from unconsolidated entities and (v) a $6.2 million increase in net recognized gains on CMBS investments, all partially offset by (vi) an $11.3 million unfavorable change in realized gains (losses) on derivatives.

Income taxes, which principally relate to the taxable nature of our loan servicing and loan conduit businesses and certain other real estate related investing activities which are housed in TRSs, increased $3.4 million due to an increase in taxable income of our TRSs.

Income attributable to non-controlling interests decreased $0.1 million.

Corporate

Core corporate costs and expenses increased by $9.4 million, from $196.3 million during the year ended December 31, 2018 to $205.7 million during the year ended December 31, 2019, primarily due to (i) a $9.5 million unfavorable change in gain (loss) on extinguishment of debt primarily due to the $10.0 million positive adjustment to Core Earnings during the year ended December 31, 2018 upon the repayment at maturity of the 2018 Notes, as described above, (ii) a $3.8 million increase in base management fees and (iii) a $2.5 million unfavorable change in gain (loss) on interest rate swaps, all partially offset by (iv) an $8.4 million decrease in interest expense principally on lower average outstanding balances of our unsecured senior notes.

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Commercial and Residential Lending Segment

The Commercial and Residential Lending Segment’s Core Earnings increased by $25.2 million, from $420.0 million during the year ended December 31, 2017 to $445.2 million during the year ended December 31, 2018. After making adjustments for the calculation of Core Earnings, revenues were $627.2 million, costs and expenses were $187.5 million and other income was $9.8 million.

Core revenues, consisting principally of interest income on loans, increased by $80.2 million during the year ended December 31, 2018, primarily due to a $76.8 million increase in interest income from loans and a $3.5 million increase in interest income from investment securities. The increased interest income from loans was principally due to (i) increased LIBOR rates, partially offset by the compression of interest rate spreads in credit markets, (ii) higher average balances of both commercial loans and residential loans held-for-sale and (iii) income of $15.1 million received in 2018 from a profit participation in a mortgage loan that was repaid in 2016, partially offset by (iv) lower levels of prepayment related income.

Core costs and expenses increased by $59.2 million during the year ended December 31, 2018, primarily due to a $53.6 million increase in interest expense associated with the various secured financing facilities used to fund a portion of our investment portfolio and a $6.5 million increase in general and administrative expenses.

Core other income increased by $6.9 million, primarily due to a $24.3 million favorable change in foreign currency gain (loss) and a $4.1 million increase in realized gains on sales of investments primarily from securitizations of residential loans held-for-sale, partially offset by a $23.1 million unfavorable change in gain (loss) on foreign currency derivatives.

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Infrastructure Lending Segment

The Infrastructure Lending Segment had Core Earnings of $1.3 million for the period from the initial acquisition on September 19, 2018 through December 31, 2018. After making adjustments for the calculation of Core Earnings, revenues were $30.7 million, costs and expenses were $29.1 million and other income (loss) was nominal.

Revenues of $30.7 million included interest income of $29.0 million from loans and $1.1 million from investment securities.

Costs and expenses of $29.1 million consisted of $20.9 million of interest expense on the debt facility used to finance a portion of the acquisition price and subsequent loan fundings, $5.2 million of general and administrative expenses and a $3.0 million acquisition-related commitment fee related to an unused bridge financing facility.

Property Segment

Core Earnings by Portfolio (amounts in thousands)

	For the Year Ended December 31,
	2018		2017		Change
Master Lease Portfolio	$	40,271	$	7,111	$	33,160
Medical Office Portfolio		25,440		26,340		(900)
Ireland Portfolio		18,285		18,932		(647)
Woodstar I Portfolio		26,106		22,538		3,568
Woodstar II Portfolio		17,218		53		17,165
Investment in unconsolidated entities		—		3,559		(3,559)
Other/Corporate		(4,821)		(2,686)		(2,135)
Core Earnings	$	122,499	$	75,847	$	46,652

The Property Segment’s Core Earnings increased by $46.7 million, from $75.8 million during the year ended December 31, 2017 to $122.5 million during the year ended December 31, 2018. After making adjustments for the calculation of Core Earnings, revenues were $291.6 million, costs and expenses were $183.1 million and other income was $21.6 million.

Core revenues increased by $94.0 million during the year ended December 31, 2018, primarily due to the fuller inclusion of rental income for the Master Lease Portfolio and Woodstar II Portfolio, both of which were acquired after August 2017.

Core costs and expenses increased by $58.8 million during the year ended December 31, 2018, primarily due to increases in interest expense of $29.3 million and rental related costs of $27.4 million primarily relating to the fuller inclusion of the Master Lease Portfolio and Woodstar II Portfolio.

Core other income increased by $18.8 million during the year ended December 31, 2018, primarily due to a $23.1 million net gain on sale of seven properties in the Master Lease Portfolio, partially offset by a $3.5 million decrease in equity in earnings recognized from our investment in the Retail Fund.

Investing and Servicing Segment

The Investing and Servicing Segment’s Core Earnings decreased by $36.3 million, from $271.6 million during the year ended December 31, 2017 to $235.3 million during the year ended December 31, 2018. After making adjustments for the calculation of Core Earnings, revenues were $321.7 million, costs and expenses were $136.5 million, other income was $60.0 million, income tax provision was $4.7 million and the deduction of income attributable to non-controlling interests was $5.2 million.

Core revenues decreased by $4.4 million during the year ended December 31, 2018, primarily due to decreases of $7.3 million in servicing fees and $4.6 million in interest income from our CMBS portfolio, partially offset by an increase of $7.0 million in rental income from our REIS Equity Portfolio.

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Core costs and expenses increased by $1.6 million during the year ended December 31, 2018, primarily due to increases of $7.6 million in interest expense and $5.3 million in costs of rental operations associated with our REIS Equity Portfolio, partially offset by an $11.0 million decrease in general and administrative expenses primarily reflecting lower profit-based compensation, headcount and corporate expense allocations.

Core other income decreased by $54.4 million principally due to decreases of $52.8 million in earnings from unconsolidated entities and $18.8 million in realized gains on conduit loans, partially offset by a $15.9 million lesser decrease in fair value of servicing rights. The decrease in earnings from unconsolidated entities reflects a $52.4 million realized gain in the year ended December 31, 2017 related to an unconsolidated investor entity which owns equity in an online real estate company and sold nearly all of its interest during that year.

Income taxes, which principally relate to the taxable nature of our loan servicing and loan conduit businesses and certain other real estate related investing activities which are housed in TRSs, decreased $25.9 million due to (i) a decrease in the taxable income of our TRSs, which during the year ended December 31, 2017 included the realized gain related to the unconsolidated investor entity which sold nearly all of its interest in an online real estate company, (ii) the non-recurring impact in 2017 of remeasuring our net deferred tax assets upon enactment of the Tax Cuts and Jobs Act and a (iii) a lower statutory tax rate in 2018.

Income attributable to non-controlling interests increased $1.8 million primarily due to the increased minority investors’ share of gains from operating properties sold during the year ended December 31, 2018.

Corporate

Core corporate costs and expenses increased by $13.0 million, from $183.3 million during the year ended December 31, 2017 to $196.3 million during the year ended December 31, 2018, primarily due to a $9.1 million decrease in core gains on extinguishment of debt and a $5.4 million increase in base management fees.

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Liquidity and Capital Resources

Liquidity is a measure of our ability to meet our cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make new investments where appropriate, pay dividends to our stockholders and other general business needs. We closely monitor our liquidity position and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months. Our primary sources of liquidity are as follows:

Cash Flows for the Year Ended December 31, 2019 (amounts in thousands)

			VIE		Excluding Investing
	GAAP		Adjustments		and Servicing VIEs
Net cash used in operating activities	$	(13,199)	$	(7,189)	$	(20,388)
Cash Flows from Investing Activities:
Origination and purchase of loans held-for-investment		(5,473,399)		—		(5,473,399)
Proceeds from principal collections and sale of loans		4,273,779		—		4,273,779
Purchase of investment securities		(98,258)		(351,220)		(449,478)
Proceeds from sales and collections of investment securities		212,986		230,182		443,168
Proceeds from sales of real estate and related businesses, net of cash transferred		343,896		—		343,896
Purchases and additions to properties and other assets		(30,865)		(8,613)		(39,478)
Investment in unconsolidated entities		(18,055)		(13,323)		(31,378)
Net cash flows from other investments and assets		14,048		—		14,048
Net cash used in investing activities		(775,868)		(142,974)		(918,842)
Cash Flows from Financing Activities:
Proceeds from borrowings		10,167,339		—		10,167,339
Principal repayments on and repurchases of borrowings		(8,671,085)		—		(8,671,085)
Payment of deferred financing costs		(72,438)		—		(72,438)
Proceeds from common stock issuances, net of offering costs		740		—		740
Payment of dividends		(538,424)		—		(538,424)
Contributions from non-controlling interests		183,520		—		183,520
Distributions to non-controlling interests		(49,958)		8,523		(41,435)
Issuance of debt of consolidated VIEs		184,540		(184,540)		—
Repayment of debt of consolidated VIEs		(373,155)		373,155		—
Distributions of cash from consolidated VIEs		45,642		(45,642)		—
Net cash provided by financing activities		876,721		151,496		1,028,217
Net increase in cash, cash equivalents and restricted cash		87,654		1,333		88,987
Cash, cash equivalents and restricted cash, beginning of year		487,865		(2,554)		485,311
Effect of exchange rate changes on cash		(1,488)		—		(1,488)
Cash, cash equivalents and restricted cash, end of year	$	574,031	$	(1,221)	$	572,810

The discussion below is on a non-GAAP basis, after removing adjustments principally resulting from the consolidation of the securitization VIEs under ASC 810. These adjustments principally relate to (i) the purchase of CMBS, RMBS, loans and real estate from consolidated VIEs, which are reflected as repayments of VIE debt on a GAAP basis and (ii) principal collections of CMBS and RMBS related to consolidated VIEs, which are reflected as VIE distributions on a GAAP basis. There is no significant net impact to cash flows from operations or to overall cash resulting from these consolidations. Refer to Note 2 to the Consolidated Financial Statements for further discussion.

Cash and cash equivalents increased by $89.0 million during the year ended December 31, 2019, reflecting net cash provided by financing activities of $1.0 billion, partially offset by net cash used in investing activities of $918.8 million and net cash used in operating activities of $20.4 million.

Net cash used in operating activities of $20.4 million during the year ended December 31, 2019 related primarily to cash interest expense of $481.5 million, $365.0 million in originations and purchases of loans held-for-sale, net of sales and principal collections, general and administrative expenses of $157.6 million, management fees of $90.1 million and a net change in operating assets and liabilities of $4.4 million. Offsetting these cash outflows was cash interest income of $573.2 million from our loan origination and conduit programs and cash interest income on

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investment securities of $193.9 million. Net rental income provided cash of $212.8 million, servicing fees provided cash of $73.7 million and distributions of earnings from unconsolidated entities provided $28.1 million.

Net cash used in investing activities of $918.8 million for the year ended December 31, 2019 related primarily to the origination and acquisition of new loans held-for-investment of $5.5 billion, the purchase of investment securities of $449.5 million, net additions to properties and other assets of $39.5 million and investment in unconsolidated entities of $31.4 million, partially offset by proceeds received from principal collections and sales of loans of $4.3 billion and investment securities of $443.2 million and proceeds from sales of real estate and related businesses of $343.9 million.

Net cash provided by financing activities of $1.0 billion for the year ended December 31, 2019 related primarily to borrowings on our secured debt, net of repayments and deferred loan costs, of $1.4 billion and net contributions from non-controlling interests of $142.1 million, partially offset by dividend distributions of $538.4 million.

Financing Arrangements

We utilize a variety of financing arrangements, including:

1)Repurchase Agreements: Repurchase agreements effectively allow us to borrow against loans and securities that we own. Under these agreements, we sell our loans and securities to a counterparty and agree to repurchase the same loans and securities from the counterparty at a price equal to the original sales price plus interest. The counterparty retains the sole discretion over both whether to purchase the loan and security from us and, subject to certain conditions, the market value of such loan or security for purposes of determining whether we are required to pay margin to the counterparty. Generally, if the lender determines (subject to certain conditions) that the market value of the collateral in a repurchase transaction has decreased by more than a defined minimum amount, we would be required to repay any amounts borrowed in excess of the product of (i) the revised market value multiplied by (ii) the applicable advance rate. During the term of a repurchase agreement, we receive the principal and interest on the related loans and securities and pay interest to the counterparty. As of December 31, 2019, we had various repurchase agreements, with details referenced in the table provided below.

2)Secured Property Financings: We use long-term mortgage facilities from commercial lenders and government sponsors of affordable housing loans to finance many of the investment properties that we hold. These facilities accrue interest at either fixed or floating rates. We typically hedge our exposure to floating interest rate changes on these facilities through the use of interest rate swap and cap derivatives.

3)Bank Credit Facilities: We use bank credit facilities (including term loans and revolving facilities) to finance our assets. These financings may be collateralized or non-collateralized and may involve one or more lenders. Credit facilities typically have maturities ranging from two to five years and may accrue interest at either fixed or floating rates. The lender retains the sole discretion, subject to certain conditions, over the market value of such note for purposes of determining whether we are required to pay margin to the lender.

4)Loan Sales, Syndications and Securitizations: We seek non-recourse long-term financing from loan sales, syndications and/or securitizations of our investments in mortgage loans. The sales, syndications or securitizations generally involve a senior portion of our loan but may involve the entire loan. Loan sales and syndications generally involve the sale of a senior note component or participation interest to a third party lender. Securitization generally involves transferring notes to a special purpose vehicle (or the issuing entity), which then issues one or more classes of non-recourse notes pursuant to the terms of an indenture. The notes are secured by the pool of assets. In exchange for the transfer of assets to the issuing entity, we receive cash proceeds from the sale of non-recourse notes. Sales, syndications or securitizations of our portfolio investments might magnify our exposure to losses on those portfolio investments because the retained subordinate interest in any particular overall loan would be subordinate to the loan components sold and we would, therefore, absorb all losses sustained with respect to the overall loan before the owners of the senior notes experience any losses with respect to the loan in question.

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5)Unsecured Senior Notes: We issue senior notes, some of which are convertible, to finance certain operating and investing activities of the Company. These senior notes accrue interest at fixed interest rates and vary in tenure. Refer to Note 11 to the Consolidated Financial Statements for further discussion.

6)Federal Home Loan Bank Financing: As a member of the FHLB of Chicago, we have the ability to borrow funds from the FHLB of Chicago at both fixed and variable rates to finance eligible collateral, which includes residential mortgage loans.

Secured Borrowings

The following table is a summary of our secured borrowings as of December 31, 2019 (dollars in thousands):

						Pledged								Approved
					Weighted	Asset			Maximum					but		Unallocated
	Current		Extended		Average	Carrying			Facility			Outstanding		Undrawn		Financing
	Maturity		Maturity (a)		Pricing	Value			Size			Balance		Capacity (b)		Amount (c)
Repurchase Agreements:
Commercial Loans	Aug 2020 to Jan 2024	(d)	Aug 2021 to Apr 2028	(d)	(e)	$	5,327,761		$	9,066,480	(f)	$	3,640,620	$	132,957	$	5,292,903
Residential Loans	Feb 2021		N/A		LIBOR + 2.10%		14,704			400,000			11,835		—		388,165
Infrastructure Loans	Feb 2020		Feb 2021		LIBOR + 1.75%		227,463			500,000			188,198		—		311,802
Conduit Loans	Feb 2020 to Jun 2022		Feb 2021 to Jun 2023		LIBOR + 2.10%		109,864			350,000			86,575		—		263,425
CMBS/RMBS	Sep 2020 to Dec 2029	(g)	Dec 2020 to June 2030	(g)	(h)		1,005,348			837,566			682,229		34,076		121,261
Total Repurchase Agreements							6,685,140			11,154,046			4,609,457		167,033		6,377,556
Other Secured Financing:
Borrowing Base Facility	Apr 2022		Apr 2024		LIBOR + 2.25%		542,281			650,000	(i)		198,955		205,740		245,305
Infrastructure Acquisition Facility	Sep 2021		Sep 2022		(j)		754,443			771,534			603,642		—		167,892
Infrastructure Financing Facilities	Jul 2022 to Oct 2022		Oct 2024 to Jul 2027		LIBOR + 2.12%		524,197			1,000,000			428,206		—		571,794
Property Mortgages - Fixed rate	Nov 2024 to Aug 2052	(k)	N/A		3.94%		1,499,356			1,196,698			1,196,492		—		206
Property Mortgages - Variable rate	May 2020 to Jun 2026		N/A		LIBOR + 2.49%		783,460			714,810			696,503		—		18,307
Term Loan and Revolver	(l)		N/A		(l)		N/A	(l)		519,000			399,000		120,000		—
FHLB	Feb 2021		N/A		(m)		1,262,250			2,000,000			867,870		—		1,132,130
Collateralized Loan Obligation	Jul 2038		N/A		LIBOR + 1.34%		1,073,504			936,375			936,375		—		—
Total Other Secured Financing							6,439,491			7,788,417			5,327,043		325,740		2,135,634
						$	13,124,631		$	18,942,463		$	9,936,500	$	492,773	$	8,513,190
Unamortized net discount													(8,347)
Unamortized deferred financing costs													(94,045)
												$	9,834,108

(a) Subject to certain conditions as defined in the respective facility agreement.

(b) Approved but undrawn capacity represents the total draw amount that has been approved by the lenders related to those assets that have been pledged as collateral, less the drawn amount.

(c) Unallocated financing amount represents the maximum facility size less the total draw capacity that has been approved by the lenders.

(d) For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions.

(e) Certain facilities with an outstanding balance of $874.9 million as of December 31, 2019 are indexed to GBP LIBOR and EURIBOR. The remainder have a weighted average rate of LIBOR + 1.90%.

(f) The aggregate initial maximum facility size of $8.9 billion may be increased at our option, subject to certain conditions. This amount includes such upsizes.

(g) Certain facilities with an outstanding balance of $295.0 million as of December 31, 2019 carry a rolling 11-month or 12-month term which may reset monthly with the lender's consent. These facilities carry no maximum facility size.

(h) A facility with an outstanding balance of $184.7 million as of December 31, 2019 has a fixed annual interest rate of 3.49%. All other facilities are variable rate with a weighted average rate of LIBOR + 1.58%.

(i) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions.

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(j) Consists of an annual interest rate of the applicable currency benchmark index + 1.50%. The spread increases 25 bps in each of the second and third years of the facility, which was entered into in September 2018.

(k) The weighted average maturity is 9.8 years as of December 31, 2019.

(l) Consists of: (i) a $399.0 million term loan facility that matures in July 2026 with an annual interest rate of LIBOR + 2.50%; and (ii) a $120.0 million revolving credit facility that matures in July 2024 with an annual interest rate of LIBOR + 3.00%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $3.1 billion as of December 31, 2019.

(m) FHLB financing with an outstanding balance of $438.5 million as of December 31, 2019 has a weighted average fixed annual interest rate of 2.01%. The remainder is variable rate with a weighted average rate of LIBOR + 0.28%.

Refer to Note 10 to the Consolidated Financial Statements for a detailed discussion of new secured credit facilities and amendments to existing credit facilities entered into during the year ended December 31, 2019.

Variance between Average and Quarter-End Credit Facility Borrowings Outstanding

The following tables compare the average amount outstanding under our secured financing agreements during each quarter and the amount outstanding as of the end of each quarter, together with an explanation of significant variances (amounts in thousands):

			Weighted-Average				Explanations
	Quarter-End		Balance During				for Significant
Quarter Ended	Balance		Quarter		Variance		Variances
March 31, 2019	$	9,305,605	$	9,766,206	$	(460,601)	(a)
June 30, 2019		9,359,610		9,503,479		(143,869)	(b)
September 30, 2019		9,266,704		9,116,755		149,949	(c)
December 31, 2019		9,936,500		9,535,839		400,661	(d)

(a) Variance primarily due to the late quarter timing of commercial loan sales and loan repayments, all of which resulted in paydowns of the corresponding credit facilities which financed these assets.

(b) Variance primarily due to loan repayments on the Infrastructure Acquisition Facility and Commercial Loans repurchase facilities.

(c) Variance primarily due to the net increase in debt related to the CLO issuance in August 2019.

(d) Variance primarily due to the following: (i) the late quarter timing of commercial loan fundings, which resulted in the Company drawing on its corresponding credit facilities which financed these assets and (ii) borrowings on a new Infrastructure Financing Facility.

			Weighted-Average				Explanations
	Quarter-End		Balance During				for Significant
Quarter Ended	Balance		Quarter		Variance		Variances
March 31, 2018	$	5,596,955	$	5,573,668	$	23,287	N/A
June 30, 2018		6,263,085		5,813,312		449,773	(a)
September 30, 2018		8,671,698		6,918,063		1,753,635	(b)
December 31, 2018		8,761,624		8,885,381		(123,757)	(c)

(a) The Commercial and Residential Lending Segment funded 63% of the second quarter’s total loan fundings during June 2018, which resulted in the Company drawing on its secured financing agreements near quarter end to finance the additional loan fundings.

(b) The Infrastructure Lending Segment acquisition closed on September 19, 2018, which resulted in the funding of $1.5 billion under the Infrastructure Acquisition Facility.

(c) Variance primarily due to $120.0 million repaid on Commercial Loans repurchase facilities in December 2018.

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Borrowings under Unsecured Senior Notes

During the years ended December 31, 2019 and 2018, the weighted average effective borrowing rate on our unsecured senior notes was 4.9% and 4.8%, respectively. The effective borrowing rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on the convertible notes, the initial value of which reduced the balance of the notes.

Refer to Note 11 to the Consolidated Financial Statements for further disclosure regarding the terms of our unsecured senior notes.

Scheduled Principal Repayments on Investments and Overhang on Financing Facilities

The following scheduled and/or projected principal repayments on our investments were based on amounts outstanding and extended contractual maturities of those investments as of December 31, 2019. The projected and/or required repayments of financing were based on the earlier of (i) the extended contractual maturity of each credit facility or (ii) the extended contractual maturity of each of the investments that have been pledged as collateral under the respective credit facility (amounts in thousands):

	Scheduled Principal		Scheduled/Projected		Projected/Required			Scheduled Principal
	Repayments on Loans		Principal Repayments		Repayments of			Inflows Net of
	and HTM Securities		on RMBS and CMBS		Financing			Financing Outflows
First Quarter 2020		284,401		43,648		(377,174)	(1)		(49,125)
Second Quarter 2020		351,089		41,692		(168,807)			223,974
Third Quarter 2020		267,978		11,821		(62,368)			217,431
Fourth Quarter 2020		200,371		136,226		(436,786)	(2)		(100,189)
Total	$	1,103,839	$	233,387	$	(1,045,135)		$	292,091

(1) Includes $340.6 million of maturities associated with the financing of residential loans held-for-sale under the FHLB facility. Expected proceeds from sales of loans are not reflected in this table.

(2) Includes $295.0 million of repayments associated with a secured financing facility that carries a rolling 12-month term which may reset monthly with the lender’s consent.

In the normal course of business, the Company is in discussions with its lenders to extend or amend any financing facilities which contain near term expirations.

Issuances of Equity Securities

We may raise funds through capital market transactions by issuing capital stock. There can be no assurance, however, that we will be able to access the capital markets at any particular time or on any particular terms. We have authorized 100,000,000 shares of preferred stock and 500,000,000 shares of common stock. At December 31, 2019, we had 100,000,000 shares of preferred stock available for issuance and 217,799,249 shares of common stock available for issuance.

Refer to Note 17 to the Consolidated Financial Statements for a discussion of our issuances of equity securities in recent years.

Other Potential Sources of Financing

In the future, we may also use other sources of financing to fund the acquisition of our target assets, including other secured as well as unsecured forms of borrowing and sale of senior loan interests and other assets.

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Off-Balance Sheet Arrangements

We have relationships with unconsolidated entities and financial partnerships, such as entities often referred to as VIEs. Our maximum risk of loss associated with our involvement in VIEs is limited to the carrying value of our investment in the entity and any unfunded capital commitments. Refer to Note 15 to the Consolidated Financial Statements for further discussion.

Dividends

We intend to continue to make regular quarterly distributions to holders of our common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. We intend to continue to pay regular quarterly dividends to our stockholders in an amount approximating our net taxable income, if and to the extent authorized by our board of directors. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating and debt service requirements. If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. Refer to Note 17 to the Consolidated Financial Statements for a detailed dividend history.

The tax treatment for our aggregate distributions per share of common stock paid with respect to the 2019 tax year is as follows:

				Ordinary		Taxable
		Per Share		Taxable		Qualified		Capital Gain		Unrecaptured		Nondividend		Section 199A
Record Date	Payable Date	Dividend Paid		Dividends		Dividends		Distribution		1250 Gain		Distributions		Dividends
12/31/2018	1/15/2019	$	0.3180	$	0.2082	$	0.0137	$	0.1098	$	0.0264	$	—	$	0.1945
3/29/2019	4/15/2019		0.4800		0.3142		0.0206		0.1658		0.0398		—		0.2936
6/28/2019	7/15/2019		0.4800		0.3142		0.0206		0.1658		0.0398		—		0.2936
9/30/2019	10/15/2019		0.4800		0.3142		0.0206		0.1658		0.0398		—		0.2936
12/31/2019	1/15/2020		0.0079		0.0052		0.0003		0.0027		0.0006		—		0.0049
		$	1.7659	$	1.1560	$	0.0758	$	0.6099	$	0.1464	$	—	$	1.0802

To the extent that total dividends for the 2019 tax year exceeded 2019 taxable income, the portion of the fourth quarter dividend paid in January of 2020 that is equal to such excess is treated as a 2020 dividend for federal tax purposes.

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Leverage Policies

We employ leverage, to the extent available, to fund the acquisition of our target assets, increase potential returns to our stockholders, or provide temporary liquidity. Leverage can be either direct by utilizing private third party financing or indirect through originating, acquiring or retaining subordinated mortgages, B-Notes, subordinated loan participations or mezzanine loans. Although the type of leverage we deploy is dependent on the underlying asset that is being financed, we intend, when possible, to utilize leverage whose maturity is equal to or greater than the maturity of the underlying asset and minimize to the greatest extent possible exposure to the Company of credit losses associated with any individual asset. In addition, we intend to mitigate the impact of potential future interest rate increases on our borrowings through utilization of hedging instruments, primarily interest rate swap agreements.

The amount of leverage we deploy for particular investments in our target assets depends upon our Manager’s assessment of a variety of factors, which may include the anticipated liquidity and price volatility of the assets in our investment portfolio, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, including hedges, the availability and cost of financing the assets, our opinion of the creditworthiness of our financing counterparties, the health of the U.S. and European economy and commercial, residential and infrastructure markets, our outlook for the level, slope and volatility of interest rates, the credit quality of our assets, the collateral underlying our assets and our outlook for asset spreads relative to the LIBOR curve. Under our current repurchase agreements and bank credit facility, our total leverage may not exceed 80% of total assets (as defined), as adjusted to remove the impact of bona-fide loan sales that are accounted for as financings and the consolidation of VIEs pursuant to GAAP. As of December 31, 2019, our total debt to assets ratio was 68.0%.

Contractual Obligations and Commitments

Contractual obligations as of December 31, 2019 are as follows (amounts in thousands):

			Less than						More than
	Total		1 year		1 to 3 years		3 to 5 years		5 years
Secured financings (a)	$	9,000,125	$	850,326	$	1,471,000	$	3,848,815	$	2,829,984
Collateralized loan obligations		936,375		—		—		—		936,375
Unsecured senior notes		1,950,000		—		1,200,000		250,000		500,000
Loan and preferred equity interest funding commitments (b)		2,921,081		1,850,151		995,798		75,132		—
Infrastructure Lending Segment commitments (c)		360,562		285,635		74,927		—		—
Future lease commitments		35,518		6,629		8,246		3,226		17,417
Total	$	15,203,661	$	2,992,741	$	3,749,971	$	4,177,173	$	4,283,776

(a) Represents the contractual maturity of the respective credit facility, inclusive of available extension options.  If investments that have been pledged as collateral repay earlier than the contractual maturity of the debt, the related portion of the debt would likewise require earlier repayment. Refer to Note 10 to the Consolidated Financial Statements for the expected maturities by year.

(b) Excludes $231.0 million of loan funding commitments in which management projects the Company will not be obligated to fund in the future due to repayments made by the borrower earlier than, or in excess of, expectations.

(c) Represents contractual commitments of $145.1 million under revolvers and letters of credit and $215.5 million under delayed draw term loans

The table above does not include interest payable, amounts due under our management agreement, amounts due under our derivative agreements or amounts due under guarantees as those contracts do not have fixed and determinable payments.

Critical Accounting Estimates

Our financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe that all of the decisions and

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assessments upon which our financial statements are based were reasonable at the time made, based upon information available to us at that time. The following discussion describes the critical accounting estimates that apply to our operations and require complex management judgment. This summary should be read in conjunction with a more complete discussion of our accounting policies included in Note 2 to the Consolidated Financial Statements.

Loan Impairment

We evaluate each loan classified as held-for-investment for impairment at least quarterly. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral.

We regularly evaluate the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral, as well as the financial and operating capability of the borrower. Specifically, the collateral’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan and/or (iii) the collateral’s liquidation value. We also evaluate the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the collateral. In addition, we consider the overall economic environment, real estate or industry sector and geographic sub-market in which the borrower operates. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including (i) periodic financial data such as property operating statements, occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections and (iii) current credit spreads and discussions with market participants.

Significant judgment is required when evaluating loans for impairment; therefore, actual results over time could be materially different. The loan loss allowance was $33.6 million as of December 31, 2019, which includes $29.9 million of impairment reserves on specific loans recorded during the year ended December 31, 2018, a general loan loss allowance of $3.5 million based on our loan risk rating system and an allowance for infrastructure loans held-for-sale where amortized cost is in excess of fair value of $0.2 million.

Classification and Impairment Evaluation of Investment Securities

Our investment securities consist primarily of (i) RMBS that we classify as available-for-sale, (ii) CMBS, infrastructure bonds and mandatorily redeemable preferred equity interests in commercial real estate entities which we expect to hold to maturity and (iii) CMBS and RMBS for which we have elected the fair value option. Investments classified as available-for-sale are carried at their fair value. For available-for-sale debt securities where we have not elected the fair value option, changes in fair value are recorded through accumulated other comprehensive income, a component of stockholders’ equity, rather than through earnings. We do not hold any of our investment securities for trading purposes.

When the estimated fair value of a debt security for which we have not elected to apply the fair value option is less than its amortized cost, we consider whether there is other-than-temporary impairment (“OTTI”) in the value of the security. An impairment is deemed an OTTI if (i) we intend to sell the security, (ii) it is more likely than not that we will be required to sell the security before recovering our cost basis or (iii) we do not expect to recover our cost basis even if we do not intend to sell the security or do not believe it is more likely than not that we will be required to sell the security before recovering our cost basis. If the impairment is deemed to be an OTTI, the resulting accounting treatment depends on the factors causing the OTTI. If the OTTI has resulted from (i) our intention to sell the security, or (ii) our judgment that it is more likely than not that we will be required to sell the security before recovering our cost basis, an impairment loss is recognized in earnings equal to the difference between our amortized cost basis and fair value. Whereas, if the OTTI has resulted from our conclusion that we will not recover our cost basis even if we do not intend to sell the security or do not believe it is more likely than not that we will be required to sell the security before recovering our cost basis, only the credit loss portion of the impairment is recorded in earnings, and the portion of the loss related to other factors, such as changes in interest rates, continues to be recognized in accumulated other comprehensive income. Determining whether there is an OTTI may require us to exercise significant judgment and make significant assumptions, including, but not limited to, estimated cash flows, estimated prepayments, loss assumptions, and assumptions regarding changes in interest rates. As a result, actual OTTI losses could differ from reported amounts.

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Such judgments and assumptions are based upon a number of factors, including (i) credit of the issuer or the borrowers, (ii) credit rating of the security, (iii) key terms of the security, (iv) performance of underlying loans, including debt service coverage and loan-to-value ratios, (v) the value of the collateral for underlying loans, (vi) the effect of local, industry, and broader economic factors, and (vii) the historical and anticipated trends in defaults and loss severities for similar securities. As of December 31, 2019, we held $189.6 million of available-for-sale RMBS which had gross unrealized gains of $51.3 million and immaterial unrealized losses. We also had $570.6 million of held-to-maturity debt securities which had gross unrealized losses of $4.0 million and gross unrealized gains of $2.1 million as of December 31, 2019. We recognized no material OTTI charges against earnings with respect to our investment securities during the years ended December 31, 2019, 2018 and 2017.

Valuation of Financial Assets and Liabilities Carried at Fair Value

We measure our VIE assets and liabilities, mortgage-backed securities, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors. See Note 20 to the Consolidated Financial Statements for details regarding the various methods and inputs we use in measuring the fair value of our financial assets and liabilities. As of December 31, 2019, we had $63.9 billion and $60.8 billion of financial assets and liabilities, respectively, that are measured at fair value, including $62.2 billion of VIE assets and $60.7 billion of VIE liabilities we consolidate pursuant to ASC 810.

We measure the assets and liabilities of consolidated securitization VIEs at fair value pursuant to our election of the fair value option. The securitization VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the VIE, we maximize the use of observable inputs over unobservable inputs. As a result, the methods and inputs we use in measuring the fair value of the assets and liabilities of our VIEs affect our earnings only to the extent of their impact on our direct investment in the VIEs.

Goodwill Impairment

Our goodwill at December 31, 2019 of $259.8 million represents the excess of consideration transferred over the fair value of net assets acquired in connection with the acquisitions of LNR in April 2013 and the Infrastructure Lending Segment in September 2018 and October 2018. In testing goodwill for impairment, we follow ASC 350, Intangibles—Goodwill and Other, which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or we choose not to perform the qualitative assessment, then we compare the fair value of that reporting unit with its carrying value, including goodwill (“Step One”). If the carrying value of a reporting unit exceeds its fair value, goodwill is considered impaired with the impairment loss equal to the amount by which the carrying value of the goodwill exceeds the implied fair value of that goodwill.

Based on our qualitative assessment during the fourth quarter of 2019, we believe that the Investing and Servicing Segment reporting unit to which the LNR acquisition goodwill was attributed is not currently at risk of failing Step One of the impairment test. This qualitative assessment required judgment to be applied in evaluating the effects of multiple factors, including actual and projected financial performance of the reporting unit, macroeconomic conditions, industry and market conditions, and relevant entity specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill.

Based on our Step One quantitative assessment during the fourth quarter of 2019, we determined that the fair value of the Infrastructure Lending Segment reporting unit to which goodwill is attributed exceeded its carrying value including goodwill. This quantitative assessment required judgment to be applied in determining the fair value of our equity in the Infrastructure Lending Segment, which included estimates of future cash flows, terminal equity multiple and market discount rate.

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Property Impairment

We review properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability is determined by comparing the carrying amount of the property to the undiscounted future net cash flows it is expected to generate. If such carrying amount exceeds the expected undiscounted future net cash flows, we adjust the carrying amount of the property to its estimated fair value. The estimation of future net cash flows and fair values of our properties involves significant judgments by our management, and changes to these judgments could significantly impact our reported results of operations. As of December 31, 2019 we held properties with a carrying value of $2.3 billion, none of which we determined were impaired at any point during the year ended December 31, 2019.

Impairment of Investments in Unconsolidated Entities

Investments in unconsolidated entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or each reporting period for certain other investments accounted for under the fair value practicability exception. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods, estimated fair values of underlying assets and available information at the time the analyses are prepared. As of December 31, 2019, we held investments in unconsolidated entities with a carrying value of $84.3 million. We recorded an impairment loss of $71.9 million in connection with our equity method investment in the Retail Fund as of December 31, 2019 based on our estimated fair values of the underlying assets (refer to Note 8 to the Consolidated Financial Statements).

Recent Accounting Developments

Refer to Note 2 to the Consolidated Financial Statements for a discussion of recent accounting developments and the expected impact to the Company.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value while, at the same time, seeking to provide an opportunity to stockholders to realize attractive risk-adjusted returns through ownership of our capital stock. While we do not seek to avoid risk completely, we believe the risk can be quantified from historical experience and seek to actively manage that risk, to earn sufficient compensation to justify taking those risks and to maintain capital levels consistent with the risks we undertake.

Credit Risk

Our loans and investments are subject to credit risk. The performance and value of our loans and investments depend upon the owners’ ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our asset management team reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

We seek to further manage credit risk associated with our Investing and Servicing Segment loans held-for-sale through the purchase of credit index instruments. The following table presents our credit index instruments as of December 31, 2019 and December 31, 2018 (dollars in thousands):

	Face Value of		Aggregate Notional Value of		Number of
	Loans Held-for-Sale		Credit Index Instruments		Credit Index Instruments
December 31, 2019	$	160,635	$	89,000	5
December 31, 2018	$	46,249	$	24,000	3

Capital Market Risk

We are exposed to risks related to the equity capital markets and our related ability to raise capital through the issuance of our common stock or other equity instruments. We are also exposed to risks related to the debt capital markets, and our related ability to finance our business through borrowings under repurchase obligations or other debt

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instruments. As a REIT, we are required to distribute a significant portion of our taxable income annually, which constrains our ability to accumulate operating cash flow and therefore requires us to utilize debt or equity capital to finance our business. We seek to mitigate these risks by monitoring the debt and equity capital markets to inform our decisions on the amount, timing and terms of capital we raise.

Interest Rate Risk

Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We are subject to interest rate risk in connection with our investments and the related financing obligations. In general, we seek to match the interest rate characteristics of our investments with the interest rate characteristics of any related financing obligations such as repurchase agreements, bank credit facilities, term loans, revolving facilities and securitizations. In instances where the interest rate characteristics of an investment and the related financing obligation are not matched, we mitigate such interest rate risk through the utilization of interest rate derivatives of the same duration. The following table presents financial instruments where we have utilized interest rate derivatives to hedge interest rate risk and the related interest rate derivatives as of December 31, 2019 and 2018 (dollars in thousands):

			Aggregate Notional
	Face Value of		Value of Interest		Number of Interest
	Hedged Instruments		Rate Derivatives		Rate Derivatives
Instrument hedged as of December 31, 2019
Loans held-for-investment, residential	$	654,925	$	169,200	8
Loans held-for-sale		747,779		344,900	24
RMBS, available-for-sale		278,853		85,000	2
HTM debt securities		18,784		18,784	1
Secured financing agreements		693,496		1,423,881	14
Unsecured senior notes		1,000,000		970,000	2
	$	3,393,837	$	3,011,765	51
Instrument hedged as of December 31, 2018
Loans held-for-sale	$	346,300	$	337,700	10
RMBS, available-for-sale		309,497		109,000	3
Secured financing agreements		1,085,717		1,029,376	16
Unsecured senior notes		1,000,000		970,000	2
	$	2,741,514	$	2,446,076	31

The following table summarizes the estimated annual change in net investment income for our variable rate investments and our variable rate debt assuming increases or decreases in LIBOR or other applicable index rates and adjusted for the effects of our interest rate hedging activities (amounts in thousands, except per share data):

	Variable rate
	investments and		2.0%		1.0%		1.0%		2.0%
Income (Expense) Subject to Interest Rate Sensitivity	indebtedness (1)		Increase		Increase		Decrease		Decrease
Investment income from variable rate investments	$	10,021,039	$	187,250	$	87,453	$	(50,173)	$	(72,550)
Interest expense from variable rate debt, net of interest rate derivatives		(7,097,303)		(156,089)		(77,971)		75,439		128,804
Net investment income from variable rate instruments	$	2,923,736	$	31,161	$	9,482	$	25,266	$	56,254
Impact per diluted shares outstanding			$	0.11	$	0.03	$	0.09	$	0.20

(1)Includes the notional value of interest rate derivatives.

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LIBOR Transition Risk

In July 2017, the United Kingdom’s Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. There is currently no certainty regarding the future utilization of LIBOR or of any particular replacement rate (although the secured overnight financing rate has been proposed as an alternative to U.S.-dollar LIBOR). As indicated in the Interest Rate Risk section above, a substantial portion of our loans, investment securities, borrowings and interest rate derivatives are indexed to LIBOR or similar reference rates. Market participants anticipate that financial instruments tied to LIBOR will require transition to an alternative reference rate if LIBOR is no longer available. Our LIBOR-based loan agreements and borrowing arrangements generally specify alternative reference rates such as the prime rate and federal funds rate, respectively. The potential effect of the discontinuation of LIBOR on our interest income and expense cannot yet be determined and any changes to benchmark interest rates could increase our financing costs and/or result in mismatches between the interest rates of our investments and the corresponding financings.

Prepayment Risk

Prepayment risk is the risk that principal will be repaid earlier than anticipated, causing the return on certain investments to be less than expected. As we receive prepayments of principal on our assets, any premiums paid on such assets are amortized against interest income. In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income. In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest income earned on the assets.

Extension Risk

We compute the projected weighted-average life of our assets based on assumptions regarding the rate at which the borrowers will prepay the loans or extend. If prepayment rates decrease in a rising interest rate environment or extension options are exercised, the life of the fixed-rate assets could extend beyond the term of the secured debt agreements. This could have a negative impact on our results of operations. In some situations, we may be forced to sell assets to maintain adequate liquidity, which could cause us to incur losses.

Fair Value Risk

The estimated fair value of our investments fluctuates primarily due to changes in interest rates and other factors. Generally, in a rising interest rate environment, the estimated fair value of the fixed-rate investments would be expected to decrease; conversely, in a decreasing interest rate environment, the estimated fair value of the fixed-rate investments would be expected to increase. As market volatility increases or liquidity decreases, the fair value of our assets recorded and/or disclosed may be adversely impacted. Our economic exposure is generally limited to our net investment position as we seek to fund fixed rate investments with fixed rate financing or variable rate financing hedged with interest rate swaps.

Foreign Currency Risk

We intend to hedge our currency exposures in a prudent manner. However, our currency hedging strategies may not eliminate all of our currency risk due to, among other things, uncertainties in the timing and/or amount of payments received on the related investments, and/or unequal, inaccurate, or unavailable hedges to perfectly offset changes in future exchange rates. Additionally, we may be required under certain circumstances to collateralize our currency hedges for the benefit of the hedge counterparty, which could adversely affect our liquidity.

Consistent with our strategy of hedging foreign currency exposure on certain investments, we typically enter into a series of forwards to fix the U.S. dollar amount of foreign currency denominated cash flows (interest income, rental income and principal payments) we expect to receive from our foreign currency denominated investments. Accordingly, the notional values and expiration dates of our foreign currency hedges approximate the amounts and timing of future payments we expect to receive on the related investments.

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The following table represents our current currency hedge exposure as it relates to our investments denominated in foreign currencies, along with the aggregate notional amount of the hedges in place (amounts in thousands except for number of contracts) using the December 31, 2019 GBP closing rate of 1.3259, Euro (“EUR”) closing rate of 1.1215 and Australian Dollar (“AUD”) closing rate of 0.7021:

Carrying Value of Net Investment		Local Currency	Number of Foreign Exchange Contracts	Aggregate Notional Value of Hedges Applied		Expiration Range of Contracts
$	97,427	GBP	2	$	97,114	March 2020 – December 2023
	9,461	EUR	72		9,346	August 2020 – July 2021
	32,702	GBP	1		37,702	July 2023
	3,829	GBP	3		9,441	February 2020 – June 2020
	60,313	GBP	16		158,811	January 2020 – July 2021
	33,265	EUR	8		36,910	May 2020 – March 2022
	21,264	EUR	44		31,641	February 2020 – August 2022
	95,296	GBP	12		111,165	January 2020 – January 2022
	54,232	GBP	9		52,167	April 2021
	2,753	AUD	1		4,417	March 2020
	23,431	EUR	30		31,649	February 2020 – June 2023
	56,515	EUR	12		70,351	February 2020 – November 2022
	28,409	GBP	8		34,625	March 2020 – December 2021
	10,655	AUD	3		13,732	November 2021
	58,455	GBP	32		74,097	February 2020 – November 2021
	2,599	EUR	1		4,453	June 2022
	12,664	GBP	10		13,891	March 2020 – April 2022
	2,377	GBP	—		—	N/A
	—	EUR	1		39,025	January 2020
$	605,647		265	$	830,537

Real Estate Risk

The market values of commercial and residential mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses.

Inflation Risk

Most of our assets and liabilities are interest rate sensitive in nature. As a result, interest rates and other factors influence our performance significantly more than inflation does. Changes in interest rates may correlate with inflation rates and/or changes in inflation rates. Our financial statements are prepared in accordance with GAAP, and our distributions are determined by our board of directors consistent with our obligation to distribute to our stockholders at least 90% of our REIT taxable income on an annual basis in order to maintain our REIT qualification; in each case, our activities and balance sheet are measured with reference to historical cost and/or fair value without considering inflation.

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Item 8. Financial Statements and Supplementary Data.

Index to Financial Statements and Schedules

Financial Statements
Reports of Independent Registered Public Accounting Firm	99
Consolidated Balance Sheets as of December 31, 2019 and 2018	102
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017	103
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2018 and 2017	104
Consolidated Statements of Equity for the Years Ended December 31, 2019, 2018 and 2017	105
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017	106
Notes to Consolidated Financial Statements	108
Note 1 Business and Organization	108
Note 2 Summary of Significant Accounting Policies	109
Note 3 Acquisitions and Divestitures	122
Note 4 Restricted Cash	126
Note 5 Loans	127
Note 6 Investment Securities	133
Note 7 Properties	137
Note 8 Investment in Unconsolidated Entities	139
Note 9 Goodwill and Intangibles	140
Note 10 Secured Borrowings	143
Note 11 Unsecured Senior Notes	147
Note 12 Loan Securitization/Sale Activities	149
Note 13 Derivatives and Hedging Activity	151
Note 14 Offsetting Assets and Liabilities	153
Note 15 Variable Interest Entities	154
Note 16 Related-Party Transactions	156
Note 17 Stockholders’ Equity and Non-Controlling Interests	160
Note 18 Earnings per Share	166
Note 19 Accumulated Other Comprehensive Income	167
Note 20 Fair Value	168
Note 21 Income Taxes	175
Note 22 Commitments and Contingencies	177
Note 23 Segment and Geographic Data	179
Note 24 Quarterly Financial Data	184
Note 25 Subsequent Events	184
Schedule III—Real Estate and Accumulated Depreciation as of December 31, 2019	185
Schedule IV—Mortgage Loans on Real Estate as of December 31, 2019	187

All other schedules are omitted because they are not required or the required information is shown in the financial statements or the notes thereto.

98

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Starwood Property Trust, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Starwood Property Trust, Inc. and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Investment Securities - Valuation of Level 3 Residential Mortgage Backed Securities and Commercial Mortgage Backed Securities — Refer to Notes 6 and 20 to the consolidated financial statements

Critical Audit Matter Description

The Company has commercial mortgage backed securities recorded in accordance with the fair value option and residential mortgage backed securities, available-for-sale recorded at fair value that are not actively traded and whose fair values are derived from proprietary pricing models that utilize unobservable inputs, market bids, other third-party prices or quotes. Under accounting principles generally accepted in the United States of America, these financial instruments are generally classified as Level 3 assets. Management’s judgments in selecting the price estimate that is most reflective of fair value is inherently subjective.

99

Performing audit procedures to evaluate the appropriateness of these fair values requires a high degree of auditor judgement and an increased extent of effort, including the need to involve our fair value specialists who possess significant quantitative and modeling expertise.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s fair value estimates for Level 3 assets, included the following, among others:

● We tested the effectiveness of controls, including those controls relating to investment security metrics and characteristics, pricing sources, pricing policy and pricing selection.
​

● With the assistance of our fair value specialists, we developed independent fair value estimates for selected investment securities and compared our estimates to management’s estimates. 
​

● We evaluated the differences between our estimates of fair value and management’s estimates and considered whether there were any indicators of management bias.

/s/ DELOITTE & TOUCHE LLP

Miami, Florida
February 25, 2020

We have served as the Company's auditor since 2009.

100

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of

Starwood Property Trust, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Starwood Property Trust. Inc. and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 25, 2020, expressed an unqualified opinion on those financial statements and financial statement schedules.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

Miami, Florida

February 25, 2020

101

Starwood Property Trust, Inc. and Subsidiaries

Consolidated Balance Sheets

(Amounts in thousands, except share data)

	As of December 31,
	2019		2018
Assets:
Cash and cash equivalents	$	478,388	$	239,824
Restricted cash		95,643		248,041
Loans held-for-investment, net ($671,572 and $0 held at fair value)		10,586,074		8,532,356
Loans held-for-sale ($764,622 and $671,282 held at fair value)		884,150		1,187,552
Loans transferred as secured borrowings		—		74,346
Investment securities ($239,600 and $262,319 held at fair value)		810,238		906,468
Properties, net		2,266,440		2,784,890
Intangible assets ($16,917 and $20,557 held at fair value)		85,700		145,033
Investment in unconsolidated entities		84,329		171,765
Goodwill		259,846		259,846
Derivative assets		28,943		52,691
Accrued interest receivable		64,087		60,355
Other assets		211,323		152,922
Variable interest entity (“VIE”) assets, at fair value		62,187,175		53,446,364
Total Assets	$	78,042,336	$	68,262,453
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	212,006	$	217,663
Related-party payable		40,925		44,043
Dividends payable		137,427		133,466
Derivative liabilities		8,740		15,415
Secured financing agreements, net		8,906,048		8,683,565
Collateralized loan obligations, net		928,060		—
Unsecured senior notes, net		1,928,622		1,998,831
Secured borrowings on transferred loans, net		—		74,239
VIE liabilities, at fair value		60,743,494		52,195,042
Total Liabilities		72,905,322		63,362,264
Commitments and contingencies (Note 22)
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Preferred stock, $0.01 per share, 100,000,000 shares authorized, no shares issued and outstanding		—		—
Common stock, $0.01 per share, 500,000,000 shares authorized, 287,380,891 issued and 282,200,751 outstanding as of December 31, 2019 and 280,839,692 issued and 275,659,552 outstanding as of December 31, 2018		2,874		2,808
Additional paid-in capital		5,132,532		4,995,156
Treasury stock (5,180,140 shares)		(104,194)		(104,194)
Accumulated other comprehensive income		50,932		58,660
Accumulated deficit		(381,719)		(348,998)
Total Starwood Property Trust, Inc. Stockholders’ Equity		4,700,425		4,603,432
Non-controlling interests in consolidated subsidiaries		436,589		296,757
Total Equity		5,137,014		4,900,189
Total Liabilities and Equity	$	78,042,336	$	68,262,453

Note: In addition to the VIE assets and liabilities which are separately presented, our consolidated balance sheet as of December 31, 2019 includes assets of $1.1 billion and liabilities of $0.9 billion related to a consolidated collateralized loan obligation (“CLO”), which is considered to be a VIE.  The CLO’s assets can only be used to settle obligations of the CLO, and the CLO’s liabilities do not have recourse to Starwood Property Trust, Inc. Refer to Note 15 for additional discussion of VIEs.

See notes to consolidated financial statements.

102

Starwood Property Trust, Inc. and Subsidiaries

Consolidated Statements of Operations

(Amounts in thousands, except per share data)

	For the Year Ended December 31,
	2019		2018		2017
Revenues:
Interest income from loans	$	724,013	$	620,543	$	513,814
Interest income from investment securities		76,629		56,839		52,813
Servicing fees		54,296		78,766		61,446
Rental income		337,966		349,684		249,000
Other revenues		3,515		3,448		2,815
Total revenues		1,196,419		1,109,280		879,888
Costs and expenses:
Management fees		119,132		129,455		122,699
Interest expense		508,729		408,188		295,666
General and administrative		155,112		136,132		129,587
Acquisition and investment pursuit costs		1,056		8,587		3,472
Costs of rental operations		122,982		127,068		94,258
Depreciation and amortization		113,322		132,649		93,603
Loan loss provision, net		7,126		34,821		(5,458)
Other expense		2,365		732		1,422
Total costs and expenses		1,029,824		977,632		735,249
Other income (loss):
Change in net assets related to consolidated VIEs		236,309		165,892		252,434
Change in fair value of servicing rights		(3,640)		(10,202)		(24,323)
Change in fair value of investment securities, net		833		10,345		(3,811)
Change in fair value of mortgage loans held-for-sale, net		71,601		40,522		66,987
(Loss) earnings from unconsolidated entities		(101,354)		10,540		30,505
Gain on sale of investments and other assets, net		188,028		59,044		20,499
(Loss) gain on derivative financial instruments, net		(6,310)		34,603		(72,532)
Foreign currency gain (loss), net		17,582		(9,245)		33,671
Total other-than-temporary impairment (“OTTI”)		(267)		—		(180)
Noncredit portion of OTTI recognized in other comprehensive income		267		—		71
Net impairment losses recognized in earnings		—		—		(109)
Loss on extinguishment of debt		(19,270)		(5,808)		(5,915)
Other (loss) income, net		(207)		(812)		2,244
Total other income		383,572		294,879		299,650
Income before income taxes		550,167		426,527		444,289
Income tax provision		(13,232)		(15,330)		(31,522)
Net income		536,935		411,197		412,767
Net income attributable to non-controlling interests		(27,271)		(25,367)		(11,997)
Net income attributable to Starwood Property Trust, Inc.	$	509,664	$	385,830	$	400,770
Earnings per share data attributable to Starwood Property Trust, Inc.:
Basic	$	1.81	$	1.44	$	1.53
Diluted	$	1.79	$	1.42	$	1.52

See notes to consolidated financial statements.

103

Starwood Property Trust, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Amounts in thousands)

	For the Year Ended December 31,
	2019		2018		2017
Net income	$	536,935	$	411,197	$	412,767
Other comprehensive (loss) income (net change by component):
Cash flow hedges		—		(25)		51
Available-for-sale securities		(2,519)		(4,374)		12,960
Foreign currency translation		(5,209)		(6,865)		20,775
Other comprehensive (loss) income		(7,728)		(11,264)		33,786
Comprehensive income		529,207		399,933		446,553
Less: Comprehensive income attributable to non-controlling interests		(27,271)		(25,367)		(11,997)
Comprehensive income attributable to Starwood Property Trust, Inc.	$	501,936	$	374,566	$	434,556

See notes to consolidated financial statements.

104

Starwood Property Trust, Inc. and Subsidiaries

Consolidated Statements of Equity

(Amounts in thousands, except share data)

													Total
													Starwood
											Accumulated		Property
	Common stock			Additional							Other		Trust, Inc.		Non-
		Par		Paid-In		Treasury Stock			Accumulated		Comprehensive		Stockholders’		Controlling		Total
	Shares	Value		Capital		Shares	Amount		Deficit		Income		Equity		Interests		Equity
Balance, January 1, 2017	263,893,806	$	2,639	$	4,691,180	4,606,885	$	(92,104)	$	(115,579)	$	36,138	$	4,522,274	$	37,799	$	4,560,073
Proceeds from DRIP Plan	31,626		—		702	—		—		—		—		702		—		702
Equity offering costs	—		—		(15)	—		—		—		—		(15)		—		(15)
Equity component of 2023 Convertible Senior Notes issuance	—		—		3,755	—		—		—		—		3,755		—		3,755
Equity component of 2018 Convertible Senior Notes repurchase	—		—		(18,105)	—		—		—		—		(18,105)		—		(18,105)
Share-based compensation	1,178,565		12		18,139	—		—		—		—		18,151		—		18,151
Manager incentive fee paid in stock	879,312		9		19,590	—		—		—		—		19,599		—		19,599
Net income	—		—		—	—		—		400,770		—		400,770		11,997		412,767
Dividends declared, $1.92 per share	—		—		—	—		—		(502,503)		—		(502,503)		—		(502,503)
Other comprehensive income, net	—		—		—	—		—		—		33,786		33,786		—		33,786
VIE non-controlling interests	—		—		—	—		—		—		—		—		1,718		1,718
Contributions from non-controlling interests	—		—		—	—		—		—		—		—		145,283		145,283
Distributions to non-controlling interests	—		—		—	—		—		—		—		—		(96,010)		(96,010)
Balance, December 31, 2017	265,983,309	$	2,660	$	4,715,246	4,606,885	$	(92,104)	$	(217,312)	$	69,924	$	4,478,414	$	100,787	$	4,579,201
Proceeds from DRIP Plan	28,406		—		608	—		—		—		—		608		—		608
Equity offering costs	—		—		(22)	—		—		—		—		(22)		—		(22)
Conversion of 2019 Convertible Notes	12,407,081		124		238,760	—		—		—		—		238,884		—		238,884
Common stock repurchased	—		—		—	573,255		(12,090)		—		—		(12,090)		—		(12,090)
Share-based compensation	1,421,979		14		22,744	—		—		—		—		22,758		—		22,758
Manager incentive fee paid in stock	998,917		10		20,782	—		—		—		—		20,792		—		20,792
Net income	—		—		—	—		—		385,830		—		385,830		25,367		411,197
Dividends declared, $1.92 per share	—		—		—	—		—		(517,516)		—		(517,516)		—		(517,516)
Other comprehensive loss, net	—		—		—	—		—		—		(11,264)		(11,264)		—		(11,264)
VIE non-controlling interests	—		—		—	—		—		—		—		—		(5,669)		(5,669)
Contributions from non-controlling interests	—		—		—	—		—		—		—		—		430,033		430,033
Distributions to non-controlling interests	—		—		(2,962)	—		—		—		—		(2,962)		(253,442)		(256,404)
Sale of controlling interest in majority owned property asset	—		—		—	—		—		—		—		—		(319)		(319)
Balance, December 31, 2018	280,839,692	$	2,808	$	4,995,156	5,180,140	$	(104,194)	$	(348,998)	$	58,660	$	4,603,432	$	296,757	$	4,900,189
Proceeds from DRIP Plan	33,454		—		767	—		—		—		—		767		—		767
Redemption of Class A Units for common stock	974,176		10		21,060	—		—		—		—		21,070		(21,070)		—
Equity offering costs	—		—		(27)	—		—		—		—		(27)		—		(27)
Conversion of 2019 Convertible Notes	3,611,918		36		67,526	—		—		—		—		67,562		—		67,562
Share-based compensation	1,387,346		15		36,140	—		—		—		—		36,155		—		36,155
Manager incentive fee paid in stock	534,305		5		11,910	—		—		—		—		11,915		—		11,915
Net income	—		—		—	—		—		509,664		—		509,664		27,271		536,935
Dividends declared, $1.92 per share	—		—		—	—		—		(542,385)		—		(542,385)		—		(542,385)
Other comprehensive loss, net	—		—		—	—		—		—		(7,728)		(7,728)		—		(7,728)
VIE non-controlling interests	—		—		—	—		—		—		—		—		(2,808)		(2,808)
Contributions from non-controlling interests	—		—		—	—		—		—		—		—		186,397		186,397
Distributions to non-controlling interests	—		—		—	—		—		—		—		—		(49,958)		(49,958)
Balance, December 31, 2019	287,380,891	$	2,874	$	5,132,532	5,180,140	$	(104,194)	$	(381,719)	$	50,932	$	4,700,425	$	436,589	$	5,137,014

See notes to consolidated financial statements.

105

Starwood Property Trust, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Amounts in thousands)

	For the Year Ended December 31,
	2019		2018		2017
Cash Flows from Operating Activities:
Net income	$	536,935	$	411,197	$	412,767
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Amortization of deferred financing costs, premiums and discounts on secured borrowings		36,088		27,832		19,298
Amortization of discounts and deferred financing costs on unsecured senior notes		7,760		11,785		21,531
Accretion of net discount on investment securities		(11,791)		(15,253)		(15,208)
Accretion of net deferred loan fees and discounts		(35,387)		(38,099)		(39,084)
Share-based compensation		36,155		22,758		18,151
Share-based component of incentive fees		11,915		20,792		19,599
Change in fair value of investment securities		(833)		(10,345)		3,811
Change in fair value of consolidated VIEs		(67,798)		(17,408)		(69,483)
Change in fair value of servicing rights		3,640		10,202		24,323
Change in fair value of loans held-for-sale		(71,601)		(40,522)		(66,987)
Change in fair value of derivatives		11,441		(30,828)		68,309
Foreign currency (gain) loss, net		(17,582)		9,158		(33,439)
Gain on sale of investments and other assets		(188,028)		(59,044)		(20,499)
Impairment charges on properties and related intangibles		1,494		1,869		1,146
Loan loss provision, net		7,126		34,821		(5,458)
Depreciation and amortization		113,394		130,838		90,896
Loss (earnings) from unconsolidated entities		101,354		(10,540)		(30,505)
Distributions of earnings from unconsolidated entities		11,631		5,917		67,542
Loss on extinguishment of debt		19,270		5,808		5,915
Origination and purchase of loans held-for-sale, net of principal collections		(3,543,503)		(2,105,232)		(2,199,390)
Proceeds from sale of loans held-for-sale		3,177,640		2,246,989		1,582,050
Changes in operating assets and liabilities:
Related-party payable, net		(3,118)		1,674		4,551
Accrued and capitalized interest receivable, less purchased interest		(114,156)		(62,261)		(94,077)
Other assets		(29,787)		8,207		(35,300)
Accounts payable, accrued expenses and other liabilities		(5,458)		25,155		22,702
Net cash (used in) provided by operating activities		(13,199)		585,470		(246,839)
Cash Flows from Investing Activities:
Origination and purchase of loans held-for-investment		(5,473,399)		(4,428,891)		(3,234,987)
Proceeds from principal collections on loans		3,132,368		3,057,430		2,562,515
Proceeds from loans sold		1,141,411		835,849		52,609
Purchase of investment securities		(98,258)		(492,400)		(98,394)
Proceeds from sales of investment securities		7,326		16,427		11,579
Proceeds from principal collections on investment securities		205,660		382,924		232,793
Infrastructure lending business combination		—		(2,158,553)		—
Real estate business combinations, net of cash and restricted cash acquired		—		—		(17,639)
Proceeds from sales of real estate and related businesses, net of cash transferred		343,896		311,874		55,739
Purchases and additions to properties and other assets		(30,865)		(54,772)		(573,930)
Investment in unconsolidated entities		(18,055)		(3,100)		(32,186)
Distribution of capital from unconsolidated entities		18,127		21,461		14,252
Payments for purchase or termination of derivatives		(42,835)		(29,581)		(40,518)
Proceeds from termination of derivatives		38,756		20,523		31,456
Return of investment basis in purchased derivative asset		—		—		151
Net cash used in investing activities		(775,868)		(2,520,809)		(1,036,560)

See notes to consolidated financial statements.

106

Starwood Property Trust, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

(Amounts in thousands)

	For the Year Ended December 31,
	2019		2018		2017
Cash Flows from Financing Activities:
Proceeds from borrowings	$	10,167,339	$	9,412,715	$	6,273,600
Principal repayments on and repurchases of borrowings		(8,671,085)		(6,360,610)		(4,586,509)
Payment of deferred financing costs		(72,438)		(67,218)		(22,703)
Proceeds from common stock issuances		767		608		702
Payment of equity offering costs		(27)		(22)		(647)
Payment of dividends		(538,424)		(509,966)		(501,663)
Contributions from non-controlling interests		183,520		13,407		106
Distributions to non-controlling interests		(49,958)		(256,404)		(96,010)
Purchase of treasury stock		—		(12,090)		—
Issuance of debt of consolidated VIEs		184,540		102,474		25,605
Repayment of debt of consolidated VIEs		(373,155)		(410,453)		(137,208)
Distributions of cash from consolidated VIEs		45,642		92,283		92,411
Net cash provided by financing activities		876,721		2,004,724		1,047,684
Net increase (decrease) in cash, cash equivalents and restricted cash		87,654		69,385		(235,715)
Cash, cash equivalents and restricted cash, beginning of year		487,865		418,273		650,755
Effect of exchange rate changes on cash		(1,488)		207		3,233
Cash, cash equivalents and restricted cash, end of year	$	574,031	$	487,865	$	418,273
Supplemental disclosure of cash flow information:
Cash paid for interest	$	481,483	$	337,605	$	250,690
Income taxes paid		11,284		10,900		20,767
Supplemental disclosure of non-cash investing and financing activities:
Dividends declared, but not yet paid	$	136,715	$	133,237	$	125,844
Consolidation of VIEs (VIE asset/liability additions)		10,368,817		9,885,200		3,925,370
Deconsolidation of VIEs (VIE asset/liability reductions)		377,071		1,649,485		2,480,125
Assets of Ireland real estate subsidiary sold, net of cash		440,966		—		—
Liabilities of Ireland real estate subsidiary sold		360,049		—		—
Reclassification of residential loans held-for-sale to held-for-investment		340,948		—		—
Settlement of 2019 Convertible Notes in shares		75,525		271,243		—
Settlement of loans transferred as secured borrowings		74,692		—		35,000
Net assets acquired through foreclosure or conversion to equity interest		53,278		—		—
Loan principal collections temporarily held at master servicer		44,426		—		—
Redemption of Class A Units for common stock		21,070		—		—
Lease liabilities arising from obtaining right-of-use assets		9,626		—		—
Net assets acquired from consolidated VIEs		8,613		27,737		31,547
Contribution of Woodstar II Portfolio net assets from non-controlling interests		2,877		416,626		145,177
Fair value of assets acquired, net of cash and restricted cash		—		2,167,652		18,507
Fair value of liabilities assumed		—		9,099		760

See notes to consolidated financial statements.

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Starwood Property Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

As of December 31, 2019

1. Business and Organization

Starwood Property Trust, Inc. (“STWD” and, together with its subsidiaries, “we” or the “Company”) is a Maryland corporation that commenced operations in August 2009, upon the completion of our initial public offering. We are focused primarily on originating, acquiring, financing and managing mortgage loans and other real estate investments in both the United States (“U.S.”) and Europe. As market conditions change over time, we may adjust our strategy to take advantage of changes in interest rates and credit spreads as well as economic and credit conditions.

We have four reportable business segments as of December 31, 2019 and we refer to the investments within these segments as our target assets:

● Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial and residential first mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in both the U.S. and Europe (including distressed or non-performing loans).

● Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments.

● Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that are held for investment.

● Real estate investing and servicing (the “Investing and Servicing Segment”)—includes (i) a servicing business in the U.S. that manages and works out problem assets, (ii) an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, including subordinated interests of securitization and resecuritization transactions, (iii) a mortgage loan business which originates conduit loans for the primary purpose of selling these loans into securitization transactions and (iv) an investment business that selectively acquires commercial real estate assets, including properties acquired from CMBS trusts.

Our segments exclude the consolidation of securitization variable interest entities (“VIEs”).

We are organized and conduct our operations to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). As such, we will generally not be subject to U.S. federal corporate income tax on that portion of our net income that is distributed to stockholders if we distribute at least 90% of our taxable income to our stockholders by prescribed dates and comply with various other requirements.

We are organized as a holding company and conduct our business primarily through our various wholly-owned subsidiaries. We are externally managed and advised by SPT Management, LLC (our “Manager”) pursuant to the terms of a management agreement. Our Manager is controlled by Barry Sternlicht, our Chairman and Chief Executive Officer. Our Manager is an affiliate of Starwood Capital Group, a privately-held private equity firm founded by Mr. Sternlicht.

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2. Summary of Significant Accounting Policies

Balance Sheet Presentation of Securitization Variable Interest Entities

We operate investment businesses that acquire unrated, investment grade and non-investment grade rated CMBS and RMBS. These securities represent interests in securitization structures (commonly referred to as special purpose entities, or “SPEs”). These SPEs are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. Under accounting principles generally accepted in the United States of America (“GAAP”), SPEs typically qualify as VIEs. These are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.

Because we often serve as the special servicer or servicing administrator of the trusts in which we invest, or we have the ability to remove and replace the special servicer without cause, consolidation of these structures is required pursuant to GAAP as outlined in detail below. This results in a consolidated balance sheet which presents the gross assets and liabilities of the VIEs. The assets and other instruments held by these VIEs are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the VIEs do not have any recourse to the general credit of any other consolidated entities, nor to us as the consolidator of these VIEs.

The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.

Refer to the segment data in Note 23 for a presentation of our business segments without consolidation of these VIEs.

Basis of Accounting and Principles of Consolidation

The accompanying consolidated financial statements include our accounts and those of our consolidated subsidiaries and VIEs. Intercompany amounts have been eliminated in consolidation.

Entities not deemed to be VIEs are consolidated if we own a majority of the voting securities or interests or hold the general partnership interest, except in those instances in which the minority voting interest owner or limited partner can remove us as general partner without cause, dissolve the partnership without cause or effectively participate through substantive participative rights. Substantive participative rights include the ability to select, terminate and set compensation of the investee’s management, if applicable, and the ability to participate in capital and operating decisions of the investee, including budgets, in the ordinary course of business.

We invest in entities with varying structures, many of which do not have voting securities or interests, such as general partnerships, limited partnerships, and limited liability companies. In many of these structures, control of the entity rests with the general partners or managing members, while other members hold passive interests. The general partner or managing member may hold anywhere from a relatively small percentage of the total financial interests to a majority of the financial interests. For entities not deemed to be VIEs, where we serve as the sole general partner or managing member, we are considered to have the controlling financial interest and therefore the entity is consolidated, regardless of our financial interest percentage, unless there are other limited partners or investing members that can remove us as general partner without cause, dissolve the partnership without cause or effectively participate through substantive participative rights. In those circumstances where we, as majority controlling interest owner, can be removed without cause or cannot cause the entity to take actions that are significant in the ordinary course of business, because such actions could be vetoed by the minority controlling interest owner, we do not consolidate the entity.

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When we consolidate entities other than securitization VIEs, the third party ownership interests are reflected as non-controlling interests in consolidated subsidiaries, a separate component of equity, in our consolidated balance sheet. When we consolidate securitization VIEs, the third party ownership interests are reflected as VIE liabilities in our consolidated balance sheet because the beneficial interests payable to these third parties are legally issued in the form of debt. Our presentation of net income attributes earnings to controlling and non-controlling interests.

Variable Interest Entities

In addition to the securitization VIEs, we have financed a pool of our loans through a collateralized loan obligation (“CLO”) which is considered a VIE. We also hold interests in certain other entities which are considered VIEs as the limited partners of those entities with equity at risk do not collectively possess (i) the right to remove the general partner or dissolve the partnership without cause or (ii) the right to participate in significant decisions made by the partnership.

We evaluate all of our interests in VIEs for consolidation. When our interests are determined to be variable interests, we assess whether we are deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification (“ASC”) 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. We consider our variable interests as well as any variable interests of our related parties in making this determination. Where both of these factors are present, we are deemed to be the primary beneficiary and we consolidate the VIE. Where either one of these factors is not present, we are not the primary beneficiary and do not consolidate the VIE.

To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes: (i) identifying the activities that most significantly impact the VIE’s economic performance; and (ii) identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. The right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has the power to direct the activities of a VIE.

To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, including debt and equity investments, servicing fees and other arrangements deemed to be variable interests in the VIE. This assessment requires that we apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by us.

Our purchased investment securities include unrated and non-investment grade rated securities issued by securitization trusts. In certain cases, we may contract to provide special servicing activities for these trusts, or, as holder of the controlling class, we may have the right to name and remove the special servicer for these trusts. In our role as special servicer, we provide services on defaulted loans within the trusts, such as foreclosure or work-out procedures, as permitted by the underlying contractual agreements. In exchange for these services, we receive a fee. These rights give us the ability to direct activities that could significantly impact the trust’s economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove us as special servicer without cause, we do not have the power to direct activities that most significantly impact the trust’s economic performance. We evaluated all of our positions in such investments for consolidation.

For securitization VIEs in which we are determined to be the primary beneficiary, all of the underlying assets, liabilities and equity of the structures are recorded on our books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these

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structures, as well as the fees paid by these trusts to us in our capacity as special servicer, are eliminated in consolidation. Further, an allocable portion of the identified servicing intangible asset associated with the servicing fee streams, and the corresponding allocable amortization or change in fair value of the servicing intangible asset, are also eliminated in consolidation.

We perform ongoing reassessments of: (i) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and (ii) whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion regarding the VIE to change.

We elect the fair value option for initial and subsequent recognition of the assets and liabilities of our consolidated securitization VIEs. Interest income and interest expense associated with these VIEs are no longer relevant on a standalone basis because these amounts are already reflected in the fair value changes. We have elected to present these items in a single line on our consolidated statements of operations. The residual difference shown on our consolidated statements of operations in the line item “Change in net assets related to consolidated VIEs” represents our beneficial interest in the VIEs.

We separately present the assets and liabilities of our consolidated securitization VIEs as individual line items on our consolidated balance sheets. The liabilities of our consolidated securitization VIEs consist solely of obligations to the bondholders of the related trusts, and are thus presented as a single line item entitled “VIE liabilities.” The assets of our consolidated securitization VIEs consist principally of loans, but at times, also include foreclosed loans which have been temporarily converted into real estate owned (“REO”). These assets in the aggregate are likewise presented as a single line item entitled “VIE assets.”

Loans comprise the vast majority of our securitization VIE assets and are carried at fair value due to the election of the fair value option. When an asset becomes REO, it is due to nonperformance of the loan. Because the loan is already at fair value, the carrying value of an REO asset is also initially at fair value. Furthermore, when we consolidate a trust, any existing REO would be consolidated at fair value. Once an asset becomes REO, its disposition time is relatively short. As a result, the carrying value of an REO generally approximates fair value under GAAP.

In addition to sharing a similar measurement method as the loans in a trust, the securitization VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our securitization VIEs are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective. Also creating limitations from a valuation perspective is our role as special servicer, which provides us very limited visibility, if any, into the performing loans of a trust.

REO assets generally represent a very small percentage of the overall asset pool of a trust. In new issue trusts there are no REO assets. We estimate that REO assets constitute approximately 1% of our consolidated securitization VIE assets, with the remaining 99% representing loans. However, it is important to note that the fair value of our securitization VIE assets is determined by reference to our securitization VIE liabilities as permitted under Accounting Standards Update (“ASU”) 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. In other words, our VIE liabilities are more reliably measurable than the VIE assets, resulting in our current measurement methodology which utilizes this value to determine the fair value of our securitization VIE assets as a whole. As a result, these percentages are not necessarily indicative of the relative fair values of each of these asset categories if the assets were to be valued individually.

Due to our accounting policy election under ASU 2014-13, separately presenting two different asset categories would result in an arbitrary assignment of value to each, with one asset category representing a residual amount, as opposed to its fair value. However, as a pool, the fair value of the assets in total is equal to the fair value of the liabilities.

For these reasons, the assets of our securitization VIEs are presented in the aggregate.

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Fair Value Option

The guidance in ASC 825, Financial Instruments, provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our consolidated balance sheets from those instruments using another accounting method.

We have elected the fair value option for certain eligible financial assets and liabilities of our consolidated securitization VIEs, residential loans held-for-investment, loans held-for-sale originated or acquired for future securitization and purchased CMBS issued by VIEs we could consolidate in the future. The fair value elections for VIE and securitization related items were made in order to mitigate accounting mismatches between the carrying value of the instruments and the related assets and liabilities that we consolidate at fair value. The fair value elections for residential mortgage loans held-for-investment were made in order to maintain consistency across all our residential mortgage loans. The fair value elections for mortgage loans held-for-sale were made due to the expected short-term holding period of these instruments.

Fair Value Measurements

We measure our mortgage-backed securities, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.

As discussed above, we measure the assets and liabilities of consolidated securitization VIEs at fair value pursuant to our election of the fair value option. The securitization VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the securitization VIEs, we maximize the use of observable inputs over unobservable inputs. Refer to Note 20 for further discussion regarding our fair value measurements.

Business Combinations

Under ASC 805, Business Combinations, the acquirer in a business combination must recognize, with certain exceptions, the fair values of assets acquired, liabilities assumed, and non-controlling interests when the acquisition constitutes a change in control of the acquired entity. As goodwill is calculated as a residual, all goodwill of the acquired business, not just the acquirer’s share, is recognized under this “full goodwill” approach. During the measurement period, a period which shall not exceed one year, we prospectively adjust the provisional amounts recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized.

Effective with our early adoption of ASU 2017-01, Business Combinations (Topic 805) – Clarifying the Definition of a Business, in December 2017, we apply the asset acquisition provisions of ASC 805 in accounting for acquisitions of real estate with in-place leases where substantially all of the fair value of the assets acquired is concentrated in either a single identifiable asset or group of similar identifiable assets. This results in the acquired properties being recognized initially at their purchase price inclusive of acquisition costs, which are capitalized. All other acquisitions of real estate with in-place leases are accounted for in accordance with the business combination provisions of ASC 805. We also apply the asset acquisition provisions of ASC 805 for acquired real estate assets where a lease is entered into concurrently with the acquisition of the asset, such as in sale leaseback transactions.

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Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and short-term investments. Short-term investments are comprised of highly liquid instruments with original maturities of three months or less. The Company maintains its cash and cash equivalents in multiple financial institutions and at times these balances exceed federally insurable limits.

Restricted Cash

Restricted cash includes cash and cash equivalents that are legally or contractually restricted as to withdrawal or usage and primarily includes (i) loan payments received by our Infrastructure Lending Segment which are restricted by our lender and periodically applied, in part, to the outstanding balance of the Infrastructure Lending debt facility, (ii) cash collateral associated with derivative financial instruments and (iii) funds held on behalf of borrowers and tenants.

Loans Held-for-Investment

Loans that are held for investment are carried at cost, net of unamortized acquisition premiums or discounts, loan fees and origination costs as applicable, unless the loans are deemed impaired or we have elected to apply the fair value option at purchase.

Loan Impairment

We evaluate each loan classified as held-for-investment not under the fair value option for impairment at least quarterly. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral.

There may be circumstances where we modify a loan by granting the borrower a concession that we might not otherwise consider when a borrower is experiencing financial difficulty or is expected to experience financial difficulty in the foreseeable future. Such concessionary modifications are classified as troubled debt restructurings (“TDRs”) unless the modification solely results in a delay in payment that is insignificant. Loans classified as TDRs are considered impaired loans for reporting and measurement purposes.

Loans Held-For-Sale

Our loans that we intend to sell or liquidate in the short-term are classified as held-for-sale and are carried at the lower of amortized cost or fair value, unless we have elected to apply the fair value option at origination or purchase. With regards to our Investing and Servicing Segment’s conduit business, we periodically enter into derivative financial instruments to hedge unpredictable changes in fair value of loans held-for-sale, including changes resulting from both interest rates and credit quality. Because these derivatives are not designated, changes in their fair value are recorded in earnings. In order to best reflect the results of the hedged loan portfolio in earnings, we have elected the fair value option for these loans. As a result, changes in the fair value of the loans are also recorded in earnings.

Investment Securities

We designate our debt investment securities as held-to-maturity, available-for-sale, or trading depending on our investment strategy and ability to hold such securities to maturity. Held-to-maturity debt securities where we have not elected to apply the fair value option are stated at cost plus any premiums or discounts, which are amortized or accreted through the consolidated statements of operations using the effective interest method. Debt securities we (i) do not hold for the purpose of selling in the near-term, or (ii) may dispose of prior to maturity, are classified as available-for-sale and are carried at fair value in the accompanying financial statements. Unrealized gains or losses on available-for-sale debt securities where we have not elected the fair value option are reported as a component of accumulated other comprehensive income (loss) (“AOCI”) in stockholders’ equity.

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When the estimated fair value of a debt security for which we have not elected the fair value option is less than its amortized cost, we consider whether there is OTTI in the value of the security. An impairment is deemed an OTTI if (i) we intend to sell the security, (ii) it is more likely than not that we will be required to sell the security before recovering our cost basis or (iii) we do not expect to recover the entire amortized cost basis of the security even if we do not intend to sell the security or do not believe it is more likely than not that we will be required to sell the security before recovering our cost basis. If the impairment is deemed to be an OTTI, the resulting accounting treatment depends on the factors causing the OTTI. If the OTTI has resulted from (i) our intention to sell the security, or (ii) our judgment that it is more likely than not that we will be required to sell the security before recovering our cost basis, an impairment loss is recognized in earnings equal to the entire difference between our amortized cost basis and fair value. Whereas, if the OTTI has resulted from our conclusion that we will not recover our cost basis even if we do not intend to sell the security or do not believe it is more likely than not that we will be required to sell the security before recovering our cost basis, only the credit loss portion of the impairment is recorded in earnings, and the portion of the loss related to other factors, such as changes in interest rates, continues to be recognized in AOCI. Following the recognition of an OTTI through earnings, a new cost basis is established for the security. Determining whether there is an OTTI may require us to exercise significant judgment and make significant assumptions, including, but not limited to, estimated cash flows, estimated prepayments, loss assumptions, and assumptions regarding changes in interest rates.

Our only equity investment security is carried at fair value, with unrealized holding gains and losses recorded in earnings.

Properties Held-For-Investment

Properties, net, as reported on our consolidated balance sheets, consist of commercial real estate properties held-for-investment and are recorded at cost, less accumulated depreciation and impairments, if any. Properties consist primarily of land, buildings and improvements. Land is not depreciated, and buildings and improvements are depreciated on a straight-line basis over their estimated useful lives. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments are capitalized and depreciated on a straight-line basis over their estimated useful lives. We review properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability is determined by comparing the carrying amount of the property to the undiscounted future net cash flows it is expected to generate. If such carrying amount exceeds the expected undiscounted future net cash flows, we adjust the carrying amount of the property to its estimated fair value.

Properties Held-For-Sale

Properties and any associated intangible assets are presented within properties held-for-sale on our consolidated balance sheet when the sale of the property is considered probable, at which time we cease depreciation and amortization of the property and the associated intangibles. Held-for-sale properties are reported at the lower of their carrying value or fair value less costs to sell. There were no properties held-for-sale at December 31, 2019 or 2018.

Servicing Rights Intangibles

Our identifiable intangible assets include domestic special servicing rights for which we have elected to apply the fair value measurement method, which is necessary to conform to our election of the fair value option for measuring the assets and liabilities of the VIEs consolidated pursuant to ASC 810.

Lease Intangibles

In connection with our acquisition of properties, we recognize intangible lease assets and liabilities associated with certain noncancelable operating leases of the acquired properties. These intangible lease assets and liabilities include in-place lease intangible assets, favorable lease intangible assets and unfavorable lease liabilities. In-place lease intangible assets reflect the acquired benefit of purchasing properties with in-place leases and are measured based on estimates of direct costs associated with leasing the property and lost rental income during projected lease-up and free rent periods, both of which are avoided due to the presence of in-place leases at the acquisition date. Favorable and unfavorable lease intangible assets and liabilities reflect the terms of in-place tenant leases being either favorable or

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unfavorable relative to market terms at the acquisition date. The estimated fair values of our favorable and unfavorable lease assets and liabilities at the respective acquisition dates represent the discounted cash flow differential between the contractual cash flows of such leases and the estimated cash flows that comparable leases at market terms would generate. Our intangible lease assets and liabilities are recognized within intangible assets and other liabilities, respectively, in our consolidated balance sheets. Our in-place lease intangible assets are amortized to amortization expense while our favorable and unfavorable lease intangible assets and liabilities where we are the lessor are amortized to rental income. Favorable and unfavorable lease intangible assets and liabilities where we are the lessee are amortized to costs of rental operations, except in the case of our unfavorable lease liability associated with office space occupied by the Company, which is amortized to general and administrative expense. Both our favorable and unfavorable lease intangible assets and liabilities are amortized over the remaining noncancelable term of the respective leases on a straight-line basis.

Leases

On January 1, 2019, ASC 842, Leases, became effective for the Company. ASC 842 establishes a right-of-use model for lessee accounting which results in the recognition of most leased assets and lease liabilities on the balance sheet of the lessee. Lessor accounting was not significantly affected by this ASC. We elected to apply the provisions of ASC 842 as of January 1, 2019 and not to retrospectively adjust prior periods presented. Such application did not result in any cumulative-effect adjustment as of January 1, 2019. We elected the “package of practical expedients” for transition purposes, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs for leases that commenced prior to January 1, 2019. We also elected not to apply the recognition provisions of ASC 842 to short-term leases, which have original lease terms of 12 months or less. As a lessor, we elected not to separate nonlease components, such as reimbursements from tenants for common area maintenance (“CAM”), from lease components for all classes of underlying assets, and continue to recognize such nonlease components ratably in rental income. We also elected to continue to exclude from rental income all sales, use and other similar taxes collected from lessees. As required by ASC 842, we no longer record as revenues and expenses lessor costs (such as property taxes) paid directly by the lessees. The application of ASC 842 has had no material effect on our consolidated financial statements, as all of our leases, as both lessor and lessee, are currently classified as operating leases, which are subject to essentially the same straight-line revenue and expense recognition as in the past. As a lessee, our only significant long-term lease as of January 1, 2019 resulted in the recognition of a $12.0 million lease liability and corresponding right-of-use asset, which are classified within “Accounts payable, accrued expenses and other liabilities” and “Other assets”, respectively, in our consolidated balance sheet as of December 31, 2019.

Investment in Unconsolidated Entities

We own non-controlling equity interests in various privately-held partnerships and limited liability companies. Unless we elect the fair value option under ASC 825, we use the fair value practicability exception described below to account for investments in which our interest is so minor that we have virtually no influence over the underlying investees. We use the equity method to account for all other non-controlling interests in partnerships and limited liability companies. Equity method investments are initially recorded at cost and subsequently adjusted for our share of income or loss, as well as contributions made or distributions received.

Prior to January 1, 2018, all cost method investments were initially recorded at cost with income generally recorded when distributions were received. On January 1, 2018, ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, became effective prospectively for public companies with a calendar fiscal year. This ASU requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies, at fair value with changes in fair value recognized within net income. This ASU does not apply to equity method investments, investments in Federal Home Loan Bank (“FHLB”) stock, investments that result in consolidation of the investee or investments in certain investment companies. For investments in equity securities without a readily determinable fair value, an entity is permitted to elect a practicability exception, under which the investment will be measured at cost, less impairment, plus or minus observable price changes from orderly transactions of an identical or similar investment of the same issuer.

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Our equity investments within the scope of this ASU are limited to our other equity investments set forth in Note 8, with the exception of our FHLB stock which is outside the scope of this ASU, and to our marketable equity security discussed in Note 6 for which we had previously elected the fair value option. Our other equity investments within the scope of this ASU do not have readily determinable fair values. Therefore, we have elected the practicability exception whereby we measure these investments at cost, less impairment, plus or minus observable price changes from orderly transactions of identical or similar investments of the same issuer.

Additionally, this ASU eliminated the requirement to assess whether an impairment of an equity investment is other than temporary. The impairment model for equity investments subject to this election is now a single-step model whereby an entity performs a qualitative assessment to identify impairment. If the qualitative assessment indicates that an impairment exists, the entity would estimate the fair value of the investment and recognize in net income an impairment loss equal to the difference between the fair value and the carrying amount of the equity investment.

We continue to review our equity method and other investments not subject to this election for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods, estimated fair values of underlying assets and available information at the time the analyses are prepared.

Goodwill

Goodwill is not amortized, but rather tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment. Goodwill at December 31, 2019 represents the excess of the consideration paid over the fair value of net assets acquired in connection with the acquisitions of LNR Property LLC (“LNR”) in April 2013 and the Infrastructure Lending Segment in September 2018 and October 2018.

In testing goodwill for impairment, we follow ASC 350, Intangibles—Goodwill and Other, which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or we choose not to perform the qualitative assessment, then we compare the fair value of that reporting unit with its carrying value, including goodwill. If the carrying value of a reporting unit exceeds its fair value, goodwill is considered impaired with the impairment loss equal to the amount by which the carrying value of the goodwill exceeds the implied fair value of that goodwill.

Derivative Instruments and Hedging Activities

We record all derivatives on our consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on whether we have elected to designate a derivative in a hedging relationship and have satisfied the criteria necessary to apply hedge accounting under GAAP. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We regularly enter into derivative contracts that are intended to economically hedge certain of our risks, even though the transactions may not qualify for, or we may not elect to pursue, hedge accounting. In such cases, changes in the fair value of the derivatives are recorded in earnings.

Generally, our derivatives are subject to master netting arrangements, though we elect to present all derivative assets and liabilities on a gross basis within our consolidated balance sheets.

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Convertible Senior Notes

ASC 470, Debt, requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. The equity components of our convertible senior notes (the “Convertible Notes”) have been reflected within additional paid-in capital in our consolidated balance sheets. The resulting debt discount is being amortized over the period during which the convertible senior notes are expected to be outstanding (the maturity date) as additional non-cash interest expense.

Upon settlement of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration, inclusive of transaction costs, amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component, including unamortized debt issuance costs, is recognized as gain (loss) on extinguishment of debt in our consolidated statements of operations. The remaining settlement consideration allocated to the equity component is recognized as a reduction of additional paid-in capital in our consolidated balance sheets.

Revenue Recognition

On January 1, 2018, new accounting rules regarding revenue recognition became effective for public companies with a calendar fiscal year. None of our significant revenue sources – interest income from loans and investment securities, loan servicing fees, and rental income – are within the scope of the new revenue recognition guidance. The revenue recognition guidance also included revisions to existing accounting rules regarding the determination of whether a company is acting as a principal or agent in an arrangement and accounting for sales of nonfinancial assets where the seller has continuing involvement. These additional revisions also did not materially impact the Company.

Interest Income

Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms of the instrument. For loans where we do not elect the fair value option, origination fees and direct loan origination costs are also recognized in interest income over the loan term as a yield adjustment using the effective interest method. When we elect the fair value option, origination fees and direct loan costs are recorded directly in income and are not deferred. Discounts or premiums associated with the purchase of non-performing loans and investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections.

We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan’s outstanding principal balance is only recognized when received in cash. If a full recovery of principal is doubtful, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms.

For loans acquired with deteriorated credit quality, interest income is only recognized to the extent that our estimate of undiscounted expected principal and interest exceeds our investment in the loan. Accretable yield, if any, is recognized as interest income on a level-yield basis over the life of the loan.

For the majority of our available-for-sale RMBS, which have been purchased at a discount to par value, we do not expect to collect all amounts contractually due at the time we acquired the securities. Accordingly, we expect that a portion of the purchase discount will not be recognized as interest income, which is referred to as non-accretable

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difference. This amount of non-accretable difference may change over time based on the actual performance of these securities, their underlying collateral, actual and projected cash flow from such collateral, economic conditions and other factors. If the performance of a credit deteriorated security is more favorable than forecasted, we will generally accrete more credit discount into interest income than initially or previously expected. These adjustments are made prospectively beginning in the period subsequent to the determination that a favorable change in performance is projected. Conversely, if the performance of a credit deteriorated security is less favorable than forecasted, an OTTI may be taken, and the amount of discount accreted into income will generally be less than previously expected.

Upon the sale of loans or securities which are not accounted for pursuant to the fair value option, the excess (or deficiency) of net proceeds over the net carrying value of such loans or securities is recognized as a realized gain (loss).

Servicing Fees

We typically seek to be the special servicer on CMBS transactions in which we invest. When we are appointed to serve in this capacity, we earn special servicing fees from the related activities performed, which consist primarily of overseeing the workout of under-performing and non-performing loans underlying the CMBS transactions. These fees are recognized in income in the period in which the services are performed and the revenue recognition criteria have been met.

Rental Income

Rental income is recognized when earned from tenants. For leases that provide rent concessions or fixed escalations over the lease term, rental income is recognized on a straight-line basis over the noncancelable term of the lease. In net lease arrangements, costs reimbursable from tenants are recognized in rental income in the period in which the related expenses are incurred as we are generally the primary obligor with respect to purchasing goods and services for property operations. In instances where the tenant is responsible for property maintenance and repairs and contracts and settles such costs directly with third party service providers, we do not reflect those expenses in our consolidated statement of operations as the tenant is the primary obligor.

Securitizations, Sales and Financing Arrangements

We periodically sell our financial assets, such as commercial mortgage loans, residential mortgage loans, CMBS, RMBS and other assets. In connection with these transactions, we may retain or acquire senior or subordinated interests in the related assets. Gains and losses on such transactions are recognized in accordance with ASC 860, Transfers and Servicing, which is based on a financial components approach that focuses on control. Under this approach, after a transfer of financial assets that meets the criteria for treatment as a sale—legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint, and transferred control—an entity recognizes the financial assets it retains and any liabilities it has incurred, derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished. We determine the gain or loss on sale of the assets by allocating the carrying value of the sold asset between the sold asset and the interests retained based on their relative fair values, as applicable. The gain or loss on sale is the difference between the cash proceeds from the sale and the amount allocated to the sold asset. If the sold asset is being accounted for pursuant to the fair value option, there is no gain or loss.

Deferred Financing Costs

Costs incurred in connection with debt issuance are capitalized and amortized to interest expense over the terms of the respective debt agreements. Such costs are presented as a direct deduction from the carrying value of the related debt liability.

Acquisition and Investment Pursuit Costs

Costs incurred in connection with acquisitions of investments, loans and businesses, as well as in pursuing unsuccessful acquisitions and investments, are recorded within acquisition and investment pursuit costs in our consolidated statements of operations when incurred. Costs incurred in connection with acquisitions of real estate not

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accounted for as business combinations are capitalized within the purchase price. These costs reflect services performed by third parties and principally include due diligence and legal services.

Share-Based Payments

The fair value of the restricted stock (“RSAs”) or restricted stock units (“RSUs”) granted is recorded as expense on a straight-line basis over the vesting period for the award, with an offsetting increase in stockholders’ equity. For grants to employees and directors, the fair value is determined based upon the stock price on the grant date.

Effective July 1, 2018, we early adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718) –Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for nonemployee share-based compensation with the existing accounting model for employee share based compensation. Prior to our adoption of ASU 2018-07, nonemployee share awards were recognized as an expense on a straight-line basis over the vesting period of the award with the fair value of the award remeasured at each vesting date. After our adoption of ASU 2018-07, nonemployee share awards continue to be recorded as expense on a straight-line basis over their vesting period, however, the fair value of the award is only determined on the grant date and not remeasured at subsequent vesting dates, consistent with the accounting for employee share awards. For non-employee awards granted prior to our July 1, 2018 adoption date, the awards were remeasured at fair value as of our July 1, 2018 adoption date with no subsequent remeasurement.

Foreign Currency Translation

Our assets and liabilities denominated in foreign currencies are translated into U.S. dollars using foreign currency exchange rates at the end of the reporting period. Income and expenses are translated at the average exchange rates for each reporting period. The effects of translating the assets, liabilities and income of our foreign investments held by entities with a U.S. dollar functional currency are included in foreign currency gain (loss) in the consolidated statements of operations or other comprehensive income (“OCI”) for debt securities available-for-sale for which the fair value option has not been elected. The effects of translating the assets, liabilities and income of our foreign investments held by entities with functional currencies other than the U.S. dollar are included in OCI. Realized foreign currency gains and losses and changes in the value of foreign currency denominated monetary assets and liabilities are included in the determination of net income and are reported as foreign currency gain (loss) in our consolidated statements of operations.

Income Taxes

The Company has elected to be taxed as a REIT under the Code. The Company is subject to federal income taxation at corporate rates on its REIT taxable income, however, the Company is allowed a deduction for the amount of dividends paid to its stockholders in arriving at its REIT taxable income. As a result, distributed net income of the Company is subjected to taxation at the stockholder level only. The Company intends to continue operating in a manner that will permit it to maintain its qualification as a REIT for tax purposes.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company evaluates the realizability of its deferred tax assets and recognizes a valuation allowance if, based on the available evidence, both positive and negative, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers, among other matters, estimates of expected future taxable income, nature of current and cumulative losses, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods.

We recognize tax positions in the financial statements only when it is more likely than not that, based on the technical merits of the tax position, the position will be sustained upon examination by the relevant taxing authority. A tax position is measured at the largest amount of benefit that will more likely than not be realized upon settlement. If, as a result of new events or information, a recognized tax position no longer is considered more likely than not to be

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sustained upon examination, a liability is established for the unrecognized benefit with a corresponding charge to income tax expense in our consolidated statement of operations. We report interest and penalties, if any, related to income tax matters as a component of income tax expense.

Earnings Per Share

We present both basic and diluted earnings per share (“EPS”) amounts in our financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from (i) our share-based compensation, consisting of unvested RSAs and RSUs, (ii) shares contingently issuable to our Manager, (iii) the conversion options associated with our outstanding Convertible Notes (see Notes 11 and 18), and (iv) non-controlling interests that are redeemable with our common stock (see Note 17). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period.

Nearly all of the Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. In addition, the non-controlling interests that are redeemable with our common stock are considered participating securities because they earn a preferred return indexed to the dividend rate on our common stock (see Note 17). Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. For the years ended December 31, 2019, 2018 and 2017, the two-class method resulted in the most dilutive EPS calculation.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, CMBS, RMBS, loan investments and interest receivable. We may place cash investments in excess of insured amounts with high quality financial institutions. We perform an ongoing analysis of credit risk concentrations in our investment portfolio by evaluating exposure to various counterparties, markets, underlying property types, contract terms, tenant mix and other credit metrics.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our loans, investment securities and intangible assets, which has a significant impact on the amounts of interest income, credit losses (if any) and fair values that we record and/or disclose. In addition, the fair value of financial assets and liabilities that are estimated using a discounted cash flows method is significantly impacted by the rates at which we estimate market participants would discount the expected cash flows.

Recent Accounting Developments

On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments, which mandates use of an “expected loss” credit model for estimating future credit losses of certain financial instruments instead of the “incurred loss” credit model that current GAAP requires. The “expected loss” model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event in accordance with the current “incurred loss” methodology. This ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. We expect this ASU to result in our recognition of higher levels of potential credit losses earlier in the credit cycle. Though we are still in the process of finalizing the effect of this ASU, we expect to record an initial increase in our allowance for credit losses of between $30 million and $40 million as of January 1, 2020 through a cumulative-effect adjustment to accumulated deficit.

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On January 26, 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, which simplifies the method applied for measuring impairment in cases where goodwill is impaired.  This ASU specifies that goodwill impairment will be measured as the excess of the reporting unit’s carrying value (inclusive of goodwill) over its fair value, eliminating the requirement that all assets and liabilities of the reporting unit be remeasured individually in connection with measurement of goodwill impairment.  This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019 and is applied prospectively.  Early application is permitted.  We do not expect the application of this ASU to materially impact the Company.

On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework, which adds new disclosure requirements and modifies or eliminates existing disclosure requirements of ASC 820. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted. We do not expect the application of this ASU to materially impact the Company, as it only affects fair value disclosures.

On October 31, 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810) – Targeted Improvements to Related Party Guidance for Variable Interest Entities, which requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted. We do not expect the application of this ASU to materially impact the Company.

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3. Acquisitions and Divestitures

Ireland Portfolio Sale

On December 23, 2019, we sold the U.S. entity which held the net assets related to our Ireland Portfolio. The properties within the entity were sold for a gross purchase price of €530.0 million. After certain adjustments, including a €20.7 million tax withholding which was treated as a reduction of purchase price, the net purchase price was €507.6 million, plus estimated net working capital. In connection with the transaction, the buyer assumed our existing third party debt totaling €316.3 million. Our basis in these assets was €394.7 million, net of €67.5 million of accumulated depreciation. The resulting gain, after selling costs, was €108.0 (or $119.7) million. This amount is included within gain on sale of investments and other assets in our consolidated statement of operations.

Upon receipt of the net proceeds from the sale, we unwound all of our foreign currency hedges related to this portfolio, which had a fair value of $16.6 million at the unwind date.

During the year ended December 31, 2017, we sold one office property within the Ireland Portfolio for $3.9 million, recognizing an immaterial gain on sale within gain on sale of investments and other assets in our consolidated statement of operations. There were no properties sold within the Ireland Portfolio during the year ended December 31, 2018.

Investing and Servicing Segment Property Portfolio

During the year ended December 31, 2019, our Investing and Servicing Segment acquired $8.6 million in net assets of a commercial real estate property from a CMBS trust for a gross purchase price of $8.8 million. This property, aggregated with the controlling interests in 15 remaining commercial real estate properties acquired from CMBS trusts prior to December 31, 2018 for an aggregate acquisition price of $227.3 million, comprise the Investing and Servicing Segment Property Portfolio (the “REIS Equity Portfolio”). When the properties are acquired from CMBS trusts that are consolidated as VIEs on our balance sheet, the acquisitions are reflected as repayment of debt of consolidated VIEs in our consolidated statements of cash flows.

During the year ended December 31, 2018, our Investing and Servicing Segment acquired $52.7 million in net assets of three commercial real estate properties from CMBS trusts for a gross purchase price of $53.1 million. During the year ended December 31, 2017, our Investing and Servicing Segment acquired the net equity of three commercial real estate properties from CMBS trusts for $48.7 million. We applied the business combination provisions of ASC 805 in accounting for the acquisitions in 2017 since they occurred prior to our adoption of ASU 2017-01 in December 2017, whereas we applied the asset acquisition provisions of ASC 805 for the acquisitions in 2018 and 2019.

During the year ended December 31, 2019, we sold four properties within the Investing and Servicing Segment for $145.9 million. In connection with these sales, we recognized a total gain of $59.7 million within gain on sale of investments and other assets in our consolidated statements of operations, of which $5.3 million was attributable to non-controlling interests. During the year ended December 31, 2018, we sold nine properties within the Investing and Servicing Segment for $77.9 million. In connection with these sales, we recognized a total gain of $26.6 million within gain on sale of investments and other assets in our consolidated statements of operations, of which $5.1 million was attributable to non-controlling interests. One of these properties was acquired by a third party which already held a $0.3 million non-controlling interest in the property. During the year ended December 31, 2017, we sold five properties within the Investing and Servicing Segment for $52.4 million. In connection with these sales, we recognized a total gain of $19.8 million within gain on sale of investments and other assets in our consolidated statements of operations, of which $3.3 million was attributable to non-controlling interests.

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Infrastructure Lending Segment

On September 19, 2018, we acquired the project finance origination, underwriting and capital markets business of GE Capital Global Holdings, LLC (“GE Capital”) for approximately $2.0 billion (the “Infrastructure Lending Segment”) and on October 15, 2018, we acquired two additional senior secured project finance loans from GE Capital for $147.1 million. In total, the business included $2.1 billion of funded senior secured project finance loans and investment securities and $466.3 million of unfunded lending commitments (the “Infrastructure Lending Portfolio”) which are secured primarily by natural gas and renewable power facilities. We utilized $1.7 billion in new financing in order to fund the acquisition.

As of the acquisition dates, the Infrastructure Lending Portfolio was 97% floating rate with 74% of the collateral located in the U.S., 12% in Mexico, 5% in the United Kingdom and the remaining collateral dispersed through the Middle East, Ireland, Australia, Canada and Spain. The loans were predominantly denominated in U.S. Dollars (“USD”) and backed by long term power purchase agreements primarily with investment grade counterparties. The Company hired a team of professionals from GE Capital’s project finance division in connection with the acquisition to manage and expand the Infrastructure Lending Portfolio.

Goodwill of $119.4 million was recognized in connection with the Infrastructure Lending Segment acquisition as the consideration paid exceeded the fair value of the net assets acquired.

We applied the provisions of ASC 805, Business Combinations, in accounting for our acquisition of the Infrastructure Lending Segment. In doing so, we recorded all identifiable assets acquired and liabilities assumed at fair value as of the respective acquisition dates.

Woodstar II Portfolio

During the year ended December 31, 2018, we acquired the final 19 properties of the 27 affordable housing communities comprising our “Woodstar II Portfolio”. The Woodstar II Portfolio in its entirety is comprised of 6,109 units concentrated primarily in Central and South Florida and is 100% occupied.

The 19 affordable housing communities acquired during the year ended December 31, 2018 consist of 4,369 units and were acquired for $438.1 million, including contingent consideration of $29.2 million (the “2018 Closing”). The properties acquired in the 2018 Closing were recognized initially at the purchase price of $408.9 million plus capitalized acquisition costs of $4.1 million. Government sponsored mortgage debt of $27.0 million with weighted average fixed annual interest rates of 3.06% and remaining weighted average terms of 27.5 years was assumed at closing. We financed a portion of the 2018 Closing utilizing new 10-year mortgage debt totaling $300.9 million with weighted average fixed annual interest rates of 3.82%.

In December 2017, we acquired eight of the affordable housing communities (the “2017 Closing”), which include 1,740 units, for $156.2 million, including contingent consideration of $10.8 million. We financed the 2017 Closing utilizing 10-year mortgage debt totaling $116.7 million with a fixed 3.81% interest rate.

We effectuated the Woodstar II Portfolio acquisitions via a contribution of the properties by third parties (the “Contributors”) to SPT Dolphin Intermediate LLC (“SPT Dolphin”), a newly-formed, wholly-owned subsidiary of the Company. In exchange for the contribution, the Contributors received cash, Class A units of SPT Dolphin (the “Class A Units”) and rights to receive additional Class A Units if certain contingent events occur. The Class A unitholders have the right to redeem their Class A Units for consideration equal to the current share price of the Company’s common stock on a one-for-one basis, with the consideration paid in either cash or the Company’s common stock, at the determination of the Company.

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The 2018 Closing resulted in the Contributors receiving cash of $225.8 million, 7,403,731 Class A Units and rights to receive an additional 1,411,642 Class A Units if certain contingent events occur. In aggregate, the 2018 Closing and 2017 Closing have resulted in the Contributors receiving cash of $310.7 million, 10,183,505 Class A Units and rights to receive an additional 1,910,563 Class A Units if certain contingent events occur. During the years ended December 31, 2019 and 2018, we issued 120,926 and 1,727,314, respectively, of the total 1,910,563 contingent Class A Units to the Contributors. During the year ended December 31, 2019, redemptions of 974,176 of the Class A Units were received and settled in common stock. No redemptions of Class A Units occurred during the year ended December 31, 2018. In consolidation, the issued Class A Units are reflected as non-controlling interests in consolidated subsidiaries on our consolidated balance sheets.

Since substantially all of the fair value of the properties acquired was concentrated in a group of similar identifiable assets, the Woodstar II Portfolio acquisitions were accounted for in accordance with the asset acquisition provisions of ASC 805.

Master Lease Portfolio

On September 25, 2017, we acquired 20 retail properties and three industrial properties (the “Master Lease Portfolio”) for a purchase price of $553.3 million, inclusive of $3.7 million of related transaction costs. Concurrently with the acquisition, we leased the properties back to the seller under corporate guaranteed master net lease agreements with initial terms of 24.6 years and periodic rent escalations. These properties, which collectively comprised 5.3 million square feet, are geographically dispersed throughout the U.S., with more than 50% of the portfolio, by carrying value, located in Florida, Texas and Minnesota. We utilized $265.9 million in new financing in order to fund the acquisition. This sale leaseback transaction was accounted for as an asset acquisition.

During the year ended December 31, 2018, we sold four retail properties and three industrial properties within the Master Lease Portfolio for $235.4 million, recognizing a gain on sale of $28.5 million within gain on sale of investments and other assets in our consolidated statement of operations. There were no properties sold within the Master Lease Portfolio during the years ended December 31, 2019 and 2017.

Purchase Price Allocations of Business Combinations

We applied the business combination provisions of ASC 805 in accounting for our acquisition of the Infrastructure Lending Segment and, prior to our adoption of ASU 2017-01 in December 2017, the REIS Equity Portfolio. In doing so, we recorded all identifiable assets acquired and liabilities assumed at fair value as of the respective acquisition dates.

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The following table summarizes the identified assets acquired and liabilities assumed as of the respective acquisition dates (amounts in thousands):

	2018		2017
	Infrastructure		REIS Equity
Assets acquired:	Lending Segment		Portfolio
Loans held-for-investment	$	1,649,630	$	—
Loans held-for-sale		319,710		—
Investment securities		65,060		—
Properties		—		38,770
Intangible assets		—		11,955
Accrued interest receivable		13,843		—
Other assets		—		85
Total identifiable assets acquired		2,048,243		50,810
Liabilities assumed:
Accounts payable, accrued expenses and other liabilities		8,817		1,516
Derivative liabilities		282		—
Total liabilities assumed		9,099		1,516
Net assets acquired	$	2,039,144	$	49,294

Goodwill represents the excess of the purchase price over the fair value of the underlying assets acquired and liabilities assumed. This determination of goodwill resulting from the Infrastructure Lending Segment acquisition is as follows (amounts in thousands):

	2018
	Infrastructure
	Lending Segment
Purchase price	$	2,158,553
Fair value of net assets acquired		2,039,144
Goodwill	$	119,409

Pro Forma Operating Data (Unaudited)

The unaudited pro forma revenues and net income attributable to the Company for the years ended December 31, 2018 and 2017, assuming the Infrastructure Lending Segment was acquired on January 1, 2017, are as follows (amounts in thousands, except per share amounts):

	For the Year Ended
	December 31,
(Unaudited)	2018		2017
Revenues	$	1,182,892	$	966,636
Net income attributable to STWD		392,505		395,150
Net income per share - Basic		1.47		1.51
Net income per share - Diluted		1.44		1.50

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4. Restricted Cash

A summary of our restricted cash as of December 31, 2019 and 2018 is as follows (amounts in thousands):

	As of December 31,
	2019		2018
Cash restricted by lender	$	40,818	$	175,659
Cash collateral for derivative financial instruments		37,912		37,245
Funds held on behalf of borrowers and tenants		11,903		12,838
Other restricted cash		5,010		22,299
	$	95,643	$	248,041

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5. Loans

Our loans held-for-investment are accounted for at amortized cost and our loans held-for-sale are accounted for at the lower of cost or fair value, unless we have elected the fair value option for either. The following tables summarize our investments in mortgages and loans by subordination class as of December 31, 2019 and 2018 (dollars in thousands):

							Weighted
					Weighted		Average Life
	Carrying		Face		Average		(“WAL”)
December 31, 2019	Value		Amount		Coupon (1)		(years)(2)
First mortgages (3)	$	7,928,026	$	7,962,788	5.8	%	2.0
First priority infrastructure loans		1,397,448		1,416,164	5.6	%	4.9
Subordinated mortgages (4)		75,724		77,055	8.8	%	3.4
Mezzanine loans (3)		484,164		484,408	11.0	%	1.9
Residential loans, fair value option (5)		671,572		654,925	6.1	%	3.8
Other		62,555		66,525	8.2	%	1.6
Total loans held-for-investment		10,619,489		10,661,865
Loans held-for-sale, fair value option, residential (5)		605,384		587,144	6.2	%	3.9
Loans held-for-sale, fair value option, commercial		159,238		160,635	3.9	%	10.0
Loans held-for-sale, infrastructure		119,724		121,271	3.3	%	2.1
Total gross loans		11,503,835		11,530,915
Loan loss allowance		(33,611)		—
Total net loans	$	11,470,224	$	11,530,915
December 31, 2018
First mortgages (3)	$	6,607,117	$	6,631,236	6.9	%	2.0
First priority infrastructure loans		1,456,779		1,465,828	5.7	%	4.5
Subordinated mortgages (4)		52,778		53,996	8.9	%	3.7
Mezzanine loans (3)		393,832		394,739	10.6	%	2.0
Other		61,001		64,658	8.2	%	2.5
Total loans held-for-investment		8,571,507		8,610,457
Loans held-for-sale, fair value option, residential		623,660		609,571	6.3	%	6.6
Loans held-for-sale, commercial ($47,622 under fair value option)		94,117		94,916	5.4	%	6.2
Loans held-for-sale, infrastructure		469,775		486,909	3.5	%	0.3
Loans transferred as secured borrowings		74,346		74,692	7.1	%	1.3
Total gross loans		9,833,405		9,876,545
Loan loss allowance		(39,151)		—
Total net loans	$	9,794,254	$	9,876,545

(1) Calculated using LIBOR or other applicable index rates as of December 31, 2019 and 2018 for variable rate loans.

(2) Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination or acquisition.

(3) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan.  The application of this methodology resulted in mezzanine loans with carrying values of $967.0 million and $1.0 billion being classified as first mortgages as of December 31, 2019 and 2018, respectively.

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(4) Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.

(5) During the year ended December 31, 2019, $340.9 million of residential loans held-for-sale were reclassified into residential loans held-for-investment.

During the year ended December 31, 2018, the Company received distributions totaling $15.1 million from a profit participation in a mortgage loan that was repaid in 2016. The loan was secured by a retail and hospitality property located in the Times Square area of New York City. The profit participation is accounted for as a loan in accordance with the acquisition, development and construction accounting guidance within ASC 310-10, which resulted in distributions in excess of basis being recognized within interest income in our consolidated statements of operations. There were no distributions from profit participations received during the years ended December 31, 2019 and 2017.

As of December 31, 2019, our variable rate loans held-for-investment were as follows (dollars in thousands):

	Carrying		Weighted-average
December 31, 2019	Value		Spread Above Index
Commercial loans	$	8,030,499	4.2	%
First priority infrastructure loans		1,397,448	3.8	%
Total variable rate loans held-for-investment	$	9,427,947	4.2	%

We regularly evaluate the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral, as well as the financial and operating capability of the borrower. Specifically, the collateral’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan and/or (iii) the collateral’s liquidation value. We also evaluate the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the collateral. In addition, we consider the overall economic environment, real estate or industry sector, and geographic sub-market in which the borrower operates. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including (i) periodic financial data such as property operating statements, occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections and (iii) current credit spreads and discussions with market participants.

Our evaluation process, as described above, produces an internal risk rating between 1 and 5, which is a weighted average of the numerical ratings in the following categories: (i) sponsor capability and financial condition, (ii) loan and collateral performance relative to underwriting, (iii) quality and stability of collateral cash flows and (iv) loan structure. We utilize the overall risk ratings as a concise means to monitor any credit migration on a loan as well as on the whole portfolio. While the overall risk rating is generally not the sole factor we use in determining whether a loan is impaired, a loan with a higher overall risk rating would tend to have more adverse indicators of impairment and therefore would be more likely to experience a credit loss.

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The rating categories for commercial real estate loans generally include the characteristics described below, but these are utilized as guidelines and therefore not every loan will have all of the characteristics described in each category:

Rating	Characteristics
1	●	Sponsor capability and financial condition—Sponsor is highly rated or investment grade or, if private, the equivalent thereof with significant management experience.
	●	Loan collateral and performance relative to underwriting—The collateral has surpassed underwritten expectations.
	●	Quality and stability of collateral cash flows—Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high quality tenant mix.
	●	Loan structure—Loan to collateral value ratio (“LTV”) does not exceed 65%. The loan has structural features that enhance the credit profile.
2	●	Sponsor capability and financial condition—Strong sponsorship with experienced management team and a responsibly leveraged portfolio.
	●	Loan collateral and performance relative to underwriting—Collateral performance equals or exceeds underwritten expectations and covenants and performance criteria are being met or exceeded.
	●	Quality and stability of collateral cash flows—Occupancy is stabilized with a diverse tenant mix.
	●	Loan structure—LTV does not exceed 70% and unique property risks are mitigated by structural features.
3	●	Sponsor capability and financial condition—Sponsor has historically met its credit obligations, routinely pays off loans at maturity, and has a capable management team.
	●	Loan collateral and performance relative to underwriting—Property performance is consistent with underwritten expectations.
	●	Quality and stability of collateral cash flows—Occupancy is stabilized, near stabilized, or is on track with underwriting.
	●	Loan structure—LTV does not exceed 80%.
4	●	Sponsor capability and financial condition—Sponsor credit history includes missed payments, past due payment, and maturity extensions. Management team is capable but thin.
	●	Loan collateral and performance relative to underwriting—Property performance lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers. A sale of the property may be necessary in order for the borrower to pay off the loan at maturity.
	●	Quality and stability of collateral cash flows—Occupancy is not stabilized and the property has a large amount of rollover.
	●	Loan structure—LTV is 80% to 90%.
5	●	Sponsor capability and financial condition—Credit history includes defaults, deeds-in-lieu, foreclosures, and/or bankruptcies.
	●	Loan collateral and performance relative to underwriting—Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Sale proceeds would not be sufficient to pay off the loan at maturity.
	●	Quality and stability of collateral cash flows—The property has material vacancy and significant rollover of remaining tenants.
	●	Loan structure—LTV exceeds 90%.

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The risk ratings for loans subject to our rating system, which excludes loans held-for-sale, by class of loan were as follows as of December 31, 2019 and 2018 (dollars in thousands):

	Balance Sheet Classification
	Loans Held-For-Investment														Loans
				First Priority											Transferred				% of
Risk Rating	First			Infrastructure			Subordinated			Mezzanine					As Secured				Total
Category	Mortgages			Loans			Mortgages			Loans		Other			Borrowings		Total		Loans
December 31, 2019
1	$	503		$	—		$	—		$	—	$	23,550		$	—	$	24,053	0.2	%
2		4,186,776			—			37,980			120,372		31,178			—		4,376,306	38.0	%
3		3,509,601			—			25,767			363,792		—			—		3,899,160	33.9	%
4		40,436			—			—			—		—			—		40,436	0.4	%
5		59,116			—			—			—		—			—		59,116	0.5	%
N/A		131,594	(1)		1,397,448	(2)		11,977	(1)		—		7,827	(1)		—		1,548,846	13.5	%
	$	7,928,026		$	1,397,448		$	75,724		$	484,164	$	62,555		$	—		9,947,917
Residential loans held-for-investment, fair value option																		671,572	5.8	%
Loans held-for-sale																		884,346	7.7	%
Total gross loans																	$	11,503,835	100.0	%
December 31, 2018
1	$	6,538		$	—		$	—		$	—	$	23,767		$	—	$	30,305	0.3	%
2		3,356,342			—			7,392			111,466		—			74,346		3,549,546	36.1	%
3		2,987,296			—			33,410			282,366		31,039			—		3,334,111	33.9	%
4		63,094			—			—			—		—			—		63,094	0.6	%
5		—			—			—			—		—			—		—	—	%
N/A		193,847	(1)		1,456,779	(2)		11,976	(1)		—		6,195	(1)		—		1,668,797	17.0	%
	$	6,607,117		$	1,456,779		$	52,778		$	393,832	$	61,001		$	74,346		8,645,853
Loans held-for-sale																		1,187,552	12.1	%
Total gross loans																	$	9,833,405	100.0	%

(1) Principally represents loans individually evaluated for impairment in accordance with ASC 310-10.

(2) First priority infrastructure loans were not risk rated as the Company is in the process of developing a risk rating policy for these loans.

In accordance with our loan impairment policy, during the year ended December 31, 2018, we recorded impairment charges of $38.2 million. During the year ended December 31, 2019, we recorded an impairment charge of $3.3 million to reflect the estimated fair value of the underlying collateral for a past due infrastructure loan that was converted into an equity interest in November 2019, pursuant to a bankruptcy court ordered sale. Our recorded investment in the loan was $29.2 million ($36.2 million principal balance, net of a $7.0 million non-accretable difference). The $25.9 million carrying value, net of the $3.3 million allowance for impaired loan which we charged-off, was reclassified to investment in unconsolidated entities upon conversion into an equity interest (see Note 8).

During the year ended December 31, 2019, we also charged-off an allowance for impaired loans of $8.3 million relating to a first mortgage loan on a grocery distribution facility located in Montgomery, Alabama that we foreclosed on in March 2019 and obtained physical possession of the underlying collateral property. As of the foreclosure date, our carrying value of the loan totaled $9.0 million ($20.9 million unpaid principal balance net of an $8.3 million allowance for impaired loan and $3.6 million of unamortized discount). In April 2019, we foreclosed on a first mortgage loan on a grocery distribution facility located in Orlando, Florida and obtained physical possession of the underlying collateral property. As of the foreclosure date, the appraised value of the property exceeded the $18.5 million carrying value of the

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loan ($21.9 million unpaid principal and interest balance net of a $3.4 million unamortized discount, and no reserve for impaired loan).

As of December 31, 2019, we had allowances for impaired loans of $29.9 million. Of this amount, $21.6 million relates to a residential conversion project located in New York City, for which our recorded investment was as follows as of December 31, 2019: (i) $131.6 million first mortgage loan and contiguous mezzanine loans ($104.2 million unpaid principal balance, which does not reflect $38.4 million of accrued interest and $21.6 million allowance for impaired loan) and (ii) $7.8 million unsecured promissory note ($8.9 million unpaid principal balance and no reserve for impaired loan).

Also included in the allowance for impaired loans is $8.3 million related to two subordinated mortgages on department stores located in the Greater Chicago area. Our recorded investment in these loans totaled $12.2 million ($12.0 million unpaid principal balance and $8.3 million allowance for impaired loans) as of December 31, 2019.

We apply the cost recovery method of interest income recognition for these impaired loans. The average recorded investment in the impaired loans for the year ended December 31, 2019 was $172.8 million.

As of December 31, 2019, we held TDRs with unfunded commitments of $3.1 million. There were no TDRs for which interest income was recognized during the year ended December 31, 2019.

As of December 31, 2019, certain of the residential conversion project first mortgage and mezzanine loans with a recorded investment of $93.6 million and the department store loans discussed above were 90 days or greater past due, as were $7.4 million of residential loans. In accordance with our interest income recognition policy, these loans were placed on non-accrual status.

In accordance with our policies, we record an allowance for loan losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4,” plus (ii) 5% of the aggregate carrying amount of loans rated as a “5,” plus (iii) allowance for infrastructure loans held-for-sale where amortized cost is in excess of fair value, plus (iv) impaired loan reserves, if any. The following table presents the activity in our allowance for loan losses (amounts in thousands):

	For the year ended December 31,
	2019		2018		2017
Allowance for loan losses at January 1	$	39,151	$	4,330	$	9,788
Provision for (reversal of) loan losses		3,812		(3,384)		(5,458)
Provision for impaired loans		3,314		38,205		—
Charge-offs		(12,666)		—		—
Recoveries		—		—		—
Allowance for loan losses at December 31	$	33,611	$	39,151	$	4,330
Recorded investment in loans related to the allowance for loan loss	$	291,768	$	275,112	$	170,941

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The activity in our loan portfolio was as follows (amounts in thousands):

	For the year ended December 31,
	2019		2018		2017
Balance at January 1	$	9,794,254	$	7,382,641	$	5,946,274
Acquisitions/originations/additional funding		9,094,714		6,723,144		5,500,539
Acquisition of Infrastructure Lending Portfolio		—		1,969,340		—
Capitalized interest (1)		110,632		63,047		74,339
Basis of loans sold (2)		(4,311,390)		(3,082,347)		(1,634,717)
Loan maturities/principal repayments		(3,304,838)		(3,272,666)		(2,658,522)
Discount accretion/premium amortization		35,387		38,099		39,084
Changes in fair value		71,601		40,522		66,987
Unrealized foreign currency translation gain (loss)		40,155		(32,341)		42,356
Loan loss provision, net		(7,126)		(34,821)		5,458
Loan foreclosures		(27,303)		—		—
Transfer to/from other asset classifications		(25,862)		(364)		843
Balance at December 31	$	11,470,224	$	9,794,254	$	7,382,641

(1) Represents accrued interest income on loans whose terms do not require current payment of interest.

(2) See Note 12 for additional disclosure on these transactions.

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6. Investment Securities

Investment securities were comprised of the following as of December 31, 2019 and 2018 (amounts in thousands):

	Carrying Value as of
	December 31, 2019		December 31, 2018
RMBS, available-for-sale	$	189,576	$	209,079
RMBS, fair value option (1)		147,034		87,879
CMBS, fair value option (1), (2)		1,295,363		1,157,508
Held-to-maturity (“HTM”) debt securities, amortized cost		570,638		644,149
Equity security, fair value		12,664		11,893
Subtotal—Investment securities		2,215,275		2,110,508
VIE eliminations (1)		(1,405,037)		(1,204,040)
Total investment securities	$	810,238	$	906,468

(1) Certain fair value option CMBS and RMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810.

(2) Includes $186.6 million and $8.4 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of December 31, 2019 and 2018, respectively.

Purchases, sales and principal collections for all investment securities were as follows (amounts in thousands):

	RMBS,		RMBS, fair		CMBS, fair		HTM		Equity		Securitization
	available-for-sale		value option		value option		Securities		Security		VIEs (1)		Total
Year Ended December 31, 2019
Purchases	$	—	$	120,103	$	238,213	$	91,162	$	—	$	(351,220)	$	98,258
Sales		—		41,501		150,365		—		—		(184,540)		7,326
Principal collections		26,929		16,500		40,490		167,383		—		(45,642)		205,660
Year Ended December 31, 2018
Purchases	$	—	$	90,982	$	323,071	$	463,810	$	—	$	(385,463)	$	492,400
Acquisition of Infrastructure Lending Portfolio		—		—		—		65,060		—		—		65,060
Sales		13,264		—		105,637		—		—		(102,474)		16,427
Principal collections		34,763		1,439		114,545		327,207		—		(95,030)		382,924
Year Ended December 31, 2017
Purchases	$	7,433	$	—	$	125,776	$	79,163	$	—	$	(113,978)	$	98,394
Sales		—		—		37,184		—		—		(25,605)		11,579
Principal collections		40,635		—		109,354		182,919		—		(100,115)		232,793

(1) Represents RMBS and CMBS, fair value option amounts eliminated due to our consolidation of securitization VIEs. These amounts are reflected as repayment of debt of consolidated VIEs in our consolidated statements of cash flows.

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RMBS, Available-for-Sale

The Company classified all of its RMBS not eliminated in consolidation as available-for-sale as of December 31, 2019 and 2018. These RMBS are reported at fair value in the balance sheet with changes in fair value recorded in AOCI.

The tables below summarize various attributes of our investments in available-for-sale RMBS as of December 31, 2019 and 2018 (amounts in thousands):

							Unrealized Gains or (Losses)
							Recognized in AOCI
	Purchase				Recorded				Gross		Gross		Net
	Amortized		Credit		Amortized		Non-Credit		Unrealized		Unrealized		Fair Value
	Cost		OTTI		Cost		OTTI		Gains		Losses		Adjustment		Fair Value
December 31, 2019
RMBS	$	148,385	$	(9,805)	$	138,580	$	(314)	$	51,310	$	—	$	50,996	$	189,576
December 31, 2018
RMBS	$	165,461	$	(9,897)	$	155,564	$	(31)	$	53,546	$	—	$	53,515	$	209,079

	Weighted Average Coupon (1)		Weighted Average Rating	WAL  (Years) (2)
December 31, 2019
RMBS	3.1	%	BB-	5.6
December 31, 2018
RMBS	3.7	%	CCC-	6.0

(1) Calculated using the December 31, 2019 and 2018 one-month LIBOR rate of 1.763% and 2.503%, respectively, for floating rate securities.

(2) Represents the remaining WAL of each respective group of securities as of the respective balance sheet date. The WAL of each individual security is calculated using projected amounts and projected timing of future principal payments.

As of December 31, 2019, approximately $160.9 million, or 84.9%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.24%. As of December 31, 2018, approximately $177.4 million, or 84.9%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.22%. We purchased all of the RMBS at a discount, a portion of which will be accreted into income over the expected remaining life of the security. The majority of the income from this strategy is earned from the accretion of this accretable discount.

The following table contains a reconciliation of aggregate principal balance to amortized cost for our RMBS as of December 31, 2019 and 2018 (amounts in thousands):

	December 31, 2019		December 31, 2018
Principal balance	$	278,853	$	309,497
Accretable yield		(56,108)		(54,779)
Non-accretable difference		(84,165)		(99,154)
Total discount		(140,273)		(153,933)
Amortized cost	$	138,580	$	155,564

The principal balance of credit deteriorated RMBS was $263.7 million and $290.8 million as of December 31, 2019 and 2018, respectively. Accretable yield related to these securities totaled $50.3 million and $49.5 million as of December 31, 2019 and 2018, respectively.

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The following table discloses the changes to accretable yield and non-accretable difference for our RMBS during the years ended December 31, 2019 and 2018 (amounts in thousands):

			Non-Accretable
	Accretable Yield		Difference
Balance as of January 1, 2018	$	55,712	$	121,867
Accretion of discount		(10,932)		—
Principal write-downs, net		—		(3,682)
Sales		(9,032)		—
Transfer to/from non-accretable difference		19,031		(19,031)
Balance as of December 31, 2018		54,779		99,154
Accretion of discount		(9,945)		—
Principal write-downs, net		—		(3,715)
Transfer to/from non-accretable difference		11,274		(11,274)
Balance as of December 31, 2019	$	56,108	$	84,165

We have engaged a third party manager who specializes in RMBS to execute the trading of RMBS, the cost of which was $1.5 million, $1.8 million and $1.9 million for the years ended December 31, 2019, 2018 and 2017, respectively, recorded as management fees in the accompanying consolidated statements of operations.

During the year ended December 31, 2018, we sold RMBS for proceeds of $13.3 million and realized gross gains of $3.5 million using the specific identification cost method. There were no sales of RMBS during the years ended December 31, 2019 and 2017.

The following table presents the gross unrealized losses and estimated fair value of any available-for-sale securities that were in an unrealized loss position as of December 31, 2019 and 2018, and for which OTTIs (full or partial) have not been recognized in earnings (amounts in thousands):

	Estimated Fair Value				Unrealized Losses
	Securities with a		Securities with a		Securities with a		Securities with a
	loss less than		loss greater than		loss less than		loss greater than
	12 months		12 months		12 months		12 months
As of December 31, 2019
RMBS	$	—	$	1,380	$	—	$	(314)
As of December 31, 2018
RMBS	$	2,148	$	—	$	(31)	$	—

As of both December 31, 2019 and 2018, there was one security with unrealized losses reflected in the table above. After evaluating the security and recording adjustments for credit-related OTTI, we concluded that the remaining unrealized losses reflected above were noncredit-related and would be recovered from the security’s estimated future cash flows. We considered a number of factors in reaching this conclusion, including that we did not intend to sell the security, it was not considered more likely than not that we would be forced to sell the security prior to recovering our amortized cost, and there were no material credit events that would have caused us to otherwise conclude that we would not recover our cost. Credit losses, which represent most of the OTTI we record on securities, are calculated by comparing (i) the estimated future cash flows of each security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) our amortized cost basis. Significant judgment is used in projecting cash flows for our non-agency RMBS. As a result, actual income and/or impairments could be materially different from what is currently projected and/or reported.

CMBS and RMBS, Fair Value Option

As discussed in the “Fair Value Option” section of Note 2 herein, we elect the fair value option for certain CMBS and RMBS in an effort to eliminate accounting mismatches resulting from the current or potential consolidation of securitization VIEs. As of December 31, 2019, the fair value and unpaid principal balance of CMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of

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securitization VIEs, were $1.3 billion and $3.0 billion, respectively. As of December 31, 2019, the fair value and unpaid principal balance of RMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of securitization VIEs, were $147.0 million and $87.4 million, respectively. The $1.4 billion total fair value balance of CMBS and RMBS represents our economic interests in these assets. However, as a result of our consolidation of securitization VIEs, the vast majority of this fair value (all except $37.4 million at December 31, 2019) is eliminated against VIE liabilities before arriving at our GAAP balance for fair value option investment securities.

As of December 31, 2019, $118.2 million of our CMBS were variable rate and none of our RMBS were variable rate.

HTM Debt Securities, Amortized Cost

The table below summarizes unrealized gains and losses of our investments in HTM debt securities as of December 31, 2019 and 2018 (amounts in thousands):

	Net Carrying Amount		Gross Unrealized		Gross Unrealized
	(Amortized Cost)		Holding Gains		Holding Losses		Fair Value
December 31, 2019
CMBS	$	383,473	$	946	$	(3,001)	$	381,418
Preferred interests		142,012		1,148		(353)		142,807
Infrastructure bonds		45,153		—		(651)		44,502
Total	$	570,638	$	2,094	$	(4,005)	$	568,727
December 31, 2018
CMBS	$	408,556	$	2,435	$	(3,349)	$	407,642
Preferred interests		174,825		703		—		175,528
Infrastructure bonds		60,768		178		(168)		60,778
Total	$	644,149	$	3,316	$	(3,517)	$	643,948

The table below summarizes the maturities of our HTM debt securities by type as of December 31, 2019 (amounts in thousands):

			Preferred		Infrastructure
	CMBS		Interests		Bonds		Total
Less than one year	$	284,251	$	—	$	5,371	$	289,622
One to three years		99,222		141,659		—		240,881
Three to five years		—		353		—		353
Thereafter		—		—		39,782		39,782
Total	$	383,473	$	142,012	$	45,153	$	570,638

As of December 31, 2019 and 2018, $19.8 million and $21.2 million, respectively, of our infrastructure bonds with an aggregate principal balance of $32.8 million and $34.2 million, respectively, were originally acquired with deteriorated credit quality and had no accretable yield and an aggregate non-accretable difference of $13.0 million.

Equity Security, Fair Value Option

During 2012, we acquired 9,140,000 ordinary shares from a related-party in Starwood European Real Estate Finance Limited (“SEREF”), a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange. The fair value of the investment remeasured in USD was $12.7 million and $11.9 million as of December 31, 2019 and 2018, respectively. As of December 31, 2019, our shares represent an approximate 2% interest in SEREF.

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7. Properties

Our properties are held within the following portfolios:

Woodstar I Portfolio

The Woodstar I Portfolio is comprised of 32 affordable housing communities with 8,948 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas. During the year ended December 31, 2015, we acquired 18 of the 32 affordable housing communities of the Woodstar I Portfolio with the final 14 communities acquired during the year ended December 31, 2016. The Woodstar I Portfolio includes total gross properties and lease intangibles of $629.5 million and federal, state and county sponsored financing and other debt of $478.2 million as of December 31, 2019.

Woodstar II Portfolio

The Woodstar II Portfolio is comprised of 27 affordable housing communities with 6,109 units concentrated primarily in Central and South Florida. The Woodstar II Portfolio includes total gross properties and lease intangibles of $605.5 million and debt of $436.9 million as of December 31, 2019. Refer to Note 3 for further discussion of the Woodstar II Portfolio.

Medical Office Portfolio

The Medical Office Portfolio is comprised of 34 medical office buildings acquired during the year ended December 31, 2016. These properties, which collectively comprise 1.9 million square feet, are geographically dispersed throughout the U.S. and primarily affiliated with major hospitals or located on or adjacent to major hospital campuses. The Medical Office Portfolio includes total gross properties and lease intangibles of $759.9 million and debt of $590.9 million as of December 31, 2019.

Master Lease Portfolio

The Master Lease Portfolio is comprised of 16 retail properties geographically dispersed throughout the U.S., with more than 50% of the portfolio, by carrying value, located in Florida, Texas and Minnesota. These properties, which were acquired in September 2017, collectively comprise 1.9 million square feet and were leased back to the seller under corporate guaranteed master net lease agreements with initial terms of 24.6 years and periodic rent escalations. The Master Lease Portfolio includes total gross properties of $343.8 million and debt of $192.4 million as of December 31, 2019. Refer to Note 3 for further discussion of the Master Lease Portfolio.

Investing and Servicing Segment Property Portfolio

The REIS Equity Portfolio is comprised of 16 commercial real estate properties and one equity interest in an unconsolidated commercial real estate property. The REIS Equity Portfolio includes total gross properties and lease intangibles of $277.8 million and debt of $187.9 million as of December 31, 2019. Refer to Note 3 for further discussion of the REIS Equity Portfolio.

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The table below summarizes our properties held as of December 31, 2019 and December 31, 2018 (dollars in thousands):

	Depreciable Life	December 31, 2019		December 31, 2018
Property Segment
Land and land improvements	0 – 15 years	$	484,397	$	648,972
Buildings and building improvements	5 – 45 years		1,687,756		1,980,283
Furniture & fixtures	3 – 7 years		52,567		46,048
Investing and Servicing Segment
Land and land improvements	0 – 15 years		54,052		82,332
Buildings and building improvements	3 – 40 years		182,048		213,010
Furniture & fixtures	2 – 5 years		2,139		2,158
Commercial and Residential Lending Segment (1)
Land and land improvements	0 – 7 years		11,386		—
Buildings and building improvements	10 – 23 years		16,285		—
Properties, cost			2,490,630		2,972,803
Less: accumulated depreciation			(224,190)		(187,913)
Properties, net		$	2,266,440	$	2,784,890

(1) Represents properties acquired through loan foreclosure. Refer to Note 5 for further discussion.

During the year ended December 31, 2019, we sold $407.2 million of net property assets relating to the Ireland Portfolio. Refer to Note 3 for further discussion. Also during the year ended December 31, 2019, we sold four operating properties within the REIS Equity Portfolio for $145.9 million. In connection with these REIS Equity Portfolio sales, we recognized a total gain of $59.7 million within gain on sale of investments and other assets in our consolidated statement of operations, of which $5.3 million was attributable to non-controlling interests.

During the years ended December 31, 2018 and 2017, we sold 16 and six operating properties, respectively, for $313.3 million and $56.4 million, respectively. In connection with these sales, we recognized a total gain of $55.1 million and $19.9 million, respectively, within gain on sale of investments and other assets in our consolidated statements of operations, of which $5.1 million and $3.3 million, respectively, was attributable to non-controlling interests. One of these properties was acquired by a third party which already held a $0.3 million non-controlling interest in the property.

Future rental payments due to us from tenants under existing non-cancellable operating leases for each of the next five years and thereafter are as follows (in thousands):

2020	$	177,516
2021		95,524
2022		89,602
2023		79,177
2024		71,271
Thereafter		688,437
Total	$	1,201,527

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8. Investment in Unconsolidated Entities

The table below summarizes our investments in unconsolidated entities as of December 31, 2018 and 2017 (dollars in thousands):

	Participation /	Carrying value as of December 31,
	Ownership % (1)	2019		2018
Equity method:
Retail Fund (see Note 16)	33%	$	—	$	114,362
Equity interest in a natural gas power plant (2)	10%		25,862		—
Investor entity which owns equity in an online real estate company	50%		9,473		9,372
Equity interests in commercial real estate	50%		1,907		6,294
Equity interest in and advances to a residential mortgage originator (3)	N/A		12,002		9,082
Various	25% - 50%		8,339		6,984
			57,583		146,094
Other:
Equity interest in a servicing and advisory business (4)	4%		—		6,207
Investment funds which own equity in a loan servicer and other real estate assets	4% - 6%		9,225		9,225
Various	0% - 2%		17,521		10,239
			26,746		25,671
		$	84,329	$	171,765

(1)None of these investments are publicly traded and therefore quoted market prices are not available.

(2)This 10% equity interest was obtained in November 2019 pursuant to a bankruptcy court ordered sale in satisfaction of a past due $36.2 million infrastructure loan which had a carrying value of $25.9 million and was secured by a gas-fired power generation facility. We report our interest in this investment on a three-month lag basis.

(3)As of December 31, 2019 and 2018, includes a $4.5 million and $2.0 million subordinated loan, respectively.

(4)During the year ended December 31, 2019, we received a capital distribution of $8.4 million and our equity interest was reduced to 4%.

We own a 33% equity interest in a fund that owns four regional shopping malls (the “Retail Fund”). The fund is an investment company which measures its assets at fair value on a recurring basis. We report our interest in the Retail Fund on a three-month lag basis at its liquidation value. During the three months ended March 31, 2019, we recorded a $44.9 million decrease to our investment due to unrealized decreases in the fair value of real estate properties reported to us by the Retail Fund.

In November 2019, the Retail Fund’s secured financing matured and was not repaid. In light of these events, we commissioned independent appraisals of the underlying assets in order to estimate the fair value of our investment in the Retail Fund as of December 31, 2019. Based upon the results of these appraisals, we recorded an impairment charge of $71.9 million against the remainder of our investment as of December 31, 2019. These amounts were recognized within (loss) earnings from unconsolidated entities in our consolidated statement of operations during the year ended December 31, 2019. The impairment charge resulted in a $71.9 million difference between the zero carrying value of our investment and the underlying equity in the net assets of the Retail Fund.

As of December 31, 2019, the carrying value of our equity investment in a residential mortgage originator exceeded the underlying equity in net assets of such investee by $1.6 million. This difference is the result of the Company recording its investment in the investee at its acquisition date fair value, which included certain non-amortizing intangible assets not recognized by the investee. Should the Company determine these intangible assets held by the investee are impaired, the Company will recognize such impairment loss through earnings from unconsolidated

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entities in our consolidated statement of operations, otherwise, such difference between the carrying value of our equity investment in the residential mortgage originator and the underlying equity in the net assets of the residential mortgage originator will continue to exist.

During the year ended December 31, 2017, the investor entity which owns equity in an online real estate company sold approximately 88% of its interest in the online real estate company and we received a pre-tax cash distribution of $66.0 million from the investor entity related to the sale. We recognized $53.9 million of income from our investment in this investor entity as a result of the sale within earnings from unconsolidated entities in our consolidated statement of operations during the year ended December 31, 2017.

Other than our equity interests in the Retail Fund and the residential mortgage originator, there were no differences between the carrying value of our equity method investments and the underlying equity in the net assets of the investees as of December 31, 2019.

During the year ended December 31, 2019, we did not become aware of any observable price changes in our other investments accounted for under the fair value practicability exception discussed in Note 2 or any indicators of impairment.

9. Goodwill and Intangibles

Goodwill

Infrastructure Lending Segment

The Infrastructure Lending Segment’s goodwill of $119.4 million at both December 31, 2019 and 2018 represents the excess of consideration transferred over the fair value of net assets acquired on September 19, 2018 and October 15, 2018. The goodwill recognized is attributable to value embedded in the acquired Infrastructure Lending Segment’s lending platform and is fully tax deductible over 15 years.

As discussed in Note 2, goodwill is tested for impairment at least annually. Based on our quantitative assessment during the fourth quarter of 2019, we determined that the fair value of the Infrastructure Lending Segment reporting unit to which goodwill is attributed exceeded its carrying value including goodwill. Therefore, we concluded that the goodwill attributed to the Infrastructure Lending Segment was not impaired.

LNR Property LLC (“LNR”)

The Investing and Servicing Segment’s goodwill of $140.4 million at both December 31, 2019 and 2018 represents the excess of consideration transferred over the fair value of net assets of LNR acquired on April 19, 2013. The goodwill recognized is attributable to value embedded in LNR’s existing platform, which includes a network of commercial real estate asset managers, work-out specialists, underwriters and administrative support professionals as well as proprietary historical performance data on commercial real estate assets. The tax deductible component of this goodwill as of April 19, 2013 was $149.9 million and is deductible over 15 years.

Based on our qualitative assessment during the fourth quarter of 2019, we determined that it is not more likely than not that the fair value of the Investing and Servicing Segment reporting unit to which goodwill is attributed is less than its carrying value including goodwill.  Therefore, we concluded that the goodwill attributed to the Investing and Servicing Segment was not impaired. 

Intangible Assets

Servicing Rights Intangibles

In connection with the LNR acquisition, we identified domestic servicing rights that existed at the purchase date, based upon the expected future cash flows of the associated servicing contracts. As of December 31, 2019 and

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2018, the balance of the domestic servicing intangible was net of $26.2 million and $24.1 million, respectively, which was eliminated in consolidation pursuant to ASC 810 against VIE assets in connection with our consolidation of securitization VIEs. Before VIE consolidation, as of December 31, 2019 and 2018, the domestic servicing intangible had a balance of $43.2 million and $44.6 million, respectively, which represents our economic interest in this asset.

Lease Intangibles

In connection with our acquisitions of commercial real estate, we recognized in-place lease intangible assets and favorable lease intangible assets associated with certain non-cancelable operating leases of the acquired properties.

The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of December 31, 2019 and 2018 (amounts in thousands):

	As of December 31, 2019						As of December 31, 2018
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Value		Amortization		Value		Value		Amortization		Value
Domestic servicing rights, at fair value	$	16,917	$	—	$	16,917	$	20,557	$	—	$	20,557
In-place lease intangible assets		135,293		(84,383)		50,910		198,220		(100,873)		97,347
Favorable lease intangible assets		24,218		(6,345)		17,873		36,895		(9,766)		27,129
Total net intangible assets	$	176,428	$	(90,728)	$	85,700	$	255,672	$	(110,639)	$	145,033

The following table summarizes the activity within intangible assets for the years ended December 31, 2019 and 2018 (amounts in thousands):

	Domestic		In-place Lease		Favorable Lease
	Servicing		Intangible		Intangible
	Rights		Assets		Assets		Total
Balance as of January 1, 2018	$	30,759	$	122,465	$	29,868	$	183,092
Acquisition of Woodstar II Portfolio properties		—		10,792		—		10,792
Acquisition of additional REIS Equity Portfolio properties		—		7,342		2,687		10,029
Amortization		—		(39,830)		(4,046)		(43,876)
Sales		—		(1,791)		(1,036)		(2,827)
Foreign exchange loss		—		(1,270)		(344)		(1,614)
Impairment (1)		—		(361)		—		(361)
Changes in fair value due to changes in inputs and assumptions		(10,202)		—		—		(10,202)
Balance as of December 31, 2018	$	20,557	$	97,347	$	27,129	$	145,033
Sale of Ireland Portfolio		—		(20,271)		(5,654)		(25,925)
Sale of certain REIS Equity Portfolio properties		—		(5,208)		(13)		(5,221)
Acquisition of additional REIS Equity Portfolio property		—		277		—		277
Amortization		—		(19,297)		(3,256)		(22,553)
Foreign exchange loss		—		(806)		(221)		(1,027)
Impairment (1)		—		(1,132)		(112)		(1,244)
Changes in fair value due to changes in inputs and assumptions		(3,640)		—		—		(3,640)
Balance as of December 31, 2019	$	16,917	$	50,910	$	17,873	$	85,700

(1) Impairment of intangible lease assets is recognized within other expense in our consolidated statements of operations.

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The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands):

2020	$	11,699
2021		9,674
2022		7,892
2023		6,136
2024		4,742
Thereafter		28,640
Total	$	68,783

Lease Liabilities

In connection with our acquisition of certain properties within our Medical Office Portfolio, we recognized aggregate unfavorable lease liabilities of $4.8 million with a weighted average life of 9.7 years at acquisition. The liability balance was $2.3 million and $2.9 million as of December 31, 2019 and 2018, respectively.

In connection with our acquisition of LNR in 2013, we recognized an unfavorable lease liability of $15.3 million related to an assumed operating lease for our offices in Miami Beach, Florida, which expires in 2021. This liability is being amortized over the remaining 1.5 years of the underlying lease term at a rate of approximately $1.9 million per year. The liability balance was $2.8 million and $4.7 million as of December 31, 2019 and 2018, respectively.

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10. Secured Borrowings

Secured Financing Agreements

The following table is a summary of our secured financing agreements in place as of December 31, 2019 and 2018 (dollars in thousands):

												Outstanding Balance at
	Current		Extended		Weighted Average	Pledged Asset			Maximum			December 31,		December 31,
	Maturity		Maturity (a)		Pricing	Carrying Value			Facility Size			2019		2018
Repurchase Agreements:
Commercial Loans	Aug 2020 to Jan 2024	(b)	Aug 2021 to Apr 2028	(b)	(c)	$	5,327,761		$	9,066,480	(d)	$	3,640,620	$	3,598,311
Residential Loans	Feb 2021		N/A		LIBOR + 2.10%		14,704			400,000			11,835		—
Infrastructure Loans	Feb 2020		Feb 2021		LIBOR + 1.75%		227,463			500,000			188,198		—
Conduit Loans	Feb 2020 to Jun 2022		Feb 2021 to Jun 2023		LIBOR + 2.10%		109,864			350,000			86,575		35,034
CMBS/RMBS	Sep 2020 to Dec 2029	(e)	Dec 2020 to June 2030	(e)	(f)		1,005,348			837,566			682,229		656,405
Total Repurchase Agreements							6,685,140			11,154,046			4,609,457		4,289,750
Other Secured Financing:
Borrowing Base Facility	Apr 2022		Apr 2024		LIBOR + 2.25%		542,281			650,000	(g)		198,955		—
Infrastructure Acquisition Facility	Sep 2021		Sep 2022		(h)		754,443			771,534			603,642		1,551,148
Infrastructure Financing Facilities	Jul 2022 to Oct 2022		Oct 2024 to Jul 2027		LIBOR + 2.12%		524,197			1,000,000			428,206		—
Property Mortgages - Fixed rate	Nov 2024 to Aug 2052	(i)	N/A		3.94%		1,499,356			1,196,698			1,196,492		1,475,382
Property Mortgages - Variable rate	May 2020 to Jun 2026		N/A		LIBOR + 2.49%		783,460			714,810			696,503		645,344
Term Loan and Revolver	(j)		N/A		(j)		N/A	(j)		519,000			399,000		300,000
FHLB	Feb 2021		N/A		(k)		1,262,250			2,000,000			867,870		500,000
Total Other Secured Financing							5,365,987			6,852,042			4,390,668		4,471,874
						$	12,051,127		$	18,006,088			9,000,125		8,761,624
Unamortized net discount													(8,347)		(963)
Unamortized deferred financing costs													(85,730)		(77,096)
												$	8,906,048	$	8,683,565

(a) Subject to certain conditions as defined in the respective facility agreement.

(b) For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions.

(c) Certain facilities with an outstanding balance of $874.9 million as of December 31, 2019 are indexed to GBP LIBOR and EURIBOR. The remainder have a weighted average rate of LIBOR + 1.90%.

(d) The aggregate initial maximum facility size of $8.9 billion may be increased at our option, subject to certain conditions. This amount includes such upsizes.

(e) Certain facilities with an outstanding balance of $295.0 million as of December 31, 2019 carry a rolling 11-month or 12-month term which may reset monthly with the lender's consent. These facilities carry no maximum facility size.

(f) A facility with an outstanding balance of $184.7 million as of December 31, 2019 has a fixed annual interest rate of 3.49%. All other facilities are variable rate with a weighted average rate of LIBOR + 1.58%.

(g) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions.

(h) Consists of an annual interest rate of the applicable currency benchmark index + 1.50%. The spread increases 25 bps in each of the second and third years of the facility, which was entered into in September 2018.

(i) The weighted average maturity is 9.8 years as of December 31, 2019.

(j) Consists of: (i) a $399.0 million term loan facility that matures in July 2026 with an annual interest rate of LIBOR + 2.50%; and (ii) a $120.0 million revolving credit facility that matures in July 2024 with an annual interest rate of LIBOR + 3.00%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $3.1 billion as of December 31, 2019.

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(k) FHLB financing with an outstanding balance of $438.5 million as of December 31, 2019 has a weighted average fixed annual interest rate of 2.01%. The remainder is variable rate with a weighted average rate of LIBOR + 0.28%.

In the normal course of business, the Company is in discussions with its lenders to extend or amend any financing facilities which contain near term expirations.

In February 2019, we entered into a $500.0 million Infrastructure Loans repurchase facility. The facility carries a one-year initial term with a one-year extension option and an annual interest rate of LIBOR + 1.75%.

In February 2019, we amended a Residential Loans repurchase facility to increase available borrowings by $200.0 million and extend the current maturity from June 2019 to February 2021.

In March 2019, we amended the FHLB facility to increase available borrowings from $500.0 million to $2.0 billion, subject to scheduled reductions to available capacity from September 2020 through maturity in February 2021.

In April 2019, we amended the Borrowing Base Facility to extend the current maturity from February 2021 to April 2022 with two one-year extension options.

In July 2019, we entered into the following credit agreements: (i) a $400.0 million term loan facility that carries a seven-year term and an annual interest rate of LIBOR + 2.50%; and (ii) a $100.0 million revolving credit facility that carries a five-year term and an annual interest rate of LIBOR + 3.00%. A portion of the net proceeds from the term loan was used to repay the amount outstanding under our previous term loan. We recognized a loss on extinguishment of debt of $1.5 million in our consolidated statement of operations in connection with the repayment of our previous term loan. In December 2019, the revolving credit facility was amended to increase available borrowings from $100.0 million to $120.0 million.

In July 2019, we entered into a $500.0 million Infrastructure Financing Facility to finance loans within the Infrastructure Lending Segment. The facility carries a three-year revolving period with two one-year extension options, one of which is at our discretion. The facility also carries a term-match to the respective collateral for an additional five-year term after the last day of the revolving period, with such term-match not to exceed the eight-year life of the facility. The facility has an annual interest rate between 2.00% to 2.85% over the applicable currency benchmark index rate, plus fees associated with the facility as well as each advance.

In October 2019, we entered into a $500.0 million Infrastructure Financing Facility to finance loans within the Infrastructure Lending Segment. The facility carries a three-year revolving period with two one-year extension options and an annual interest rate of LIBOR + 1.75%.

In October 2019, we entered into a $600.0 million first mortgage and mezzanine loan to refinance our existing Medical Office Portfolio debt of $494.3 million. The facility carries a two-year term with three one-year extension options and a weighted average floating rate of interest of LIBOR + 2.07%. Using proceeds from the unwind of our hedge on the existing debt, we swapped the interest to a fixed rate of 3.3%. We recognized loss on extinguishment of debt of $4.7 million in our consolidated statement of operations in connection with this refinancing.

In November 2019, we entered into mortgage loans with total borrowings of $84.5 million to finance our Woodstar I Portfolio. The loans carry six-year terms and weighted average fixed annual interest rates of 4.79%. A portion of the net proceeds from the mortgage loans was used to repay $9.2 million of outstanding government sponsored mortgage loans.

In December 2019, we amended a CMBS/RMBS repurchase facility to increase available borrowings from $150.0 million to $300.0 million.

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During the year ended December 31, 2019, we entered into and amended several Commercial Loans repurchase facilities resulting in an aggregate upsize of $2.8 billion.

Our secured financing agreements contain certain financial tests and covenants. As of December 31, 2019, we were in compliance with all such covenants.

We seek to mitigate risks associated with our repurchase agreements by managing risk related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value. The margin call provisions under the majority of our repurchase facilities, consisting of 78% of these agreements, do not permit valuation adjustments based on capital markets activity. Instead, margin calls on these facilities are limited to collateral-specific credit marks. To monitor credit risk associated with the performance and value of our loans and investments, our asset management team regularly reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. For repurchase agreements containing margin call provisions for general capital markets activity, approximately 22% of these pertain to our loans held-for-sale, for which we manage credit risk through the purchase of credit index instruments. We further seek to manage risks associated with our repurchase agreements by matching the maturities and interest rate characteristics of our loans with the related repurchase agreement.

For the years ended December 31, 2019, 2018 and 2017, approximately $34.3 million, $27.0 million and $19.5 million, respectively, of amortization of deferred financing costs from secured financing agreements was included in interest expense on our consolidated statements of operations.

Collateralized Loan Obligations

In August 2019, we refinanced a pool of our commercial loans held-for-investment through a CLO, STWD 2019-FL1. On the closing date, the CLO issued $1.1 billion principal amount of notes, of which $936.4 million was purchased by third party investors. We retained $86.6 million of notes, along with preferred shares with a liquidation preference of $77.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO in exchange for cash. During the year ended December 31, 2019, we utilized the reinvestment feature, contributing $88.4 million of additional interests into the CLO.

The following table is a summary of our CLO as of December 31, 2019 (amounts in thousands):

		Face		Carrying		Weighted
	Count	Amount		Value		Average Spread		Maturity
Collateral assets	20	$	1,073,504	$	1,073,504	LIBOR + 3.34%	(a)	Nov 2023	(b)
Financing	1		936,375		928,060	LIBOR + 1.65%	(c)	July 2038	(d)

(a) Represents the weighted-average coupon earned on variable rate loans during the year ended December 31, 2019. Of the loans financed by the CLO, 9% earned fixed weighted average interest of 6.84%.

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(b) Represents the weighted-average maturity, assuming the extended contractual maturity of the collateral assets.

(c) Represents the weighted-average cost of financing incurred during the year ended December 31, 2019, inclusive of deferred issuance costs.

(d) Repayments of the CLO are tied to timing of the related collateral asset repayments. The term of the CLO financing obligation represents the legal final maturity date.

We incurred $9.2 million of issuance costs in connection with the CLO, which are amortized on an effective yield basis over the estimated life of the CLO. As of December 31, 2019, our unamortized issuance costs were $8.3 million.

The CLO is considered a VIE, for which we are deemed the primary beneficiary. We therefore consolidate the CLO. Refer to Note 15 for further discussion.

Maturities

Our credit facilities generally require principal to be paid down prior to the facilities’ respective maturities if and when we receive principal payments on, or sell, the investment collateral that we have pledged. The following table sets forth our principal repayments schedule for secured financings based on the earlier of (i) the extended contractual maturity of each credit facility or (ii) the extended contractual maturity of each of the investments that have been pledged as collateral under the respective credit facility (amounts in thousands):

	Repurchase		Other Secured
	Agreements		Financing		CLO			Total
2020	$	480,249	$	564,886	$	—		$	1,045,135
2021		625,956		857,429		—			1,483,385
2022		1,010,970		552,175		—			1,563,145
2023		1,056,812		705,283		—			1,762,095
2024		1,065,312		284,235		—			1,349,547
Thereafter		370,158		1,426,660		936,375	(a)		2,733,193
Total	$	4,609,457	$	4,390,668	$	936,375		$	9,936,500

(a) Assumes utilization of the reinvestment feature.

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11. Unsecured Senior Notes

The following table is a summary of our unsecured senior notes outstanding as of December 31, 2019 and 2018 (dollars in thousands):

						Remaining
	Coupon		Effective		Maturity	Period of		Carrying Value at December 31,
	Rate		Rate (1)		Date	Amortization		2019		2018
2019 Convertible Notes	N/A		N/A		N/A	N/A		$	—	$	77,969
2021 Senior Notes (February)	3.63	%	3.89	%	2/1/2021	1.1	years		500,000		500,000
2021 Senior Notes (December)	5.00	%	5.32	%	12/15/2021	2.0	years		700,000		700,000
2023 Convertible Notes	4.38	%	4.86	%	4/1/2023	3.3	years		250,000		250,000
2025 Senior Notes	4.75	%	5.04	%	3/15/2025	5.2	years		500,000		500,000
Total principal amount									1,950,000		2,027,969
Unamortized discount—Convertible Notes									(3,610)		(4,644)
Unamortized discount—Senior Notes									(12,144)		(16,416)
Unamortized deferred financing costs									(5,624)		(8,078)
Carrying amount of debt components								$	1,928,622	$	1,998,831
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes								$	3,755	$	3,755

(1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on our Convertible Notes, the value of which reduced the initial liability and was recorded in additional paid-in-capital.

Senior Notes Due February 2021

On January 29, 2018, we issued $500.0 million of 3.625% Senior Notes due 2021 (the “2021 February Notes”). The 2021 February Notes mature on February 1, 2021. Prior to November 1, 2020, we may redeem some or all of the 2021 February Notes at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of the applicable date of redemption. On and after November 1, 2020, we may redeem some or all of the 2021 February Notes at a price equal to 100% of the principal amount thereof. In addition, prior to February 1, 2020, we may redeem up to 40% of the 2021 February Notes at the applicable redemption price using the proceeds of certain equity offerings. The 2021 February Notes were swapped to floating rate (see Note 13).

Senior Notes Due December 2021

On December 16, 2016, we issued $700.0 million of 5.00% Senior Notes due 2021 (the “2021 December Notes”). The 2021 December Notes mature on December 15, 2021. Prior to September 15, 2021, we may redeem some or all of the 2021 December Notes at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of the applicable date of redemption. On and after September 15, 2021, we may redeem some or all of the 2021 December Notes at a price equal to 100% of the principal amount thereof. In addition, prior to December 15, 2019, we may redeem up to 35% of the 2021 December Notes at the applicable redemption price using the proceeds of certain equity offerings.

Senior Notes Due 2025

On December 4, 2017, we issued $500.0 million of 4.75% Senior Notes due 2025 (the “2025 Notes”). The 2025 Notes mature on March 15, 2025. Prior to September 15, 2024, we may redeem some or all of the 2025 Notes at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of the applicable date of redemption. On and after September 15, 2024, we may redeem some or all of the 2025 Notes at a price equal to 100% of the principal amount thereof. In addition, prior to March 15, 2021, we may redeem up to 40% of the 2025 Notes at the

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applicable redemption price using the proceeds of certain equity offerings. The 2025 Notes were swapped to floating rate (see Note 13).

Convertible Notes

On March 29, 2017, we issued $250.0 million of 4.375% Convertible Senior Notes due 2023 (the “2023 Notes”). On October 8, 2014, we issued $431.3 million of 3.75% Convertible Senior Notes due 2017 (the “2017 Notes”). On February 15, 2013, we issued $600.0 million of 4.55% Convertible Senior Notes due 2018 (the “2018 Notes”). On July 3, 2013, we issued $460.0 million of 4.00% Convertible Senior Notes due 2019 (the “2019 Notes”). In October 2017, we repaid the full outstanding principal amount of the 2017 Notes in cash upon their maturity. In March 2018, we repaid the full outstanding principal amount of the 2018 Notes in cash upon their maturity.

During the year ended December 31, 2019, we settled the remaining $78.0 million principal amount of the 2019 Notes through the issuance of 3.6 million shares of common stock and cash payments of $12.0 million. During the year ended December 31, 2018, we received and settled redemption notices related to the 2019 Notes with a par amount totaling $263.4 million. Total consideration of $296.8 million was paid via the issuance of 12.4 million shares and cash payments of $25.5 million. The $264.4 million of settlement consideration attributable to the liability component of the 2019 Notes exceeded the proportionate net carrying amount of the liability component by $2.1 million, which was recognized as a loss on extinguishment of debt in our consolidated statement of operations for the year ended December 31, 2018. The $32.4 million of settlement consideration attributable to the equity component of the 2019 Notes was recognized as a reduction of additional paid-in capital in our consolidated statement of equity for the year ended December 31, 2018, partially offsetting the $271.2 million fair value of the shares issued.

On March 29, 2017, the proceeds from the issuance of the 2023 Notes were used to repurchase $230.0 million of the 2018 Notes for $250.7 million. The repurchase price was allocated between the fair value of the liability component and the fair value of the equity component of the 2018 Notes at the repurchase date. The portion of the repurchase price attributable to the equity component totaled $18.1 million and was recognized as a reduction of additional paid-in capital during the year ended December 31, 2017. The portion of the repurchase price attributable to the liability component exceeded the net carrying amount of the liability component by $5.9 million, which was recognized as a loss on extinguishment of debt in our consolidated statement of operations for the year ended December 31, 2017.

We recognized interest expense of $12.3 million, $28.9 million and $72.2 million during the years ended December 31, 2019, 2018 and 2017, respectively, from our Convertible Notes.

The following table details the conversion attributes of our Convertible Notes outstanding as of December 31, 2019 (amounts in thousands, except rates):

	December 31, 2019			Conversion Spread Value - Shares (3)
	Conversion	Conversion		For the Year Ended December 31,
	Rate (1)	Price (2)		2019	2018	2017
2018 Notes	N/A		N/A	—	—	541
2019 Notes	N/A		N/A	—	91	1,358
2023 Notes	38.5959	$	25.91	—	—	—
				—	91	1,899

(1) The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of Convertible Notes converted, as adjusted in accordance with the indentures governing the Convertible Notes (including the applicable supplemental indentures).

(2) As of December 31, 2019, 2018 and 2017, the market price of the Company’s common stock was $24.86, $19.71 and $21.35 per share, respectively.

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(3) The conversion spread value represents the portion of the Convertible Notes that are “in-the-money”, representing the value that would be delivered to investors in shares upon an assumed conversion.

The if-converted value of the 2023 Notes was less than their principal amount by $10.1 million at December 31, 2019 as the closing market price of the Company’s common stock of $24.86 was less than the implicit conversion price of $25.91 per share.

Effective June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. The if-converted value of the principal amount of the 2023 Notes was $239.9 million as of December 31, 2019.

Conditions for Conversion

Prior to October 1, 2022, the 2023 Notes will be convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of the Company’s common stock is at least 110% of the conversion price of the 2023 Notes for at least 20 out of 30 trading days prior to the end of the preceding fiscal quarter, (2) the trading price of the 2023 Notes is less than 98% of the product of (i) the conversion rate and (ii) the closing price of the Company’s common stock during any five consecutive trading day period, (3) the Company issues certain equity instruments at less than the 10-day average closing market price of its common stock or the per-share value of certain distributions exceeds the market price of the Company’s common stock by more than 10% or (4) certain other specified corporate events (significant consolidation, sale, merger, share exchange, fundamental change, etc.) occur.

On or after October 1, 2022, holders of the 2023 Notes may convert each of their notes at the applicable conversion rate at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date.

12. Loan Securitization/Sale Activities

As described below, we regularly sell loans and notes under various strategies. We evaluate such sales as to whether they meet the criteria for treatment as a sale—legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint and transfer of control.

Conduit Loan Securitizations

Within the Investing and Servicing Segment, we originate commercial mortgage loans with the intent to sell these mortgage loans to VIEs for the purposes of securitization. These VIEs then issue CMBS that are collateralized in part by these assets, as well as other assets transferred to the VIE by third parties. In certain instances, we retain an interest in the VIE and/or serve as special servicer for the VIE. In these circumstances, we generally consolidate the VIE into which the loans were sold. The following summarizes the fair value and par value of loans sold from our conduit platform, as well as the amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with these loans for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):

					Repayment of
					repurchase
	Face Amount		Proceeds		agreements
For the Year Ended December 31,
2019	$	1,781,981	$	1,845,890	$	1,289,129
2018		1,517,599		1,563,433		1,147,316
2017		1,517,368		1,582,050		1,152,938

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Securitization Financing Arrangements and Sales

Within the Commercial and Residential Lending Segment, we originate or acquire residential and commercial mortgage loans, subsequently selling all or a portion thereof. Typically, our motivation for entering into these transactions is to effectively create leverage on the subordinated position that we will retain and hold for investment. These loans may be sold directly or through a securitization. In certain instances, we retain an interest in the VIE and continue to act as servicer, special servicer or servicing administrator for the loan following its sale. In these circumstances, similar to the case of our Investing and Servicing Segment described above, we generally consolidate the VIE into which the loans were sold. During the year ended December 31, 2019, we sold residential loans into three securitization VIEs which we consolidate. During the year ended December 31, 2018, we sold residential loans into two securitization VIEs which we consolidate, along with two securitization VIEs into which our commercial loans were sold. In each of these instances, we retained interests in the VIEs. The following table summarizes our loans sold and loans transferred as secured borrowings by the Commercial and Residential Lending Segment net of expenses (amounts in thousands):

									Loan Transfers
	Loan Transfers Accounted for as Sales								Accounted for as Secured
	Commercial				Residential				Borrowings
For the Year Ended December 31,	Face Amount		Proceeds		Face Amount		Proceeds		Face Amount		Proceeds
2019	$	751,210	$	748,045	$	1,282,527	$	1,331,856	$	—	$	—
2018		840,400		835,849		660,865		683,556		—		—
2017		55,470		52,609		—		—		75,000		74,098

During the years ended December 31, 2019 and 2018, we recognized a $6.9 million and $1.3 million, respectively, change in fair value of mortgage loans held-for-sale, net in our consolidated statements of operations in connection with residential mortgage loan securitizations. During the year ended December 31, 2019, gains recognized by the Commercial and Residential Lending Segment on sales of commercial loans were $4.6 million. During the years ended December 31, 2018 and 2017, gains (losses) recognized by the Commercial and Residential Lending Segment on sales of commercial loans were not material.

Our securitizations have each been structured as bankruptcy-remote entities whose assets are not intended to be available to the creditors of any other party.

Infrastructure Loan Sales

During the year ended December 31, 2019, the Infrastructure Lending Segment sold loans held-for-sale with an aggregate face amount of $404.1 million for proceeds of $393.3 million, recognizing a gain of $3.1 million. In connection with these sales, we sold an interest rate swap guarantee for cash payment of $3.1 million and recognized a decrease in fair value of $2.7 million within (loss) gain on derivative financial instruments, net in our consolidated statement of operations during the year ended December 31, 2019. Refer to Note 13 for further discussion of our interest rate swap guarantees. There were no sales of loans by the Infrastructure Lending Segment during the year ended December 31, 2018.

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13. Derivatives and Hedging Activity

Risk Management Objective of Using Derivatives

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, foreign exchange, liquidity and credit risk primarily by managing the amount, sources and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates, credit spreads, and foreign exchange rates. Our derivative financial instruments are used to manage differences in the amount, timing and duration of the known or expected cash receipts and known or expected cash payments principally related to our investments, anticipated level of loan sales, and borrowings.

Designated Hedges

The Company does not generally elect to apply the hedge accounting designation to its hedging instruments. As of December 31, 2019 and 2018, the Company did not have any designated hedges. Additionally, during the years ended December 31, 2019, 2018 and 2017 the impact of cash flow hedges on our net income was not material, and we did not recognize any hedge ineffectiveness in earnings associated with these cash flow hedges.

Non-designated Hedges and Derivatives

Derivatives not designated as hedges are derivatives that do not meet the criteria for hedge accounting under GAAP or which we have not elected to designate as hedges. We do not use these derivatives for speculative purposes but instead they are used to manage our exposure to various risks such as foreign exchange rates, interest rate changes and certain credit spreads. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in gain (loss) on derivative financial instruments in our consolidated statements of operations.

We have entered into the following types of non-designated hedges and derivatives:

● Foreign exchange (“Fx”) forwards whereby we agree to buy or sell a specified amount of foreign currency for a specified amount of USD at a future date, economically fixing the USD amounts of foreign denominated cash flows we expect to receive or pay related to certain foreign denominated loan investments and properties;

● Interest rate contracts which hedge a portion of our exposure to changes in interest rates;

● Credit index instruments which hedge a portion of our exposure to the credit risk of our commercial loans held-for-sale; and

● Interest rate swap guarantees whereby we guarantee the interest rate swap obligations of certain Infrastructure Lending borrowers. Our interest rate swap guarantees were assumed in connection with the acquisition of the Infrastructure Lending Segment.

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The following table summarizes our non-designated derivatives as of December 31, 2019 (notional amounts in thousands):

Type of Derivative	Number of Contracts	Aggregate Notional Amount	Notional Currency	Maturity
Fx contracts – Sell Euros ("EUR")	168	199,183	EUR	January 2020 – June 2023
Fx contracts – Sell Pounds Sterling ("GBP")	93	444,236	GBP	January 2020 – December 2023
Fx contracts – Sell Australian dollar ("AUD")	4	25,850	AUD	March 2020 – November 2021
Interest rate swaps – Paying fixed rates	37	1,299,466	USD	July 2022 – January 2030
Interest rate swaps – Receiving fixed rates	2	970,000	USD	January 2021- March 2025
Interest rate caps	12	742,299	USD	January 2020 – August 2023
Credit index instruments	5	89,000	USD	November 2054 – August 2061
Interest rate swap guarantees	6	394,671	USD	March 2022 – June 2025
Interest rate swap guarantees	1	9,390	GBP	December 2024
Total	328

The table below presents the fair value of our derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2019 and 2018 (amounts in thousands):

	Fair Value of Derivatives				Fair Value of Derivatives
	in an Asset Position (1)				in a Liability Position (2)
	as of December 31,				as of December 31,
	2019		2018		2019		2018
Interest rate contracts		14,385		30,791		—		14,457
Interest rate swap guarantees		—		—		614		396
Foreign exchange contracts		14,558		21,346		7,834		562
Credit index instruments		—		554		292		—
Total derivatives	$	28,943	$	52,691	$	8,740	$	15,415

(1) Classified as derivative assets in our consolidated balance sheets.

(2) Classified as derivative liabilities in our consolidated balance sheets.

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The tables below present the effect of our derivative financial instruments on the consolidated statements of operations and of comprehensive income for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):

a
		Amount of Gain (Loss)
		Recognized in Income for the
Derivatives Not Designated	Location of Gain (Loss)	Year Ended December 31,
as Hedging Instruments	Recognized in Income	2019		2018		2017
Interest rate contracts	(Loss) gain on derivative financial instruments	$	(10,516)	$	(1,593)	$	(5,165)
Interest rate swap guarantees	(Loss) gain on derivative financial instruments		(3,350)		(114)		—
Foreign exchange contracts	(Loss) gain on derivative financial instruments		8,801		36,040		(65,645)
Credit index instruments	(Loss) gain on derivative financial instruments		(1,245)		270		(1,722)
		$	(6,310)	$	34,603	$	(72,532)

			Gain
	Gain		Reclassified
	Recognized		from AOCI		Gain Recognized
Derivatives Designated as Hedging Instruments	in OCI		into Income		in Income		Location of Gain
For the Year Ended December 31,	(effective portion)		(effective portion)		(ineffective portion)		Recognized in Income
2019	$	—	$	—	$	—	Interest expense
2018	$	8	$	33	$	—	Interest expense
2017	$	54	$	3	$	—	Interest expense

14. Offsetting Assets and Liabilities

The following tables present the potential effects of netting arrangements on our financial position for financial assets and liabilities within the scope of ASC 210-20, Balance Sheet—Offsetting, which for us are derivative assets and liabilities as well as repurchase agreement liabilities (amounts in thousands):

							(iv)
							Gross Amounts Not
							Offset in the Statement
			(ii)		(iii) = (i) - (ii)		of Financial Position
			Gross Amounts		Net Amounts				Cash
	(i)		Offset in the		Presented in				Collateral
	Gross Amounts		Statement of		the Statement of		Financial		Received /		(v) = (iii) - (iv)
	Recognized		Financial Position		Financial Position		Instruments		Pledged		Net Amount
As of December 31, 2019
Derivative assets	$	28,943	$	—	$	28,943	$	5,312	$	14,208	$	9,423
Derivative liabilities	$	8,740	$	—	$	8,740	$	5,312	$	292	$	3,136
Repurchase agreements		4,609,457		—		4,609,457		4,609,457		—		—
	$	4,618,197	$	—	$	4,618,197	$	4,614,769	$	292	$	3,136
As of December 31, 2018
Derivative assets	$	52,691	$	—	$	52,691	$	1,408	$	—	$	51,283
Derivative liabilities	$	15,415	$	—	$	15,415	$	1,408	$	8,658	$	5,349
Repurchase agreements		4,289,750		—		4,289,750		4,289,750		—		—
	$	4,305,165	$	—	$	4,305,165	$	4,291,158	$	8,658	$	5,349

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15. Variable Interest Entities

Investment Securities

As discussed in Note 2, we evaluate all of our investments and other interests in entities for consolidation, including our investments in CMBS, RMBS and our retained interests in securitization transactions we initiated, all of which are generally considered to be variable interests in VIEs.

Securitization VIEs consolidated in accordance with ASC 810 are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. The assets and other instruments held by these securitization entities are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the securitization entities do not have any recourse to the general credit of any other consolidated entities, nor to us as the primary beneficiary. The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.

VIEs in which we are the Primary Beneficiary

The inclusion of the assets and liabilities of securitization VIEs in which we are deemed the primary beneficiary has no economic effect on us. Our exposure to the obligations of securitization VIEs is generally limited to our investment in these entities. We are not obligated to provide, nor have we provided, any financial support for any of these consolidated structures.

During the year ended December 31, 2019, we refinanced a pool of our commercial loans held-for-investment through a CLO, which is considered to be a VIE. We are the primary beneficiary of, and therefore consolidate, the CLO in our financial statements as we have both (i) the power to direct the activities in our role as collateral manager that most significantly impact the CLO’s economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the CLO that could be potentially significant through the subordinate interests we own.

The following table details the assets and liabilities of our consolidated CLO (amounts in thousands):

	As of
	December 31, 2019
Assets:
Loans held-for-investment	$	1,073,504
Accrued interest receivable		3,129
Other assets		26,496
Total Assets	$	1,103,129
Liabilities
Accounts payable, accrued expenses and other liabilities	$	1,362
Collateralized loan obligations, net		928,060
Total Liabilities	$	929,422

Assets held by this CLO are restricted and can be used only to settle obligations of the CLO, including the subordinate interests owned by us. The liabilities of this CLO are non-recourse to us and can only be satisfied from the assets of the CLO.

We also hold controlling interests in other non-securitization entities that are considered VIEs. SPT Dolphin, the entity which holds the Woodstar II Portfolio, is a VIE because the third party interest holders do not carry kick-out rights or substantive participating rights. We were deemed to be the primary beneficiary of the VIE because we possess both the power to direct the activities of the VIE that most significantly impact its economic performance and a

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significant economic interest in the entity. This VIE had total assets of $684.1 million and liabilities of $444.4 million as of December 31, 2019.

In December 2019, we entered into a newly-formed joint venture (the “CMBS JV”) within our Investing and Servicing Segment, which is considered a VIE because the third party interest holder does not carry kick-out rights or substantive participating rights. We hold a 51% ownership interest and are deemed the primary beneficiary of the CMBS JV. This VIE had total assets of $347.2 million and liabilities of $0.4 million as of December 31, 2019. Refer to Note 17 for further discussion.

In total, our other consolidated non-securitization VIEs had total assets of $1.1 billion and liabilities of $491.8 million as of December 31, 2019.

VIEs in which we are not the Primary Beneficiary

In certain instances, we hold a variable interest in a VIE in the form of CMBS, but either (i) we are not appointed, or do not serve as, special servicer or servicing administrator or (ii) an unrelated third party has the rights to unilaterally remove us as special servicer without cause. In these instances, we do not have the power to direct activities that most significantly impact the VIE’s economic performance. In other cases, the variable interest we hold does not obligate us to absorb losses or provide us with the right to receive benefits from the VIE which could potentially be significant. For these structures, we are not deemed to be the primary beneficiary of the VIE, and we do not consolidate these VIEs.

As of December 31, 2019, four of our collateralized debt obligation (“CDO”) structures within our Investing and Servicing Segment were in default or imminent default, which, pursuant to the underlying indentures, changes the rights of the variable interest holders. Upon default of a CDO, the trustee or senior note holders are allowed to exercise certain rights, including liquidation of the collateral, which at that time, is the activity which would most significantly impact the CDO’s economic performance. Further, when the CDO is in default, the collateral administrator no longer has the option to purchase securities from the CDO. In cases where the CDO is in default and we do not have the ability to exercise rights which would most significantly impact the CDO’s economic performance, we do not consolidate the VIE. As of December 31, 2019, none of these CDO structures were consolidated.

As noted above, we are not obligated to provide, nor have we provided, any financial support for any of our securitization VIEs, whether or not we are deemed to be the primary beneficiary. As such, the risk associated with our involvement in these VIEs is limited to the carrying value of our investment in the entity. As of December 31, 2019, our maximum risk of loss related to securitization VIEs in which we were not the primary beneficiary was $37.4 million on a fair value basis.

As of December 31, 2019, the securitization VIEs which we do not consolidate had debt obligations to beneficial interest holders with unpaid principal balances, excluding the notional value of interest-only securities, of $6.1 billion. The corresponding assets are comprised primarily of commercial mortgage loans with unpaid principal balances corresponding to the amounts of the outstanding debt obligations.

We also hold passive non-controlling interests in certain unconsolidated entities that are considered VIEs. We are not the primary beneficiaries of these VIEs as we do not possess the power to direct the activities of the VIEs that most significantly impact their economic performance and therefore report our interests, which totaled $21.2 million as of December 31, 2019, within investment in unconsolidated entities on our consolidated balance sheet. Our maximum risk of loss is limited to our carrying value of the investments.

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16. Related-Party Transactions

Management Agreement

We are party to a management agreement (the “Management Agreement”) with our Manager. Under the Management Agreement, our Manager, subject to the oversight of our board of directors, is required to manage our day to day activities, for which our Manager receives a base management fee and is eligible for an incentive fee and stock awards. Our Manager’s personnel perform certain due diligence, legal, management and other services that outside professionals or consultants would otherwise perform. As such, in accordance with the terms of our Management Agreement, our Manager is paid or reimbursed for the documented costs of performing such tasks, provided that such costs and reimbursements are in amounts no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis.

In February 2018, our board of directors authorized an amendment to our Management Agreement to adjust the calculation of the base management fee and incentive fee to treat equity securities of subsidiaries issued in exchange for properties as issued common stock, effective December 28, 2017 (the “Amendment”). The terms of the Amendment are reflected in the below descriptions of the base management fee and incentive fee calculations.

Base Management Fee. The base management fee is 1.5% of our stockholders’ equity per annum and calculated and payable quarterly in arrears in cash. For purposes of calculating the management fee, our stockholders’ equity means: (a) the sum of (1) the net proceeds from all issuances of our equity securities since inception and equity securities of subsidiaries issued in exchange for properties (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (2) our retained earnings and income to non-controlling interests with respect to equity securities of subsidiaries issued in exchange for properties at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less (b) any amount that we pay to repurchase our common stock since inception. It also excludes (1) any unrealized gains and losses and other non-cash items that have impacted stockholders’ equity as reported in our financial statements prepared in accordance with GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between our Manager and our independent directors and approval by a majority of our independent directors. As a result, our stockholders’ equity, for purposes of calculating the management fee, could be greater or less than the amount of stockholders’ equity shown in our consolidated financial statements.

For the years ended December 31, 2019, 2018 and 2017, approximately $77.0 million, $73.2 million and $67.8 million, respectively, was incurred for base management fees. As of December 31, 2019 and 2018, there were $19.3 million and $19.2 million, respectively, of unpaid base management fees included in related-party payable in our consolidated balance sheets.

Incentive Fee. Our Manager is entitled to be paid the incentive fee described below with respect to each calendar quarter if (1) our Core Earnings (as defined below) for the previous 12-month period exceeds an 8% threshold, and (2) our Core Earnings for the 12 most recently completed calendar quarters is greater than zero.

The incentive fee is calculated as follows: an amount, not less than zero, equal to the difference between (1) the product of (x) 20% and (y) the difference between (i) our Core Earnings for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price per share of our common stock of all of our public offerings and including issue price per equity security of subsidiaries issued in exchange for properties multiplied by the weighted average number of all shares of common stock outstanding (including any RSUs, any RSAs and other shares of common stock underlying awards granted under our equity incentive plans) and equity securities of subsidiaries issued in exchange for properties in such previous 12-month period, and (B) 8%, and (2) the sum of any incentive fee paid to our Manager with respect to the first three calendar quarters of such previous 12-month period. One half of each quarterly installment of the incentive fee is payable in shares of our common stock so long as the ownership of such additional number of shares by our Manager would not violate the 9.8% stock ownership limit set forth in our charter, after giving effect to any waiver from such limit that our board of directors may grant in the future. The remainder of the incentive fee is payable in cash. The number of shares to be issued to our Manager is equal to the dollar amount of the portion of the quarterly installment of the incentive fee payable in shares divided by the average of the closing prices of our common stock on the NYSE for the five trading days prior to the date on which such quarterly installment is paid.

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Core Earnings is a non-GAAP financial measure. We calculate Core Earnings as GAAP net income (loss) excluding non-cash equity compensation expense, the incentive fee, depreciation and amortization of real estate and associated intangibles, acquisition costs associated with successful acquisitions, any unrealized gains, losses or other non-cash items recorded in net income for the period, regardless of whether such items are included in OCI, 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. The amount is adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash adjustments as determined by our Manager and approved by a majority of our independent directors.

For the years ended December 31, 2019, 2018 and 2017, approximately $20.2 million, $41.4 million and $42.1 million, respectively, was incurred for incentive fees. As of December 31, 2019 and 2018, there were $18.1 million and $21.8 million, respectively, of unpaid incentive fees included in related-party payable in our consolidated balance sheets.

Expense Reimbursement. We are required to reimburse our Manager for operating expenses incurred by our Manager on our behalf. In addition, pursuant to the terms of the Management Agreement, we are required to reimburse our Manager for the cost of legal, tax, consulting, accounting and other similar services rendered for us by our Manager’s personnel provided that such costs are no greater than those that would be payable if the services were provided by an independent third party. The expense reimbursement is not subject to any dollar limitations but is subject to review by our independent directors. For the years ended December 31, 2019, 2018 and 2017, approximately $7.7 million, $7.7 million and $6.4 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our consolidated statements of operations. As of December 31, 2019 and 2018, there were $3.5 million and $3.0 million, respectively, of unpaid reimbursable executive compensation and other expenses included in related-party payable in our consolidated balance sheets.

Equity Awards. In certain instances, we issue RSAs to certain employees of affiliates of our Manager who perform services for us. During the years ended December 31, 2019, 2018 and 2017, we granted 182,861, 252,375 and 138,264 RSAs, respectively, at grant date fair values of $4.1 million, $5.3 million and $3.1 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $4.1 million, $2.9 million and $2.7 million for the years ended December 31, 2019, 2018 and 2017, respectively, and are reflected in general and administrative expenses in our consolidated statements of operations. These shares generally vest over a three-year period.

Payments to Manager Employees.  During the year ended December 31, 2018, we made a cash payment of $1.3 million directly to an employee of our Manager in connection with the Company’s Infrastructure Lending Segment acquisition which was recognized within general and administrative expenses in our consolidated statement of operations for that year.  No cash payments were made directly to employees of our Manager during the years ended December 31, 2019 and 2017.

Termination Fee. We can terminate the Management Agreement without cause, as defined in the Management Agreement, with an affirmative two-thirds vote by our independent directors and 180 days written notice to our Manager. Upon termination without cause, our Manager is due a termination fee equal to three times the sum of the average annual base management fee and incentive fee earned by our Manager over the preceding eight calendar quarters. No termination fee is payable if our Manager is terminated for cause, as defined in the Management Agreement, which can be done at any time with 30 days written notice from our board of directors.

Manager Equity Plan

In May 2017, the Company’s shareholders approved the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the “2017 Manager Equity Plan”), which replaced the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In September 2019, we granted 1,200,000 RSUs to our Manager under the 2017 Manager Equity Plan. In April 2018, we granted 775,000 RSUs to our Manager under the 2017 Manager Equity Plan. In March 2017, we granted 1,000,000 RSUs to our Manager under the Manager Equity Plan. In May 2015, we granted 675,000 RSUs to our Manager under the Manager Equity Plan. In connection with these grants and prior similar grants, we

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recognized share-based compensation expense of $20.2 million, $12.6 million and $10.4 million within management fees in our consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017, respectively. Refer to Note 17 for further discussion of these grants.

Investments in Loans and Securities

In November 2019, the Company and SEREF, an affiliate of our Manager, each originated €39.0 million of a €192.0 million first mortgage and subordinated loan. The loan was to a third party borrower for the acquisition of an office portfolio located in Spain. The loan matures in November 2023. In December 2019, we sold the first mortgage of €15.0 million.

In September 2019, the Company co-originated a €73.6 million first mortgage loan with SEREF, an affiliate of our Manager. The loan was to a third party borrower for the development of a Grade A office building and convention center in Dublin, Ireland. The Company originated €58.9 million of the loan and SEREF originated €14.7 million. The loan matures in May 2022.

In February 2019, the Company acquired a $60.0 million participation in a $1.0 billion first priority infrastructure term loan. In April 2019 and July 2019, the Company acquired participations of $5.0 million and $16.0 million, respectively, in a $300.0 million upsize to the term loan. The loan is secured by two domestic natural gas power plants. An affiliate of our Manager, Starwood Energy Group, is the borrower under the term loan.

In March 2019, the Company originated a $22.5 million loan to refinance the debt of a commercial real estate partnership in which we hold a 50% equity interest.

During the years ended December 31, 2019 and 2018, the Company acquired $353.0 million and $135.6 million, respectively, of loans from a residential mortgage originator in which it holds an equity interest. Also in September 2019 and October 2019, the Company amended a $2.0 million subordinated loan to this residential mortgage originator, which was entered into in June 2018, to extend the maturity from September 2019 to September 2020 and increase the total commitment to $4.5 million. Refer to Note 8 for further discussion.

In December 2018, the Company co-originated a £62.5 million mezzanine loan for the development of a residential and hotel property located in Central London with SEREF, an affiliate of our Manager. We originated £21.3 million of the loan and SEREF originated £41.2 million. The loan matures in December 2021.

In June 2018, a subordinate CMBS investment in a securitization issued by an affiliate of our Manager was paid off in full. We acquired the security, which was secured by five regional malls in Ohio, California and Washington, for $84.1 million in December 2013. In January 2016, we acquired an additional $9.7 million of this subordinate CMBS investment.

In March 2018, the Company acquired a €55.0 million newly-originated loan participation from SEREF, which is secured by a luxury resort in Estepona, Spain. The loan matures in March 2023.

In February 2018, a GBP denominated first mortgage loan that we had co-originated with SEREF in November 2013, which was secured by Centre Point, an iconic tower located in Central London, England, was repaid in full.

In January 2018, the Company acquired a $130.0 million first mortgage participation from an unaffiliated third party. The loan is secured by four U.S. power plants that each have long-term power purchase agreements with investment grade counterparties. The borrower is an affiliate of our Manager.

In August 2017, we originated a $339.2 million first mortgage and mezzanine loan for the acquisition of an office campus located in Irvine, California. An affiliate of our Manager has a non-controlling equity interest in the borrower.

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In June 2016, we co-originated a £75.0 million first mortgage for the development of a three-property mixed use portfolio located in Greater London with SEREF, an affiliate of our Manager. We originated £60.0 million of the loan and SEREF originated £15.0 million. In June 2017, we amended the first mortgage to reduce the total commitment to £69.3 million, of which our share was £55.4 million. In October 2018, we amended the first mortgage to increase the total commitment to £77.0 million, of which our share is £61.6 million, and remove one of the properties from the collateral pool. The loan matures in February 2020.

In May 2017, our conduit business acquired certain commercial real estate loans from an unaffiliated third party for an aggregate purchase price of $50.0 million. The underlying borrowers are affiliates of our Manager. Subsequently during the year ended December 31, 2017, the loans were sold.

In March 2015, we purchased a subordinate single-borrower CMBS from a third party for $58.6 million which is secured by 85 U.S. hotel properties. The borrower is an affiliate of Starwood Distressed Opportunity Fund IX (“Fund IX”), an affiliate of our Manager. The subordinate single-borrower CMBS was fully repaid in March 2017.

In July 2014, we announced the co-origination of a £101.75 million first mortgage loan for the development of a 46-story residential tower and 18-story housing development containing a total of 366 private residential and affordable housing units located in London. We originated £86.75 million of the loan, and private funds managed by an affiliate of our Manager provided £15.0 million. The first mortgage loan was paid off in full in March 2017.

In April 2013, we purchased two B-Notes for $146.7 million from entities substantially all of whose equity was owned by an affiliate of our Manager. The B-Notes are secured by two Class A office buildings located in Austin, Texas. On May 17, 2013, we sold senior participation interests in the B-Notes to a third party, generating $95.0 million in aggregate proceeds. We retained the subordinated interests. In October 2015, we sold one of the subordinated interests in the B-Notes to a third party, generating $29.2 million in aggregate proceeds. The remaining subordinated interest was paid off in full in April 2017.

In December 2012, we acquired 9,140,000 ordinary shares in SEREF, a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange, for approximately $14.7 million, which equated to approximately 4% ownership of SEREF. As of December 31, 2019, our shares represent an approximate 2% interest in SEREF. Refer to Note 6 for additional details.

Investment in Unconsolidated Entities

In October 2014, we committed $150 million for a 33% equity interest in four regional shopping malls (the “Retail Fund”). In August 2017, we funded the remaining $15.5 million capital commitment associated with this investment.  During the years ended December 31, 2019, 2018 and 2017, we recognized a loss of $114.4 million, earnings of $3.7 million and a loss of $27.7 million, respectively, and received distributions of $2.1 million during the year ended December 31, 2017. During the period included in our year ended December 31, 2019, the Retail Fund reported unrealized decreases in the fair value of its real estate properties, which resulted in a $47.2 million decrease to our investment. In addition, we provided an impairment charge of $71.9 million against the remainder of the investment based on our estimate of the fair value of the underlying retail assets as of December 31, 2019. Refer to Note 8 for further detail. The Retail Fund was established for the purpose of acquiring and operating four leading regional shopping malls located in Florida, Michigan, North Carolina and Virginia. All leasing services and asset management functions for the properties are conducted by an affiliate of our Manager which specializes in redeveloping, managing and repositioning retail real estate assets. In addition, another affiliate of our Manager serves as general partner of the Retail Fund.

In April 2013, in connection with our acquisition of LNR, we acquired 50% of a joint venture which owns equity in an online real estate company. An affiliate of ours, Fund IX, owns the remaining 50% of the venture.

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Acquisitions from Consolidated CMBS Trusts

Our Investing and Servicing Segment acquires interests in properties for its REIS Equity Portfolio from CMBS trusts, some of which are consolidated as VIEs on our balance sheet. Acquisitions from consolidated VIEs are reflected as repayment of debt of consolidated VIEs in our consolidated statements of cash flows. During the years ended December 31, 2019, 2018 and 2017, we acquired $8.6 million, $27.7 million and $30.9 million, respectively, of net real estate assets from consolidated CMBS trusts for a total gross purchase price of $8.8 million, $28.0 million and $31.3 million, respectively. Refer to Note 3 for further discussion of these acquisitions.

Other Related-Party Arrangements

During the year ended December 31, 2016, we established a co-investment fund which provides key personnel with the opportunity to invest in certain properties included in our REIS Equity Portfolio. These personnel include certain of our employees as well as employees of affiliates of our Manager (collectively, “Fund Participants”). The fund carries an aggregate commitment of $15.0 million and owns a 10% equity interest in certain REIS Equity Portfolio properties acquired subsequent to January 1, 2015. As of December 31, 2019, Fund Participants have funded $4.9 million of the capital commitment, and it is our current expectation that there will be no additional funding of the commitment. The capital contributed by Fund Participants is reflected on our consolidated balance sheets as non-controlling interests in consolidated subsidiaries. In an effort to retain key personnel, the fund provides for disproportionate distributions which allows Fund Participants to earn an incremental 60% on all operating cash flows attributable to their capital account, net of a 5% preferred return to us as general partner of the fund. Amounts earned by Fund Participants pursuant to this waterfall are reflected within net income attributable to non-controlling interests in our consolidated statements of operations. During the years ended December 31, 2019, 2018 and 2017, the non-controlling interests related to this fund received cash distributions of $1.3 million, $2.0 million and $1.4 million, respectively.

During the years ended December 31, 2019 and 2018, we engaged Highmark Residential (“Highmark”) (formerly known as Milestone Management), an affiliate of our Manager, to provide property management services for 11 and ten properties within our Woodstar I Portfolio, respectively, bringing the total number of our properties managed by Highmark to 21. Fees paid to Highmark are calculated as a percentage of gross receipts and are at market terms. During the years ended December 31, 2019 and 2018, property management fees paid to Highmark were $1.6 million and $0.1 million, respectively.

17. Stockholders’ Equity and Non-Controlling Interests

The Company’s authorized capital stock consists of 100,000,000 shares of preferred stock, $0.01 par value per share, and 500,000,000 shares of common stock, $0.01 par value per share.

In May 2014, we established the Starwood Property Trust, Inc. Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”), which provides stockholders with a means of purchasing additional shares of our common stock by reinvesting the cash dividends paid on our common stock and by making additional optional cash purchases. Shares of our common stock purchased under the DRIP Plan will either be issued directly by the Company or purchased in the open market by the plan administrator. The Company may issue up to 11.0 million shares of common stock under the DRIP Plan. During the years ended December 31, 2019, 2018 and 2017, shares issued under the DRIP Plan were not material.

In May 2014, we entered into an amended and restated At-The-Market Equity Offering Sales Agreement (the “ATM Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated to sell shares of the Company’s common stock of up to $500.0 million from time to time, through an “at the market” equity offering program. Sales of shares under the ATM Agreement are made by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale or at negotiated prices. During the years ended December 31, 2019, 2018 and 2017, there were no shares issued under the ATM Agreement.

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In September 2014, our board of directors authorized and announced the repurchase of up to $250 million of our outstanding common stock over a period of one year. Subsequent amendments to the repurchase program approved by our board of directors in December 2014, June 2015, January 2016 and February 2017 resulted in the program being (i) amended to increase maximum repurchases to $500.0 million, (ii) expanded to allow for the repurchase of our outstanding Convertible Notes under the program and (iii) extended through January 2019. Purchases made pursuant to the program were made in either the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases were discretionary and subject to economic and market conditions, stock price, applicable legal requirements and other factors. There were no Convertible Note or common stock repurchases under the repurchase program during the years ended December 31, 2019 and 2017. During the year ended December 31, 2018, we repurchased 573,255 shares of common stock for $12.1 million and there were no Convertible Notes repurchases under our repurchase program. The repurchase program expired in January 2019.

During the years ended December 31, 2019 and 2018, we issued 3.6 million shares and 12.4 million shares, respectively, in connection with the settlement of $78.0 million and $263.4 million, respectively, of our 2019 Notes. Refer to Note 11 for further discussion.

Our board of directors declared the following dividends during the years ended December 31 2019, 2018 and 2017:

Declaration Date	Record Date	Ex-Dividend Date	Payment Date	Amount		Frequency
11/8/19	12/31/19	12/30/19	1/15/20	$	0.48	Quarterly
8/7/19	9/30/19	9/27/19	10/15/19		0.48	Quarterly
5/8/19	6/28/19	6/27/19	7/15/19		0.48	Quarterly
2/28/19	3/29/19	3/28/19	4/15/19		0.48	Quarterly
11/9/18	12/31/18	12/28/18	1/15/19		0.48	Quarterly
8/8/18	9/28/18	9/27/18	10/15/18		0.48	Quarterly
5/4/18	6/29/18	6/28/18	7/13/18		0.48	Quarterly
2/28/18	3/30/18	3/28/18	4/13/18		0.48	Quarterly
11/8/17	12/29/17	12/28/17	1/12/18		0.48	Quarterly
8/9/17	9/29/17	9/28/17	10/13/17		0.48	Quarterly
5/9/17	6/30/17	6/28/17	7/14/17		0.48	Quarterly
2/23/17	3/31/17	3/29/17	4/14/17		0.48	Quarterly

Equity Incentive Plans

In May 2017, the Company’s shareholders approved the 2017 Manager Equity Plan and the Starwood Property Trust, Inc. 2017 Equity Plan (the “2017 Equity Plan”), which allow for the issuance of up to 11,000,000 stock options, stock appreciation rights, RSAs, RSUs or other equity-based awards or any combination thereof to the Manager, directors, employees, consultants or any other party providing services to the Company. The 2017 Manager Equity Plan succeeds and replaces the Manager Equity Plan and the 2017 Equity Plan succeeds and replaces the Starwood Property Trust, Inc. Equity Plan (the “Equity Plan”) and the Starwood Property Trust, Inc. Non-Executive Director Stock Plan (the “Non-Executive Director Stock Plan”). As of December 31, 2019, 7,498,820 share awards were available to be issued under either the 2017 Manager Equity Plan or the 2017 Equity Plan, determined on a combined basis.

To date, we have only granted RSAs and RSUs under the equity incentive plans. The holders of awards of RSAs or RSUs are entitled to receive dividends or “distribution equivalents” beginning on either the award’s grant date or vest date, depending on the terms of the award.

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The table below summarizes our share awards granted or vested under the Manager Equity Plan and the 2017 Manager Equity Plan during the years ended December 31, 2019, 2018 and 2017 (dollar amounts in thousands):

Grant Date	Type	Amount Granted	Grant Date Fair Value		Vesting Period
September 2019	RSU	1,200,000	$	29,484	(1)
April 2018	RSU	775,000		16,329	3 years
March 2017	RSU	1,000,000		22,240	3 years
May 2015	RSU	675,000		16,511	3 years
January 2014	RSU	489,281		14,776	3 years
January 2014	RSU	2,000,000		55,420	3 years

(1) Of the amount granted, 218,898 vested immediately on the grant date and the remaining amount vests over a three-year period.

During the years ended December 31, 2019, 2018 and 2017, we granted 520,236, 851,170 and 742,516 RSAs, respectively, under the Equity Plan and the 2017 Equity Plan to a select group of eligible participants which includes our employees, directors and employees of our Manager who perform services for us. The awards were granted based on the market price of the Company’s common stock on the respective grant date and generally vest over a three-year period. Expenses related to the vesting of these awards are reflected in general and administrative expenses in our consolidated statements of operations. No RSUs were granted under the Equity Plan and the 2017 Equity Plan during the years ended December 31, 2019, 2018 and 2017.

The following shares of common stock were issued, without restriction, to our Manager as part of the incentive compensation due under the Management Agreement during the years ended December 31, 2019, 2018 and 2017:

Timing of Issuance	Shares of Common Stock Issued	Price per share
November 2019	38,942	$	24.08
March 2019	495,363		22.16
November 2018	98,026		21.94
August 2018	131,179		21.67
May 2018	224,071		21.49
March 2018	545,641		20.13
November 2017	239,757		21.64
August 2017	98,061		22.10
May 2017	123,478		21.83
February 2017	418,016		22.84

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The following table summarizes our share-based compensation expenses during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	For the year ended December 31,
	2019		2018		2017
Management fees:
Manager incentive fee	$	10,082	$	20,700	$	21,072
2017 Manager Equity Plan (1)		20,255		12,573		10,423
		30,337		33,273		31,495
General and administrative:
2017 Equity Plan (1)		15,900		10,185		7,728
		15,900		10,185		7,728
Total share-based compensation expense (2)	$	46,237	$	43,458	$	39,223

(1)Share-based compensation expense relating to the Manager Equity Plan is reflected within the 2017 Manager Equity Plan. Share-based compensation expense relating to the Non-Executive Director Stock Plan and the Equity Plan are reflected within the 2017 Equity Plan.

(2)The income tax benefit associated with the share-based compensation expense for the years ended December 31, 2019 and 2018 was $1.7 million and $1.3 million, respectively.

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Schedule of Non-Vested Shares and Share Equivalents (1)

		2017		Weighted Average
	2017	Manager		Grant Date Fair
	Equity Plan	Equity Plan	Total	Value (per share)
Balance as of January 1, 2019	1,436,445	997,920	2,434,365	$	21.52
Granted	520,236	1,200,000	1,720,236		24.01
Vested	(518,298)	(892,323)	(1,410,621)		22.20
Forfeited	(25,213)	—	(25,213)		21.84
Balance as of December 31, 2019	1,413,170	1,305,597	2,718,767		22.74

(1) Equity-based award activity for awards granted under the Equity Plan and Non-Executive Director Stock Plan is reflected within the 2017 Equity Plan column, and for awards granted under the Manager Equity Plan, within the 2017 Manager Equity Plan column.

The weighted average grant date fair value per share of grants during the years ended December 31, 2019, 2018 and 2017 was $24.01, $21.20 and $22.20, respectively.

Vesting Schedule

	2017 Equity	2017 Manager
	Plan	Equity Plan	Total
2020	799,039	668,701	1,467,740
2021	440,173	391,619	831,792
2022	173,958	245,277	419,235
Total	1,413,170	1,305,597	2,718,767

As of December 31, 2019, there was approximately $49.3 million of total unrecognized compensation costs related to unvested share-based compensation arrangements which are expected to be recognized over a weighted average period of 2.0 years. The total fair value of shares vested during the years ended December 31, 2019, 2018 and 2017 were $33.2 million, $18.3 million and $18.3 million, respectively, as of the respective vesting dates.

Non-Controlling Interests in Consolidated Subsidiaries

As discussed in Note 3, in connection with our Woodstar II Portfolio acquisitions, we issued 10.2 million Class A Units in SPT Dolphin and rights to receive an additional 1.9 million Class A Units if certain contingent events occur. During the years ended December 31, 2019 and 2018, we issued 0.1 million and 1.7 million, respectively, of the total 1.9 million contingent Class A Units to the Contributors. The Class A Units are redeemable for consideration equal to the current share price of the Company’s common stock on a one-for-one basis, with the consideration paid in either cash or the Company’s common stock, at the determination of the Company. During the year ended December 31, 2019, redemptions of 1.0 million of the Class A Units were received and settled in common stock. No Class A Units were redeemed during the year ended December 31, 2018. In consolidation, the outstanding Class A Units are reflected as non-controlling interests in consolidated subsidiaries on our consolidated balance sheets, the balance of which was $235.9 million and $254.9 million as of December 31, 2019 and 2018, respectively.

To the extent SPT Dolphin has sufficient cash available, the Class A Units earn a preferred return indexed to the dividend rate of the Company’s common stock. Any distributions made pursuant to this waterfall are recognized within net income attributable to non-controlling interests in our consolidated statements of operations. During the years ended December 31, 2019 and 2018, we recognized net income attributable to non-controlling interests of $21.6 million and $17.6 million, respectively, associated with these Class A Units. Amounts attributable to the Class A Unitholders were not significant for the year ended December 31, 2017.

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As discussed in Note 15, we entered into the CMBS JV within our Investing and Servicing Segment in December 2019. In connection with the formation of this venture, we sold assets totaling $333.0 million to the CMBS JV, including $318.3 million of CMBS, $13.3 million of interests in various existing CMBS joint ventures, and $1.4 million of related interest receivables. We obtained a 51% interest in the venture for cash consideration of $169.8 million, and our joint venture partner obtained a 49% interest for $163.2 million. The $13.3 million of joint venture interests that we contributed into the CMBS JV relate to joint ventures which we consolidate. The CMBS within these ventures carried a fair value of $24.5 million at the time of sale and related non-controlling interests of $11.2 million.

Because the CMBS JV was deemed a VIE for which we were the primary beneficiary (see Note 15), this transaction was not recognized as a sale for GAAP purposes. Instead, the 49% interest of our joint venture partner is reflected as a non-controlling interest in consolidated subsidiaries on our consolidated balance sheet, and any net income attributable to this 49% joint venture interest will be reflected within net income attributable to non-controlling interests in our consolidated statement of operations. The non-controlling interests in CMBS JV was $175.6 million as of December 31, 2019. During the year ended December 31, 2019, net income attributable to non-controlling interests was immaterial.

In March 2018, we acquired the non-controlling interest held by a third party in one of our consolidated REIS Equity Portfolio properties, which was carried at $0.3 million, for $3.3 million. The excess of the consideration paid to acquire the non-controlling interest over the carrying value of the non-controlling interest was recorded as a reduction of stockholders’ equity in March 2018.

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18. Earnings per Share

The following table provides a reconciliation of net income and the number of shares of common stock used in the computation of basic EPS and diluted EPS (amounts in thousands, except per share amounts):

	For the Year Ended December 31,
	2019		2018		2017
Basic Earnings
Income attributable to STWD common stockholders	$	509,664	$	385,830	$	400,770
Less: Income attributable to participating shares not already deducted as non-controlling interests		(3,873)		(3,592)		(3,183)
Basic earnings	$	505,791	$	382,238	$	397,587
Diluted Earnings
Income attributable to STWD common stockholders	$	509,664	$	385,830	$	400,770
Less: Income attributable to participating shares not already deducted as non-controlling interests		(3,873)		(3,592)		(3,183)
Add: Interest expense on Convertible Notes (1)		12,354		25,148		—
Add: Loss on extinguishment of Convertible Notes (1)		—		2,099		—
Diluted earnings	$	518,145	$	409,485	$	397,587
Number of Shares:
Basic — Average shares outstanding		279,337		265,279		259,620
Effect of dilutive securities — Convertible Notes (1)		9,805		22,659		1,899
Effect of dilutive securities — Contingently issuable shares		360		546		508
Effect of dilutive securities — Unvested non-participating shares		210		—		52
Diluted — Average shares outstanding		289,712		288,484		262,079
Earnings Per Share Attributable to STWD Common Stockholders:
Basic	$	1.81	$	1.44	$	1.53
Diluted	$	1.79	$	1.42	$	1.52

(1) Prior to June 30, 2018, the Company had asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. Accordingly, under GAAP, the dilutive effect to EPS was previously determined using the treasury stock method by dividing only the “conversion spread value” of the “in-the-money” Convertible Notes by the Company’s average share price and including the resulting share amount in the diluted EPS denominator. The conversion value of the principal amount of the Convertible Notes was not included. Effective June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the years ended December 31, 2019 and 2018 is determined using the “if-converted” method whereby interest expense or any loss on extinguishment of our Convertible Notes is added back to the diluted EPS numerator and the full number of potential shares contingently issuable upon their conversion is included in the diluted EPS denominator, if dilutive. Refer to Note 11 for further discussion.

As of December 31, 2019, 2018 and 2017, participating shares of 13.3 million, 13.8 million and 4.2 million, respectively, were excluded from the computation of diluted shares as their effect was already considered under the more dilutive two-class method used above. Such participating shares at December 31, 2019 and 2018 include 11.0 million and 11.9 million potential shares, respectively, of our common stock issuable upon redemption of the Class A Units in SPT Dolphin, as discussed in Note 17.

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19. Accumulated Other Comprehensive Income

The changes in AOCI by component are as follows (amounts in thousands):

			Cumulative
			Unrealized Gain
	Effective Portion of		(Loss) on		Foreign
	Cumulative Loss on		Available-for-		Currency
	Cash Flow Hedges		Sale Securities		Translation		Total
Balance at January 1, 2017	$	(26)	$	44,929	$	(8,765)	$	36,138
OCI before reclassifications		54		13,055		20,775		33,884
Amounts reclassified from AOCI		(3)		(95)		—		(98)
Net period OCI		51		12,960		20,775		33,786
Balance at December 31, 2017		25		57,889		12,010		69,924
OCI before reclassifications		8		(1,390)		(6,865)		(8,247)
Amounts reclassified from AOCI		(33)		(2,984)		—		(3,017)
Net period OCI		(25)		(4,374)		(6,865)		(11,264)
Balance at December 31, 2018		—		53,515		5,145		58,660
OCI before reclassifications		—		(2,460)		(3,665)		(6,125)
Amounts reclassified from AOCI		—		(59)		(1,544)		(1,603)
Net period OCI		—		(2,519)		(5,209)		(7,728)
Balance at December 31, 2019	$	—	$	50,996	$	(64)	$	50,932

The reclassifications out of AOCI impacted the consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 as follows (amounts in thousands):

	Amounts Reclassified from
	AOCI during the Year						Affected Line Item
	Ended December 31,						in the Statements
Details about AOCI Components	2019		2018		2017		of Operations
Gain (loss) on cash flow hedges:
Interest rate contracts	$	—	$	33	$	3	Interest expense
Unrealized gains on available-for-sale securities:
Interest realized upon collection		59		46		95	Interest income from investment securities
Net realized gain on sale of investment		—		2,938		—	Gain on sale of investments and other assets, net
Total		59		2,984		95
Foreign currency translation:
Foreign currency gain from sale of Ireland Portfolio		1,544		—		—	Gain on sale of investments and other assets, net
Total reclassifications for the period	$	1,603	$	3,017	$	98

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20. Fair Value

GAAP establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring financial assets and liabilities at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:

Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level III—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Valuation Process

We have valuation control processes in place to validate the fair value of the Company’s financial assets and liabilities measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and the assumptions are reasonable.

Pricing Verification—We use recently executed transactions, other observable market data such as exchange data, broker/dealer quotes, third party pricing vendors and aggregation services for validating the fair values generated using valuation models. Pricing data provided by approved external sources is evaluated using a number of approaches; for example, by corroborating the external sources’ prices to executed trades, analyzing the methodology and assumptions used by the external source to generate a price and/or by evaluating how active the third party pricing source (or originating sources used by the third party pricing source) is in the market.

Unobservable Inputs—Where inputs are not observable, we review the appropriateness of the proposed valuation methodology to ensure it is consistent with how a market participant would arrive at the unobservable input. The valuation methodologies utilized in the absence of observable inputs may include extrapolation techniques and the use of comparable observable inputs.

Any changes to the valuation methodology will be reviewed by our management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while we anticipate that our valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value could result in a different estimate of fair value at the reporting date.

Fair Value on a Recurring Basis

We determine the fair value of our financial assets and liabilities measured at fair value on a recurring basis as follows:

Loans held-for-sale, commercial

We measure the fair value of our commercial mortgage loans held-for-sale using a discounted cash flow analysis unless observable market data (i.e., securitized pricing) is available. A discounted cash flow analysis requires management to make estimates regarding future interest rates and credit spreads. The most significant of these inputs

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relates to credit spreads and is unobservable. Thus, we have determined that the fair values of mortgage loans valued using a discounted cash flow analysis should be classified in Level III of the fair value hierarchy, while mortgage loans valued using securitized pricing should be classified in Level II of the fair value hierarchy. Mortgage loans classified in Level III are transferred to Level II if securitized pricing becomes available.

Loans held-for-sale and loans held-for-investment, residential

We measure the fair value of our residential mortgage loans held-for-sale and held-for-investment based on the net present value of expected future cash flows using a combination of observable and unobservable inputs. Observable market participant assumptions include pricing related to trades of residential mortgage loans with similar characteristics. Unobservable inputs include the expectation of future cash flows, which involves judgments about the underlying collateral, the creditworthiness of the borrower, estimated prepayment speeds, estimated future credit losses, forward interest rates, investor yield requirements and certain other factors. At each measurement date, we consider both the observable and unobservable valuation inputs in the determination of fair value. However, given the significance of the unobservable inputs, these loans have been classified within Level III.

RMBS

RMBS are valued utilizing observable and unobservable market inputs. The observable market inputs include recent transactions, broker quotes and vendor prices (“market data”). However, given the implied price dispersion amongst the market data, the fair value determination for RMBS has also utilized significant unobservable inputs in discounted cash flow models including prepayments, default and severity estimates based on the recent performance of the collateral, the underlying collateral characteristics, industry trends, as well as expectations of macroeconomic events (e.g., housing price curves, interest rate curves, etc.). At each measurement date, we consider both the observable and unobservable valuation inputs in the determination of fair value. However, given the significance of the unobservable inputs these securities have been classified within Level III.

CMBS

CMBS are valued utilizing both observable and unobservable market inputs. These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, recent trades of similar securities and the spreads used in the prior valuation. We obtain current market spread information where available and use this information in evaluating and validating the market price of all CMBS. Depending upon the significance of the fair value inputs used in determining these fair values, these securities are classified in either Level II or Level III of the fair value hierarchy. CMBS may shift between Level II and Level III of the fair value hierarchy if the significant fair value inputs used to price the CMBS become or cease to be observable.

Equity security

The equity security is publicly registered and traded in the U.S. and its market price is listed on the London Stock Exchange. The security has been classified within Level I.

Domestic servicing rights

The fair value of this intangible is determined using discounted cash flow modeling techniques which require management to make estimates regarding future net servicing cash flows, including forecasted loan defeasance, control migration, delinquency and anticipated maturity defaults which are calculated assuming a debt yield at which default occurs. Since the most significant of these inputs are unobservable, we have determined that the fair values of this intangible in its entirety should be classified in Level III of the fair value hierarchy.

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Derivatives

The valuation of derivative contracts are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market based inputs, including interest rate curves, spot and market forward points and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

The valuation of over the counter derivatives are determined using discounted cash flows based on Overnight Index Swap (“OIS”) rates. Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value. Uncollateralized or partially collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e., a LIBOR OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk. For credit index instruments, fair value is determined based on changes in the relevant indices from the date of initiation of the instrument to the reporting date, as these changes determine the amount of any future cash settlement between us and the counterparty. These indices are considered Level II inputs as they are directly observable.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level II of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level III inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of December 31, 2019 and 2018, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level II of the fair value hierarchy.

Liabilities of consolidated VIEs

Our consolidated VIE liabilities generally represent bonds that are not owned by us. The majority of these are either traded in the marketplace or can be analogized to similar securities that are traded in the marketplace. For these liabilities, pricing is considered to be Level II, where the valuation is based upon quoted prices for similar instruments traded in active markets. We generally utilize third party pricing service providers for valuing these liabilities. In order to determine whether to utilize the valuations provided by third parties, we conduct an ongoing evaluation of their valuation methodologies and processes, as well as a review of the individual valuations themselves. In evaluating third party pricing for reasonableness, we consider a variety of factors, including market transaction information for the particular bond, market transaction information for bonds within the same trust, market transaction information for similar bonds, the bond’s ratings and the bond’s subordination levels.

For the minority portion of our consolidated VIE liabilities which consist of unrated or non-investment grade bonds that are not owned by us, pricing may be either Level II or Level III. If independent third party pricing similar to that noted above is available, we consider the valuation to be Level II. If such third party pricing is not available, the valuation is generated from model-based techniques that use significant unobservable assumptions, and we consider the valuation to be Level III. For VIE liabilities classified as Level III, valuation is determined based on discounted expected future cash flows which take into consideration expected duration and yields based on market transaction information, ratings, subordination levels, vintage and current market spread. VIE liabilities may shift between Level II

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and Level III of the fair value hierarchy if the significant fair value inputs used to price the VIE liabilities become or cease to be observable.

Assets of consolidated VIEs

The securitization VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets of the VIE, we maximize the use of observable inputs over unobservable inputs. The individual assets of a VIE are inherently incapable of precise measurement given their illiquid nature and the limitations on available information related to these assets. Because our methodology for valuing these assets does not value the individual assets of a VIE, but rather uses the value of the VIE liabilities as an indicator of the fair value of VIE assets as a whole, we have determined that our valuations of VIE assets in their entirety should be classified in Level III of the fair value hierarchy.

Fair Value on a Nonrecurring Basis

We determine the fair value of our financial assets and liabilities measured at fair value on a nonrecurring basis as follows:

Loans held-for-sale, infrastructure

We measure the fair value of infrastructure loans held-for-sale, which are carried at the lower of amortized cost or fair value, utilizing bids periodically received from third parties to acquire these assets. As these bids represent observable market data, we have determined that the fair value of these assets would be classified in Level II of the fair value hierarchy.

Fair Value Only Disclosed

We determine the fair value of our financial instruments and assets where fair value is disclosed as follows:

Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings

We estimate the fair values of our loans not carried at fair value on a recurring basis by discounting their expected cash flows at a rate we estimate would be demanded by the market participants that are most likely to buy our loans. The expected cash flows used are generally the same as those used to calculate our level yield income in the financial statements. Since these inputs are unobservable, we have determined that the fair value of these loans in their entirety would be classified in Level III of the fair value hierarchy.

HTM debt securities

We estimate the fair value of our mandatorily redeemable preferred equity interests in commercial real estate companies and infrastructure bonds using the same methodology described for our loans held-for-investment. We estimate the fair value of our HTM CMBS using the same methodology described for our CMBS carried at fair value on a recurring basis.

Secured financing agreements, CLO, unsecured senior notes not convertible and secured borrowings on transferred loans

The fair value of the secured financing agreements, CLO, unsecured senior notes not convertible and secured borrowings on transferred loans are determined by discounting the contractual cash flows at the interest rate we estimate such arrangements would bear if executed in the current market. We have determined that our valuation of these instruments should be classified in Level III of the fair value hierarchy.

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Convertible Notes

The fair value of the debt component of our Convertible Notes is estimated by discounting the contractual cash flows at the interest rate we estimate such notes would bear if sold in the current market without the embedded conversion option which, in accordance with ASC 470, is reflected as a component of equity. We have determined that our valuation of our Convertible Notes should be classified in Level III of the fair value hierarchy.

Fair Value Disclosures

The following tables present our financial assets and liabilities carried at fair value on a recurring basis in the consolidated balance sheets by their level in the fair value hierarchy as of December 31, 2019 and 2018 (amounts in thousands):

	December 31, 2019
	Total		Level I		Level II		Level III
Financial Assets:
Loans under fair value option	$	1,436,194	$	—	$	—	$	1,436,194
RMBS		189,576		—		—		189,576
CMBS		37,360		—		12,352		25,008
Equity security		12,664		12,664		—		—
Domestic servicing rights		16,917		—		—		16,917
Derivative assets		28,943		—		28,943		—
VIE assets		62,187,175		—				62,187,175
Total	$	63,908,829	$	12,664	$	41,295	$	63,854,870
Financial Liabilities:
Derivative liabilities	$	8,740	$	—	$	8,740	$	—
VIE liabilities		60,743,494		—		58,206,102		2,537,392
Total	$	60,752,234	$	—	$	58,214,842	$	2,537,392

	December 31, 2018
	Total		Level I		Level II		Level III
Financial Assets:
Loans under fair value option	$	671,282	$	—	$	—	$	671,282
RMBS		209,079		—		—		209,079
CMBS		41,347		—		16,119		25,228
Equity security		11,893		11,893		—		—
Domestic servicing rights		20,557		—		—		20,557
Derivative assets		52,691		—		52,691		—
VIE assets		53,446,364		—		—		53,446,364
Total	$	54,453,213	$	11,893	$	68,810	$	54,372,510
Financial Liabilities:
Derivative liabilities	$	15,415	$	—	$	15,415	$	—
VIE liabilities		52,195,042		—		50,753,596		1,441,446
Total	$	52,210,457	$	—	$	50,769,011	$	1,441,446

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The changes in financial assets and liabilities classified as Level III are as follows for the years ended December 31, 2019 and 2018 (amounts in thousands):

							Domestic
	Loans at						Servicing				VIE
	Fair Value		RMBS		CMBS		Rights		VIE Assets		Liabilities		Total
January 1, 2018 balance	$	745,743		247,021		24,191		30,759		51,045,874		(2,188,937)	$	49,904,651
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale		40,217		3,527		2,568		(10,202)		(5,835,225)		1,022,887		(4,776,228)
Net accretion		—		10,932		—		—		—		—		10,932
Included in OCI		—		(4,374)		—		—		—		—		(4,374)
Purchases / Originations		2,276,788		—		3,621		—		—		—		2,280,409
Sales		(2,051,634)		(13,264)		(3,163)		—		—		—		(2,068,061)
Issuances		—		—		—		—		—		(102,474)		(102,474)
Cash repayments / receipts		(144,322)		(34,763)		(23,520)		—		—		(89,747)		(292,352)
Transfers into Level III		—		—		16,845		—		—		(1,043,920)		(1,027,075)
Transfers out of Level III		(195,510)		—		—		—		—		922,985		727,475
Consolidation of VIEs		—		—		—		—		9,885,200		(212,257)		9,672,943
Deconsolidation of VIEs		—		—		4,686		—		(1,649,485)		250,017		(1,394,782)
December 31, 2018 balance		671,282		209,079		25,228		20,557		53,446,364		(1,441,446)		52,931,064
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale		71,337		—		505		(3,640)		(1,250,935)		47,308		(1,135,425)
OTTI		—		—		—		—		—		—		—
Net accretion		—		9,945		—		—		—		—		9,945
Included in OCI		—		(2,519)		—		—		—		—		(2,519)
Purchases / Originations		4,015,167		—		5,165		—		—		—		4,020,332
Sales		(2,951,713)		—		(7,326)		—		—		—		(2,959,039)
Issuances		—		—		—		—		—		(116,273)		(116,273)
Cash repayments / receipts		(144,066)		(26,929)		(11,348)		—		—		(16,093)		(198,436)
Transfers into Level III		—		—		5,350		—		—		(1,728,562)		(1,723,212)
Transfers out of Level III		(225,813)		—		—		—		—		991,378		765,565
Consolidation of VIEs		—		—		—		—		10,368,817		(311,748)		10,057,069
Deconsolidation of VIEs		—		—		7,434		—		(377,071)		38,044		(331,593)
December 31, 2019 balance	$	1,436,194	$	189,576	$	25,008	$	16,917	$	62,187,175	$	(2,537,392)	$	61,317,478
Amount of total (losses) gains included in earnings attributable to assets still held at:
December 31, 2018	$	(3,753)		10,398		(352)		(10,202)		(5,835,225)		1,022,887	$	(4,816,247)
December 31, 2019		(4,459)		9,858		(666)		(3,640)		(1,250,935)		47,308		(1,202,534)

Amounts were transferred from Level II to Level III due to a decrease in the observable relevant market activity and amounts were transferred from Level III to Level II due to an increase in the observable relevant market activity.

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The following table presents the fair values, all of which are classified in Level III of the fair value hierarchy, of our financial instruments not carried at fair value on the consolidated balance sheets (amounts in thousands):

	December 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets not carried at fair value:
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings	$	10,034,030	$	10,086,372	$	9,122,972	$	9,178,709
HTM debt securities		570,638		568,727		644,149		643,948
Financial liabilities not carried at fair value:
Secured financing agreements, CLO and secured borrowings on transferred loans	$	9,834,108	$	9,826,511	$	8,757,804	$	8,662,548
Unsecured senior notes		1,928,622		2,022,283		1,998,831		1,945,160

The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollars in thousands):

	Carrying Value at		Valuation	Unobservable	Range as of (1)
	December 31, 2019		Technique	Input	December 31, 2019	December 31, 2018
Loans under fair value option	$	1,436,194	Discounted cash flow	Yield (b)	3.4% - 5.9%	4.6% - 6.1%
				Duration (c)	1.3 - 11.3 years	2.5 - 14.4 years
RMBS		189,576	Discounted cash flow	Constant prepayment rate (a)	3.1% - 24.9%	3.2% - 25.2%
				Constant default rate (b)	0.5% - 5.0%	1.1% - 5.5%
				Loss severity (b)	0% - 93% (e)	0% - 73% (e)
				Delinquency rate (c)	5% - 29%	4% - 31%
				Servicer advances (a)	27% - 85%	21% - 83%
				Annual coupon deterioration (b)	0% - 1.6%	0% - 1.4%
				Putback amount per projected total collateral loss (d)	0% - 28%	0% - 7%
CMBS		25,008	Discounted cash flow	Yield (b)	0% - 122.9%	0% - 473.5%
				Duration (c)	0 - 9.7 years	0 - 9.7 years
Domestic servicing rights		16,917	Discounted cash flow	Debt yield (a)	7.5%	7.75%
				Discount rate (b)	15%	15%
				Control migration (b)	0% - 80%	0% - 80%
VIE assets		62,187,175	Discounted cash flow	Yield (b)	0% - 690.7%	0% - 290.9%
				Duration (c)	0 - 19.2 years	0 - 20.4 years
VIE liabilities		(2,537,392)	Discounted cash flow	Yield (b)	0% - 690.7%	0% - 290.9%
				Duration (c)	0 - 12.7 years	0 - 13.7 years

(1) The ranges of significant unobservable inputs are represented in percentages and years.

Sensitivity of the Fair Value to Changes in the Unobservable Inputs

(a) Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement.

(b) Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement.

(c) Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (higher or lower) fair value measurement depending on the structural features of the security in question.

(d) Any delay in the putback recovery date leads to a decrease in fair value for the majority of securities in our RMBS portfolio.

(e) 34% and 55% of the portfolio falls within a range of 45% - 80% as of December 31, 2019 and 2018, respectively.

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21. Income Taxes

Certain of our domestic subsidiaries have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs permit us to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, we will continue to maintain our qualification as a REIT.

Our TRSs engage in various real estate related operations, including special servicing of commercial real estate, originating and securitizing commercial mortgage loans, and investing in entities which engage in real estate-related operations. As of December 31, 2019 and 2018, approximately $1.6 billion and $553.5 million, respectively, of assets were owned by TRS entities. Our TRSs are not consolidated for U.S. federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by us with respect to our interest in TRSs.

Our income tax provision consisted of the following for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	For the year ended December 31,
	2019		2018		2017
Current
Federal	$	4,917	$	10,508	$	17,495
State		3,182		3,010		3,115
Foreign		977		293		8
Total current		9,076		13,811		20,618
Deferred
Federal		3,869		1,189		10,815
State		287		330		89
Total deferred		4,156		1,519		10,904
Total income tax provision	$	13,232	$	15,330	$	31,522

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted which, amongst other corporate and individual tax law changes, lowered the corporate tax rate effective January 1, 2018. The Act reduced our Federal statutory rate from 35% to 21% effective January 1, 2018. As a result of this tax rate change, we remeasured our deferred tax assets, which resulted in a $10.4 million write-off of a portion of these assets. This charge was recognized within income tax provision in our consolidated statement of operations for the year ended December 31, 2017.

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Deferred income taxes in our U.S. tax jurisdiction reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the tax effects of temporary differences on net deferred tax assets which are classified in other assets in our consolidated balance sheets (in thousands):

	December 31,
	2019		2018
Deferred tax asset, net
Reserves and accruals	$	4,017	$	5,161
Domestic intangible assets		8,185		14,022
Lease assets		(1,950)		—
Lease liabilities		2,752		—
Investment in unconsolidated entities		(116)		(1,842)
Deferred income		19		134
Net operating and capital loss carryforwards		885		—
Other U.S. temporary differences		228		702
Net deferred tax assets	$	14,020	$	18,177

Unrecognized tax benefits were not material as of and during the years ended December 31, 2019 and 2018. The Company’s tax returns are no longer subject to audit for years ended prior to January 1, 2016. The Company had pre-tax income from foreign operations of $0.9 million and $1.4 million during the years ended December 31, 2019 and 2018, respectively. The Company had pre-tax loss from foreign operations of $26.6 million during the year ended December 31, 2017.

The following table is a reconciliation of our U.S. federal income tax determined using our statutory federal tax rate to our reported income tax provision for the years ended December 31, 2019, 2018 and 2017 (dollars in thousands):

	For the Year Ended December 31,
	2019				2018				2017
Federal statutory tax rate	$	115,535	21.0	%	$	89,571	21.0	%	$	155,501	35.0	%
REIT and other non-taxable income		(106,301)	(19.3)	%		(77,972)	(18.3)	%		(135,830)	(30.6)	%
State income taxes		3,034	0.5	%		3,038	0.7	%		3,091	0.7	%
Federal benefit of state tax deduction		(637)	(0.1)	%		(638)	(0.1)	%		(1,082)	(0.2)	%
Changes in tax law		—	—	%		—	—	%		10,365	2.3	%
Other		1,601	0.3	%		1,331	0.3	%		(523)	(0.1)	%
Effective tax rate	$	13,232	2.4	%	$	15,330	3.6	%	$	31,522	7.1	%

During the year ended December 31, 2017, we recognized $53.9 million in earnings from unconsolidated entities related to our interest in an investor entity which owns equity in an online real estate company (see Note 8). The income tax effect of these earnings, net of the related Manager incentive fee, was $18.3 million in our consolidated statement of operations for the year ended December 31, 2017.

There were no valuation allowances during the years ended December 31, 2019 and 2018. During the year ended December 31, 2017, $5.5 million of a valuation allowance associated with our deferred tax assets was released to the income tax provision.

176

22. Commitments and Contingencies

As of December 31, 2019, our Commercial and Residential Lending Segment had future commercial loan funding commitments totaling $3.2 billion, of which we expect to fund $2.9 billion. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions.

As of December 31, 2019, our Infrastructure Lending Segment had future infrastructure loan funding commitments totaling $360.6 million, including $145.1 million under revolvers and letters of credit (“LCs”), and $215.5 million under delayed draw term loans. As of December 31, 2019, $19.7 million of revolvers and LCs were outstanding.

In connection with the Infrastructure Lending Segment acquisition, we assumed guarantees of certain borrowers’ performance under existing interest rate swaps.  As of December 31, 2019, we had seven outstanding guarantees on interest rate swaps maturing between March 2022 and June 2025. Refer to Note 13 for further discussion.

Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum debt service coverage ratios or executions of new leases before advances are made to the borrower.

Management is not aware of any other contractual obligations, legal proceedings, or any other contingent obligations incurred in the normal course of business that would have a material adverse effect on our consolidated financial statements.

Lease Commitment Disclosures

Our lease commitments consist of corporate office leases and ground leases for investment properties, all of which are classified as operating leases. We sublease some of the space within our corporate offices to third parties. Our lease costs and sublease income were as follows (in thousands):

	For the Year Ended December 31,
	2019		2018		2017
Operating lease costs	$	5,634	$	4,962	$	4,699
Short-term lease costs		115		210		96
Sublease income		(1,613)		(1,643)		(1,500)
Total lease cost	$	4,136	$	3,529	$	3,295

177

Information concerning our operating lease liabilities, which are classified within accounts payable, accrued expenses and other liabilities in our consolidated balance sheet as of December 31, 2019, is as follows (dollars in thousands):

	For the Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities—operating	$	5,215

	December 31, 2019
Weighted-average remaining lease term	6.0	years
Weighted-average discount rate	4.4	%

Future maturity of operating lease liabilities:
2020	$	6,163
2021		3,480
2022		1,272
2023		1,281
2024		6,206
Thereafter		1,002
Total		19,404
Less interest component		(2,316)
Operating lease liability	$	17,088

178

23. Segment and Geographic Data

In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis prior to the impact of consolidating securitization VIEs under ASC 810. The segment information within this Note is reported on that basis.

The table below presents our results of operations for the year ended December 31, 2019 by business segment (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	$	610,316	$	99,580	$	—	$	14,117	$	—	$	724,013	$	—	$	724,013
Interest income from investment securities		81,255		6,318		—		117,663		—		205,236		(128,607)		76,629
Servicing fees		423		—		—		69,962		—		70,385		(16,089)		54,296
Rental income		—		—		287,094		50,872		—		337,966		—		337,966
Other revenues		1,038		751		409		1,317		26		3,541		(26)		3,515
Total revenues		693,032		106,649		287,503		253,931		26		1,341,141		(144,722)		1,196,419
Costs and expenses:
Management fees		1,495		—		—		72		117,404		118,971		161		119,132
Interest expense		222,118		62,836		76,838		33,621		113,964		509,377		(648)		508,729
General and administrative		29,481		18,260		6,232		87,115		13,681		154,769		343		155,112
Acquisition and investment pursuit costs		1,351		75		217		(587)		—		1,056		—		1,056
Costs of rental operations		2,691		—		95,370		24,921		—		122,982		—		122,982
Depreciation and amortization		1,091		83		92,561		19,587		—		113,322		—		113,322
Loan loss provision, net		2,616		4,510		—		—		—		7,126		—		7,126
Other expense		307		—		1,693		365		—		2,365		—		2,365
Total costs and expenses		261,150		85,764		272,911		165,094		245,049		1,029,968		(144)		1,029,824
Other income (loss):
Change in net assets related to consolidated VIEs		—		—		—		—		—		—		236,309		236,309
Change in fair value of servicing rights		—		—		—		(1,468)		—		(1,468)		(2,172)		(3,640)
Change in fair value of investment securities, net		(1,084)		—		—		89,206		—		88,122		(87,289)		833
Change in fair value of mortgage loans held-for-sale, net		10,462		—		—		61,139		—		71,601		—		71,601
Earnings (loss) from unconsolidated entities		10,649		—		(114,362)		4,166		—		(99,547)		(1,807)		(101,354)
Gain on sale of investments and other assets, net		4,619		3,041		119,746		60,622		—		188,028		—		188,028
(Loss) gain on derivative financial instruments, net		(20,325)		(3,349)		(1,284)		(7,414)		26,062		(6,310)		—		(6,310)
Foreign currency gain (loss), net		17,342		205		37		(2)		—		17,582		—		17,582
Loss on extinguishment of debt		(857)		(11,357)		(4,745)		(845)		(1,466)		(19,270)		—		(19,270)
Other (loss) income, net		—		(50)		(100)		16		(73)		(207)		—		(207)
Total other income (loss)		20,806		(11,510)		(708)		205,420		24,523		238,531		145,041		383,572
Income (loss) before income taxes		452,688		9,375		13,884		294,257		(220,500)		549,704		463		550,167
Income tax (provision) benefit		(4,818)		89		(393)		(8,110)		—		(13,232)		—		(13,232)
Net income (loss)		447,870		9,464		13,491		286,147		(220,500)		536,472		463		536,935
Net income attributable to non-controlling interests		(392)		—		(21,630)		(4,786)		—		(26,808)		(463)		(27,271)
Net income (loss) attributable to Starwood Property Trust, Inc.	$	447,478	$	9,464	$	(8,139)	$	281,361	$	(220,500)	$	509,664	$	—	$	509,664

179

The table below presents our results of operations for the year ended December 31, 2018 by business segment (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	$	576,564	$	28,995	$	—	$	14,984	$	—	$	620,543	$	—	$	620,543
Interest income from investment securities		50,063		1,095		—		127,100		—		178,258		(121,419)		56,839
Servicing fees		421		—		—		103,866		—		104,287		(25,521)		78,766
Rental income		—		—		292,453		57,231		—		349,684		—		349,684
Other revenues		902		619		444		1,299		360		3,624		(176)		3,448
Total revenues		627,950		30,709		292,897		304,480		360		1,256,396		(147,116)		1,109,280
Costs and expenses:
Management fees		1,838		—		—		72		127,133		129,043		412		129,455
Interest expense		160,769		20,949		75,192		27,459		124,805		409,174		(986)		408,188
General and administrative		26,324		5,631		7,113		84,978		11,747		135,793		339		136,132
Acquisition and investment pursuit costs		2,490		6,806		(46)		(663)		—		8,587		—		8,587
Costs of rental operations		—		—		99,632		27,436		—		127,068		—		127,068
Depreciation and amortization		76		—		110,684		21,889		—		132,649		—		132,649
Loan loss provision, net		34,821		—		—		—		—		34,821		—		34,821
Other expense		307		—		(27)		452		—		732		—		732
Total costs and expenses		226,625		33,386		292,548		161,623		263,685		977,867		(235)		977,632
Other income (loss):
Change in net assets related to consolidated VIEs		—		—		—		—		—		—		165,892		165,892
Change in fair value of servicing rights		—		—		—		(14,373)		—		(14,373)		4,171		(10,202)
Change in fair value of investment securities, net		(2,765)		—		—		33,229		—		30,464		(20,119)		10,345
Change in fair value of mortgage loans held-for-sale, net		(6,851)		—		—		47,373		—		40,522		—		40,522
Earnings from unconsolidated entities		5,063		—		3,658		3,809		—		12,530		(1,990)		10,540
Gain on sale of investments and other assets, net		4,019		—		28,468		26,557		—		59,044		—		59,044
Gain (loss) on derivative financial instruments, net		17,654		1,821		22,756		(298)		(7,330)		34,603		—		34,603
Foreign currency loss, net		(7,816)		(1,425)		(2)		(2)		—		(9,245)		—		(9,245)
Loss on extinguishment of debt		(730)		—		(2,661)		(318)		(2,099)		(5,808)		—		(5,808)
Other income (loss), net		43		—		508		(1,363)		—		(812)		—		(812)
Total other income (loss)		8,617		396		52,727		94,614		(9,429)		146,925		147,954		294,879
Income (loss) before income taxes		409,942		(2,281)		53,076		237,471		(272,754)		425,454		1,073		426,527
Income tax provision		(2,801)		(292)		(7,549)		(4,688)		—		(15,330)		—		(15,330)
Net income (loss)		407,141		(2,573)		45,527		232,783		(272,754)		410,124		1,073		411,197
Net income attributable to non-controlling interests		(1,451)		—		(17,623)		(5,220)		—		(24,294)		(1,073)		(25,367)
Net income (loss) attributable to Starwood Property Trust, Inc.	$	405,690	$	(2,573)	$	27,904	$	227,563	$	(272,754)	$	385,830	$	—	$	385,830

180

The table below presents our results of operations for the year ended December 31, 2017 by business segment (amounts in thousands):

	Commercial and
	Residential				Investing
	Lending		Property		and Servicing						Securitization
	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 provision, 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
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

181

The table below presents our consolidated balance sheet as of December 31, 2019 by business segment (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	$	26,278	$	2,209	$	30,123	$	61,693	$	356,864	$	477,167	$	1,221	$	478,388
Restricted cash		36,135		41,967		7,171		10,370		—		95,643		—		95,643
Loans held-for-investment, net		9,187,332		1,397,448		—		1,294		—		10,586,074		—		10,586,074
Loans held-for-sale		605,384		119,528		—		159,238		—		884,150		—		884,150
Investment securities		992,974		45,153		—		1,177,148		—		2,215,275		(1,405,037)		810,238
Properties, net		26,834		—		2,029,024		210,582		—		2,266,440		—		2,266,440
Intangible assets		—		—		47,303		64,644		—		111,947		(26,247)		85,700
Investment in unconsolidated entities		46,921		25,862		—		32,183		—		104,966		(20,637)		84,329
Goodwill		—		119,409		—		140,437		—		259,846		—		259,846
Derivative assets		14,718		7		3		7		14,208		28,943		—		28,943
Accrued interest receivable		45,996		3,134		133		2,388		13,242		64,893		(806)		64,087
Other assets		59,170		6,101		82,910		54,238		8,911		211,330		(7)		211,323
VIE assets, at fair value		—		—		—		—		—		—		62,187,175		62,187,175
Total Assets	$	11,041,742	$	1,760,818	$	2,196,667	$	1,914,222	$	393,225	$	17,306,674	$	60,735,662	$	78,042,336
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	30,594	$	6,443	$	48,370	$	73,021	$	53,494	$	211,922	$	84	$	212,006
Related-party payable		—		—		—		5		40,920		40,925		—		40,925
Dividends payable		—		—		—		—		137,427		137,427		—		137,427
Derivative liabilities		7,698		750		—		292		—		8,740		—		8,740
Secured financing agreements, net		5,038,876		1,217,066		1,698,334		574,507		391,215		8,919,998		(13,950)		8,906,048
Collateralized loan obligations, net		928,060		—		—		—		—		928,060		—		928,060
Unsecured senior notes, net		—		—		—		—		1,928,622		1,928,622		—		1,928,622
VIE liabilities, at fair value		—		—		—		—		—		—		60,743,494		60,743,494
Total Liabilities		6,005,228		1,224,259		1,746,704		647,825		2,551,678		12,175,694		60,729,628		72,905,322
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock		—		—		—		—		2,874		2,874		—		2,874
Additional paid-in capital		1,522,360		529,668		208,650		(123,210)		2,995,064		5,132,532		—		5,132,532
Treasury stock		—		—		—		—		(104,194)		(104,194)		—		(104,194)
Accumulated other comprehensive income (loss)		50,996		—		—		(64)		—		50,932		—		50,932
Retained earnings (accumulated deficit)		3,463,158		6,891		5,431		1,194,998		(5,052,197)		(381,719)		—		(381,719)
Total Starwood Property Trust, Inc. Stockholders’ Equity		5,036,514		536,559		214,081		1,071,724		(2,158,453)		4,700,425		—		4,700,425
Non-controlling interests in consolidated subsidiaries		—		—		235,882		194,673		—		430,555		6,034		436,589
Total Equity		5,036,514		536,559		449,963		1,266,397		(2,158,453)		5,130,980		6,034		5,137,014
Total Liabilities and Equity	$	11,041,742	$	1,760,818	$	2,196,667	$	1,914,222	$	393,225	$	17,306,674	$	60,735,662	$	78,042,336

182

The table below presents our consolidated balance sheet as of December 31, 2018 by business segment (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	$	14,385	$	13	$	27,408	$	31,449	$	164,015	$	237,270	$	2,554	$	239,824
Restricted cash		28,324		175,659		25,144		11,679		7,235		248,041		—		248,041
Loans held-for-investment, net		7,072,220		1,456,779		—		3,357		—		8,532,356		—		8,532,356
Loans held-for-sale		670,155		469,775		—		47,622		—		1,187,552		—		1,187,552
Loans transferred as secured borrowings		74,346		—		—		—		—		74,346		—		74,346
Investment securities		1,050,920		60,768		—		998,820		—		2,110,508		(1,204,040)		906,468
Properties, net		—		—		2,512,847		272,043		—		2,784,890		—		2,784,890
Intangible assets		—		—		90,889		78,219		—		169,108		(24,075)		145,033
Investment in unconsolidated entities		35,274		—		114,362		44,129		—		193,765		(22,000)		171,765
Goodwill		—		119,409		—		140,437		—		259,846		—		259,846
Derivative assets		18,174		1,066		32,733		718		—		52,691		—		52,691
Accrued interest receivable		39,862		6,982		359		616		13,177		60,996		(641)		60,355
Other assets		13,958		20,472		67,098		49,363		2,057		152,948		(26)		152,922
VIE assets, at fair value		—		—		—		—		—		—		53,446,364		53,446,364
Total Assets	$	9,017,618	$	2,310,923	$	2,870,840	$	1,678,452	$	186,484	$	16,064,317	$	52,198,136	$	68,262,453
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	26,508	$	26,476	$	67,415	$	75,655	$	21,467	$	217,521	$	142	$	217,663
Related-party payable		—		—		—		53		43,990		44,043		—		44,043
Dividends payable		—		—		—		—		133,466		133,466		—		133,466
Derivative liabilities		1,290		477		37		1,423		12,188		15,415		—		15,415
Secured financing agreements, net		4,405,599		1,524,551		1,884,187		585,258		297,920		8,697,515		(13,950)		8,683,565
Unsecured senior notes, net		—		—		—		—		1,998,831		1,998,831		—		1,998,831
Secured borrowings on transferred loans		74,239		—		—		—		—		74,239		—		74,239
VIE liabilities, at fair value		—		—		—		—		—		—		52,195,042		52,195,042
Total Liabilities		4,507,636		1,551,504		1,951,639		662,389		2,507,862		11,181,030		52,181,234		63,362,264
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock		—		—		—		—		2,808		2,808		—		2,808
Additional paid-in capital		1,430,503		761,992		645,561		87,779		2,069,321		4,995,156		—		4,995,156
Treasury stock		—		—		—		—		(104,194)		(104,194)		—		(104,194)
Accumulated other comprehensive income (loss)		53,516		—		5,208		(64)		—		58,660		—		58,660
Retained earnings (accumulated deficit)		3,015,676		(2,573)		13,570		913,642		(4,289,313)		(348,998)		—		(348,998)
Total Starwood Property Trust, Inc. Stockholders’ Equity		4,499,695		759,419		664,339		1,001,357		(2,321,378)		4,603,432		—		4,603,432
Non-controlling interests in consolidated subsidiaries		10,287		—		254,862		14,706		—		279,855		16,902		296,757
Total Equity		4,509,982		759,419		919,201		1,016,063		(2,321,378)		4,883,287		16,902		4,900,189
Total Liabilities and Equity	$	9,017,618	$	2,310,923	$	2,870,840	$	1,678,452	$	186,484	$	16,064,317	$	52,198,136	$	68,262,453

Revenues generated from foreign sources were $115.6 million, $90.5 million and $82.0 million for the years ended December 31, 2019, 2018 and 2017, respectively. The majority of our revenues generated from foreign sources are derived from the United Kingdom and Ireland. Refer to Schedules III and IV for a detailed listing of the properties and loans held by the Company, including their respective geographic locations.

183

24. Quarterly Financial Data (Unaudited)

The following table summarizes our quarterly financial data which, in the opinion of management, reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our results of operations (amounts in thousands, except per share amounts):

	For the Three-Month Periods Ended
	March 31		June 30		September 30		December 31
2019:
Revenues	$	310,480	$	311,181	$	288,330	$	286,428
Net income		76,508		132,446		150,001		177,980
Net income attributable to Starwood Property Trust, Inc.		70,383		127,016		140,396		171,869
Earnings per share — Basic		0.25		0.45		0.50		0.61
Earnings per share — Diluted		0.25		0.45		0.49		0.60
2018:
Revenues	$	260,587	$	269,556	$	285,719	$	293,418
Net income		104,794		117,090		89,381		99,932
Net income attributable to Starwood Property Trust, Inc.		99,932		109,230		84,536		92,132
Earnings per share — Basic		0.38		0.41		0.31		0.33
Earnings per share — Diluted		0.38		0.40		0.31		0.33

Annual EPS may not equal the sum of each quarter’s EPS due to rounding and other computational factors.

25. Subsequent Events

Our significant events subsequent to December 31, 2019 were as follows:

Residential Mortgage Loan Securitization

In February 2020, we securitized residential mortgage loans held-for-sale with a principal balance of $381.3 million.

Dividend Declaration

On February 25, 2020, our board of directors declared a dividend of $0.48 per share for the first quarter of 2020, which is payable on April 15, 2020 to common stockholders of record as of March 31, 2020.

184

Starwood Property Trust, Inc. and Subsidiaries

Schedule III—Real Estate and Accumulated Depreciation

December 31, 2019

(Dollars in thousands)

			Initial Cost				Costs		Gross Amounts Carried at
			to Company				Capitalized		December 31, 2019
Property Type /					Depreciable		Subsequent to				Depreciable					Accumulated		Acquisition
Geographic Location	Encumbrances		Land		Property		Acquisition(1)		Land		Property		Total			Depreciation(3)		Date
Aggregated Properties
Hotel—U.S., Midwest (1 property)	$	—	$	—	$	5,565	$	929	$	—	$	6,494	$	6,494		$	(1,807)	Feb-18
Medical office—U.S., Midwest (7 properties)		78,048		2,764		97,802		503		2,764		98,305		101,069			(9,705)	Dec-16
Medical office—U.S., North East (7 properties)		191,661		11,283		176,999		—		11,283		176,999		188,282			(16,437)	Dec-16
Medical office—U.S., South East (6 properties)		107,252		7,930		117,740		159		7,930		117,899		125,829			(11,555)	Dec-16
Medical office—U.S., South West (8 properties)		125,345		15,921		126,842		667		15,921		127,509		143,430			(13,493)	Dec-16
Medical office—U.S., West (6 properties)		97,694		13,415		107,844		488		13,415		108,332		121,747			(12,243)	Dec-16
Mixed Use—U.S., West (1 property)		8,667		1,002		14,323		246		1,002		14,569		15,571			(1,659)	Feb-16
Multifamily—U.S., South East (60 properties)		930,351		251,084		926,809		31,202		251,113		957,982		1,209,095			(113,293)	Oct-15 to Aug-19
Office—U.S., North East (1 property)		17,474		7,250		10,614		2,538		7,250		13,152		20,402			(1,505)	May-18
Office—U.S., South East (2 properties)		23,809		7,081		31,528		3,503		7,081		35,031		42,112			(7,585)	May-16 to Oct-16
Office—U.S., South West (2 properties)		28,334		8,188		28,019		2,252		8,188		30,271		38,459			(2,735)	Sep-17 to Feb-18
Office—U.S., West (1 property)		15,448		—		4,261		5,592		—		9,853		9,853			(1,301)	Oct-17
Retail—U.S., Mid Atlantic (1 property)		11,438		6,432		6,315		11,940		6,432		18,255		24,687			(1,985)	Mar-16
Retail—U.S., Midwest (7 properties)		79,300		24,384		109,445		1,354		24,384		110,799		135,183			(9,573)	Nov-15 to Sep-17
Retail—U.S., North East (1 property)		11,580		472		12,260		568		472		12,828		13,300			(1,877)	Nov-15
Retail—U.S., South East (5 properties)		42,200		21,353		60,618		49		21,353		60,667		82,020			(4,352)	Sep-16 to Sep-17
Retail—U.S., South West (6 properties)		76,894		37,458		78,579		90		37,458		78,669		116,127			(8,012)	Oct-14 to Sep-17
Retail—U.S., West (2 properties)		33,000		18,633		36,794		—		18,633		36,794		55,427			(2,875)	Sep-17
Self-storage—U.S., North East (1 property)		14,500		2,202		11,498		172		2,202		11,670		13,872			(1,361)	Dec-15
Industrial—U.S., South East (2 properties)		—		10,121		17,295		255		10,121		17,550		27,671			(837)	Mar-19 to Apr-19
	$	1,892,995	$	446,973	$	1,981,150	$	62,507	$	447,002	$	2,043,628	$	2,490,630	(2)	$	(224,190)

Notes to Schedule III:

(1) No material costs subsequent to acquisition were capitalized to land.

(2) The aggregate cost for federal income tax purposes is $2.6 billion.

(3) Depreciation is computed based upon estimated useful lives as described in Note 7 to the Consolidated Financial Statements.

185

The following schedule presents our real estate activity during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019		2018		2017
Beginning balance, January 1	$	2,972,803	$	2,755,050	$	1,986,285
Additions during the year:
Acquisitions (1)		8,472		445,170		725,955
Acquisitions through foreclosure		27,416		—		—
Improvements		30,865		25,764		18,575
Contingent consideration issued		2,877		38,211		—
Measurement period adjustments		—		—		660
Foreign currency translation		—		—		59,508
Total additions		69,630		509,145		804,698
Deductions during the year:
Costs of real estate sold		(535,417)		(269,989)		(35,774)
Foreign currency translation		(15,702)		(21,260)		—
Other		(684)		(143)		(159)
Total deductions		(551,803)		(291,392)		(35,933)
Ending balance, December 31	$	2,490,630	$	2,972,803	$	2,755,050

(1) Refer to Note 16 to the Consolidated Financial Statements for a discussion of property acquisitions from related parties.

The following schedule presents activity within accumulated depreciation during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019		2018		2017
Beginning balance, January 1	$	187,913	$	107,569	$	41,565
Depreciation expense		92,024		91,188		65,253
Disposition/write-offs		(54,260)		(9,389)		(1,785)
Foreign currency translation		(1,487)		(1,455)		2,536
Ending balance, December 31	$	224,190	$	187,913	$	107,569

186

Starwood Property Trust, Inc. and Subsidiaries

Schedule IV—Mortgage Loans on Real Estate

December 31, 2019

(Dollars in thousands)

	Prior		Face		Carrying			Payment	Maturity	Principal Amount of
Description/ Location	Liens (1)		Amount		Amount		Interest Rate (2)	Terms (3)	Date (4)	Delinquent Loans
Individually Significant First Mortgages: (5)
Mixed Use, Birmingham, United Kingdom	$	—	$	331,342	$	327,235	3GBP+4.35%	I/O	1/11/2024	$	—
Multifamily, Various, United Kingdom		—		301,709		299,822	3GBP+4.50%	I/O	10/26/2021		—
Office, Irvine, CA		—		303,516		302,496	L+2.25% to 4.50%	I/O	9/9/2020		—
Aggregated First Mortgages: (5)
Hotel, International, Floating (3 mortgages)		N/A		N/A		33,265	3EU+4.90%	N/A	2022		—
Hotel, International, Floating (2 mortgages)		N/A		N/A		32,798	L+3.00% to 9.00%	N/A	2021		—
Hotel, Mid Atlantic, Floating (4 mortgages)		N/A		N/A		95,277	L+2.00% to 6.80%	N/A	2022		—
Hotel, Midwest, Floating (4 mortgages)		N/A		N/A		53,482	L+2.25% to 8.63%	N/A	2020		—
Hotel, North East, Floating (4 mortgages)		N/A		N/A		159,787	L+2.50% to 10.00%	N/A	2020-2023		—
Hotel, South East, Floating (4 mortgages)		N/A		N/A		59,462	L+2.40% to 7.40%	N/A	2022		—
Hotel, South West, Floating (8 mortgages)		N/A		N/A		158,577	L+2.00% to 7.67%	N/A	2023		—
Hotel, Various, Floating (9 mortgages)		N/A		N/A		364,603	L+2.00% to 10.50%	N/A	2021		—
Hotel, West, Floating (17 mortgages)		N/A		N/A		414,745	L+2.00% to 9.50%	N/A	2021-2024		—
Industrial, South East, Fixed (4 mortgages)		N/A		N/A		37,365	8.18%	N/A	2024		—
Mixed Use, International, Fixed (1 mortgage)		N/A		N/A		27,069	8.50%	N/A	2021		—
Mixed Use, International, Floating (2 mortgages)		N/A		N/A		98,646	3EU+4.85%	N/A	2023		—
Mixed Use, International, Floating (3 mortgages)		N/A		N/A		118,001	GBP+3.15% to 5.75%	N/A	2020-2022		—
Mixed Use, Mid Atlantic, Floating (1 mortgage)		N/A		N/A		3,796	L+3.15%	N/A	2024		—
Mixed Use, South East, Fixed (4 mortgages)		N/A		N/A		108,133	5.00% to 12.00%	N/A	2024		—
Mixed Use, South West, Floating (10 mortgages)		N/A		N/A		129,970	L+2.50% to 10.00%	N/A	2020-2022		—
Mixed Use, West, Floating (2 mortgages)		N/A		N/A		208,279	L+6.37%	N/A	2020		—
Multi-family, International, Fixed (1 mortgage)		N/A		N/A		10,655	8.00%	N/A	2021		—
Multi-family, Midwest, Fixed (1 mortgage)		N/A		N/A		1,294	6.28%	N/A	2024		—
Multi-family, Mid Atlantic, Floating (2 mortgages)		N/A		N/A		89,970	L+1.75% to 5.75%	N/A	2023		—
Multi-family, North East, Floating (7 mortgages)		N/A		N/A		280,322	L+1.85% to 6.45%	N/A	2021-2023		—
Multi-family, South West, Floating (10 mortgages)		N/A		N/A		183,159	L+2.50% to 3.00%	N/A	2021-2022		—
Multi-family, West, Floating (4 mortgages)		N/A		N/A		24,201	L+3.75% to 9.25%	N/A	2020		—
Office, International, Fixed (1 mortgage)		N/A		N/A		151,772	5.35%	N/A	2021		—
Office, International, Floating (2 mortgages)		N/A		N/A		259,567	3GBP+3.50% to 3.65%	N/A	2023		—
Office, International, Floating (2 mortgages)		N/A		N/A		26,780	EUR+6.00% to 7.80%	N/A	2021-2022		—
Office, Mid Atlantic, Floating (25 mortgages)		N/A		N/A		609,434	L+1.75% to 7.50%	N/A	2021-2023		—
Office, Midwest, Floating (6 mortgages)		N/A		N/A		129,593	L+1.75% to 9.75%	N/A	2021		—
Office, North East, Floating (22 mortgages)		N/A		N/A		826,429	L+2.80% to 12.00%	N/A	2020-2023		—
Office, South East, Floating (4 mortgages)		N/A		N/A		126,443	L+2.00% to 8.25%	N/A	2020		—
Office, South West, Floating (11 mortgages)		N/A		N/A		271,045	L+2.00% to 8.55%	N/A	2020-2023		—
Office, West, Floating (19 mortgages)		N/A		N/A		631,645	L+1.25% to 8.60%	N/A	2021-2024		—
Other, Midwest, Floating (4 mortgages)		N/A		N/A		59,729	L+4.50% to 11.17%	N/A	2021		—
Other, Various, Fixed (1 mortgage)		N/A		N/A		40,583	10.00%	N/A	2025		—
Other, Various, Floating (1 mortgage)		N/A		N/A		76,583	3M L+4.00%	N/A	2024		—
Other, West, Floating (4 mortgages)		N/A		N/A		24,356	L+7.00%	N/A	2021		—
Residential, North East, Fixed (1 mortgage)		N/A		N/A		31,855	8.00%	N/A	2020		16,167
Residential, North East, Floating (16 mortgages)		N/A		N/A		727,851	L+2.50% to 8.60%	N/A	2020-2022		49,149
Residential, West, Floating (3 mortgages)		N/A		N/A		34,118	L+2.75% to 8.75%	N/A	2021		—
Residential, Various, Fixed (1,197 mortgages)		N/A		N/A		671,572	3.25% to 9.00%	N/A	2013-2019		5,619
Retail, Midwest, Floating (4 mortgages)		N/A		N/A		40,436	L+2.75% to 10.75%	N/A	2020		—
Retail, North East, Floating (1 mortgage)		N/A		N/A		167,678	L+7.25%	N/A	2021		—
Retail, South West, Floating (8 mortgages)		N/A		N/A		71,350	L+2.25% to 15.25%	N/A	2020		—
Retail, West, Fixed (1 mortgage)		N/A		N/A		503	7.26%	N/A	2023		—
Loans Held-for-Sale, Various, Fixed		N/A		N/A		764,622	3.40% to 9.13%	N/A	2015-2029		2,528
Aggregated Subordinated and Mezzanine Loans: (5)
Hotel, North East, Floating (2 mortgages)		N/A		N/A		36,167	L+7.55% to 9.00%	N/A	2021		—
Hotel, South East, Floating (3 mortgages)		N/A		N/A		82,947	L+6.75% to 7.04%	N/A	2021-2022		—
Industrial, South East, Fixed (1 mortgage)		N/A		N/A		2,337	8.18%	N/A	2024		—
Industrial, South East, Floating (2 mortgages)		N/A		N/A		21,882	L+12.75%	N/A	2020		—
Mixed Use, International, Floating (1 mortgage)		N/A		N/A		56,515	3EU+7.25%	N/A	2022		—
Mixed Use, South East, Floating (2 mortgages)		N/A		N/A		25,628	L+5.50% to 10.25%	N/A	2021		—
Mixed Use, South West, Floating (1 mortgage)		N/A		N/A		83,353	L+11.85%	N/A	2021		—
Multi-family, Mid Atlantic, Floating (1 mortgage)		N/A		N/A		24,330	L+9.75%	N/A	2022		—
Multi-family, North East, Floating (3 mortgages)		N/A		N/A		62,780	L+7.10% to 9.25%	N/A	2021-2023		—
Office, International, Floating (2 mortgages)		N/A		N/A		23,491	3EU+8.95%	N/A	2024		—
Office, North East, Fixed (2 mortgages)		N/A		N/A		34,456	8.72%	N/A	2023		—
Office, South East, Fixed (1 mortgage)		N/A		N/A		7,245	8.25%	N/A	2020		—
Office, West, Floating (1 mortgage)		N/A		N/A		25,300	L+6.67%	N/A	2022		—
Other, West, Floating (2 mortgages)		N/A		N/A		61,577	L+11.00%	N/A	2021		—
Retail, Midwest, Fixed (2 mortgages)		N/A		N/A		11,977	7.16%	N/A	2024		11,977

187

	Prior		Face		Carrying				Payment	Maturity	Principal Amount of
Description/ Location	Liens (1)		Amount		Amount			Interest Rate (2)	Terms (3)	Date (4)	Delinquent Loans
Loan Loss Allowance		—		—		(33,415)						—
Prepaid Loan Costs, Net		—		—		(2,230)						—
					$	9,890,693	(6)				$	85,440

Notes to Schedule IV:

(1) Represents third party priority liens. Third party portions of pari-passu participations are not considered prior liens. Additionally, excludes the outstanding debt on third party joint ventures of underlying borrowers.

(2) L = one month LIBOR rate, 3M L = three month LIBOR rate, GBP = one month GBP LIBOR rate, 3GBP = three month GBP LIBOR rate, 3EU = three month EURO LIBOR rate.

(3) I/O = interest only until maturity.

(4) Based on management’s judgment of extension options being exercised.

(5) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. 

(6) The aggregate cost for federal income tax purposes is $10.0 billion.

The following schedule presents activity within our Commercial and Residential Lending Segment and Investing and Servicing Segment loan portfolios during the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):

	For the year ended December 31,
	2019		2018		2017
Balance at January 1	$	7,806,699	$	7,357,034	$	5,946,274
Acquisitions/originations/additional funding		8,174,321		6,543,873		5,494,837
Capitalized interest		109,978		62,445		73,784
Basis of loans sold		(3,921,171)		(3,082,347)		(1,634,717)
Loan maturities/principal repayments		(2,387,843)		(3,086,107)		(2,657,696)
Discount accretion/premium amortization		29,775		37,408		38,560
Changes in fair value		71,601		40,522		66,987
Unrealized foreign currency translation gain (loss)		38,050		(26,645)		42,356
Loan loss provision, net		(2,616)		(34,821)		5,458
Loan foreclosures		(27,303)		—		—
Transfer to/from other asset classifications		(798)		(4,663)		(18,809)
Balance at December 31	$	9,890,693	$	7,806,699	$	7,357,034

Refer to Note 16 to the Consolidated Financial Statements for a discussion of loan activity with related parties.

188

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosures.

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Management Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

As of December 31, 2019, our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework established in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this assessment, our management has concluded that our internal control over financial reporting as of December 31, 2019 is effective.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the U.S., and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

The effectiveness of our internal control over financial reporting as of December 31, 2019 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report included in this Form 10-K, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2019.

Changes to Internal Control Over Financial Reporting. No change in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the quarter ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None noted.

189

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Information required by this Item with respect to members of our board of directors and with respect to our Audit Committee will be contained in the Proxy Statement for the 2020 Annual Meeting of Shareholders (“2020 Proxy Statement”) under the captions “Election of Directors” and “Board and Committee Meetings—Audit Committee” and in the chart disclosing Audit Committee membership and is incorporated herein by this reference. Information required by this Item with respect to our executive officers will be contained in the 2020 Proxy Statement under the caption “Executive Officers,” and is incorporated herein by this reference. Information required by this Item with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 will be contained in the 2020 Proxy Statement under the caption “Delinquent Section 16(a) Reports,” and is incorporated herein by this reference.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics for all directors, officers and employees of the Company which is available on our website at http://ir.starwoodpropertytrust.com/govdocs. In addition, stockholders may request a free copy of the Code of Business Conduct and Ethics from:

Starwood Property Trust, Inc.

Attention: Investor Relations

591 West Putnam Avenue

Greenwich, CT 06830

(202) 422-7700

We have also adopted a Code of Ethics for our Principal Executive Officer and Senior Financial Officers setting forth a code of ethics applicable to our Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer, which is available on our website at http://ir.starwoodpropertytrust.com/govdocs. Stockholders may request a free copy of the Code of Ethics for Principal Executive Officer and Senior Financial Officers from the address and phone number set forth above.

Corporate Governance Guidelines

We have also adopted Corporate Governance Guidelines, which are available on our website at http://ir.starwoodpropertytrust.com/govdocs. Stockholders may request a free copy of the Corporate Governance Guidelines from the address and phone number set forth above.

Item 11. Executive Compensation.

Information required by this Item will be contained in the 2020 Proxy Statement under the captions “Executive Compensation” and “Compensation of Directors” and is incorporated herein by this reference, provided that the Compensation Committee Report shall not be deemed to be “filed” with this Form 10-K.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information required by this Item will be contained in the 2020 Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners, Directors and Management” and “Executive Compensation – Equity Compensation Plan Information” and is incorporated herein by this reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Information required by this Item will be contained in the 2020 Proxy Statement under the captions “Certain Relationships and Related Transactions” and “Corporate Governance—Determination of Director Independence” and is incorporated herein by this reference.

190

Item 14. Principal Accountant Fees and Services.

Information required by this Item will be contained in the 2020 Proxy Statement under the captions “Independent Registered Public Accounting Firm” and “Independent Registered Public Accounting Firm – Pre-Approval Policies for Services of Independent Registered Public Accounting Firm” and is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Documents filed as part of this report:

(1)Financial Statements:

See Item 8—“Financial Statements and Supplementary Data”, filed herewith, for a list of financial statements.

(2)Financial Statement Schedules:

Included within Item 8:

Schedule III—Real Estate and Accumulated Depreciation

Schedule IV—Mortgage Loans on Real Estate

(3)Exhibits:

Exhibit No.	Description
2.1	Asset Purchase Agreement, dated August 7, 2018, between Starwood Property Trust, Inc., as buyer, and GE Capital Global Holdings, LLC, as seller (Incorporated by reference to Exhibit 2.1 of the Company’s Quarterly Report on Form 10-Q filed November 9, 2018)
3.1	Articles of Amendment and Restatement of Starwood Property Trust, Inc. (Incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed November 16, 2009)
3.2	Amended and Restated Bylaws of Starwood Property Trust, Inc. (Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed March 17, 2014)
4.1	Indenture for Senior Debt Securities between the Company and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.6 of the Company’s Registration Statement on Form S-3 (File No. 333-210560) filed April 1, 2016)
4.2	First Supplemental Indenture, dated as of February 15, 2013, between the Company and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed February 15, 2013)
4.3	Second Supplemental Indenture, dated as of July 3, 2013, between the Company and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed July 3, 2013)
4.4	Third Supplemental Indenture, dated as of October 8, 2014, between the Company and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed October 8, 2014)

191

Exhibit No.	Description
4.5	Fourth Supplemental Indenture, dated as of March 29, 2017, between the Company and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed March 29, 2017)
4.6	Form of 4.375% Convertible Senior Notes due 2023 (Incorporated by reference as Exhibit A to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed March 29, 2017)
4.7	Indenture, dated as of December 16, 2016, between Starwood Property Trust, Inc. and The Bank of New York Mellon, as trustee (including the form of the Company’s 5.000% Senior Notes due 2021) (Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed December 21, 2016)
4.8	Registration Rights Agreement, dated as of December 16, 2016, between Starwood Property Trust, Inc. and J.P. Morgan Securities LLC, as representative of the initial purchasers (Incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed December 21, 2016)
4.9	Indenture, dated as of December 4, 2017, between Starwood Property Trust, Inc. and The Bank of New York Mellon, as trustee (including the form of Starwood Property Trust, Inc.’s 4.750% Senior Notes due 2025) (Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed December 4, 2017)
4.10	Registration Rights Agreement, dated as of December 4, 2017, between Starwood Property Trust, Inc. and J.P. Morgan Securities LLC, as representative of the initial purchasers (Incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed December 4, 2017)
4.11	Registration Rights Agreement, dated as of December 28, 2017, among Starwood Property Trust, Inc. and the persons listed on Schedule I thereto (Incorporated by reference to Exhibit 4.13 of the Company’s Annual Report on Form 10-K filed February 28, 2018)
4.12	Indenture, dated as of January 29, 2018, between Starwood Property Trust, Inc. and The Bank of New York Mellon, as trustee (including the form of Starwood Property Trust, Inc.’s 3.625% Senior Notes due 2021) (Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed January 29, 2018)
4.13	Registration Rights Agreement, dated as of January 29, 2018, between Starwood Property Trust, Inc. and J.P. Morgan Securities LLC, as representative of the initial purchasers (Incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed January 29, 2018)
4.14	Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
10.1	Registration Rights Agreement, dated August 17, 2009, among Starwood Property Trust, Inc., SPT Investment, LLC and SPT Management, LLC (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed November 16, 2009)
10.2	Management Agreement, dated August 17, 2009, among SPT Management, LLC and Starwood Property Trust, Inc. (Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed November 16, 2009)
10.3	Amendment No. 1, dated May 7, 2012, to Management Agreement, dated August 17, 2009, as amended, between Starwood Property Trust, Inc. and SPT Management, LLC (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed May 8, 2012)

192

Exhibit No.	Description
10.4	Amendment No. 2, dated December 4, 2014, to Management Agreement, dated August 17, 2009, as amended, between Starwood Property Trust, Inc. and SPT Management, LLC (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed December 5, 2014)
10.5	Amendment No. 3, dated August 4, 2016, to Management Agreement, dated August 17, 2009, as amended, between Starwood Property Trust, Inc. and SPT Management, LLC (Incorporated by reference to Exhibit 10.5 of the Company’s Annual Report on Form 10-K filed February 23, 2017)
10.6	Amendment No. 4, dated February 15, 2018 and effective as of December 28, 2017, to Management Agreement, dated August 17, 2009, as amended, between Starwood Property Trust, Inc. and SPT Management, LLC (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed February 22, 2018)
10.7	Co-Investment and Allocation Agreement, dated August 17, 2009, among Starwood Property Trust, Inc., SPT Management, LLC and Starwood Capital Group Global, L.P. (Incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q filed November 16, 2009)
10.8	Amendment No. 1, dated as of June 19, 2015, to the Co-Investment and Allocation Agreement, dated as of August 17, 2009, by and among Starwood Property Trust, Inc., SPT Management, LLC and Starwood Capital Group Global, L.P. (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed June 25, 2015)
10.9	Amendment No. 2, dated as of November 21, 2016, to the Co-Investment and Allocation Agreement, dated as of August 17, 2009, by and among Starwood Property Trust, Inc., SPT Management, LLC and Starwood Capital Group Global, L.P. (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed November 22, 2016)
10.10	Starwood Property Trust, Inc. 2017 Manager Equity Plan (Incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A filed March 31, 2017)*
10.11	Restricted Stock Unit Award Agreement (Starwood Property Trust, Inc. 2017 Manager Equity Plan) (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed November 8, 2019)*
10.12	Starwood Property Trust, Inc. 2017 Equity Plan (Incorporated by reference to Appendix B of the Company’s Definitive Proxy Statement on Schedule 14A filed March 31, 2017)*
10.13	Form of Restricted Stock Award Agreement for Independent Directors (Starwood Property Trust, Inc. 2017 Equity Plan) (Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed November 8, 2019)*
10.14	Form of Restricted Stock Award Agreement (Starwood Property Trust, Inc. 2017 Equity Plan) (Incorporated by reference to Exhibit 10.7 of the Company’s Quarterly Report on Form 10-Q filed May 8, 2019)*
10.15	Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, by and among Starwood Property Mortgage Sub-14, L.L.C., Starwood Property Mortgage Sub-14-A, L.L.C. and JPMorgan Chase Bank, National Association (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed December 16, 2015)

193

Exhibit No.	Description
10.16	First through Eighth Amendments to Uncommitted Master Repurchase Agreement by and among JPMorgan Chase Bank, National Association, Starwood Property Mortgage Sub-14, L.L.C., Starwood Property Mortgage Sub-14-A, L.L.C., Starwood Mortgage Funding VI LLC and SPT CA Fundings 2, LLC
10.17	Form of Indemnification Agreement for Directors and Officers (Incorporated by reference to Exhibit 10.23 of the Company’s Annual Report on Form 10-K filed February 25, 2016)*
10.18	Tax Protection Agreement, dated as of December 28, 2017, among SPT Dolphin Intermediate LLC, SPT Dolphin Parent LLC and the persons listed on Annex A thereto (Incorporated by reference to Exhibit 10.17 of the Company’s Annual Report on Form 10-K filed February 28, 2018)
10.19	Amended and Restated Advances, Collateral Pledge and Security Agreement, dated as of July 7, 2017, between the Federal Home Loan Bank of Chicago (“FHLB”) and Prospect Mortgage Insurance, LLC (“PMI”) (the “Amended and Restated Advances, Collateral Pledge and Security Agreement”) (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed May 8, 2019)
10.20	Supplement to Amended and Restated Advances, Collateral Pledge and Security Agreement, dated as of July 7, 2017, among PMI, SMRF Trust III (the “SMRF Trust III”), SMRF Trust III-A (“SMRF Trust III-A”, and together with SMRF Trust III, the “Trusts”), Wilmington Trust, National Association, solely as Delaware Trustee of the Trusts, and the FHLB (the “Supplement to Amended and Restated Advances, Collateral Pledge and Security Agreement”) (Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed May 8, 2019)
10.21	Letter Agreement, dated March 15, 2019, between PMI and FHLB supplementing the Amended and Restated Advances, Collateral Pledge and Security Agreement dated July 7, 2017 and the Supplement to Amended and Restated Advances, Collateral Pledge and Security Agreement dated July 7, 2017, between PMI and the FHLB (Incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q filed May 8, 2019)
10.22	Sixth Amended and Restated Master Repurchase and Securities Contract, dated as of April 10, 2019, among Starwood Property Mortgage Sub-2, L.L.C., Starwood Property Mortgage Sub-2-A, L.L.C. and SPT CA Fundings 2, LLC, as sellers, and Wells Fargo, National Association, as buyer (Incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q filed May 8, 2019)
10.23	Indenture, dated as of August 15, 2019, by and among STWD 2019-FL1, Ltd., as Issuer, STWD 2019-FL1, LLC, as Co-Issuer, Starwood Property Mortgage, L.L.C., as Advancing Agent, Wilmington Trust, National Association, as Trustee, and Wells Fargo Bank, National Association, as Note Administrator and Custodian (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed August 21, 2019)
10.24	Second Amended and Restated Guaranty, dated November 22, 2019, made by Starwood Property Trust, Inc. in favor of the FHLB
10.25	Fifth Amended and Restated Guarantee and Security Agreement, dated as of April 10, 2019, made by Starwood Property Trust, Inc. in favor of Wells Fargo Bank, National Association

194

Exhibit No.	Description
10.26	Guarantee Agreement and First and Second Amendments thereto made by Starwood Property Trust, Inc. in favor of JPMorgan Chase Bank, National Association
21.1	Subsidiaries of the Registrant
23.1	Consent of Independent Registered Public Accounting Firm
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Indicates management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary.

None.

195

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Starwood Property Trust, Inc.
Date: February 25, 2020
	By:	/s/ BARRY S. STERNLICHT Barry S. Sternlicht Chief Executive Officer and Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

		​ Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
Date: February 25, 2020	By:	/s/ BARRY S. STERNLICHT Barry S. Sternlicht Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
Date: February 25, 2020	By:	/s/ RINA PANIRY Rina Paniry Chief Financial Officer, Treasurer, Chief Accounting Officer and Principal Financial Officer
Date: February 25, 2020	By:	/s/ RICHARD D. BRONSON Richard D. Bronson Director
Date: February 25, 2020	By:	/s/ JEFFREY G. DISHNER Jeffrey G. Dishner Director
Date: February 25, 2020	By:	/s/ CAMILLE J. DOUGLAS Camille J. Douglas Director
Date: February 25, 2020	By:	/s/ SOLOMON J. KUMIN Solomon J. Kumin Director
Date: February 25, 2020	By:	/s/ FRED S. RIDLEY Fred S. Ridley Director
Date: February 25, 2020	By:	/s/ STRAUSS ZELNICK Strauss Zelnick Director

196

EX-4.14

Exhibit 4.14

DESCRIPTION OF SECURITIES REGISTERED PURSUANT TO

SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

Starwood Property Trust, Inc. has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: our common stock.

Unless otherwise indicated or the context requires otherwise, references to “our company,” “we,” “us” and “our” mean Starwood Property Trust, Inc. and its consolidated subsidiaries.

Description of Capital Stock

The following description of our capital stock is a summary and does not purport to be complete. It is subject to, and qualified in its entirety by reference to our charter and bylaws, which are on file with the Securities and Exchange Commission as exhibits to our periodic reports and are incorporated herein by reference.  We encourage you to read our charter and bylaws and the other documents we refer to for additional information.

General

Our charter provides that we may issue up to 500,000,000 shares of common stock, $0.01 par value per share, and 100,000,000 shares of preferred stock, $0.01 par value per share. Our charter authorizes our board of directors to amend our charter to increase or decrease the aggregate number of authorized shares of stock or the number of shares of stock of any class or series without stockholder approval.

Under Maryland law, stockholders are not personally liable for the debts or obligations of a corporation solely as a result of their status as stockholders.

Our common stock is listed on the New York Stock Exchange under the trading symbol “STWD.”

Shares of Common Stock

Subject to the preferential rights of any other class or series of shares of stock and to the restrictions on ownership and transfer of shares of stock contained in our charter, holders of shares of common stock are entitled to receive dividends on such shares of common stock out of assets legally available therefor if, as and when authorized by our board of directors and declared by us, and the holders of our shares of common stock are entitled to share ratably in our assets legally available for distribution to our stockholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all our known debts and liabilities.

 The shares of common stock do not represent any interest in or obligation of Starwood Capital Group or any of its affiliates. Further, the shares are not a deposit or other obligation of any bank, are not an insurance policy of any insurance company and are not insured or guaranteed by the Federal Deposit Insurance Corporation, any other governmental agency or any insurance company. The shares of common stock do not benefit from any insurance guarantee association coverage or any similar protection.

 Subject to the provisions of our charter regarding the restrictions on ownership and transfer of shares of stock and except as may otherwise be specified in the terms of any class or series of shares of common stock, each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors, and, except as provided with respect to any other class or series of shares of stock, the holders of such shares of common stock will possess the exclusive voting power. There is no cumulative voting in the election of our board of directors, which means that the holders of a majority of the outstanding shares of common stock can elect all of the directors then standing for election, and the holders of the remaining shares will not be able to elect any directors.

1

Holders of shares of common stock have no preference, conversion, exchange, sinking fund or redemption rights, have no preemptive rights to subscribe for any securities of our company and generally have no appraisal rights. Subject to the provisions of our charter regarding the restrictions on ownership and transfer of shares of stock, shares of common stock have equal dividend, liquidation and other rights.

Shares of Preferred Stock

Our board of directors may authorize the issuance of shares of preferred stock in one or more series and may determine, with respect to any such series, the rights, preferences, privileges and restrictions of the preferred stock, including distribution rights, conversion rights, voting rights, restrictions on ownership and transfer, redemption rights and terms of redemptions, and liquidation preferences.  The issuance of preferred stock could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders. In addition, any preferred stock that we issue could rank senior to our common stock with respect to the payment of distributions, in which case we could not pay any distributions on our common stock until full distributions have been paid with respect to such preferred stock.

No shares of preferred stock are currently outstanding.

Power to Reclassify Our Unissued Shares of Stock

Our charter authorizes our board of directors to classify and reclassify any unissued shares of common or preferred stock into other classes or series of shares of stock. Prior to issuance of shares of each class or series, our board of directors is required by Maryland law and by our charter to set, subject to our charter restrictions on ownership and transfer of shares of stock, the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Therefore, our board of directors could authorize the issuance of shares of common or preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for our shares of common stock or otherwise be in the best interest of our stockholders.

Power to Increase or Decrease Authorized Shares of Common Stock and Issue Additional Shares of Common and Preferred Stock

We believe that the power of our board of directors to amend our charter to increase or decrease the number of authorized shares of stock, to issue additional authorized but unissued shares of common or preferred stock and to classify or reclassify unissued shares of common or preferred stock and thereafter to issue such classified or reclassified shares of stock provides us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise. The additional classes or series, as well as the shares of common stock, will be available for issuance without further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Although our board of directors does not intend to do so, it could authorize us to issue a class or series that could, depending upon the terms of the particular class or series, delay, defer or prevent a change in control or other transaction that might involve a premium price for our shares of common stock or otherwise be in the best interest of our stockholders.

Restrictions on Ownership and Transfer

In order for us to qualify as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), our shares of stock must be owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made).

2

Our charter contains restrictions on the ownership and transfer of our shares of common stock and other outstanding shares of stock. The relevant sections of our charter provide that, subject to the exceptions described below, no person or entity may own, or be deemed to own, by virtue of the applicable constructive ownership provisions of the Internal Revenue Code, more than 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock (the common stock ownership limit), or 9.8% by value or number of shares, whichever is more restrictive, of our outstanding capital stock (the aggregate share ownership limit). We refer to the common stock ownership limit and the aggregate share ownership limit collectively as the “ownership limits.” A person or entity that becomes subject to the ownership limits by virtue of a violative transfer that results in a transfer to a trust, as set forth below, is referred to as a “purported beneficial transferee” if, had the violative transfer been effective, the person or entity would have been a record owner and beneficial owner or solely a beneficial owner of our shares of stock, or is referred to as a “purported record transferee” if, had the violative transfer been effective, the person or entity would have been solely a record owner of our shares of stock.

The constructive ownership rules under the Internal Revenue Code are complex and may cause shares of stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock, or 9.8% by value or number of shares, whichever is more restrictive, of our outstanding capital stock (or the acquisition of an interest in an entity that owns, actually or constructively, our shares of stock by an individual or entity), could, nevertheless, cause that individual or entity, or another individual or entity, to own constructively in excess of 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock, or 9.8% by value or number of shares, whichever is more restrictive, of our outstanding capital stock and thereby subject the shares of common stock or total shares of stock to the applicable ownership limits.

Our board of directors may, in its sole discretion, exempt (prospectively or retroactively) a person from the above-referenced ownership limits. However, our board of directors may not exempt any person whose actual or constructive ownership of our outstanding stock would result in our being “closely held” within the meaning of Section 856(h) of the Internal Revenue Code or otherwise would result in our failing to qualify as a REIT. In order to be considered by our board of directors for exemption, a person also must not own, actually or constructively, an interest in one of our tenants (or a tenant of any entity which we own or control) that would cause us to own, actually or constructively, more than a 9.9% interest in the tenant. The person seeking an exemption must represent to the satisfaction of our board of directors that it will not violate these two restrictions. The person also must agree that any violation or attempted violation of these restrictions will result in the automatic transfer to a trust of the shares of stock causing the violation. As a condition of its waiver, our board of directors may require an opinion of counsel or an Internal Revenue Service ruling satisfactory to our board of directors with respect to our qualification as a REIT.

In connection with the waiver of the ownership limits or at any other time, our board of directors may from time to time increase or decrease the ownership limits for all other persons and entities; provided, however, that any decrease may be made only prospectively as to existing holders (other than a decrease as a result of a retroactive change in existing law, in which case the decrease will be effective immediately); and provided, further, that the ownership limits may not be increased if, after giving effect to such increase, five or fewer individuals could own or constructively own in the aggregate, more than 49.9% in value of the shares then outstanding. Prior to the modification of the ownership limits, our board of directors may require such opinions of counsel, affidavits, undertakings or agreements as it may deem necessary or advisable in order to determine or ensure our qualification as a REIT. Reduced ownership limits will not apply to any person or entity whose percentage ownership in our shares of common stock or total shares of stock, as applicable, is in excess of such decreased ownership limits until such time as such person’s or entity’s percentage of our shares of common stock or total shares of stock, as applicable, equals or falls below the decreased ownership limits, but any further acquisition of our shares of common stock or total shares of stock, as applicable, in excess of such percentage ownership of our shares of common stock or total shares of stock will be in violation of the ownership limits.

3

Our charter provisions further prohibit:

any person from beneficially or constructively owning, applying certain attribution rules of the Internal Revenue Code, our shares of stock that would result in our being “closely held” under Section 856(h) of the Internal Revenue Code or otherwise cause us to fail to qualify as a REIT; and

any person from transferring our shares of stock if such transfer would result in our shares of stock being owned by fewer than 100 persons (determined without reference to any rules of attribution).

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of our shares of stock that will or may violate any of the foregoing restrictions on transferability and ownership will be required to immediately give written notice to us, or, in the case of such proposed or attempted transaction, give at least 15 days’ prior written notice to us and provide us with such other information as we may request in order to determine the effect of such transfer on our qualification as a REIT.

The foregoing provisions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT.

Pursuant to our charter, if any transfer of our shares of stock would result in our shares of stock being owned by fewer than 100 persons, such transfer will be null and void and the intended transferee will acquire no rights in such shares. In addition, if any purported transfer of our shares of stock or any other event would otherwise result in any person violating the ownership limits or such other limit established by our board of directors or in our being “closely held” under Section 856(h) of the Internal Revenue Code or otherwise failing to qualify as a REIT, then that number of shares (rounded up to the nearest whole share) that would cause us to violate such restrictions will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us and the intended transferee will acquire no rights in such shares. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the purported record transferee, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to a trustee (the “charitable trustee”) upon demand for distribution to the beneficiary by the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limits or our being “closely held” under Section 856(h) of the Internal Revenue Code or otherwise failing to qualify as a REIT, then our charter provides that the transfer of the shares will be void.

Shares of stock transferred to the charitable trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (1) the price paid by the purported record transferee for the shares (or, in the case of a devise or gift, the last reported sales price reported on the New York Stock Exchange (or other applicable exchange) on the day of the event which resulted in the transfer of such shares of stock to the trust) and (2) the market price on the date we, or our designee, accepts such offer. We have the right to accept such offer until the charitable trustee has sold the shares of stock held in the trust pursuant to the clauses discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, the charitable trustee must distribute the net proceeds of the sale to the purported record transferee and any dividends or other distributions held by the charitable trustee with respect to such shares of stock will be paid to the charitable beneficiary.

If we do not buy the shares, the charitable trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the charitable trustee who could own the shares without violating the ownership limits. After that, the charitable trustee must distribute to the purported record transferee an amount equal to the lesser of (1) the price paid by the purported record transferee for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares for value (for example, in the case of a gift, devise or other transaction), the last reported sales price reported on the New York Stock Exchange (or other applicable exchange) on the day of the event which resulted in the transfer of such shares of stock to the trust) and (2) the sales proceeds (net of commissions and other expenses of sale) received by the charitable trustee for the shares held in the trust. Any net sales proceeds in excess of the amount payable to the purported record transferee will be immediately paid to the beneficiary, together with any dividends or other distributions thereon. In addition, if prior to discovery by us that shares of stock have been transferred to a trust, such shares of stock are sold by a purported record transferee, then such shares will be deemed to have been sold on behalf of the trust and to the extent that the purported record transferee received an amount for or in respect of such

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shares that exceeds the amount that such purported record transferee was entitled to receive, such excess amount will be paid to the charitable trustee upon demand. The purported beneficial transferee or purported record transferee has no rights in the shares held by the charitable trustee.

The charitable trustee will be designated by us and will be unaffiliated with us and with any purported record transferee or purported beneficial transferee. Prior to the sale of any shares by the trust, the charitable trustee will receive, in trust for the beneficiary, all dividends and other distributions paid by us with respect to the shares held in trust and may also exercise all voting rights with respect to the shares held in trust. These rights will be exercised for the exclusive benefit of the charitable beneficiary. Any dividend or other distribution paid prior to our discovery that shares of stock have been transferred to the trust will be paid by the recipient to the charitable trustee upon demand. Any dividend or other distribution authorized but unpaid will be paid when due to the charitable trustee.

Subject to Maryland law, effective as of the date that the shares have been transferred to the trust, the charitable trustee will have the authority, at the charitable trustee’s sole discretion:

to rescind as void any vote cast by a purported record transferee prior to our discovery that the shares have been transferred to the trust; and

to recast the vote in accordance with the desires of the charitable trustee acting for the benefit of the beneficiary of the trust.

However, if we have already taken irreversible corporate action, then the charitable trustee may not rescind and recast the vote.

In addition, if our board of directors or other permitted designees determine in good faith that a transfer or other event would violate the restrictions on ownership and transfer of our shares of stock set forth in our charter, our board of directors or other permitted designees will take such action as it deems or they deem advisable to refuse to give effect to or to prevent such transfer or other event, including, but not limited to, causing us to redeem the shares of stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer.

Every owner of more than 5% (or such lower percentage as required by the Internal Revenue Code or the regulations promulgated thereunder) of our stock, within 30 days after the end of each taxable year, is required to give us written notice, stating the name and address of such owner, the number of shares of each class and series of our stock beneficially owned and a description of the manner in which such shares are held. Each such owner shall provide us with such additional information as we may request in order to determine the effect, if any, of such beneficial ownership on our status as a REIT and to ensure compliance with the ownership limits. In addition, each stockholder shall, upon demand, be required to provide us with such information as we may request, in good faith, in order to determine our status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the ownership limits.

These ownership limits could delay, defer or prevent a transaction or a change in control that might involve a premium price for the common stock or otherwise be in the best interest of the stockholders.

Transfer Agent and Registrar

The transfer agent and registrar for our shares of common stock is Computershare Trust Company, N.A.

Certain Provisions of the Maryland General Corporation Law

and our Charter and Bylaws

The following description of certain provisions of Maryland law and our charter and bylaws is only a summary. For a complete description, we refer you to the Maryland General Corporation Law (the “MGCL”), our

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charter and our bylaws.  Copies of our charter and bylaws are on file with the Securities and Exchange Commission as exhibits to our periodic reports and are incorporated herein by reference.

Our Board of Directors

Our bylaws and charter provide that the number of directors we have may be established by our board of directors but may not be more than 15. Our charter and bylaws currently provide that except as may be provided by our board of directors in setting the terms of any class or series of preferred stock, any vacancy on our board of directors for any reason other than an increase in the number of directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum. Any vacancy in the number of directors created by an increase in the number of directors may be filled by a majority vote of the entire board of directors. Any individual elected to fill such vacancy will serve until the next annual meeting of stockholders and until a successor is duly elected and qualifies.

Pursuant to our charter, each of our directors is elected by our common stockholders to serve until the next annual meeting and until his or her successor is duly elected and qualifies. Holders of shares of common stock will have no right to cumulative voting in the election of directors. Consequently, at each annual meeting of stockholders, the holders of a majority of the shares of common stock entitled to vote will be able to elect all of our directors.

Removal of Directors

Our charter provides that subject to the rights of holders of one or more classes or series of preferred stock to elect or remove one or more directors, a director may be removed but only with cause and then only by the affirmative vote of at least two-thirds of the votes of common stockholders entitled to be cast generally in the election of directors. Cause means, with respect to any particular director, a conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to us through bad faith or active and deliberate dishonesty. This provision, when coupled with the exclusive power of our board of directors to fill vacancies on our board of directors, precludes stockholders from (1) removing incumbent directors except upon a substantial affirmative vote and with cause and (2) filling the vacancies created by such removal with their own nominees.

Business Combinations

Under the MGCL, certain “business combinations” (including a merger, consolidation, share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and an interested stockholder (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s voting stock or an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation) or an affiliate of such an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Thereafter, any such business combination must be recommended by the board of directors of such corporation and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding voting shares of stock of the corporation and (2) two-thirds of the votes entitled to be cast by holders of voting shares of stock of the corporation other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder, unless, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. A person is not an interested stockholder under the statute if our board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. Our board of directors may provide that its approval is subject to compliance with any terms and conditions determined by it.

These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by a board of directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our board of directors has by resolution exempted business combinations between us and any

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person. Consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between us and any person described above. As a result, any person described above may be able to enter into business combinations with us that may not be in the best interest of our stockholders without compliance by our company with the supermajority vote requirements and other provisions of the statute.

Should our board of directors opt back into the statute or otherwise fail to approve a business combination, the business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

Control Share Acquisitions

The MGCL provides that “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights except to the extent approved at a special meeting of stockholders by the affirmative vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock in a corporation in respect of which any of the following persons is entitled to exercise or direct the exercise of the voting power of such shares in the election of directors: (1) a person who makes or proposes to make a control share acquisition; (2) an officer of the corporation; or (3) an employee of the corporation who is also a director of the corporation. “Control shares” are voting shares of stock which, if aggregated with all other such shares of stock previously acquired by the acquirer, or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power: (A) one-tenth or more but less than one-third; (B) one-third or more but less than a majority; or (C) a majority or more of all voting power. Control shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses and making an “acquiring person statement” as described in the MGCL), may compel our board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an “acquiring person statement” as required by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or of any meeting of stockholders at which the voting rights of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

The control share acquisition statute does not apply to (1) shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (2) acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares of stock. There is no assurance that such provision will not be amended or eliminated at any time in the future.

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Subtitle 8

Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Securities Exchange Act of 1934, as amended, and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions:

a classified board;

a two-thirds vote requirement for removing a director;

a requirement that the number of directors be fixed only by vote of the directors;

a requirement that a vacancy on its board be filled only by the remaining directors in office and for the remainder of the full term of the class of directors in which the vacancy occurred; and

a majority requirement for the calling of a special meeting of stockholders.

Through provisions in our charter and bylaws unrelated to Subtitle 8, we already (1) require the affirmative vote of the holders of not less than two-thirds of all of the votes entitled to be cast on the matter for the removal of any director from our board, which removal will be allowed only for cause, (2) vest in our board the exclusive power to fix the number of directorships and (3) require, unless called by our chairman of the board, chief executive officer or president or our board of directors, the written request of stockholders of not less than a majority of all votes entitled to be cast at such a meeting to call a special meeting.

Meetings of Stockholders

Pursuant to our bylaws, a meeting of our stockholders for the election of directors and the transaction of any business will be held annually during the month of May on a date and at the time set by our board of directors (or such other date and time as the board of directors may determine). In addition, the chairman of our board of directors, chief executive officer, president or board of directors may call a special meeting of our stockholders. Subject to the provisions of our bylaws, a special meeting of our stockholders will also be called by our Secretary upon the written request of the stockholders entitled to cast not less than a majority of all the votes entitled to be cast at the meeting.

Extraordinary Transactions

Under the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, merge with another entity or engage in similar transactions outside the ordinary course of business unless approved by the affirmative vote of stockholders holding at least two-thirds of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. Our charter provides that these matters (other than the removal of directors for cause and an amendment to our charter related to the removal of directors for cause) may be approved by a majority of all of the votes entitled to be cast on the matter. Our charter also provides that we may sell or transfer all or substantially all of our assets if approved by our board of directors and by the affirmative vote of a majority of all the votes entitled to be cast on the matter.

Amendment to Our Charter and Bylaws

Except for amendments related to removal of directors (which must be declared advisable by our board of directors and approved by the affirmative vote of the holders of not less than two-thirds of all the votes entitled to be cast on the matter), and amendments increasing and decreasing the aggregate number of authorized shares of stock or the number of shares of stock of any class or series (which may be approved by our board of directors without stockholder approval), our charter may be amended only if the amendment is declared advisable by our board of directors and approved by the affirmative vote of the holders of not less than a majority of all of the votes entitled to be cast on the matter.

Our board of directors has the exclusive power to adopt, alter or repeal any provision of our bylaws and to make new bylaws.

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Dissolution of Our Company

The dissolution of our company must be declared advisable by a majority of our entire board of directors and approved by the affirmative vote of the holders of not less than a majority of all of the votes entitled to be cast on the matter.

Advance Notice of Director Nominations and New Business

Our bylaws provide that, with respect to an annual meeting of stockholders, nominations of individuals for election to our board of directors and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by or at the direction of our board of directors or (3) by a stockholder who is a stockholder of record both at the time of giving the notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting and who has complied with the advance notice provisions set forth in our bylaws.

With respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting. Nominations of individuals for election to our board of directors may be made only (1) pursuant to our notice of the meeting, (2) by or at the direction of our board of directors or (3) provided that our board of directors has determined that directors will be elected at such meeting, by a stockholder who is a stockholder of record both at the time of giving the notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting and who has complied with the advance notice provisions set forth in our bylaws.

Anti-takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws

Our charter and bylaws and Maryland law contain provisions that may delay, defer or prevent a change in control or other transaction that might involve a premium price for our shares of common stock or otherwise be in the best interests of our stockholders, including business combination provisions, restrictions on ownership and transfer of our stock and advance notice requirements for director nominations and stockholder proposals. Likewise, if the provision in the bylaws opting out of the control share acquisition provisions of the MGCL were rescinded or if we were to opt into the classified board or other provisions of Subtitle 8, these provisions of the MGCL could have similar anti-takeover effects.

Indemnification and Limitation of Directors’ and Officers’ Liability

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our charter contains such a provision that eliminates such liability to the maximum extent permitted by Maryland law.

The MGCL requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he is made or threatened to be made a party by reason of his service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that:

the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty;

the director or officer actually received an improper personal benefit in money, property or services; or

in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

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However, under the MGCL, a Maryland corporation may not indemnify a director or officer in a suit by or in the right of the corporation in which the director or officer was adjudged liable on the basis that personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by us or in our right, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.

In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation's receipt of:

a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and

a written undertaking by the director or officer or on the director’s or officer’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director or officer did not meet the standard of conduct.

Our charter authorizes us to obligate ourselves and our bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to:

any present or former director or officer who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity; or

any individual who, while a director or officer of our company and at our request, serves or has served another corporation, REIT, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee of such corporation, REIT, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity.

Our charter and bylaws also permit us to indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described above and to any personnel or agent of our company or a predecessor of our company.

REIT Qualification

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without approval of our stockholders, if it determines that it is no longer in our best interests to continue to qualify as a REIT.

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EX-10.16

Exhibit 10.16

FIRST AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

THIS FIRST AMENDMENT TO UNCOMMITTED MASTER  REPURCHASE AGREEMENT (this “Amendment”), dated as of March 31, 2016, by and between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“Buyer”) and STARWOOD PROPERTY MORTGAGE SUB-14,L.L.C. and STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C., each a Delaware limited liability company (individually and/or collectively as the context may require, “Seller”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Master Repurchase Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Seller and Buyer have entered into that certain Uncommitted Master Repurchase Agreement, dated as of December 10, 2015 (the “Master Repurchase Agreement”); and

WHEREAS, Seller and Buyer wish to modify certain terms and provisions of the Master Repurchase Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1.    Amendments to Master Repurchase Agreement. The Master Repurchase Agreement is hereby amended as follows:

(a)    The following definitions are hereby added, in alphabetical order, to Article 2 of the Master Repurchase Agreement:

“U.K. Facility Agreement” shall mean that certain Master Repurchase Agreement, dated as of October 1, 2013, by and between JPMorgan Chase Bank, National Association, a national banking association organized under the laws of the United States acting through its London Branch, J.P. Morgan Europe Limited and Starwood Property Mortgage Sub-11, L.L.C., a Delaware limited liability company.

“U.K. Facility Seller” shall mean Starwood Property Mortgage Sub-11, L.L.C., a Delaware limited liability company.

“U.K. Facility Transaction Documents” shall mean “Transaction Documents” as defined in the U.K. Facility Agreement.

“U.K. Facility Purchased Asset” shall mean “Purchased Asset” as defined in the U.K. Facility Agreement.

“U.K. Facility Guarantor” shall mean Starwood Property Trust, Inc., a Maryland corporation.

“U.K. Facility Pledgor” shall mean Starwood Property Mortgage, L.L.C., a Delaware limited liability company.

(b)    Article 11(w)(xi) of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“except in connection with the U.K. Facility Transaction Documents, assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets to secure the obligations of any other Person or hold out its credit or assets as being available to satisfy the obligations of any other Person or enter into any transaction with an Affiliate of Seller except on commercially reasonable terms similar to those available to unaffiliated parties in an arm’s length transaction;”

(c)    Article 12(a)(xxviii) of the Master Repurchase Agreement is hereby amended by deleting the period at the end of said Article and replacing same with: “; and” and adding the following to the Master Repurchase Agreement as Article 12(a)(xxix):

“an “Event of Default” (as defined in the U.K. Facility Agreement) occurs under the U.K. Facility Agreement or any related U.K. Facility Transaction Documents on the part of U.K. Facility Seller, U.K. Facility Guarantor, or U.K. Facility Pledgor, as the case may be, that is not cured within any applicable cure period.”

(d)    Article 12(b)(iii) of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

Upon the occurrence and during the continuance of an Event of Default with respect to any Seller, Buyer may (A) immediately sell on a servicing released basis, at a public or private sale in a commercially reasonable manner and at such price or prices as Buyer may deem satisfactory any or all of the Purchased Assets and/or the U.K. Facility Purchased Asset, and/or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Assets and/or the U.K. Facility Purchased Asset, to give Sellers credit for such Purchased Assets and/or give U.K. Facility Seller credit for such U.K. Facility Purchased Asset in an amount equal to the Market Value of such Purchased Assets (provided that, solely for purposes of this Article 12(b)(iii)(B), Buyer’s determination of Market Value shall not take into consideration the second sentence of the definition thereof) and/or the Market Value (as defined in the U.K. Facility Agreement) of the U.K. Facility Purchased Asset against the aggregate unpaid Repurchase Price for such Purchased Assets or the U.K. Facility Purchased Asset, as applicable, and any other amounts owing by Sellers under the Transaction Documents. The proceeds of any disposition of Purchased Assets and/or the U.K. Facility Purchased Asset effected pursuant to this Article 12(b)(iii) shall be applied (without duplication of amounts applied under Article 12(b)(iii) of the U.K. Facility Agreement, (v) first, to the actual out-of-pocket costs and expenses incurred by Buyer in connection with Sellers’ default; (w) second, to actual, out-of-pocket damages incurred by Buyer in connection with Sellers’ default, (x) third, to the Repurchase Price and

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Repurchase Price of the U.K. Facility Purchased Asset; (y) fourth, to any Breakage Costs; and (z) fifth, to return any excess to Sellers.”

(e)    Article 12(b)(iv) of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“The parties recognize that it may not be possible to purchase or sell all of the Purchased Assets and/or the U.K. Facility Purchased Asset on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets or U.K. Facility Purchased Asset, as applicable, may not be liquid. In view of the nature of the Purchased Assets and the U.K. Facility Purchased Asset, the parties agree that liquidation of a Transaction or the Purchased Assets and/or the U.K. Facility Purchased Asset does not require a public purchase or sale and that a good faith private purchase or sale shall be deemed to have been made in a commercially reasonable manner. Accordingly, Buyer may elect, in its sole discretion, the time and manner of liquidating any Purchased Assets and/or the U.K. Facility Purchased Asset, and nothing contained herein shall (A) obligate Buyer to liquidate any Purchased Assets and/or the U.K. Facility Purchased Asset on the occurrence and during the continuance of an Event of Default or to liquidate all of the Purchased Assets and/or the U.K. Facility Purchased Asset in the same manner or on the same Business Day or (B) constitute a waiver of any right or remedy of Buyer.”

(f)    Article 12(b)(vi) of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“Buyer shall have, in addition to its rights and remedies under the Transaction Documents, all of the rights and remedies provided by applicable federal, state, foreign (where relevant), and local laws (including, without limitation, if the Transactions are recharacterized as secured financings, the rights and remedies of a secured party under the UCC of the State of New York, to the extent that the UCC is applicable, and the right to offset any mutual debt and claim), in equity, and under any other agreement between Buyer and Sellers. Without limiting the generality of the foregoing, without duplication of amounts set off under Article 12(b)(vi) of the U.K. Facility Agreement, Buyer shall be entitled to set off the proceeds of the liquidation of the Purchased Assets and/or the U.K. Facility Purchased Asset against all of each Seller’s obligations to Buyer under this Agreement, without prejudice to Buyer’s right to recover any deficiency.”

(g)    Annex I to the Master Repurchase Agreement is hereby modified by deleting all references to “Cadwalader Wickersham & Taft LLP” and substituting the following therefor:

“and

Prior to May 1, 2016:

Paul Hastings LLP

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75 East 55th Street
New York, New York 10022
Attention:	John A. Cahill, Esq.
Telephone:	(212) 318-6260
Telecopy:	(212) 230-7682
From and after to May 1, 2016:
Paul Hastings LLP
200 Park Avenue
New York, New York 10166
Attention:	John A. Cahill, Esq.
Telephone:	(212) 318-6260
Telecopy:	(212) 230-7682”

2.    Effectiveness. The effectiveness of this Amendment is subject to receipt by Buyer of the following:

(a)    Amendment. This Amendment, duly executed and delivered by Seller and Buyer and acknowledged by Guarantor; and

(b)    Fees. Payment by Seller of the actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with this Amendment and the transactions contemplated hereby.

3.    Continuing Effect; Reaffirmation of Guarantee Agreement. As amended by this Amendment, all terms, covenants and provisions of the Master Repurchase Agreement are ratified and confirmed and shall remain in full force and effect. In addition, all terms, covenants and provisions of the Guarantee Agreement are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Buyer, and Guarantor hereby consents, acknowledges and agrees to the modifications set forth in this Amendment. By its joinder below, Guarantor hereby reaffirms its obligations under the Guarantee Agreement in their entirety.

4.    Binding Effect; No Partnership; Counterparts. The provisions of the Master Repurchase Agreement, as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment in Portable Document Format (PDF) by email or facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.

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5.    Further Agreements. Seller agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Buyer and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

6.    Governing Law. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

7.    Headings. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

8.    References to Transaction Documents. All references to the Master Repurchase Agreement in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement as amended hereby, unless the context expressly requires otherwise.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the day first written above.

BUYER:
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, a national banking association
By:	/s/ Shyam Dawada
Name:	Shyam Dawada
Title:	Vice President

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

Signature Page to First Amendment to Uncommitted Master Repurchase Agreement

SELLER:
STARWOOD PROPERTY MORTGAGE SUB-
14, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD PROPERTY MORTGAGE SUB-
14-A, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

Signature Page to First Amendment to Uncommitted Master Repurchase Agreement

JOINDER AGREED AND ACKNOWLEDGED:
GUARANTOR:
STARWOOD PROPERTY TRUST, INC., a
Maryland corporation
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to First Amendment to Uncommitted Master Repurchase Agreement

SECOND AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

SECOND AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

THIS SECOND AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT (this “Amendment”), dated as of April 25, 2016, by and between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“Buyer”) and STARWOOD PROPERTY  MORTGAGE  SUB-14,  L.L.C.  and  STARWOOD  PROPERTY  MORTGAGE SUB-14-A, L.L.C., each a Delaware limited liability company (collectively, “Original Seller”) and STARWOOD MORTGAGE FUNDING VI LLC, a Delaware limited liability company (“Funding VI Seller”; together with Original Seller, individually and/or collectively as the context may require, “Seller”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Master Repurchase Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Original Seller and Buyer have entered into that certain Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016 (the “Master Repurchase Agreement”);

WHEREAS, pursuant to that certain Seller Joinder Agreement, dated as of the date hereof, Funding VI Seller has become a party to the Master Repurchase Agreement, the Fee Letter and each other applicable Transaction Document as a seller thereunder; and

WHEREAS, Seller and Buyer wish to modify certain terms and provisions of the Master Repurchase Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1.    Amendments to Master Repurchase Agreement. The Master Repurchase Agreement is hereby amended as follows:

(a)    The following definitions contained in Article 2 of the Master Repurchase Agreement are hereby modified as follows:

(i)    The definition of “Depository” is hereby deleted in its entirety and replaced with the following:

““Depository” shall mean, individually or collectively, as the context may require, (i) with respect to the Sub-14 Depository Account, Wells Fargo Bank, National Association and (ii) with respect to the Funding VI Depository Account, U.S. Bank, National Association, or any successor to either such bank appointed by Buyer in its sole discretion.”

(ii)    The definition of “Depository Account” is hereby deleted in its entirety and replaced with the following:

““Depository Account” shall have the meaning specified in Article 5(b).”

(iii)    The definition of “Depository Agreement” is hereby deleted in its entirety and replaced with the following:

““Depository Agreement” shall mean, individually or collectively, as the context may require, (i) that certain Deposit Account Control Agreement (Repo Collection Account), dated as of January 8, 2016 among Buyer, Original Seller and Wells Fargo Bank, National Association, relating to the Sub-14 Depository Account and (ii) that certain Deposit Account Control Agreement (Repo Collection Account), dated as of April 25, 2016, among Buyer, Funding VI Seller and U.S. Bank, National Association relating to the Funding VI Depository Account, as such agreements may be amended, modified and/or restated from time to time, and/or any replacement agreement to such agreements.”

(iv)    The definition of “Eligible Assets” is hereby modified by deleting the paragraph immediately following clause (v) in its entirety and replacing such paragraph with the following:

“Notwithstanding anything to the contrary contained in this Agreement, the following shall not be Eligible Assets for purposes of this Agreement: (i) non-performing loans; (ii) loans that are Defaulted Assets; (iii) construction loans or land loans, (iv) any Asset, where the purchase thereof would cause the aggregate of all Repurchase Prices to exceed the Maximum Facility Amount; (v) loans for which the applicable Appraisal is (a) not dated within three hundred sixty-four (364) days of the proposed Purchase Date or (b) not ordered by a “Financial Services Institution” as defined in the Interagency Appraisal and Evaluation Guidelines, (vi) any Asset, which may not be a Purchased Asset pursuant to any Requirement of Law due to a change in any Requirement of Law that affects the legal, regulatory or capital treatment of such Purchased Asset (other than any change in a Requirement of Law which permits such Purchased Asset to remain a Purchased Asset hereunder, so long as Sellers pay to Buyer such additional amounts as required pursuant to Articles 3(h),  (i),  (k) or (l), as applicable) or (vii) any Asset, where the purchase thereof would cause the aggregate of all Repurchases Prices of CMBS Purchased Assets to exceed the CMBS Purchased Asset Capacity.”

(v)    The definition of “Knowledge” is hereby deleted in its entirety and replaced with the following:

““Knowledge” shall mean, as of any date of determination, the then-current actual (as distinguished from imputed or constructive) knowledge of (i) Cary Carpenter, Andrew J. Sossen, Rina Paniry, Mark Cagley, Leslie K. Fairbanks or Lawrence A. Brown1 (or, if following the Closing Date any such individual

1 Subject to JPM review.

2

ceases to be an officer of, or in the employ of, Seller and/or Guarantor then such other individual or individuals employed in such capacity or in comparable capacity, or (ii) any asset manager of Manager or Guarantor that is responsible for the management of any applicable Purchased Asset.”

(vi)    The definition of “Maximum Facility Amount” is hereby deleted in its entirety and replaced with the following:

““Maximum Facility Amount” shall mean the Initial Facility Capacity, plus the sum of (i) the CMBS Purchased Asset Capacity and (ii) if and when the Additional Facility Capacity is made available pursuant to Article 3(dd), the Additional Facility Capacity.”

(vii)    The definition of “Pledge Agreement” is hereby deleted in its entirety and replaced with the following:

““Pledge Agreement” shall mean each Pledge Agreement, dated on or after the date hereof, made by the applicable Pledgor in favor of Buyer, pledging all of the related Seller’s Capital Stock to Buyer, in each case, as same may be amended, modified and/or restated from time to time in accordance therewith.”

(viii)    The definition of “Pledgor” is hereby amended by (A) deleting the word “and” after clause (a) thereof and replacing same with “,”; (B) deleting the period at the end of clause (b) and replacing same with “,” and (C) adding the following new clause (c) immediately after clause (b):

“(c) with respect to Starwood Mortgage Funding VI LLC, SMC.”

(ix)    The definition of “Repurchase Date” is hereby deleted in its entirety and replaced with the following:

““Repurchase Date” shall mean:

(a)    with respect to a Purchased Asset that is not a CMBS Purchased Asset, the earliest to occur of (i) any Early Repurchase Date for such Transaction; (ii) the date set forth in the applicable Confirmation; (iii) the Accelerated Repurchase Date; (iv) the Maturity Date; and (v) the date that is two (2) Business Days prior to the maturity date of such Purchased Asset (subject to extension, if applicable, in accordance with the related Purchased Asset Documents); provided, that, solely with respect to clause (v), the settlement with respect to such Repurchase Date and Purchased Asset may occur two (2) Business Days later, and

(b)    with respect to any Purchased Asset that is a CMBS Purchased Asset, the earliest to occur of: (i) any Early Repurchase Date for such Transaction; (ii) the date set forth in the applicable Confirmation; (iii) the Accelerated

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Repurchase Date; (iv) the Maturity Date; (v) for any CMBS Purchased Asset that is not a Kick-Out Loan, the one (1) year anniversary of the Purchase Date of such Purchased Asset as specified in the related Confirmation; and (vi) for any CMBS Purchased Asset that is a Kick-Out Loan, the date that is six (6) months following the date that Buyer has delivered notice to Seller that such Purchased Asset has been designated a Kick-Out Loan.”

(b)    The following definitions are hereby added, in alphabetical order, to Article 2 of the Master Repurchase Agreement:

“Buyer Securitization” shall have the meaning specified in the Fee Letter.

“Cashiering Activities”  shall have the meaning specified in Article 27(d) hereof.

“CMBS” shall mean mortgage pass-through certificates or other securities issued pursuant to a securitization of commercial real estate loans.

“CMBS Purchased Asset” shall mean any Purchased Asset that is a Senior Mortgage Loan and that is designated by Buyer and Seller as a CMBS Purchased Asset on the related Confirmation and that are eligible for a CMBS securitization.

“CMBS Purchased Asset Capacity” shall mean $200,000,000.

“Due Diligence Fee” shall have the meaning specified in the Fee Letter.

“Funding VI Depository Account” shall have the meaning specified in Article 5(b).

“Funding VI Purchased Assets” shall mean all Purchased Assets under Transactions to which Funding VI Seller is a party from time to time.

“Funding VI Seller” shall mean Starwood Mortgage Funding VI LLC, a Delaware limited liability company.

“Kick-Out Loan” shall mean any CMBS Purchased Asset not eligible for inclusion in a CMBS securitization, whether by reason of failure to satisfy legal or REMIC requirements or a Rating Agency or “B-piece” buyer determination.

“Qualified Subservicer” shall mean Northmarq, CBRE/GEMSA, Holliday Fenoglio, Jones Lang LaSalle, Grandbridge, Berkadia, Bernard Financial Corp. and NRC Group, Inc. (a/k/a Newmark).

“Securitization Window” shall have the meaning specified in the Fee Letter.

“SMC” shall mean Starwood Mortgage Capital LLC, a Delaware limited liability company.”

“Sub-14 Depository Account” shall mean the meaning specified in Article 5(b).

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“Sub-14 Seller” shall mean, individually and collectively as the context requires, Starwood Property Mortgage Sub-14, L.L.C., a Delaware limited liability company and Starwood Property Mortgage Sub-14-A, L.L.C., a Delaware limited liability company.

“Sub-14 Purchased Assets” shall mean all Purchased Assets under Transactions to which any Sub-14 Seller is a party from time to time.

(c)    Article 3(b)(iii)(H) of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“whether the Purchased Assets included in the Transaction are designated as CMBS Purchased Assets; and”

(d)    The following is hereby added to the Master Repurchase Agreement as Article 3(b)(iii)(I):

“any additional terms or conditions not inconsistent with this Agreement.”

(e)    The following is hereby added to the Master Repurchase Agreement as Article 3(b)(vi):

“To the extent applicable, Funding VI Seller shall have paid the Due Diligence Fee pursuant to the terms of Article 3(ff).”

(f)Article 3(z) of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“(i)   If at any time Buyer determines that Margin Excess exists for a related Purchased Asset, the applicable Seller may request that an Additional Advance be made in a specified amount up to such Margin Excess for such Purchased Asset; provided that Buyer has determined in its commercially reasonable discretion that all of the following conditions have been satisfied (collectively, the “Additional Advance Conditions”): (i) no Margin Deficit equal to or greater than the Minimum Transfer Amount shall exist, no Force Majeure Event, Default or Event of Default exists or would result from such Additional Advance, and no event shall have occurred that has, or would reasonably be expected to have, a Material Adverse Effect, and (ii) Seller has satisfied the conditions and obligations with respect to entering into a new Transaction set forth in clauses (G) and (J) of Article 3(b)(iv). Provided that the Additional Advance Conditions are satisfied, Buyer shall pay to the applicable Seller the additional Purchase Price requested by such Seller with respect to such Purchased Asset up to an amount not to exceed the available Margin Excess for such Purchased Asset on such Additional Advance Date within three (3) Business Days after the applicable Seller’s request therefor. Upon funding of any such Additional Advance, the Margin Excess (if any remains) shall be recalculated taking into account such increase in Purchase

5

Price. Notwithstanding the foregoing, in no event shall the amount of any Additional Advance transferred to a Seller be in an amount that would cause (a) the outstanding Purchase Price of the related Purchased Asset, after giving effect to such Additional Advance, to exceed the Maximum Purchase Price for such Purchased Asset as of the related Additional Advance Date, (b) the aggregate Repurchase Price of all Purchased Assets to exceed the Maximum Facility Amount or (c) the aggregate Repurchase Price for all CMBS Purchased Assets to exceed the CMBS Purchased Asset Capacity. In connection with any such Additional Advance, prior to the Additional Advance Date, the applicable Seller shall prepare and deliver to Buyer an amended and restated Confirmation reflecting such Additional Advance, and Buyer and the applicable Seller shall execute and deliver to each other an updated Confirmation setting forth the new outstanding Purchase Price and Advance Rate with respect to such Transaction.”

(g)    The following is hereby added to the Master Repurchase Agreement as Article 3(ff):

“The terms and provisions governing the Due Diligence Fee under Article 3(ff) are set forth in the Fee Letter, and are hereby incorporated by reference.”

(h)    Article 5(a) of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“(a)  Concurrently with the execution and delivery of this Agreement, Sellers shall establish (i) a segregated deposit account (the “Sub-14 Depository Account”) in the name of Sub-14 Seller for the benefit of Buyer at Wells Fargo Bank, National Association, as Depository and (ii) a segregated deposit account (the “Funding VI Depository Account”; together with the Sub-14 Depository Account, collectively, the “Depository Accounts”) in the name of Funding VI Seller for the benefit of Buyer at U.S. Bank, National Association, as Depository. Each Depository Account shall be subject to the applicable Depository Agreement in favor of Buyer. Buyer shall have sole dominion and control (including “control” within the meaning of the UCC (as defined in Article 6(b) below) over the Depository Accounts. The Depository Accounts shall, at all times, be subject to the Depository Agreements. All Income shall be deposited directly by the applicable servicer into the Depository Accounts in accordance with the applicable Servicer Notice. Depository shall then apply such Income in accordance with the applicable provisions of Articles 5(c) through 5(e) of this Agreement.”

(i)    Article 5(b) of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“(b) Contemporaneously with the sale to Buyer of any Sub-14 Purchased Asset, Sub-14 Seller shall cause the servicer with respect to each Sub-14 Purchased Asset to enter into a Servicer Notice with respect to such Sub-14 Purchased Asset (if the applicable servicer has not already executed and delivered a Servicer Notice) pursuant to which such servicer shall agree to pay all Income payable

6

under the related Sub-14 Purchased Asset into the Sub-14 Depository Account. Contemporaneously with the sale to Buyer of any Funding VI Purchased Asset, Funding VI Seller shall cause the servicer with respect to each Funding VI Purchased Asset to enter into a Servicer Notice with respect to such Funding VI Purchased Asset (if the applicable servicer has not already executed and delivered a Servicer Notice) pursuant to which such servicer shall agree to pay all Income payable under the related Funding VI Purchased Asset into the Funding VI Depository Account. If a servicer or borrower with respect to any Purchased Asset forwards any Income with respect to such Purchased Asset to any Seller or any Affiliate of such Seller rather than directly into the applicable Depository Account, such Seller shall, or shall cause such Affiliate to, deposit in the applicable Depository Account any such amounts within one (1) Business Day of such Seller’s (or its Affiliate’s) receipt thereof.”

(j)    Article 5(c) of the Master Repurchase Agreement is hereby amended by (i) deleting the first (1st) through fourth (4th) lines thereof and replacing the same with:

“(c) So long as no Event of Default shall have occurred and be continuing, all Income or other amounts received by each Depository in respect of any Sub-14 Purchased Asset or Funding VI Purchased Asset, as applicable (other than Principal Proceeds) during each Collection Period shall be applied by each Depository on the related Remittance Date in the following order of priority:”

and (ii) adding the following sentence at the end of such Article:

“Notwithstanding the foregoing, it is acknowledged and agreed that, so long as amounts on deposit in each Depository Account are sufficient to satisfy such obligations, amounts on deposit in the Sub-14 Depository Account shall only be applied to pay Price Differential and other amounts due to Buyer with respect to Sub-14 Purchased Assets and amounts on deposit in the Funding VI Depository Account shall only be applied to pay Price Differential and other amounts due to Buyer with respect to Funding VI Purchased Assets and surplus amounts, if any, available from the Sub-14 Depository Account shall be remitted to Sub-14 Seller and surplus amounts, if any, available from the Funding VI Depository Account shall be remitted to Funding VI Seller.”

(k)    Article 5(d) of the Master Repurchase Agreement is hereby amended by deleting the first (1st) through seventh (7th) lines thereof and replacing same with:

“So long as no Event of Default shall have occurred and be continuing, (i) any

scheduled payment of Principal Proceeds shall be applied by each Depository on the related Remittance Date, and (ii) any unscheduled prepayment in full of Principal Proceeds or prepayment in part of Principal Proceeds in an amount equal to or greater than $1,000,000 shall be applied by each Depository on the second Business Day following written request by Buyer or written request by Sub-14 Seller or Funding VI Seller, as applicable (and countersigned by Buyer)

7

following receipt of such Principal Proceeds, in each case, in the following order of priority:”

(l)    Article 5(e) of the Master Repurchase Agreement is hereby amended by deleting the first (1st) through fifth (5th) lines thereof and replacing same with:

“(e) If an Event of Default shall have occurred and be continuing, all Income (including, without limitation, any Principal Proceeds or any other amounts received, without regard to their source) or any other amounts received by each Depository in respect of a Purchased Asset shall be applied by each Depository on the Business Day next following the Business Day on which such funds are deposited in each Depository Account in the following order of priority:”

(m)    Article 9(b)(x)(F) of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with:

“(F) Upon execution and delivery of the Depository Agreement relating to the Sub-14 Depository Account, Buyer shall have a legal, valid and enforceable first priority security interest in all right, title and interest of Sub-14 Seller in the Sub- 14 Depository Account and all funds credited thereto. Upon execution and delivery of the Depository Agreement relating to the Funding VI Depository Account, Buyer shall have a legal, valid and enforceable first priority security interest in all right, title and interest of Funding VI Seller in the Funding VI Depository Account and all funds credited thereto.”

(n)    The following is hereby added to the Master Repurchase Agreement as Article 11(ff):

“(ff) If the aggregate outstanding Purchase Price of all CMBS Purchased Assets as of any date of determination exceeds the CMBS Purchased Asset Capacity, Sellers shall immediately pay to Buyer an amount necessary to reduce such aggregate outstanding Purchase Price for such Purchased Assets to an amount equal to or less than the CMBS Purchased Asset Capacity.”

(o)    Article 27(d) of the Master Repurchase Agreement is hereby amended by adding the following at the end of said Article:

“(d) Notwithstanding the foregoing but subject to Article 27(c), Sellers shall not be required to obtain Buyer’s approval with respect to the employment by any Seller or Primary Servicer or Interim Servicer, as applicable, of any sub-servicer (i) that is not responsible for the collection of any Income, escrow or reserve payments or the maintaining of any escrow or reserve accounts with respect to any Purchased Assets (collectively, “Cashiering Activities”) or (ii) that is responsible for Cashiering Activities provided that such subservicer is a Qualified Subservicer and Sellers shall not be required to cause any such subservicer with respect to which Buyer’s approval is not required to execute a Servicer Notice.”

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(p)    Annex I to the Master Repurchase Agreement is hereby modified by (i) deleting all references to “Cadwalader Wickersham & Taft LLP” and substituting the following therefor:

“and

Prior to May 1, 2016:

Paul Hastings LLP 75 East 55th Street

New York, New York 10022

Attention:        John A. Cahill, Esq.

Telephone:      (212) 318-6260

Telecopy:        (212) 230-7682

From and after May 1, 2016:

Paul Hastings LLP 200 Park Avenue

New York, New York 10166

Attention:        John A. Cahill, Esq.

Telephone:       (212) 318-6260

Telecopy:         (212) 230-7682”

and (ii) adding the following after the initial notice address of Sellers:

Starwood Property Mortgage Sub-14, L.L.C.

Starwood Property Mortgage Sub-14-A, L.L.C.

Starwood Mortgage Funding VI LLC

c/o Starwood Mortgage Capital

1601 Washington Avenue, Suite 800

Miami Beach, FL 33139

Attention: Leslie K. Fairbanks

Telephone: (305) 695-5502

Fax: (305) 695-5539

Email: lfairbanks@starwood.com

(q)    Exhibit I to the Master Repurchase Agreement is hereby deleted in its entirety and replaced with Exhibit A attached hereto.

(r)    Exhibit II to the Master Repurchase Agreement is hereby deleted in its entirety and replaced with Exhibit B attached hereto.

2.    Effectiveness. The effectiveness of this Amendment is subject to receipt by Buyer of the following:

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(a)    Amendment. This Amendment, duly executed and delivered by Seller and Buyer and acknowledged by Guarantor;

(b)    Amendment to Fee Letter. The First Amendment to Fee Letter, dated as of  the date hereof (the “Fee Letter Amendment”), by and between Buyer and Seller.

(c)    Pledge Agreement. The Pledge Agreement, dated as of the date hereof, made by SMC Pledgor in favor of Buyer.

(d)    Responsible Officer Certificate. A signed certificate from a Responsible Officer of Seller certifying: (i) that no amendments have been made to the organizational documents of Seller, Pledgor and Guarantor since December 10, 2015, unless otherwise stated therein; and (b) the authority of Seller, SMC and Guarantor to execute and deliver this Amendment and the other Transaction Documents, as applicable, to be executed and delivered in connection with this Amendment.

(e)    Good Standing. Certificates of existence and good standing and/or qualification to engage in business for the Seller, Pledgor and Guarantor.

(f)    Legal Opinion. Opinions of outside counsel to Seller reasonably acceptable to Buyer as to such matters as Buyer may reasonably request, provided that no additional bankruptcy safe harbor opinion shall be required for purposes of this Amendment.

(g)    Fees. Payment by Seller of the actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with this Amendment and the transactions contemplated hereby.

3.    Continuing Effect; Reaffirmation of Guarantee Agreement. As amended by this Amendment, all terms, covenants and provisions of the Master Repurchase Agreement are ratified and confirmed and shall remain in full force and effect. In addition, all terms, covenants and provisions of the Guarantee Agreement are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Buyer, and Guarantor hereby consents, acknowledges and agrees to the modifications set forth in this Amendment. By its execution hereof, Guarantor hereby reaffirms its obligations under the Guarantee Agreement.

4.    Binding Effect; No Partnership; Counterparts. The provisions of the Master Repurchase Agreement, as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment in Portable Document Format (PDF) by email or facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.

10

5.    Further Agreements. Seller agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Buyer and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

6.    Governing Law. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

7.    Headings. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

8.    References to Transaction Documents. All references to the Master Repurchase Agreement in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement as amended hereby, unless the context expressly requires otherwise.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the day first written above.

BUYER:
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, a national banking association
By:	/s/ Thomas N. Cassino
Name:	Thomas N. Cassino
Title:	Executive Director

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

Signature Page to Second Amendment to Uncommitted Master Repurchase Agreement

SELLERS:
STARWOOD PROPERTY MORTGAGE SUB-
14, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD PROPERTY MORTGAGE SUB-
14-A, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD MORTGAGE FUNDING VI
LLC, a Delaware limited liability company
By:	/s/ Leslie K. Fairbanks
Name:	Leslie K. Fairbanks
Title:	Executive Vice President

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

Signature Page to Second Amendment to Uncommitted Master Repurchase Agreement

AGREED AND ACKNOWLEDGED:
GUARANTOR:
STARWOOD PROPERTY TRUST, INC.,  a
Maryland corporation
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to Second Amendment to Uncommitted Master Repurchase Agreement

EXHIBIT A

(Attached)

EXHIBIT I

CONFIRMATION STATEMENT

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

Ladies and Gentlemen:

Seller is pleased to deliver our written CONFIRMATION of our agreement to enter into the Transaction pursuant to which JPMorgan Chase Bank, National Association shall purchase from us the Purchased Assets identified on the attached Schedule 1 pursuant to the Uncommitted Master Repurchase Agreement, dated as of December 10, 2015 (as amended, the “Agreement”), between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (“Buyer”) and STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C. [(“Seller”)], STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C. [(“Seller”)] and Starwood Mortgage Funding VI LLC [(“Seller”)] on the following terms. Capitalized terms used herein without definition have the meanings given in the Agreement.

Purchase Date:	[] [], 201[    ]
Purchased Assets:	[Name]: As identified on attached Schedule 1
Aggregate Principal Amount of
Purchased Assets:	$[        ]
Repurchase Date:
CMBS Purchased Asset:	[Yes/No]
Purchase Price:	$[]
Maximum Purchase Price:	$[]
Market Value2:	$[]
Pricing Rate:	one month LIBOR plus %
Requested Advance Rate:
Maximum Advance Rate:
Existing Mezzanine Debt:	[Yes/No]
Total Future Funding
Obligations of Seller:	$[]
Future Funding Amount:	$[] [the funding of which by Buyer shall be subject to the terms and conditions of Article 3(c) of the Agreement.]
Governing Agreements:	As identified on attached Schedule 1
Type of Funding:	[Table/Non-table]

2  As of the Purchase Date only.

Wiring Instructions:
Primary Servicer:
Name and address for communications:	Buyer:	JPMorgan Chase Bank, National Association 383 Madison Avenue
		New York, New York 10179
		Attention:    Ms. Nancy S. Alto
		Telephone:  (212) 834-3038
		Telecopy:    (917) 546-2564

With a	JPMorgan Chase Bank, National Association
copy to:	383 Madison Avenue
	New York, New York 10179
	Attention:    Mr. Thomas Nicholas Cassino
	Telephone:  (212) 834-5158
	Telecopy:    (212) 834-6029
Seller:	[STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C.]
	[STARWOOD PROPERTY MORTGAGE SUB- 14-A, L.L.C.]
	[STARWOOD MORTGAGE FUNDING VI LLC]
	c/o Starwood Property Trust, Inc.
	591 West Putnam Avenue
	Greenwich, Connecticut
	Attention:    General Counsel
	Telephone:   (203) 422-8191
	Telecopy:     (203) 422-8192
	and
	c/o Starwood Mortgage Capital
	1601 Washington Avenue, Suite 800
	Miami Beach, FL 33139
	Attention: Leslie K. Fairbanks
	Telephone: (305) 695-5502
	Fax: (305) 695-5539
	Email: lfairbanks@starwood.com
With	Sidley Austin LLP
copies	787 Seventh Avenue
to:	New York, New York
	Attention:    Robert L. Boyd
	Telephone:  (212) 839-7352
	Telecopy:    (212) 839-5599
	[STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C.]
	[STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C.]
	[STARWOOD MORTGAGE FUNDING VI LLC]

By:

Name:

Title:

AGREED AND ACKNOWLEDGED:

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

By:

Name:

Title:

Schedule 1 to Confirmation Statement

Purchased Assets:

Aggregate Principal Amount:

EXHIBIT B

(Attached)

EXHIBIT II

AUTHORIZED REPRESENTATIVES OF SELLERS

STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C.

STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C.

Name	Specimen Signature
Barry S. Sternlicht
Andrew J. Sossen	/s/ Andrew J. Sossen
Rina Paniry	/s/ Rina Paniry
Vincent Kallaher	/s/ Vincent Kallaher
Jeffrey DiModica	/s/ Jeffrey DiModica

STARWOOD MORTGAGE FUNDING VI LLC

Name	Specimen Signature
Lawrence A. Brown
Leslie K. Fairbanks
Jeremy Beard	/s/ Jeremy Beard
Grace Y. Chiang	/s/ Grace Y. Chiang
Jerry Hirschkorn

Exhibit II

THIRD AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT AND AMENDMENT OF FEE LETTER

THIRD AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT AND AMENDMENT OF FEE LETTER

THIS THIRD AMENDMENT TO UNCOMMITTED MASTER  REPURCHASE AGREEMENT (this “Amendment”), dated as of April 20, 2018, by and between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“Buyer”) and STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C.   and STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C., each a Delaware limited liability company (collectively, “Original Seller”) and STARWOOD MORTGAGE FUNDING VI LLC, a Delaware limited liability company (“Funding VI Seller”), and SPT CA FUNDINGS 2, LLC, a Delaware limited liability company (“SPT CA Seller”; together with Original Seller and Funding VI Seller, individually and/or collectively as the context may require, “Seller”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Master Repurchase Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Original Seller and Buyer have entered into that certain Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016, and that certain Second Amendment to Uncommitted Master Repurchase Agreement, dated as of April 25, 2016 (the “Master Repurchase Agreement”); and

WHEREAS, Seller and Buyer wish to modify certain terms and provisions of the Master Repurchase Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1.    Amendments to Master Repurchase Agreement. The Master Repurchase Agreement is hereby amended as follows:

(a)  The definition of “Senior Pari Passu Interest” in Article 2 of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“Senior Pari Passu Interest” shall mean an A-Note in an A/B structure or a pari passu structure or a pari passu participation interest (including any Starwood Pari Passu Participation Interest), in each case, representing one pari passu portion of the most senior interests in a performing Senior Mortgage Loan that is evidenced by an A-Note or a Participation Certificate, respectively.

(b)  The following definitions are hereby added, in alphabetical order, to Article 2 of the Master Repurchase Agreement:

“Companion Interest” shall mean, with respect to any pari passu participation interest in a performing Senior Mortgage Loan, the other pari passu participation interest(s) in such Senior Mortgage Loan.

“Future Advance Pari Passu Particpation Interest” shall have the meaning specified in Article 3(hh).

“SPP Mortgage Loan Maximum Purchase Price” shall mean, with respect to any Starwood Pari Passu Mortgage Loan, the Maximum Purchase Price for such Starwood Pari Passu Mortgage Loan assuming that the entire principal balance of such loan (including the principal balance of all Starwood Pari Passu Participation Interests and related Companion Interests in such Starwood Pari Passu Mortgage Loan) were a Purchased Asset hereunder. The “SPP Mortgage Loan Maximum Purchase Price” for any Starwood Pari Passu Mortgage Loan shall be set forth in the Confirmation for the related Starwood Pari Passu Participation Interest.

“SPP Additional Advance” shall have the meaning specified in Article 3(gg).

“SPP Additional Advance Conditions” shall have the meaning specified in Article 3(gg).

“SPP Maximum Purchase Price Increase” shall have the meaning specified in Article 3(gg).

“Starwood Pari Passu Conversion” shall mean the amendment and modification of a Purchased Asset to create a Starwood Pari Passu Participation Interest and one or more Companion Interests for the related Starwood Pari Passu Mortgage Loan pursuant to a Starwood Pari Passu Participation Agreement and upon terms acceptable to Buyer in its sole good faith discretion.

“Starwood Pari Passu Mortgage Loan” shall mean a performing Senior Mortgage Loan a portion of which is a Starwood Pari Passu Participation Interest.

“Starwood Pari Passu Participation Agreement” shall mean the participation agreement governing the respective rights and obligations of the holders of any Starwood Pari Passu Participation Interest and the Companion Interest(s) related thereto, as same may be amended, modified and/or restated from time to time in accordance with the terms hereof.

“Starwood Pari Passu Participation Interest” shall mean a pari passu participation interest, representing one pari passu portion of the most senior interests in a performing Senior Mortgage Loan, (a) which participation interest entitles the holder of such participation interest to control servicing and other decisions with respect to the related Senior Mortgage Loan pursuant to the related participation agreement and (b) with respect to which the related Companion Interest(s) in such Senior Mortgage Loan (i) are held by Guarantor or a Subsidiary of Guarantor, (ii) do not entitle the holder of such Companion Interests to control servicing and other decisions with respect to such Senior Mortgage Loan and (iii) have not been pledged as security for any secured credit facility (including any repurchase facility) of Guarantor or any Subsidiary of Guarantor and (c)

2

with respect to which any Future Advance Pari Passu Particpation Interests shall be transferred to Buyer and remain subject to a Transaction in accordance with the terms and provisions hereof.

“Starwood Pari Passu Purchased Asset” shall mean a Purchased Asset that is a Starwood Pari Passu Participation Interest.

“Starwood Pari Passu Reallocation” shall mean a reallocation of the principal balance of a Starwood Pari Passu Mortgage Loan between the Starwood Pari Passu Participation Interest and the Companion Interests for such Starwood Pari Passu Mortgage Loan, and the terms of such reallocation shall be acceptable to Buyer in its sole good faith discretion.

“Third Amendment” shall mean that certain Third Amendment to Uncommitted Master Repurchase Agreement, dated as of April 20, 2018, among Sellers and Buyer.

(c)   Article 3(b)(iii) of the Master Repurchase Agreement is hereby amended by

(i) deleting the word “and” at the end of clause (G) thereof; (ii) deleting the period at the end of clause (H) thereof and replacing same with: “; and”; and (iii) adding the following new clause (I) immediately after clause (H) thereof:

“(I) if such Purchased Asset is a Starwood Pari Passu Purchased Asset, the principal balances of each related Companion Interest and the related Starwood Pari Passu Mortgage Loan and the SPP Mortgage Loan Maximum Purchase Price.”

(d)   The following are hereby added to the Master Repurchase Agreement as Articles 3(gg) and 3(hh):

“(gg) Upon no less than three (3) Business Days’ prior written notice to Buyer, Seller may effectuate Starwood Pari Passu Reallocations with respect to Starwood Pari Passu Purchased Assets from time to time; provided that in no event shall Seller consummate more than two (2) Starwood Pari Passu Reallocations (it being acknowledged that Starwood Pari Passu Reallocations effectuated with respect to two (2) or more Starwood Pari Passu Purchased Assets on or about the same date shall be considered one transaction for purposes of the foregoing limitation) in any calendar month. If a Starwood Pari Passu Reallocation for any Starwood Pari Passu Purchased Asset results in an increase in the principal balance of such Starwood Pari Passu Purchased Asset, the applicable Seller may request that Buyer (i) increase the Maximum Purchase Price for such Starwood Pari Passu Purchased Asset to reflect such principal increase (a “SPP Maximum Purchase Price Increase”) (but in no event shall such Starwood Pari Passu Maximum Purchase Price Increase cause such Maximum Purchase Price to exceed the SPP Mortgage Loan Maximum Purchase Price for the related Starwood Pari Passu Mortgage Loan) and (ii) make an Additional Advance (an “SPP Additional Advance”) in a specified amount up to the Margin Excess for such Starwood Pari Passu Purchased Asset after giving effect to such Starwood Pari Passu Maximum

3

Purchase Price Increase. Any such SPP Additional Advance shall be subject to Buyer’s determination, in its commercially sole good faith discretion, that all of the following conditions have been satisfied (collectively, the “SPP Additional Advance Conditions”):

(i)   the applicable Seller shall have given Buyer not less than three (3) Business Days’ prior written notice of the applicable Starwood Pari Passu Reallocation which notice shall include the then outstanding principal balance of the related Starwood Pari Passu Mortgage Loan, and the respective principal balances of the applicable Starwood Pari Passu Participation Interest and Companion Interests both before and after giving effect to such Starwood Pari Passu Reallocation, and the terms of same shall be acceptable to Buyer in its sole good faith discretion;

(ii)  the applicable Seller shall have delivered to Buyer copies of all amendments or modifications of the related Starwood Pari Passu Participation Agreement entered into in connection with the applicable Starwood Pari Passu Reallocation, which amendments and modifications shall be in form and substance acceptable to Buyer in its sole good faith discretion;

(iii) no Margin Deficit equal to or greater than the Minimum Transfer Amount shall exist, no Force Majeure Event, Default or Event of Default exists or would result from such SPP Additional Advance, and no event shall have occurred that has, or would reasonably be expected to have, a Material Adverse Effect; and

(iv) the Seller has satisfied the conditions and obligations with respect to entering into a new Transaction set forth in clauses (G) and (J) of Article 3(b)(iv).

Provided that the SPP Additional Advance Conditions are satisfied, Buyer shall pay to the applicable Seller the additional Purchase Price requested by such Seller with respect to such Purchased Asset up to an amount not to exceed the available Margin Excess for such Starwood Pari Passu Purchased Asset within three (3) Business Days after the applicable Seller’s request therefor. Upon the funding of any such SPP Additional Advance, the Margin Excess (if any remains) shall be recalculated taking into account such increase in Purchase Price. Notwithstanding the foregoing, in no event shall the amount of any SPP Additional Advance transferred to a Seller be in an amount that would cause (A) the outstanding Purchase Price of the related Starwood Pari Passu Purchased Asset, after giving effect to such SPP Additional Advance, to exceed the Maximum Purchase Price for such Starwood Pari Passu Purchased Asset as of the date of such SPP Additional Advance after giving effect to the applicable SPP Maximum Purchase Price Increase or (B) the aggregate Repurchase Price of all Purchased Assets to exceed the Maximum Facility Amount. In connection with any such SPP Additional Advance, prior to the date of such SPP Additional Advance, the applicable Seller shall prepare and deliver to Buyer an amended and restated Confirmation reflecting the applicable Starwood Pari Passu Maximum Purchase Price Increase and such SPP

4

Additional Advance, and Buyer and the applicable Seller shall execute and deliver to each other an updated Confirmation setting forth: (v) the new outstanding Purchase Price and Advance Rate with respect to such Transaction, (w) the then outstanding principal balance of the related Starwood Pari Passu Mortgage Loan, (x) the adjusted principal balances of the Starwood Pari Passu Purchased Asset and Companion Interests after giving effect to the applicable Starwood Pari Passu Reallocation, (y) the SPP Mortgage Loan Maximum Purchase Price and (z) any other revised terms for such Transaction.

If a Starwood Pari Passu Reallocation for any Starwood Pari Passu Purchased Asset results in a decrease in the principal balance of such Starwood Pari Passu Purchased Asset, prior to the date of such Starwood Pari Passu Reallocation, the applicable Seller shall prepare and deliver to Buyer an amended and restated Confirmation setting forth: (v) the new outstanding Purchase Price and Advance Rate with respect to such Transaction, (w) the then outstanding principal balance of the related Starwood Pari Passu Mortgage Loan, (x) the adjusted principal balances of the Starwood Pari Passu Purchased Asset and Companion Interests after giving effect to the applicable Starwood Pari Passu Reallocation, (y) the SPP Mortgage Loan Maximum Purchase Price and (z) any other revised terms for such Transaction. In addition to the foregoing, if any such decrease results in a Margin Deficit for such Purchased Asset, the applicable Seller shall pay to Buyer the amount of such Margin Deficit on or prior to the effective date of such Starwood Pari Passu Reallocation, notwithstanding anything contained to the contrary in Article 4(a).

(hh) Seller may effectuate Starwood Pari Passu Conversions with respect to Purchased Assets from time to time; provided that in no event shall Seller consummate more than two (2) Starwood Pari Passu Conversions in any calendar month. Any such Starwood Pari Passu Conversion and any SPP Additional Advance requested by Seller in connection therewith shall be subject to Buyer’s determination, in its sole good faith discretion, that all of the following conditions have been satisfied (collectively, the “SPP Pari Passu Conversion Conditions”):

(i)   the applicable Seller shall have given Buyer not less than three (3) Business Days’ prior written notice of the applicable Starwood Pari Passu Conversion which notice shall include the then outstanding principal balance of the related Starwood Pari Passu Mortgage Loan, and the proposed principal balances of the applicable Starwood Pari Passu Participation Interest and Companion Interests after giving effect to such Starwood Pari Passu Conversion, and the terms of same shall be acceptable to Buyer in its sole good faith discretion;

(ii)   the applicable Seller shall have delivered to Buyer copies of the related Starwood Pari Passu Participation Agreement entered into in connection with the applicable Starwood Pari Passu Conversion, which Starwood Pari Passu Participation Agreement shall be substantially in the form attached as Exhibit II to

5

the Third Amendment and with such changes as may be acceptable to Buyer in its sole good faith discretion;

(iii)   no Margin Deficit equal to or greater than the Minimum Transfer Amount shall exist, no Force Majeure Event, Default or Event of Default exists or would result from any such SPP Additional Advance, and no event shall have occurred that has, or would reasonably be expected to have, a Material Adverse Effect;

(iv)   the Seller has satisfied the conditions and obligations with respect to entering into a new Transaction set forth in clauses (G) and (J) of Article 3(b)(iv);

(v)    if the related Starwood Pari Passu Mortgage Loan contains one or more participation interests with obligations to make future advances (each, a “Future Advance Pari Passu Participation Interest”), such Future Advance Pari Passu Participation Interests shall be transferred to Buyer in accordance with the terms and provisions hereof; and and

(vi)   the related Mortgage Note shall have been delivered to Buyer or to the Custodian, and if the related Starwood Pari Passu Participation Interest has been certificated, Seller has delivered to Buyer or the Custodian the original participation certificate evidencing such Starwood Pari Passu Participation Interest. To the extent additional documents are delivered to Custodian relating to such Starwood Pari Passu Participation Interest, Buyer shall have received an Asset Schedule and Exception Report (as defined in the Custodial Agreement) duly completed and with exceptions acceptable to Buyer in its sole discretion in respect of the Starwood Pari Passu Participation Interest.

In connection with any such SPP Pari Passu Conversion, prior to the Purchase Date of the related Starwood Pari Passu Purchased Asset, the applicable Seller shall prepare and deliver to Buyer an amended and restated Confirmation setting forth: (v) the new outstanding Purchase Price and Advance Rate with respect to such Transaction, (w) the then outstanding principal balance of the related Starwood Pari Passu Mortgage Loan, (x) the principal balances of the Starwood Pari Passu Purchased Asset and Companion Interests after giving effect to the applicable Starwood Pari Passu Conversion, (y) the SPP Mortgage Loan Maximum Purchase Price and (z) any other revised terms for such Transaction.

If a Starwood Pari Passu Conversion (and any associated reduction in the principal balance of related Starwood Pari Passu Purchased Asset from the principal balance of the Purchased Asset prior to such Starwood Pari Passu Conversion) results in a Margin Deficit for such Starwood Pari Passu Purchased Asset, the applicable Seller shall pay to Buyer the amount of such Margin Deficit on or prior to the effective date of such

6

Starwood Pari Passu Conversion, notwithstanding anything contained to the contrary in Article 4(a).

In no event shall there be more than three (3) Transactions involving Starwood Pari Passu Purchased Assets outstanding under this Agreement at any time. In addition,  at all times, there shall be at least as many Purchased Assets subject to Transactions under this Agreement that are not Starwood Pari Passu Purchased Assets as there are Transactions involving Starwood Pari Passu Purchased Assets then outstanding under this Agreement (i.e., if as of any date there are three (3) Transactions involving Starwood Pari Passu Purchased Assets outstanding under this Agreement, there must also be at least three (3) Transactions involving Purchased Assets that are not Starwood Pari Passu Purchased Assets outstanding under this Agreement as of such date).

In the event any Starwood Pari Passu Purchased Asset shall fail to satisfy the parameters of a “Starwood Pari Passu Participation Interest” as set forth in the definition thereof, such Starwood Pari Passu Purchased Asset shall not be an Eligible Asset, and Seller shall repurchase such Starwood Pari Passu Purchased Asset in the manner provided in Article 12(c) hereof.

If Buyer shall fail to approve any proposed Starwood Pari Passu Conversion or any proposed Starwood Pari Passu Reallocation within three (3) Business Days after the applicable Seller’s request therefor delivered together with a draft of the related Starwood Pari Passu Participation Agreement or amendment of the related Starwood Pari Passu Participation Agreement to be entered into in connection with the applicable Starwood Pari Passu Conversion or Starwood Pari Passu Reallocation, respectively, Sellers shall have the right to repurchase the affected Purchased Loan in accordance with the provisions of Article 3(f) hereof (other than the required notice to Buyer thereunder), without payment of any Exit Fee.”

(e)   Exhibit I to the Master Repurchase Agreement is hereby deleted in its entirety and replaced with Exhibit I attached hereto.

(f)   Article 7(f) of the Master Repurchase Agreement is hereby modified by adding the following immediately after the first (1st) sentence thereof:

“Sellers shall not, and shall not permit any holder of a Companion Interest, to enter into or consent to any amendment, modification, waiver or termination of any Starwood Pari Passu Participation Agreement without the prior written consent of Buyer, such consent to be granted or denied in Buyer’s sole good faith discretion.”

(g)   Article 10 of the Master Repurchase Agreement is hereby modified by (i) deleting the word “or” at the end of Article 10(i); (ii) deleting the “.” at the end of Article 10(j) and replacing the same with the phrase “; or” and (iii) inserting the following as Article 10(k):

“(k)   consent or assent to any amendment, modification, waiver or termination of any Starwood Pari Passu Participation Agreement, without the prior written

7

consent of Buyer, such consent to be granted or denied in Buyer’s sole good faith discretion.”.

2.    Amendments to Fee Letter. The definition of “Exit Fee” in Article 1 of the Fee Letter is hereby amended by (i) deleting the word “or” at the end of clause (e) thereof; (ii) deleting the period at the end of clause (f) thereof and replacing same with: “; or”; and (iii) inserting the following clause (g) immediately after clause (f):

“(g) such repurchase occurs in connection with Buyer’s failure to approve a proposed Starwood Paris Passu Conversion under Article 3(hh) of the Repurchase Agreement.”

3.    Buyer’s Costs. Seller shall be required to pay the actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with this Amendment and the transactions contemplated hereby.

4.    Continuing Effect; Reaffirmation of Guarantee Agreement. As amended by this Amendment, all terms, covenants and provisions of the Master Repurchase Agreement and Fee Letter are ratified and confirmed and shall remain in full force and effect. In addition, all terms, covenants and provisions of the Guarantee Agreement are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Buyer, and Guarantor hereby consents, acknowledges and agrees to the modifications set forth in this Amendment. By its execution hereof, Guarantor hereby reaffirms its obligations under the Guarantee Agreement.

5.    Binding Effect; No Partnership; Counterparts. The provisions of the Master Repurchase Agreement and the Fee Letter, as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment in Portable Document Format (PDF) by email or facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.

6.    Further Agreements. Seller agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Buyer and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

8

7.    Governing Law. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

8.    Headings. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

9.    References to Transaction Documents. All references to the Master Repurchase Agreement or the Fee Letter in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement or Fee Letter, as amended hereby, unless the context expressly requires otherwise.

[NO FURTHER TEXT ON THIS PAGE]

9

IN WITNESS WHEREOF, the  parties have executed  this Amendment as of the day first written above.

BUYER:
JPMORGAN CHASE BANK,  NATIONAL
ASSOCIATION, a  national banking association
By:	/s/ Anthony Shaskus
Name:	Anthony Shaskus
Title:	Vice President

Signature Page to Third Amendment to Uncommitted Master  Repurchase Agreement and Amendment of Fee Letter

SELLERS:
STARWOOD PROPERTY MORTGAGE SUB-14,
L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD PROPERTY MORTGAGE SUB-14-
A, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD MORTGAGE FUNDING VI LLC, a
Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
SPT CA FUNDINGS 2, LLC, a Delaware limited
liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to Third Amendment to Uncommitted Master  Repurchase Agreement and Amendment of Fee Letter

AGREED AND ACKNOWLEDGED:
GUARANTOR:
STARWOOD PROPERTY TRUST, INC., a
Maryland corporation
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to Third Amendment to Uncommitted Master  Repurchase Agreement and Amendment of Fee Letter

EXHIBIT I

AMENDED AND RESTATED FORM OF CONFIRMATION STATEMENT

EXHIBIT I

CONFIRMATION STATEMENT

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

Ladies and Gentlemen:

Seller is pleased to deliver our written CONFIRMATION of our agreement to enter into the Transaction pursuant to which JPMorgan Chase Bank, National Association shall purchase from us the Purchased Assets identified on the attached Schedule 1 pursuant to the Uncommitted Master Repurchase Agreement, dated as of December 10, 2015 (as amended, modified and/or restated, the “Agreement”), between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (“Buyer”) and STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C. [(“Seller”)], STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C. [(“Seller”)] and STARWOOD MORTGAGE FUNDING VI LLC [(“Seller”)] on the following terms. Capitalized terms used herein without definition have the meanings given in the Agreement.

Purchase Date:	[] [], 201[]
Purchased Assets:	[Name]: As identified on attached Schedule 1
Aggregate Principal Amount of
Purchased Assets:	$[]
Repurchase Date:
Purchase Price:	$[]
Maximum Purchase Price:	$[]
Market Value1:	$[]
Pricing Rate:	one month LIBOR plus %
Requested Advance Rate:
Maximum Advance Rate:
Existing Mezzanine Debt:	[Yes/No]
Total Future Funding Obligations of Seller:	$[]
Future Funding Amount:	$[] [the funding of which by Buyer shall be subject to the

1As of the Purchase Date only.

Starwood Pari Passu	terms and conditions of Article 3(c) of the Agreement.]
Participation Interest:
Companion Interest Aggregate	[Yes/No]
Principal Balance:
Starwood Pari Passu Mortgage	$[]
Loan Principal Balance:
	$[]
SPP Mortgage Loan Maximum
Purchase Price:	$[]
Governing Agreements:
	As identified on attached Schedule 1
Type of Funding:	[Table/Non-table]
Wiring Instructions:
Primary Servicer:
Name and address for	Buyer:	JPMorgan Chase Bank, National Association
communications:		383 Madison Avenue
		New York, New York 10179
		Attention:    Ms. Nancy S. Alto
		Telephone:  (212) 834-3038
		Telecopy:    (917) 546-2564
	With a	JPMorgan Chase Bank, National Association
	copy to:	383 Madison Avenue
		New York, New York 10179
		Attention: Mr. Thomas Nicholas Cassino
		Telephone: (212) 834-5158
		Telecopy: (212) 834-6029
	Seller:	[STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C.]
		[STARWOOD PROPERTY MORTGAGE SUB- 14-A, L.L.C.]
		[STARWOOD MORTGAGE FUNDING VI LLC]
		c/o Starwood Property Trust, Inc.
		591 West Putnam Avenue
		Greenwich, Connecticut 06830
		Attention:   General Counsel
		Telephone: (203) 422-8191
		Telecopy:   (203) 422-8192

With	Sidley Austin LLP
copies to:	787 Seventh Avenue
	New York, New York 10019
	Attention:   Robert L. Boyd
	Telephone: (212) 839-7352
	Telecopy:   (212) 839-5599

[STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C.]

[STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C.]

[STARWOOD MORTGAGE FUNDING VI LLC]

By:

Name:

Title:

AGREED AND ACKNOWLEDGED:

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

By:

Name:

Title:

1.         Schedule 1 to Confirmation Statement

Purchased Assets:

Aggregate Principal Amount:

EXHIBIT II

FORM OF STARWOOD PARI PASSU PARTICIPATION AGREEMENT

PARTICIPATION AGREEMENT

([NAME OF MORTGAGE LOAN])

Dated as of, 20

by and among

STARWOOD PROPERTY MORTGAGE, L.L.C.

(Initial Lender),

STARWOOD PROPERTY MORTGAGE SUB-14[-A], L.L.C.

(Initial Participation 1 Holder),

STARWOOD PROPERTY MORTGAGE, L.L.C.

(Initial Participation 2 Holder),

and

SPT CA FUNDINGS 2, LLC

(Initial Participation 3 Holder)

THIS PARTICIPATION AGREEMENT (this “Agreement”), dated as of  ,20 , by and between [STARWOOD PROPERTY MORTGAGE, L.L.C.], a Delaware limited liability company (“Starwood” or the “Initial Lender”), STARWOOD PROPERTY MORTGAGE SUB-14[-A], L.L.C., a Delaware limited liability company (“Initial Participation 1 Holder”), STARWOOD PROPERTY MORTGAGE, L.L.C., a Delaware limited liability company (“Initial Participation 2 Holder”)[, and SPT CA FUNDINGS 2, LLC, a Delaware limited liability company (“Initial Participation 3 Holder”)].

W I T N E S S E T H:

WHEREAS, pursuant to that certain Loan Agreement, dated as of , 20 (as amended, modified and/or restated, the “Loan Agreement”), Initial Lender made a mortgage loan in the [original/maximum] principal amount of $(the “Loan”) to [,  a] ([collectively,] “Borrower”), which Loan is evidenced by those certain Promissory Notes, dated as of , 20  (as amended, modified and/or restated, collectively, the “Note”), from Borrower to Initial Lender, and secured by, among other things, that certain [Mortgage] [Deed of Trust] [Deed to Secure Debt], Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of, 20  (as amended, modified and/or restated, the “Mortgage”), executed and delivered by Borrower as security for the Loan and encumbering certain real property known as , located at, , (as more particularly described therein, the “Property”)

[WHEREAS, the terms of the Loan provide for additional advances of up to $to be advanced by the Initial Lender to the Borrower;]

WHEREAS, Initial Lender intends to create [three (3)] separate participation interests in the Loan: (i) a participation in the original principal amount of $ (“Participation 1”), [and] (ii) a participation in the original principal amount  of $ (“Participation 2”[) and (iii) a participation in the maximum principal amount of $ (“Participation 3”], together with Participation 1 and Participation 2, collectively, the “Participations”);

[WHEREAS, the principal balance of Participation 3 will be increased by the amount of any future advances made by the Future Funding Participant (as defined herein), as contemplated  under  the Loan Documents (up to a maximum principal balance of $) (the obligation to make such future advances, the “Future Funding Obligations”);] and

WHEREAS, Initial Lender and the Participants (hereinafter defined) desire to enter into this Agreement to memorialize the terms under which the Participants will hold the Participations.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto mutually agree as follows:

1.          Definitions; Conflicts.    References to a “Section” or the “recitals” are, unless otherwise specified, to a Section or the recitals of this Agreement. Capitalized terms not

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otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement. Whenever used in this Agreement, the following terms shall have the respective meanings set forth below unless the context clearly requires otherwise.

“Accepted Servicing Practices” shall mean the obligation of Participation 1 Holder (or Servicer) to service and administer the Loan solely in the best interests and for the benefit of the Holders (as a collective whole), exercising the higher of (x) the same care, skill, prudence and diligence with which the Participation 1 Holder (or Servicer) services and administers similar mortgage loans for other third party portfolios, giving due consideration to customary and usual standards of practice of prudent institutional commercial lenders servicing their own loans and (y) the same care, skill, prudence and diligence which the Participation 1 Holder (or Servicer) utilizes for loans which the Participation 1 Holder (or Servicer) owns for its own account and, in the case of the immediately preceding subclauses (x) and (y), acting in accordance with applicable law, the terms of this Agreement and the Loan Documents and with a view to the maximization of timely recovery of principal and interest on a net present value basis on the Loan.

“Acquisition Date” shall mean the date hereof.

“Advance” shall mean any monthly debt service payment advance or any property advance or other servicing advance by the Participation 1 Holder (or any applicable Servicer on its behalf) under this Agreement or the Servicing Agreement with respect to the Loan or the Property.

“Affiliate” shall mean with respect to any specified Person, (a) any other Person controlling or controlled by or under common control with such specified Person (each a “Common Control Party”), (b) any other Person owning, directly or indirectly, ten percent (10%) or more of the beneficial interests in such Person or (c) any other Person in which such Person or a Common Control Party owns, directly or indirectly, ten percent (10%) or more of the beneficial interests. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract, relation to individuals or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agreement” shall mean this Participation Agreement, the exhibits and schedules hereto and all amendments hereof and supplements hereto.

“Balloon Payment” shall mean, with respect to the Loan, the payment of principal due on its stated maturity date.

“Bankruptcy Code” shall mean the United States Bankruptcy Code, as amended from time to time, any successor statute or rule promulgated thereto.

“Borrower” shall have the meaning assigned such term in the recitals.

“Borrower Related Parties” shall have the meaning assigned such term in Section 13.

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“Collection Account” shall  have the meaning assigned  to  such  term in Section 5 hereof.

“Common  Control  Party”  shall  have  the  meaning  given  to  such  term  in  the definition of “Affiliate.”

“Controlling Holder” shall mean, as of any date of determination, the Participation 1 Holder, unless the Participation 1 Holder is the Borrower or a Borrower Related Party, then the Participation 2 Holder[, unless the Participation 2 Holder is the Borrower or a Borrower Related Party, then the Participation 3 Holder, unless the Participation 3 Holder is the Borrower or a Borrower Related Party].

“Costs” shall mean all out-of-pocket costs, fees, expenses, advances, payments, losses, liabilities, judgments and/or causes of action reasonably suffered or incurred or paid by Lender or a Holder hereunder (or Servicer) pursuant to or in connection with the Loan, the Loan Documents (not including any servicing fees or special servicing fees), the Property, this Agreement or otherwise in connection with the enforcement of the Loan, including, without limitation, attorneys’ fees and disbursements, taxes, assessments, insurance premiums and other protective advances as more particularly provided in the Loan Documents or hereunder, except for those resulting from the gross negligence, willful misconduct or breach of this Agreement of or by such Holder (or Servicer); provided,  however, that neither (i) the costs and expenses relating to the origination of the Loan, nor (ii) the day-to-day customary and usual, ordinary costs of servicing and administration of the Loan shall be included or deemed to be “Costs.”

“Custodian” shall mean Wells Fargo Bank, National Association.

“Custodial Agreement” shall mean that certain Custodial Agreement, dated as of December 10, 2015, among Participation 1 Holder, Custodian and JPMorgan Chase Bank, National Association, as Buyer, as amended, modified and/or restated from time to time.

“Exit Fees” shall mean the “exit fee” or the “prepayment fee,” if any, set forth on the Loan Schedule.

[“Future Funding Obligations” shall have the meaning assigned to such term in recitals.]

[“Future Funding Participant” shall mean the Initial Participation 3 Holder and any transferees of the Future Funding Obligations.]

“Holder” shall mean each of the Participation 1 Holder, the Participation 2 Holder [and the Participation 3 Holder].

“Initial Holder” shall mean each of the Initial Participation 1 Holder, the Initial Participation 2 Holder [and the Initial Participation 3 Holder].

“Initial Participation 1 Holder” shall have the meaning set forth in the introductory paragraph to this Agreement.

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“Initial Participation 2 Holder” shall have the meaning set forth in the introductory paragraph to this Agreement.

“Initial Participation 3 Holder” shall have the meaning set forth in the introductory paragraph to this Agreement.

“Interest Rate” shall mean the Interest Rate set forth in the Loan Schedule.

“Liquidation Proceeds” shall mean the amount (other than insurance proceeds, condemnation awards or amounts required to be paid to Borrower or other Persons pursuant to the Loan Documents or applicable law) received by Servicer in connection with the liquidation of the Property, whether through judicial foreclosure, sale or otherwise, or the sale or other liquidation of the Loan, including a final discounted payoff of the Loan.

“Loan” shall have the meaning assigned such term in the recitals.

“Loan Agreement” shall have the meaning assigned such term in the recitals.

“Loan Documents” shall mean the Loan Agreement, the Note, the Mortgage and all other documents evidencing or securing the Loan, as each may be amended, modified and/or restated, and as more particularly described in the Loan Agreement.

“Loan Principal Balance” shall mean, at any date of determination, the principal balance of the Note evidencing the Loan.

“Loan Schedule” shall mean the schedule attached hereto as Exhibit A which schedule sets forth certain information and terms regarding the Loan and the Participations, as same may be amended or modified by the Holders.

“Non-Controlling Holder” shall mean any Holder that is not the Controlling

Holder.

“Note” shall have the meaning assigned to such term in the recitals.

“Participants”    shall    mean,   collectively,    the   Participation    1   Holder,    the Participation 2 Holder [and the Participation 3 Holder].

“Participation 1” shall have the meaning set forth in the recitals.

“Participation 1 Holder” shall mean the Initial Participation 1 Holder or any subsequent Holder of Participation 1.

“Participation 1 Percentage Interest” shall mean, as of any date, the percentage obtained by dividing the Participation 1 Principal Balance, as of such date, by the Loan Principal Balance, as of such date, and as such percentage may be adjusted by agreement of the Holders in accordance with Section 7 of this Agreement.

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“Participation 1 Principal Balance” shall mean the initial principal balance of Participation 1 as set forth on the Loan Schedule attached hereto, less any payments of principal thereon received by the Participation 1 Holder, plus any additional principal advances made by the Participation 1 Holder in accordance with the terms of this Agreement, and as such principal balance may be adjusted by agreement of the Holders in accordance with Section 7 of this Agreement.

“Participation 2” shall have the meaning set forth in the recitals.

“Participation 2 Holder” shall mean the Initial Participation 2 Holder or any subsequent Holder of Participation 2.

“Participation 2 Percentage Interest” shall mean, as of any date, the percentage obtained by dividing the Participation 2 Principal Balance, as of such date, by the Loan Principal Balance, as of such date, and as such percentage may be adjusted by agreement of the Holders in accordance with Section 7 of this Agreement.

“Participation 2 Principal Balance” shall mean the initial principal balance of Participation 2 as set forth on the Loan Schedule attached hereto, less any payments of principal thereon received by the Participation 1 Holder, plus any additional principal advances made by the Participation 2 Holder in accordance with the terms of this Agreement, and as such principal balance may be adjusted by agreement of the Holders in accordance with Section 7 of this Agreement.

[“Participation 3” shall have the meaning set forth in the recitals.]

[“Participation 3 Holder” shall mean the Initial Participation 3 Holder or any subsequent Holder of Participation 3.]

[“Participation 3 Percentage Interest” shall mean, as of any date, the percentage obtained by dividing the Participation 3 Principal Balance, as of such date, by the Loan Principal Balance, as of such date, and as such percentage may be adjusted by agreement of the Holders in accordance with Section 7 of this Agreement.]

[“Participation 3 Principal Balance” shall mean the initial principal balance of Participation 3 as set forth on the Loan Schedule attached hereto, less any payments of principal thereon received by the Participation 3 Holder, plus any additional principal advances made by the Participation 3 Holder in accordance with the terms of this Agreement including any advances made by the Participation 3 Holder as the Future Funding Participant under the Future Funding Obligations, and as such principal balance may be adjusted by agreement of the Holders in accordance with Section 7 of this Agreement.]

“Participation Pledgee” shall have the meaning assigned such term in Section 12.

“Participations” shall mean, collectively, Participation 1, Participation 2 [and Participation 3].

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“Penalty Charges” shall mean any amounts actually collected on the Loan from the Borrower that represent late payment charges, other than a Prepayment Premium or default interest.

“Percentage Interest” shall mean, (i) with respect to the Participation 1 Holder, the Participation 1 Percentage Interest, (ii) (with respect to the Participation 2 Holder, the Participation 2 Percentage Interest [and (iii) with respect to the Participation 3 Holder, the Participation 3 Percentage Interest].

“Permitted Fund Manager” shall mean any Person that on the date of determination is (i) one of the entities listed on Schedule 1 annexed hereto and made a part hereof or any other nationally-recognized manager of investment funds investing in debt or equity interests relating to commercial real estate, (ii) investing through a fund with committed capital of at least $250,000,000 and (iii) not subject to a proceeding relating to the bankruptcy, insolvency, reorganization or relief of debtors.

“Person” shall mean any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Pledge” shall have the meaning assigned such term in Section 12.

“Prepayment” shall mean any payment of principal made by the Borrower which is received in advance of the scheduled Maturity Date, whether made by reason of a voluntary prepayment, casualty or condemnation, due to the acceleration of the maturity of the Note or otherwise.

“Prepayment Premium” shall mean any prepayment premium, yield maintenance premium or similar fee required to be paid in connection with a Prepayment of the Loan under the Loan Documents, and as set forth on the Loan Schedule.

“Property” shall have the meaning assigned such term in the recitals.

“Qualified Institutional Lender” shall mean the Initial Participation 1 Holder, the Initial Participation 2 Holder, [the Initial Participation 3 Holder] and JPMorgan Chase Bank, National Association and the following:

(a)        an entity Controlled (as defined below) by, or under common Control (as defined below) with, the Initial Participation 1 Holder, the Initial Participation 2 Holder [or the Initial Participation 3 Holder], or

(b)        one or more of the following:

(i)         an insurance company, bank, savings and loan association, investment bank, trust company, commercial credit corporation, pension plan, pension fund, pension fund advisory firm, mutual fund, real estate investment trust, governmental entity or plan, or,

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(ii)        an investment company, money management firm or a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, which regularly engages in the business of making or owning investments of types similar to the Loan or the related Participation, or

(iii)      a trustee in connection with (x) a securitization of Participation 2 or (y) the creation of collateralized debt obligations (“CDO”) secured by, or financing through an “owner trust” of Participation 2 ((x) and (y), collectively, “Securitization Vehicles”) so long as (A) such trustee or the servicer therefor is an entity that otherwise would be a Qualified Institutional Lender and (B) the entire “controlling class” of such Securitization Vehicle, other than with respect to a CDO Securitization Vehicle, is held by one or more entities that are otherwise Qualified Institutional Lenders; provided that the operative documents of the related Securitization Vehicle require that (1) in the case of a CDO Securitization Vehicle, the “equity interest” in such Securitization Vehicle is owned by one or more Qualified Institutional Lenders and (2) if either of the relevant trustee or servicer fails to meet the requirements of this clause (iii), such Person must be replaced by a Person meeting the requirements of this clause (iii) within thirty (30) days, or

(iv)       an investment fund, limited liability company, limited partnership or general partnership in which the Initial Participation 1 Holder, the Initial Participation 2 Holder [or the Initial Participation 3 Holder], as applicable, or a Qualified Institutional Lender or a Permitted Fund Manager acts as the general partner, managing member, or the fund manager responsible for the day to day management and operation of such investment vehicle and provided that at least fifty percent (50%) of the equity interests in such investment vehicle are owned, directly or indirectly, by one (1) or more entities that are otherwise Qualified Institutional Lenders, or

(v)        an institution substantially similar to any of the foregoing; which has, in the case of entities referred to in clauses (b)(i), (ii), (iii) or (iv) of this definition, at least $200,000,000 in capital/statutory surplus or shareholders’ equity (except with respect to a pension advisory firm or similar fiduciary) and at least $600,000,000 in total assets (in name or under management), and is regularly engaged in the business of making or owning commercial real estate loans or commercial loans (or interests therein) similar to the Loan; or

(c)        any entity Controlled (as defined below) by, or under common Control (as defined below) with, any of the entities described in clause (b) above. For purposes of this definition only, “Control” means the ownership, directly or indirectly, in the aggregate of more than fifty percent (50%) of the beneficial ownership interests of an entity and the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity, whether through the ability to exercise voting power, by contract or otherwise (“Controlled” has the meaning correlative thereto).

“Remittance Date” shall have the meaning assigned to such term in Section 6.

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“Servicer” shall mean Wells Fargo Bank, National Association, as servicer under the Servicing Agreement, or any successor servicer appointed pursuant to this Agreement.

“Servicing Agreement” shall mean that certain Second Amended and Restated Servicing Agreement, dated as of February 27, 2017, between the Participation 1 Holder, Starwood Property Mortgage Sub-14[-A], L.L.C. and the Servicer, as same may be amended, modified and/or restated, or any servicing agreement with any successor Servicer.

“Servicing Fee Rate” shall mean a rate per annum equal to the servicing fee rate set forth in the Servicing Agreement.

“Transfer” shall have the meaning assigned such term in Section 12.

2.          Creation of Participation Interests; Form of Participations; Acquisition of Participations. The Initial Lender hereby creates the Participations in the Mortgage Loan and contributes its interests in the Mortgage Loan represented by Participation 1, as of the Acquisition Date, to the Initial Participation 1 Holder. On the Acquisition Date, on the terms and conditions set forth herein, the Initial Lender shall issue Participation 1 to the Initial Participation 1 Holder or any assignee thereof. The Participation 1 Holder shall be deemed the owner of Participation 1. On the Acquisition Date, on the terms and conditions set forth herein, the Initial Lender shall issue Participation 2 to the Initial Participation 2 Holder or any assignee thereof. The Participation 2 Holder shall be deemed the owner of Participation 2. [On the Acquisition Date, on the terms and conditions set forth herein, the Initial Lender shall issue Participation 3 to the Initial Participation 3 Holder or any assignee thereof. The Participation 3 Holder shall be deemed the owner of Participation 3.]

3.          Pari Passu Participations. Each Participation shall be pari passu and shall be of equal priority with each other Participation, and no Participation or portion of any Participation shall have priority or preference over any other Participation or portion thereof or the security therefor, except as may be otherwise expressly provided in Section 5 or otherwise herein.

4.          Administration of the Loan[; Future Funding Obligations]. [(a)] From and after the date hereof, Participation 1 Holder shall cause the Servicer to administer and service the Loan consistent with the terms of this Agreement, the Loan Documents, Accepted Servicing Practices, the Servicing Agreement and applicable law.

(b)  [All  future fundings  to  be made under  the Future Funding Obligations  shall be the sole responsibility of the Future Funding Participant and shall be made in accordance with this Agreement and the Loan Agreement. The Future Funding Participant hereby agrees to take all action in connection with the exercise of its rights and obligations in respect of the  future advances to be made pursuant to this Section 4(b), including, without limitation, the review of all Borrower requests for future advances, the approval of future advances and the waiver of any conditions precedent to any future advance, in a manner consistent with customary and usual standards of practice of prudent institutional loan lenders servicing and administering loans for third parties or for their own account. The transfer of the Future Funding Obligations may only be made in accordance with the provisions of Section 12. The Participation 1 Holder

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shall cause any request by Borrower for a future funding under the Loan Agreement to be sent to the Future Funding Participant. Any advance made by the Future Funding Participant will increase the Participation 3 Principal Balance in the corresponding amount of such advance. In the event that all conditions under the Loan Agreement for a future advance under the Future Funding Obligations have been met by Borrower, then the Future Funding Participant will fund such advance in accordance with the terms of the Loan Agreement and shall not require the consent of the Participation 1 Holder or the Participation 2 Holder to lend such future advance. In the event that Borrower shall have failed to satisfy a condition for a future advance under the Future Funding Obligations set forth in the Loan Agreement, the Future Funding Participant may determine to waive such condition and fund such future advance notwithstanding the failed condition without the consent of the Participation 1 Holder or the Participation 2 Holder.]

5.          Payments to Holders. (a) All amounts tendered by Borrower or otherwise available for payment on the Loan (including, without limitation, payments received in connection with any guaranty or indemnity agreement), whether received in the form of monthly debt service payments, Prepayments, Prepayment Premiums, Exit Fees, Balloon Payments, Liquidation Proceeds, Advances, Penalty Charges, proceeds under title, hazard or other insurance policies or awards or settlements in respect of condemnation proceedings or similar exercise of the power of eminent domain (other than any amounts for required reserves or escrows required by the Loan Documents and proceeds, awards or settlements to be applied to the restoration or repair of the Property or released to Borrower in accordance with Accepted Servicing Practices or the Loan Documents) shall be distributed by Participation 1 Holder (or Servicer) and applied in the following order of priority (and payments shall be made at such times as are set forth herein):

(i)         first, to the Participation 1 Holder, the Participation 2 Holder and the Participation 3 Holder, up to the amount of any unreimbursed Costs paid by the respective Holders with respect to the Loan or the Property pursuant to this Agreement or the Loan Documents including, without limitation, unreimbursed Advances;

(ii)        second, to the Holders, pro rata in accordance with their respective Percentage Interests, in an amount equal to the accrued and unpaid interest on their respective Participation Principal Balances at (x) the Interest Rate minus (y) the  Servicing Fee Rate;

(iii)       third, to the Holders, pro rata in accordance with their respective Percentage Interests, in an amount equal to (i) any scheduled principal payment (including Balloon Payments) on the Loan and (ii) any Prepayment of the Loan, in each case to be applied in reduction of their respective Participation Principal Balances;

(iv)       fourth, to the Holders, pro rata, in accordance with their respective Percentage Interests, any Prepayment Premium, to the extent actually paid; and

(v)        fifth, to the Holders, pro rata, in accordance with their respective Percentage Interests, any default interest and Penalty Charges, in each case, to the extent actually paid, and any excess amount that is paid in respect of the Loan and not otherwise applied in accordance with the foregoing clauses (i) through (iv).

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(b)  Notwithstanding the foregoing clauses (a)(i)-(v), all amounts collected on   the Loan that are payable as servicing fees, special servicing fees, indemnity obligations and other reimbursable amounts due under the Loan Documents, that are paid in accordance with the terms of the Servicing Agreement to the Servicer shall be deducted prior to any allocations to the Holders pursuant to this Section 4.

6.          Collections; Payment Procedure. Participation 1 Holder (or Servicer) shall maintain an account for receipt of all amounts paid on account of the Loan (the “Collection Account”); provided, however, that it is acknowledged and agreed that the Collection Account may be an account of Participation 1 Holder (or Servicer) containing funds from other assets unrelated to the Loan or the Property provided that a sub-account (maintained as a separate ledger account) of such account is maintained for the Loan and the Participations or Participation 1 Holder (or Servicer) otherwise maintains separate books and records with respect to activity in the Collection Account relating thereto. Pursuant to the terms hereof, Participation 1 Holder (or Servicer) is hereby irrevocably authorized and directed in accordance with the priorities set forth in Section 5, hereof, to remit from the Collection Account for deposit or credit on the date that is two (2) Business Days prior to the fifteenth (15th) day of each calendar month, or if such fifteenth (15th) day in any month is not a Business Day, the date that is two (2) Business Days prior to the next Business Day after such fifteenth (15th) day (the “Remittance Date”) all payments received under the Loan, by wire transfer to the account or accounts designated to Participation 1 Holder (or Servicer) in writing by each of the Participants; provided that delinquent payments received by Participation 1 Holder (or Servicer) after the related Remittance Date shall be remitted to such accounts on the Business Day following receipt. Amounts on deposit in the Collection Account shall be applied at the times and for the purposes specified in this Agreement. If Participation 1 Holder (or Servicer) holding or having distributed any amount received or collected in respect of the Loan determines, or a court of competent jurisdiction orders, at any time that any amount received or collected in respect of the Loan must, pursuant to any insolvency, bankruptcy, fraudulent conveyance, preference or similar law, be returned to the Borrower or paid to any other Person, then, notwithstanding any other provision of this Agreement, Participation 1 Holder (or Servicer) shall not be required to distribute any portion thereof to any Participant hereunder and each Participant shall promptly on demand repay to the Participation 1 Holder (or Servicer) the portion thereof which shall have been theretofore distributed to the related Participant, together with interest thereon at such rate, if any, as the Participation 1 Holder (or Servicer) shall have been required to pay to Borrower, the other Participants or any other Person with respect thereto. Each Participant agrees that if at any time  it shall receive from any sources whatsoever any payment on account of the Loan in excess of its distributable share thereof, it will promptly remit such excess to Participation 1 Holder (or Servicer, as applicable) and Participation 1 Holder (or Servicer, as applicable) shall promptly remit such amounts to the other Participants. Participation 1 Holder (or Servicer) shall have the right to offset any amounts due hereunder from any Participant with respect to the Loan against any future payments due to such Participant hereunder, provided, that the obligations of each Participant under this Section 6 are separate and distinct obligations from one another and in no event shall any Participant be responsible for payment of any amounts due from the other Participants hereunder. The obligations of each Participant under this Section 6 constitute absolute, unconditional and continuing obligations and Servicer shall be deemed a third party beneficiary of these provisions.

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Each month, Participation 1 Holder (or Servicer) shall prepare and shall deliver copies of a report containing the following information to each of the Participants (provided that Participation 1 Holder shall not be required to provide any such information if and to the extent the same is provided directly to the Participants by Servicer):

(i)         For each of the Participants, (x) the amount of the distribution from the Collection Account allocable to principal and (y) separately identifying the amount of scheduled principal payments, Balloon Payments, Prepayments made at the option of the Borrower or other Prepayments included therein;

(ii)        For each of the Participants, the amount of the distribution from the Collection Account allocable to interest and the amount of default interest paid under the Loan Documents;

(iii)       If the distribution to the Participants is less than the full amount that would be distributable to such Holders if there had been sufficient amounts available therefor, the amount of the shortfall and the allocation thereof between interest and principal and the amount of the shortfall, if any, under the Loan;

(iv)       The principal balance relating to each of the Participations, after giving effect to the distribution of principal on such Remittance Date;

(v)        The amount of the servicing fees and other fees paid to Servicer with respect to such Remittance Date; and

(vi)       Such other information as any Participant may reasonably request, to the extent reasonably available to Participation 1 Holder (or Servicer, as applicable), and in such event any costs incurred in providing such additional information shall be reimbursed by the requesting party.

7.          Reallocation of Principal Balance. The Participants may agree in writing to reallocate principal between the Participations and adjust the Percentage Interests of the Participants to reflect such reallocation, provided that any such reallocation of principal and adjustment of the Percentage Interests shall require the prior written consent of all Participants. The parties shall confirm such reallocation of principal between the Participations and adjustment of the Percentage Interests by executing and delivering an amendment of the Loan Schedule substantially in the form of Exhibit C attached hereto.

8.          Additional Understandings. Participation 1 Holder (or Servicer) shall furnish to each Holder copies of any notices, requests for consent, servicing reports, financial statements and reports received pursuant to the Loan Documents promptly after receipt thereof by the Participation 1 Holder (or Servicer).

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9.          Representations and Warranties of the Initial Holders.

Each Initial Holder, as of the date hereof, hereby represents and warrants to, and covenants with the other Initial Holder that:

(i)         It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation.

(ii)        The execution and delivery of this Agreement by it, and the performance of, and compliance with, the terms of this Agreement by it, will not violate its organizational documents or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach of, any material agreement or other instrument to which it is a party or that is applicable to it or any of its assets, in each case which materially and adversely affect its ability to carry out the transactions contemplated by this Agreement.

(iii)       It has the full power and authority to enter into and consummate all transactions contemplated by this Agreement, has duly authorized the execution, delivery and performance of this Agreement and has duly executed and delivered this Agreement.

(iv)       This Agreement is its legal, valid and binding obligation enforceable against it in accordance with its terms.

(v)        It has not dealt with any broker, investment banker, agent or other Person that may be entitled to any commission or compensation in connection with the consummation of any of the transactions contemplated hereby.

10.        No Creation of a Partnership or Exclusive Purchase Right. Nothing contained in this Agreement, and no action taken pursuant hereto shall be deemed to constitute the arrangement between the Participants a partnership, association, joint venture or other entity. Subject to Section 12(c) hereof, no Holder shall have any obligation whatsoever to offer to any other Holder the opportunity to purchase interests in any future notes or participation interests or future loans purchased or originated by such Holder or any of its Affiliates, and if any Holder chooses to offer to any other Holder the opportunity to purchase interests in any future notes or any participation interests in any future loans purchased or originated by such Holder or its Affiliates, such offer shall be at such purchase price and interest rate as such Holder chooses, in its sole and absolute discretion.

11.        Not a Security. None of the Participations shall be deemed to be  a security within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934.

12.        Transfer of Participations. (a) No Participant shall sell, assign, transfer, pledge, syndicate, sell, hypothecate, contribute, encumber, subparticipate or otherwise dispose of (each, a “Transfer”) all or any portion of its Participation to the Borrower or any of its Affiliates. The Participation 2 Holder shall not Transfer all or any portion of Participation 2, without first receiving the prior written consent of the Participation 1 Holder which consent shall not be unreasonably withheld or delayed (and shall pay all reasonable out-of-pocket costs and expenses

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of the Participation 1 Holder incurred in connection with reviewing such request for consent); provided that, in the event a Participation Pledgee (or its assignee or designee) relating to Participation 1 [or Participation 3] has become the Holder of the related Participation by reason of foreclosure or assignment in lieu of foreclosure, subject to Section 12(c) hereof, the Participation 2 Holder may Transfer all or any portion of Participation 2, without the consent of the Participation 1 Holder, but subject to the conditions contained in the next succeeding sentence, to a Qualified Institutional Lender that provides to the Participation 1 Holder certification in writing from an authorized officer that it is a Qualified Institutional Lender. Notwithstanding the foregoing, the Participation 2 Holder agrees that each Transfer to be made by it under this Section 12 is subject to the following restrictions: (i) the Participation 2 Holder shall give the Participation 1 Holder notice of such Transfers within five (5) days after the effective date thereof, and (ii) a transferee shall execute an assignment and assumption agreement whereby such transferee assumes all or a ratable portion, as the case may be, of the obligations of the Participation 2 Holder hereunder with respect to Participation 2 from and after the date of such assignment. Upon the consummation of a Transfer of all or any portion of Participation 2, the Participation 2 Holder shall be released from all liability arising under this Agreement with respect to Participation 2 (or the portion thereof that was the subject of such Transfer), for the period after the effective date of such Transfer (it being understood and agreed that the foregoing release shall not apply in the case of a sale, assignment, transfer or other disposition of a subparticipation interest). Notwithstanding anything to the contrary contained herein, the Participation 1 Holder may freely Transfer all or any portion of Participation 1, without any consent or approval of the Participation 2 Holder [or the Participation 3 Holder, and the Participation 3 Holder may freely Transfer all or any portion of Participation 3 (including the Future Funding Obligations), without any consent or approval of the Participation 1 Holder or the Participation 2 Holder].

(b)        Notwithstanding anything to the contrary contained herein, each of Participation 1 Holder [and Participation 3 Holder] may pledge (a “Pledge”) its Participation to any entity which has extended a credit facility to such Participant and that is a Qualified Institutional Lender (such Person, a “Participation Pledgee”), on terms and conditions set forth in this Section 12(b), it being further agreed that a financing provided by a Participation Pledgee to a Participant or any Affiliate which controls such Participant that is secured by such Participant’s interest in the applicable Participation and is structured as a repurchase arrangement, shall qualify as a “Pledge” hereunder, provided, that a Participation Pledgee which is not a Qualified Institutional Lender may not take title to the pledged Participation without the consent of the other Participant. Upon written notice by Participation 1 Holder [or Participation 3 Holder, as applicable], to the other Participants that a Pledge has been effected (including the name and address of the applicable Participation Pledgee), the non-pledging Participants agree to acknowledge receipt of such notice and thereafter agree: (i) to give such Participation Pledgee written notice of any default by the pledging Participant in respect of its obligations under this Agreement of which default such Participant has actual knowledge and which notice shall be given simultaneously with the giving of such notice to the pledging Participant; (ii) to allow such Participation Pledgee a period of ten (10) days to cure a default by the pledging Participant in respect of its obligations to the other Participants hereunder, but such Participation Pledgee shall not be obligated to cure any such default; (iii) that no amendment, modification, waiver or termination of this Agreement shall be effective against such Participation Pledgee without the prior written consent of such Participation Pledgee; (iv) that such non-pledging Participants shall

13

accept any cure by such Participation Pledgee of any default of the pledging Participant which such pledging Participant has the right to effect hereunder, as if such cure were made by such pledging Participant; (v) that such non-pledging Participants shall deliver to Participation Pledgee such estoppel certificate(s) as Participation Pledgee shall reasonably request, provided that any such certificate(s) shall be in a form reasonably satisfactory to such other Participant; and (vi) that, upon written notice (a “Redirection Notice”) to the non-pledging Participants and the Servicer by such Participation Pledgee that the pledging Participant is in default beyond any applicable cure periods with respect to the pledging Participant’s obligations to such Participation Pledgee pursuant to the applicable credit agreement or other agreements relating to the Pledge between the pledging Participant and such Participation Pledgee (which notice need not be joined in or confirmed by the pledging Participant), and until such Redirection Notice is withdrawn or rescinded by such Participation Pledgee, Participation Pledgee shall be entitled to receive any payments that the Participation 1 Holder or Servicer would otherwise be obligated to pay to the pledging Participant from time to time pursuant to this Agreement. Any pledging Participant hereby unconditionally and absolutely releases the other Participants and the Servicer from any liability to the pledging Participant on account of any non-pledging Participant’s or the Servicer’s compliance with any Redirection Notice believed by the Servicer or such non- pledging Participant to have been delivered by a Participation Pledgee. Participation Pledgee shall be permitted to exercise fully its rights and remedies against the pledging Participant (and accept an assignment in lieu of foreclosure as to such collateral), in accordance with applicable law and this Agreement and without prior notice to any other Participant. In such event, the non-pledging Participants and the Servicer shall recognize such Participation Pledgee (and any transferee which is also a Qualified Institutional Lender at any foreclosure or similar sale held by such Participation Pledgee or any transfer in lieu of foreclosure), and its successor and  assigns, as the successor to the pledging Participant’s rights, remedies and obligations under this Agreement, and any such Participation Pledgee or Qualified Institutional Lender shall assume in writing the obligations of the pledging Participant hereunder accruing from and after such Transfer (i.e., realization upon the collateral by such Participation Pledgee) and agrees to be bound by the terms and provisions of this Agreement. The rights of  a Participation Pledgee under this Section 12(b) shall remain effective as to any Participant (and the Servicer) unless and until such Participation Pledgee shall have notified such Participant (and the Servicer) in writing that its interest in the pledged Participation has terminated. [Notwithstanding anything contained herein to the contrary, in no event shall the Participation 1 Holder pledge Participation 1 unless the Participation 3 Holder has pledged the Participation 3 to the same Participation Pledgee to which Participation 1 has been pledged and the Participation 3 Holder pledge the Participation 3 unless the Participation 1 Holder has pledged Participation 1 to the same Participation Pledgee to which Participation 3 has been pledged.]

(c)        If a Participation Pledgee (or its assignee or designee) relating to Participation 1 [or Participation 3] has become the Holder of the related Participation by reason of foreclosure or assignment in lieu of foreclosure, in the event that the Participation 2 Holder desires to sell all or any portion of its interest in Participation 2, the Participation 2 Holder shall give notice to the Participation 1 Holder of its intent to do so, which notice shall include a description of all related terms associated with the proposed sale including, without limitation, the related minimum sales price and an offer by the Participation 2 Holder to sell Participation 2 to the Participation 1 Holder at such minimum sales price and upon such terms (any such notice, a “ROFO Notice”). Participation 1 Holder shall, within ten (10) calendar days after receipt of

14

Participation 2 Holder’s ROFO Notice, deliver to Participation 2 Holder a written response thereto, either agreeing to purchase, or declining to purchase, Participation 2 subject to such ROFO Notice, for the purchase price and subject to the terms set forth in the related ROFO Notice. If within said ten (10) calendar day period Participation 1 Holder agrees to so purchase Participation 2, Participation 1 Holder shall purchase the related Participation 2 in accordance with the terms set forth in the ROFO Notice, within twenty (20) days thereafter. Should Participation 1 Holder (i) reject Participation 2 Holder’s offer and related sales terms, (ii) fail to respond to Participation 2 Holder’s offer within the above ten (10) calendar day period or (iii) agree to purchase Participation 2 but fail to close such purchase within the time period prescribed pursuant to this paragraph, Participation 2 Holder shall be permitted to, for a period of ninety (90) days thereafter, sell Participation 2 to a third-party purchaser at a sales price of not less than ninety-seven percent (97%) of the sales price offered to Participation 1 Holder, which sale shall be on an arm’s length basis on otherwise substantially identical terms as those offered to Participation 1 Holder in the ROFO Notice. Should Participation 2 Holder fail to sell Participation 2 on the terms described in the preceding sentence within such ninety (90) day period, Participation 2 Holder shall not thereafter sell Participation 2 without first delivering a new ROFO Notice and again complying with all of the terms set forth in this paragraph.

13.        Other Business Activities of the Participants. Each Participant acknowledges that the other Participants may make loans or otherwise extend credit to, and generally engage in any kind of business with, any Affiliate of the Borrower (“Borrower Related Parties”), and receive payments on such other loans or extensions of credit to the Borrower Related Parties and otherwise act with respect thereto freely and without accountability in the same manner as if this Agreement and the transactions contemplated hereby were not in effect.

14.        Certain Powers of the Controlling Holder. During the term of this Agreement, the Controlling Holder shall be entitled to exercise any and all rights of the lender with respect to the Loan under the Loan Documents including, without limitation, executing amendments or modifications to the Loan Documents, the exclusive right to grant any consents and approvals and to exercise all the rights and powers granted to the lender under the Loan Documents, in each case, subject to the terms and conditions of this Agreement, the Loan Documents, Accepted Servicing Practices, the Servicing Agreement and applicable law; provided, however, prior to the exercise of any rights and remedies by any Participation Pledgee in respect of Participation 1 or Participation 3 under its related credit facility, that in no event shall the Controlling Holder modify, amend or terminate any Loan Document in a manner which would solely have an adverse effect on any Non-Controlling Holder (and would not have the same adverse effect on the Controlling Holder) without the prior written consent of such Non- Controlling Holder, which consent may be granted or denied in the sole discretion of such Non- Controlling Holder. The Controlling Holder may (i) direct the Servicer or designate (or vote on the designation of) any other Person to exercise any and all of such rights and (ii) may elect to remove the Servicer and appoint a replacement Servicer in its sole discretion with respect to the Loan. In no event shall the Controlling Holder (or the Servicer acting on its behalf) be obligated at any time to follow or take any actions recommended by any Non-Controlling Holder.

15.        No Pledge or Loan. This Agreement shall not be deemed to represent a pledge of any interest in the Loan by the Initial Lender to any Holder or a loan from Initial Lender to any Holder. The Participants shall have no interest in any property taken as security

15

for the Loan; provided,  however, that if any such property or the proceeds thereof shall be applied in reduction of the Loan Principal Balance, then each Participant shall be entitled to receive its share of such application in accordance with the terms of this Agreement and the Participation Agreement. The Participants acknowledge and agree that the Loan represents a single “claim” under Section 101 of the Bankruptcy Code, and that no Participant shall be a separate creditor of the Borrower under the Bankruptcy Code.

16.        Governing Law; Waiver of Jury Trial. THIS AGREEMENT AND THE RESPECTIVE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

17.        Modifications. This Agreement shall not be modified, cancelled or terminated except by an instrument in writing signed by the parties hereto. The party seeking modification of this Agreement shall be solely responsible for any and all expenses that may arise in order to modify this Agreement.

18.        Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns; provided that no successors or assigns of the Participants shall have any liability for a breach of a representation or warranty set forth in this Agreement (but the liability of the applicable Initial Participant therefor shall survive). Except as provided in Section 5, none of the provisions of this Agreement shall be for the benefit of or enforceable by any Person not a party hereto or a successor or assign of a party hereto.

19.        Counterparts. This Agreement may be executed in any number of counterparts and all of such counterparts shall together constitute one and the same instrument.

20.        Captions. The titles and headings of the paragraphs of this Agreement have been inserted for convenience of reference only and are not intended to summarize or otherwise describe the subject matter of the paragraphs and shall not be given any consideration in the construction of this Agreement.

21.        Notices. All notices required hereunder shall be in writing and (i) personally delivered, (ii) sent by facsimile transmission together with telephonic notice and if the sender on the same day sends a confirming copy of such notice by reputable overnight delivery service (charges prepaid), (iii) sent by reputable overnight delivery service (charges prepaid) or (iv) sent by certified United States mail, postage prepaid return receipt requested, and addressed to the respective parties at their addresses set forth on Exhibit B hereto, or at such other address as any party shall hereafter inform the other party by written notice given as aforesaid. All written notices so given shall be deemed effective upon receipt or, if mailed, upon the earlier to occur of receipt or the expiration of the fourth (4th) day following the date of mailing. In the event any Participation is subject to a Pledge, the Participation Pledgee shall be entitled to the

16

same notices required to be delivered to the other Participants relating to any Transfers of Participation hereunder. Any such pledging Participation shall provide the notice information of the applicable Participation Pledgee to the other Participants.

22.        Custody of Loan Documents. The Participants acknowledge that originals of all of the Loan Documents will be held by the Participation 1 Holder [or by the Custodian on its behalf pursuant to the Custodial Agreement].

23.        Statement of Intent. Each Participant, by its acceptance of its interest herein, agrees, unless otherwise required by appropriate tax authorities, to file its own tax returns and reports as required under applicable law.

24.        Servicing of the Loan. The parties agree that the Participation 1 Holder  (or the Servicer) shall service the Loan on behalf of the Participants.

25.        Registration of Transfers. Participation 1 Holder (or Servicer on its  behalf) shall maintain a register on which it will record the names and addresses of, and wire transfer instructions for, the Holders from time to time, to the extent such information is provided in writing to it by the Holders. Any transfer of a Participation hereunder shall be recorded on such register.

17

IN WITNESS WHEREOF, each of the Holders has caused this Agreement to be duly executed as of the day and year first above written.

Initial Lender:

STARWOOD PROPERTY MORTGAGE, L.L.C.

By:

Name:

Title:

Initial Participation 1 Holder:

STARWOOD PROPERTY MORTGAGE SUB- 14[-A], L.L.C.

By:

Name:

Title:

Initial Participation 2 Holder:

STARWOOD PROPERTY MORTGAGE, L.L.C.

By:

Name:

Title:

[Initial Participation 3 Holder:

SPT CA FUNDINGS 2, LLC

By:

Name:

Title:

EXHIBIT A

LOAN SCHEDULE

A.         Description of Loan

Date of Loan:	, 201
Initial Principal Amount of Loan:
Mortgage Promissory Note A-1 Initial
Principal Balance:	$
Mortgage Promissory Note A-2 Initial
Principal Balance:	$
	$
Maximum Principal Amount of Loan:
Mortgage Promissory Note A-1
Maximum Principal Balance:	$
Mortgage Promissory Note A-2
Maximum Principal Balance:	$
	$
Location of Property:
Current Use of Property:
Borrower:
Description of Notes:
Interest Rate:
Exit Fee/Prepayment Fee:

A-1

Prepayment Premium:

Maturity Date:

A-2

B.         Description of Participations:

Initial Participation 1 Principal Balance	$
Initial Participation 2 Principal Balance	$
[Initial Participation 3 Principal Balance]	[$ ]
[Maximum Participation 3 Principal Balance]	[$ ]

A-3

EXHIBIT B

Initial Participation 1 Holder:

[STARWOOD REPO SELLER]

c/o Starwood Property Trust, Inc.

591 West Putnam Avenue

Greenwich, Connecticut 06830

Attention: Andrew J. Sossen

Telephone: (203) 422-8191

Fax: (203) 422-8192

E-Mail: asossen@starwood.com

with copies to:

Starwood Property Trust, Inc.

1601 Washington Avenue

Miami Beach, Florida 33139

Attention: Asset Management

Email: jdiamond@starwood.com

Sidley Austin LLP

787 Seventh Avenue

New York, New York 10019

Attention: Robert L. Boyd, Esq.

Telephone: (212) 839-7352

Fax: (212) 839-5599

Email: rboyd@sidley.com

Initial Participation 2 Holder:

Starwood Property Mortgage, L.L.C.

c/o Starwood Property Trust, Inc.

591 West Putnam Avenue

Greenwich, Connecticut 06830

Attention: Andrew J. Sossen

Telephone: (203) 422-8191

Fax: (203) 422-8192

E-Mail: asossen@starwood.com

with copies to:

Starwood Property Trust, Inc.

1601 Washington Avenue

Miami Beach, Florida 33139

B-1

Attention: Asset Management

Email: jdiamond@starwood.com

Sidley Austin LLP

787 Seventh Avenue

New York, New York 10019

Attention: Robert L. Boyd, Esq.

Telephone: (212) 839-7352

Fax: (212) 839-5599

Email: rboyd@sidley.com

[Initial Participation 3 Holder:

SPT CA Fundings 2, LLC

c/o Starwood Property Trust, Inc.

591 West Putnam Avenue

Greenwich, Connecticut 06830

Attention: Andrew J. Sossen

Telephone: (203) 422-8191

Fax: (203) 422-8192

E-Mail: asossen@starwood.com

with copies to:

Starwood Property Trust, Inc.

1601 Washington Avenue

Miami Beach, Florida 33139

Attention: Asset Management

Email: jdiamond@starwood.com

Sidley Austin LLP

787 Seventh Avenue

New York, New York 10019

Attention: Robert L. Boyd, Esq.

Telephone: (212) 839-7352

Fax: (212) 839-5599

Email: rboyd@sidley.com]

C-2

EXHIBIT C

FORM OF PRINCIPAL REALLOCATION AMENDMENT

C-3

SCHEDULE 1

Permitted Fund Managers

C-4

FOURTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

FOURTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

THIS FOURTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT (this “Amendment”), dated as of May 1, 2018, by and between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“Buyer”) and STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C. and STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C., each a Delaware limited liability company (collectively, “Original Seller”) and STARWOOD MORTGAGE FUNDING VI LLC, a Delaware limited liability company (“Funding VI Seller”), and SPT CA FUNDINGS 2, LLC, a Delaware limited liability company (“SPT CA Seller”; together with Original Seller and Funding VI Seller, individually and/or collectively as the context may require, “Seller”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Master Repurchase Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Original Seller and Buyer have entered into that certain Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016, and that certain Second Amendment to Uncommitted Master Repurchase Agreement, dated as of April 25, 2016, and that certain Third Amendment to Uncommitted Master Repurchase Agreement and Amendment of Fee Letter, dated as of April 20, 2018 (the “Master Repurchase Agreement”);

WHEREAS, Sellers have requested, and Buyer has agreed, to extend the Maturity Date contained in the Master Repurchase Agreement in accordance with the terms and provisions of this Amendment; and

WHEREAS, Seller and Buyer wish to modify certain terms and provisions of the Master Repurchase Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1.    Amendments to Master Repurchase Agreement. The Master Repurchase Agreement is hereby amended as follows:

(a)    The definition of “Maturity Date” in Article 2 of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“Maturity Date” shall mean May 1, 2021 or the immediately succeeding Business Day, if such day shall not be a Business Day (the “Initial Maturity Date”), as such date may be extended subject to, and in accordance with, Article 3(n) hereof. For the sake of clarity, the Maturity Date shall not be any date beyond five (5) years from the effective date of the Fourth Amendment (the “Final Maturity Date”).

(b)    The definition of “Additional Facility Capacity Draw Conditions” in Article 2 of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“Additional Facility Capacity Draw Conditions” shall mean all of the following conditions, as determined by Buyer in its sole discretion: (i) Buyer shall have received payment from Seller of that portion of the Structuring Fee due and payable on the Additional Facility Capacity Draw Date pursuant to clause (b) of the Structuring Fee definition set forth in the Fee Letter and (ii) no Force Majeure Event, Event of Default or Margin Deficit shall have occurred and be continuing.

(c)    The following definitions are hereby added, in alphabetical order, to Article 2 of the Master Repurchase Agreement:

“Fourth Amendment” shall mean that certain Fourth Amendment to Uncommitted Master Repurchase Agreement, dated as of May 1, 2018, among Sellers and Buyer.

“Term Reset Structuring Fee” shall have the meaning specified in the Fee Letter.

(d)    Article 3(n)(i) of the Master Repurchase Agreement is hereby amended by deleting the phrase “December 10, 2020” contained in the seventeenth (17th) line thereof and replacing the same with “May 1, 2023”.

(e)    Article 3(dd) of the Master Repurchase Agreement is hereby amended by deleting the phrase “the Closing Date” contained in the second (2nd) line thereof and replacing the same with “the effective date of the Fourth Amendment”.

2.    Term Reset Structuring Fee. As consideration for Buyer’s agreement to enter into this Amendment, Buyer shall have received payment from Sellers of the Term Reset Structuring Fee on the date hereof.

3.    Effectiveness. The effectiveness of this Amendment is subject to receipt by Buyer of the following:

(a)    Amendment. This Amendment, duly executed and delivered by Sellers, Guarantor and Buyer.

(b)    Amendment to Fee Letter. The Second Amendment to Fee and Pricing Letter, dated as of the date hereof (the “Second Amendment of Fee Letter”), by and among Buyer and Sellers.

(c)    Buyer’s Costs. Payment by Sellers of the actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with this Amendment and the transactions contemplated hereby.

4.    Representations and Warranties. All representations and warranties in the Master Repurchase Agreement are true, correct, complete and accurate in all respects as of the date hereof (except as may be set forth in any Requested Exceptions Report and except that if any such representation or warranty

2

is expressly stated to have been made as of a specific date, then such representation or warranty shall be true and correct as of such specific date).

5.    Continuing Effect; Reaffirmation of Guarantee Agreement. As amended by this Amendment and the Second Amendment of Fee Letter, all terms, covenants and provisions of the Master Repurchase Agreement and Fee Letter are ratified and confirmed and shall remain in full force and effect. In addition, all terms, covenants and provisions of the Guarantee Agreement are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Buyer, and Guarantor hereby consents, acknowledges and agrees to the modifications set forth in this Amendment. By its execution hereof, Guarantor hereby reaffirms its obligations under the Guarantee Agreement.

6.    Binding Effect; No Partnership; Counterparts. The provisions of the Master Repurchase Agreement and the Fee Letter, as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment in Portable Document Format (PDF) by email or facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.

7.    Further Agreements. Seller agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Buyer and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

8.    Governing Law. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

9.    Headings. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

10.    References to Transaction Documents. All references to the Master Repurchase Agreement or the Fee Letter in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement or Fee Letter, as amended hereby and by the Second Amendment of Fee Letter, respectively, unless the context expressly requires otherwise.

[NO FURTHER TEXT ON THIS PAGE]

3

IN WITNESS WHEREOF,  the parties have executed this Amendment as of the day first written above.

BUYER:
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, a national banking association
By:	/s/ Thomas N. Cassino
Name:	Thomas N. Cassino
Title:	Executive Director

Signature Page to Fourth Amendment to Uncommitted Master Repurchase Agreement

SELLER:
STARWOOD PROPERTY MORTGAGE SUB-14,
L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD PROPERTY MORTGAGE SUB-14-
A, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD MORTGAGE FUNDING VI LLC, a
Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
SPT CA FUNDINGS 2, LLC, a Delaware limited
liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to Fourth Amendment to Uncommitted Master Repurchase Agreement

AGREED AND ACKNOWLEDGED:
GUARANTOR:
STARWOOD PROPERTY TRUST, INC.,  a
Maryland corporation
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to Fourth Amendment to Uncommitted Master Repurchase Agreement

FIFTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

EXECUTION VERSION

FIFTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

THIS FIFTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT (this “Amendment”), dated as of January 10, 2019, by and between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“Buyer”) and STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C. and STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C., each a Delaware limited liability company (collectively, “Original Seller”) and STARWOOD MORTGAGE FUNDING VI LLC, a Delaware limited liability company (“Funding VI Seller”), and SPT CA FUNDINGS 2, LLC, a Delaware limited liability company (“SPT CA Seller”; together with Original Seller and Funding VI Seller, individually and/or collectively as the context may require, “Seller”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Master Repurchase Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Original Seller and Buyer have entered into that certain Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016, and that certain Second Amendment to Uncommitted Master Repurchase Agreement, dated as of April 25, 2016, and that certain Third Amendment to Uncommitted Master Repurchase Agreement and Amendment of Fee Letter, dated as of April 20, 2018, and that certain Fourth Amendment to Uncommitted Master Repurchase Agreement, dated as of May 1, 2018 (the “Master Repurchase Agreement”);

WHEREAS, Sellers have requested, and Buyer has agreed, to permit the purchase of certain Assets secured by properties located in the United Kingdom, subject to, and in accordance with, the terms and provisions of the Master Repurchase Agreement; and

WHEREAS, Seller and Buyer wish to modify certain terms and provisions of the Master Repurchase Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1.    Amendments to Master Repurchase Agreement. The Master Repurchase Agreement is hereby amended as follows:

(a)    The following definitions are hereby added to Article 2 of the Master Repurchase Agreement in correct alphabetical order:

“Applicable Currency” shall mean U.S. dollars or Pounds Sterling, as applicable.

“Approved Valuation” shall mean a valuation in form and substance reasonably satisfactory to Buyer, prepared and issued by a Valuer valuing the Mortgagor’s interest in the relevant Underlying Mortgaged Property carried out on the basis of the market value as defined in the then current Statements of Asset Valuation

Practice and Guidance Notes issued by the Royal Institution of Chartered Surveyors.

“Fifth Amendment” shall mean that certain Fifth Amendment to Uncommitted Master Repurchase Agreement, dated as of January 10, 2019, among Sellers and Buyer.

“Foreign Depository Account” shall have the meaning set forth in Article 5(a).

“Foreign Mortgage” shall mean an English law-governed security agreement pursuant to which a Mortgagor that (a) owns an Underlying Mortgaged Property located in the United Kingdom and/or (b) is incorporated or established in United Kingdom, creates security over such Mortgagor’s entire assets and undertaking (including any such Underlying Mortgaged Property) with respect to a Foreign Purchased Asset.

“Foreign Mortgage Loan” shall mean a Senior Mortgage Loan relating to an Underlying Mortgaged Property located in the United Kingdom.

“Foreign Obligor” shall mean an entity identified as a borrower and/or a guarantor in the related loan agreement under which a Foreign Mortgage Loan is made or that otherwise creates any security over any asset as security for the obligations of any entity under such Foreign Mortgage Loan.

“Foreign Purchased Asset” shall mean a Purchased Asset with respect to which the Underlying Mortgaged Property is located in the United Kingdom.

“Original Seller” shall have the meaning given thereto in the Fifth Amendment.

“Pound Sterling” shall mean the lawful currency for the time being of the United Kingdom.

“Security Deed” shall mean the Security Deed executed and delivered concurrently with the execution and delivery of the Fifth Amendment, as the same may be amended, modified and/or restated from time to time.

“Spot Rate” shall mean, as of any date of determination, the Pound Sterling/U.S. dollar spot rate determined by Buyer at or about 11:00 a.m. New York Time such date of determination as obtained from the applicable screen on Bloomberg.

“Transfer Certificate” shall mean, with respect to each Purchased Asset, the form of transfer certificate or assignment (at Buyer’s option if an assignment is an available option in the applicable jurisdiction) used to effectuate a legal transfer of the Underlying Mortgage Loan and as attached to the underlying facilities agreement, or the equivalent in the applicable jurisdiction.

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“Undertaking Letter” shall mean one or more letters, in each case from an Acceptable Attorney or another Person acceptable to Buyer, in form and substance of Exhibit XVIII or as is otherwise customary in the relevant jurisdiction, and in each case acceptable to Buyer, wherein such Acceptable Attorney or other Person described above in possession of a Purchased Asset File (a) acknowledges receipt of such Purchased Asset File and (b) confirms that such Acceptable Attorney or other Person acceptable to Buyer is holding the same as agent on behalf of Buyer under such letter.

“U.S. Purchased Asset” shall mean a Purchased Asset with respect to which the Underlying Mortgaged Property is located in any state of the United States of America.

“Valuer” shall mean a reputable firm of valuers of international standing approved by Buyer.

(b)   The following definitions contained in Article 2 of the Master Repurchase Agreement are hereby amended and restated as follows:

“Acceptable Attorney” means (i) an attorney-at-law or notary (if required in the relevant jurisdiction) or (ii) a firm of solicitors regulated by the Solicitors Regulation Authority (with respect to any Foreign Purchased Asset) that has, in each case, delivered at the applicable Seller’s request a Bailee Letter or an Undertaking Letter, as applicable, with the exception of an attorney or notary that is not satisfactory to Buyer.

“Bailee Letter” shall mean (A) with respect to any U.S. Purchased Asset, a letter from an Acceptable Attorney or from a Title Company, or another Person acceptable to Buyer in its sole and absolute discretion, in the form attached to this Agreement as Exhibit IX, wherein such Acceptable Attorney, Title Company or other Person described above in possession of a Purchased Asset File (i) acknowledges receipt of such Purchased Asset File, (ii) confirms that such Acceptable Attorney, Title Company, or other Person acceptable to Buyer is holding the same as bailee of Buyer under such letter and (iii) agrees that such Acceptable Attorney, Title Company or other Person described above shall deliver such Purchased Asset File to the Custodian by not later than the third (3rd) Business Day following the Purchase Date for the related Purchased Asset, and (B) with respect to any Foreign Purchased Asset, an Undertaking Letter.

“Depository Agreement” shall mean, individually or collectively, as the context may require, (i) that certain Deposit Account Control Agreement (Repo Collection Account), dated as of January 8, 2016 among Buyer, Original Seller and Wells Fargo Bank, National Association, relating to the Sub-14 Depository Account, (ii) that certain Deposit Account Control Agreement (Repo Collection Account), dated as of April 25, 2016, among Buyer, Funding VI Seller and U.S. Bank, National Association relating to the Funding VI Depository Account, and (iii) the deposit account control agreement or charged account control deed to be

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entered into in accordance with the terms and provisions of the Fifth Amendment, as such agreements may be amended, modified and/or restated from time to time, and/or any replacement agreement to such agreements.

“Depository” shall mean, individually or collectively, as the context may require, (i)  with respect to the Sub-14 Depository Account, Wells Fargo Bank, National Association, (ii)  with respect to the Funding VI Depository Account, U.S. Bank, National Association, and (iii)  with respect to the Foreign Depository Account, a bank or financial institutional acceptable to Buyer in connection with the establishment of the Foreign Depository Account, or any successor to each such bank appointed by Buyer in its sole discretion.

“Eligible Assets” shall mean any of the following types of assets or loans (1) that are acceptable to Buyer in its sole and absolute discretion as of the Purchase Date for the related Purchased Asset, (2) on each day, with respect to which there is no breach of the applicable representations and warranties set forth in this Agreement (including the exhibits hereto) that materially and adversely affects the value of such Asset, the Underlying Mortgaged Property related thereto or the interests of Buyer in such Asset, except to the extent specifically disclosed in writing in a Requested Exceptions Report approved by Buyer, and (3) that are secured directly or indirectly by properties that are multi-family, mixed use, industrial, office building or hospitality or such other types of commercial properties that Buyer may agree to in its sole discretion, and are properties located in either the United States of America, its territories or possessions (or elsewhere, in the sole discretion of Buyer) or the United Kingdom:

(i)     Senior Mortgage Loans, including Senior Mortgage Loans evidenced by an A-Note; provided that, to the extent that any A-Note that is a Purchased Asset represents a Senior Pari Passu Interest that does not have control over servicing and other decisions pursuant to the related participation agreement or co-lender agreement, such Senior Pari Passu Interest shall only be an Eligible Asset hereunder to the extent that it, together with all other such Senior Pari Passu Interests that are Purchased Assets, do not exceed, in the aggregate, twenty-five percent (25%) of the Maximum Facility Amount;

(ii)     Junior Mortgage Loans, including Junior Mortgage Loans evidenced by a B-Note, but only to the extent that the Senior Mortgage Loan or A-Note, as applicable, to which such Junior Mortgage Loan or B-Note relates is also a Purchased Asset;

(iii)     Participation Interests; provided, that to the extent that any Senior Pari Passu Interest that is a Purchased Asset does not have control over servicing and other decisions pursuant to the related participation agreement or co-lender agreement, such Senior Pari Passu Interest shall only be an Eligible Asset hereunder to the extent that it, together with all other such Senior Pari Passu

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Interests without such control rights, do not exceed, in the aggregate, twenty-five percent (25%) of the Maximum Facility Amount;

(iv)     Mezzanine Loans, which may be either stand-alone Mezzanine Loans or Related Mezzanine Loans (as specified in the related Confirmation); provided that, in the case of any such Asset identified in the related Confirmation as a Related Mezzanine Loan, such Asset shall be not be an Eligible Asset at any time that the related Underlying Mortgage Loan is not also a Purchased Asset;  and

(v)     any other asset types or classifications that are acceptable to Buyer, subject to its consent on all necessary and appropriate modifications to this Agreement and each of the Transaction Documents, as determined by Buyer in its sole and absolute discretion; and

Notwithstanding anything to the contrary contained in this Agreement, the following shall not be Eligible Assets for purposes of this Agreement: (i) non-performing loans; (ii) loans that are Defaulted Assets; (iii) construction loans or land loans, (iv) any Asset, where the purchase thereof would cause the aggregate  of  all  Repurchase  Prices  to  exceed  the  Maximum Facility Amount; (v) loans for which the applicable Appraisal or Approved Valuation is (a) not dated within three hundred sixty-four (364) days of the proposed Purchase Date or (b) not ordered by a “Financial Services Institution” as defined in the Interagency Appraisal and Evaluation Guidelines, (vi) any Asset, which may not be a Purchased Asset pursuant to any Requirement of Law due to a change in any Requirement of Law that affects the legal, regulatory or capital treatment of such Purchased Asset (other than any change in a Requirement of Law which permits such Purchased Asset to remain a Purchased Asset hereunder, so long as Sellers pay to Buyer such additional amounts as required pursuant to Articles 3(h),  (i),  (k) or (l), as applicable) or (vii) any Asset, where the purchase thereof would cause the aggregate of all Repurchases Prices of CMBS Purchased Assets to exceed the CMBS Purchased Asset Capacity Buyer such additional amounts as required pursuant to Articles 3(h),  (i),  (k) or (l), as applicable).

“LIBOR” shall mean, with respect to each Pricing Rate Period, the rate determined by Buyer to be (i) the per annum rate for deposits in U.S. dollars (with respect to U.S. Purchased Assets) or Pound Sterling (with respect to Foreign Purchased Assets) for a period equal to the applicable Pricing Rate Period that appears on the Thomson Reuters ICE LIBOR# Rates - LIBOR01 Page (or any successor thereto) as the London Interbank Offering Rate as of 11:00 a.m., London time, on the Pricing Rate Determination Date (rounded upwards, if necessary, to the nearest 1/1000 of 1%); (ii) if such rate does not appear on said Thomson Reuters ICE LIBOR# Rates - LIBOR01 Page, the arithmetic mean (rounded as aforesaid) of the offered quotations of rates obtained by Buyer from the Reference Banks for deposits in U.S. dollars (with respect to U.S. Purchased Assets) or Pound Sterling (with respect to Foreign Purchased Assets) for a period

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equal to the applicable Pricing Rate Period to prime banks in the London Interbank market as of approximately 11:00 a.m., London time, on the Pricing Rate Determination Date and in an amount that is representative for a single transaction in the relevant market at the relevant time; or (iii) if fewer than two (2) Reference Banks provide Buyer with such quotations, the rate per annum which Buyer determines to be the arithmetic mean (rounded as aforesaid) of the offered quotations of rates which major banks in New York, New York selected by Buyer are quoting at approximately 11:00 a.m., New York City time, on the Pricing Rate Determination Date for loans in U.S. dollars to leading European banks for a period equal to the applicable Pricing Rate Period in amounts of not less than U.S. $1,000,000.00; provided that, in each of clauses (i), (ii) and (iii) above, if such rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. Buyer’s determination of LIBOR shall be binding and  conclusive on Sellers absent manifest error. LIBOR may or may not be the  lowest rate based upon the market for U.S. Dollar or Pound Sterling deposits, as applicable, in the London Interbank Eurodollar Market at which Buyer prices loans on the date which LIBOR is determined by Buyer as set forth above; provided, that any such determination by Buyer shall be made in the same manner as determinations made by Buyer for all similarly-situated counterparties in similar repurchase facilities.

“Maximum Purchase Price” shall mean, with respect to any Purchased Asset, the amount (expressed in the Applicable Currency) set forth in the Confirmation related thereto, which shall be equal to the product of the Maximum Advance Rate and the Market Value of such Purchased Asset as of the Purchase Date, as such amount shall be (a) increased by Future Funding Amounts actually funded in respect of such Purchased Asset by Buyer pursuant to this Agreement and (b) decreased by any principal repayments made by or on behalf of the related borrower, to the extent of the amount of such principal repayment actually paid to Buyer as a return of Purchase Price pursuant to Article 5 hereof.

“Mortgage” shall mean (i) with respect to any U.S. Purchased Asset, any mortgage, deed of trust, assignment of rents, security agreement and fixture filing, or other instruments creating and evidencing a lien on real property and other property and rights incidental thereto or (ii) with respect to a Foreign Purchased Asset, a Foreign Mortgage.

“Mortgage Note” shall mean (i) with respect to a U.S. Purchased Asset, a note or other evidence of indebtedness of a Mortgagor with respect to a Senior Mortgage Loan or Junior Mortgage Loan, and (ii) with respect to a Foreign Purchased Asset, any evidence of indebtedness of a Mortgagor.

“Mortgagor” shall mean (i) with respect to a U.S. Purchased Asset, (a) with respect to a Senior Mortgage Loan, the obligor on a Mortgage Note and the grantor of the related Mortgage, (b) with respect to a Participation Interest, the obligor on a Mortgage Note and the grantor of the related Mortgage on the Underlying Mortgage Loan related to such Participation Interest and (c) with

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respect to a Mezzanine Loan, the obligor on a Mezzanine Note and the grantor of the related security instrument related to such Mezzanine Loan, and (ii) with respect to a Foreign Purchased Asset, the Foreign Obligor that is expressed in the loan agreement for the relevant Foreign Mortgage Loan to be the legal or beneficial owner of the relevant Underlying Mortgaged Property.

“Price Differential” shall mean, with respect to any Purchased Asset as of any date, the aggregate amount obtained by daily application of the applicable Pricing Rate for such Purchased Asset to the Purchase Price of such Purchased Asset on (x) if such Purchased Asset is a U.S. Purchased Asset, a 360-day-per-year basis, and (y) if such Purchased Asset is a Foreign Purchased Asset, a 365-day-per-year basis, in each case, for the actual number of days during each Pricing Rate Period commencing on (and including) the Purchase Date for such Purchased Asset and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by the applicable Seller to Buyer with respect to such Purchased Asset).

“Primary Servicer” shall mean (i) with respect to a U.S. Purchased Asset, Wells Fargo Bank, National Association, and (ii) with respect to a Foreign Purchased Asset, Wells Fargo Bank, National Association or Mount Street Mortgage Servicing Limited, and/or any other primary servicer for any Purchased Asset approved by Buyer in its reasonable discretion, or in the case of a termination of Primary Servicer pursuant to Article 27(c), appointed by Buyer in Buyer’s sole and absolute discretion. Notwithstanding any provision to the contrary set forth elsewhere in this Agreement, immediately upon the termination of the Primary Servicing Agreement, all references in this Agreement to the term “Primary Servicer” shall automatically be changed to the term “Interim Servicer”.

“Primary Servicing Agreement” shall mean, individually and/or collectively as the context may require, (i) that certain Amended and Restated Servicing Agreement, dated as of April 25, 2016, by and between Sellers and Wells Fargo Bank, National Association, with respect to U.S. Purchased Assets and (ii) any Servicing Agreement which may hereafter be entered into by and between Sellers and a Primary Servicer with respect to Foreign Purchased Assets which agreement is approved by Sellers and Buyer in their reasonable discretion, as each of same may be amended, modified and/or restated from time to time in accordance with the terms of this Agreement.

“Remittance Date” shall mean (i) with respect to Purchased Assets other than Foreign Purchased Assets, the fifteenth (15th) calendar day of each month, or the immediately succeeding Business Day, if such calendar day shall not be a Business Day, and (ii) with respect to Purchased Assets that are Foreign Purchased Assets, unless otherwise provided in the Confirmation for such Foreign Purchased Asset, the twenty-fifth (25th) calendar day of every third (3rd) calendar month commencing with the calendar month in which the first payment date for such Foreign Purchased Asset occurs pursuant to the related facility or loan

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agreement (for example, if the first payment date for a Foreign Purchased Asset occurs in April, the Remittance Date for such Foreign Purchased Asset shall be April 25th, July 25th, October 25th and January 25th), or the immediately succeeding Business Day, if such calendar day shall not be a Business Day, or, in each case, such other day as is mutually agreed to by Sellers and Buyer. The Remittance Date for each Foreign Purchased Asset and the underlying quarterly payment dates for such Foreign Purchased Asset shall be set forth in the Confirmation for such Foreign Purchased Asset.

“Senior Mortgage Loan” shall mean, in respect of a U.S. Purchased Asset, a performing senior commercial or multifamily fixed or floating rate mortgage loan or A-Note related to a performing senior commercial or multifamily fixed or floating rate mortgage loan, in each case secured by a first lien on multifamily or commercial properties, and, in respect of a Foreign Purchased Asset, a performing senior commercial or multifamily fixed or floating rate mortgage loan secured by a first lien on multifamily or commercial properties.

(c)  The definition of “Purchase Price” contained in Article 2 of the Master Repurchase Agreement is hereby amended by (i) deleting the phrase “(expressed in dollars)” contained in the second (2nd) sentence thereof and replacing the same with the phrase “(expressed in the Applicable Currency)” and (ii) inserting the following as a new paragraph immediately following the third (3rd) sentence of such definition:

Solely for purposes of calculations related to the Maximum Facility Amount, any Transaction denominated in Pound Sterling shall be converted to the U.S. Dollar equivalent by utilizing the Spot Rate quoted by Buyer on the related Purchase Date (which shall be set forth in the applicable Confirmation).

(d)  The definition of “Transaction Documents” contained in Article 2 of the Master Repurchase Agreement is hereby amended by inserting the phrase “, the Security Deed,” immediately after the phrase “related Servicer Notice”.

(e)  The flush paragraph contained at the end of Article 2 of the Master Repurchase Agreement immediately after the defined terms is hereby amended by inserting the following immediately after the fourth (4th) sentence thereof:

References to “equivalent” of an amount means the equivalent in Pound Sterling of any amount denominated in U.S. Dollars converted at the Spot Rate.

(f)  Article 3(d) of the Master Repurchase Agreement is hereby amended by inserting the following immediately after the third (3rd) sentence thereof:

The Purchase Price for each Transaction shall be funded in the Applicable Currency denominated in the applicable Confirmation.

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(g)  Article 3(aa) of the Master Repurchase Agreement is hereby amended by inserting the following underlined phrase in clause (ii) of the proviso to the first (1st) sentence of Article 3(aa):

(ii)  such transfer of cash to Buyer shall be in an amount no less than $500,000 (or its equivalent in the Applicable Currency),

(h)  Article 5(a) of the Master Repurchase Agreement is hereby amended by deleting the first sentence thereof and replacing the same with the following:

(a) (i) Concurrently with the execution and delivery of this Agreement, Sellers shall establish a segregated deposit account (the “Sub-14 Depository Account”) in the name of Sub-14 Seller for the benefit of Buyer at Wells Fargo Bank, National Association, as Depository, (ii) on or prior to the date of the Second Amendment Date, a segregated deposit account (the “Funding VI Depository Account”) in the name of Funding VI Seller for the benefit of Buyer at U.S. Bank, National Association, as Depository and (iii) following the Fifth Amendment Date and in accordance with the terms and provisions of the Fifth Amendment, a segregated deposit account (the “Foreign Depository Account”; together with the Sub-14 Depository Account and the Funding VI Depository Account, collectively, the “Depository Accounts”) in the name of Seller for the benefit of Buyer.

(i)  Article 3(dd) of the Master Repurchase Agreement is hereby amended by deleting the phrase “the Closing Date” contained in the second (2nd) line thereof and replacing the same with “the effective date of the Fourth Amendment”.

(j)  Article 7(f) of the Master Repurchase Agreement is hereby amended by deleting clause (i)(A) thereof and replacing the same with the following:

(A)   with respect to U.S. Purchased Assets, the promissory note(s), original stock certificate or Participation Certificate (if any) in favor of such Seller or, with respect to Foreign Purchased Assets, the original loan agreement, facility agreement and any other evidence of indebtedness, in any case, evidencing the making of the Purchased Asset, with such Seller’s endorsement of such instrument to Buyer (in the case of a U.S. Purchased Asset) or a Transfer Certificate (in the case of a Foreign Purchased Asset),

(k)  Article 8 of the Master Repurchase Agreement is hereby amended by inserting the following as Article 8(c) in correct alphanumerical order:

(c)   Seller (and its Affiliates) shall not give notice of assignment to  any  underlying borrower or other obligor without the prior written consent of Buyer and the parties agree and acknowledge that for the limited purposes of English law that the assignment contained in this clause is intended to take effect only as an equitable assignment unless Buyer otherwise agrees or directs.

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(l)  Article 9(vii) of the Master Repurchase Agreement is hereby amended by deleting the second (2nd) sentence thereof and replacing the same with the following:

In the event the related Transaction is recharacterized as a secured financing of the Purchased Assets, the provisions of this Agreement (together (in relation to any Foreign Purchased Asset) with the Security Deed) are effective to create in favor of Buyer a valid security interest in all rights, title and interest of Seller in, to and under the Purchased Assets.

(m)  Article 9(x)(B) of the Master Repurchase Agreement is hereby amended and restated in its entirety as follows:

(B)    The provisions of this Agreement, the Security Deed and the related Confirmation are effective to either constitute a sale of Purchased Items to Buyer or to create in favor of Buyer a legal, valid and enforceable security interest in all right, title and interest of Seller in, to and under the Purchased Items.

(n)  Article 9(x)(C) of the Master Repurchase Agreement is hereby amended and restated in its entirety as follows:

(C)    With respect to the U.S. Purchased Assets, upon receipt by the Custodian of each Mortgage Note, Mezzanine Note, or Participation Certificate (if any), endorsed in blank by a duly authorized officer of Seller, either a purchase shall have been completed by Buyer of such Mortgage Note, Mezzanine Note or Participation Certificate (if any), as applicable, or Buyer shall have a valid and fully perfected first priority security interest in all right, title and interest of Seller in the Purchased Items described therein; and with respect to the Foreign Purchased Assets, upon receipt by the Custodian of Buyer of a Transfer Certificate or Participation Certificate (if any), endorsed in blank by a duly authorized officer of the applicable Seller either a purchase shall have been completed by Buyer of the relevant Foreign Purchased Asset or the Participation Certificate (if any), as applicable, or Buyer shall have a valid and fully perfected first priority security interest in all right, title and interest of such Seller in the Purchased Items described therein.

(o)  Article 9(x) of the Master Repurchase Agreement is hereby amended by inserting the following as clause (L) in correct alphanumerical order:

(L)    Upon execution and delivery of the Security Deed, Buyer shall have a    valid charge over, and security interest in, any deposit, escrow or reserve accounts maintained pursuant to the Purchased Asset Documents for any Foreign Purchased Asset secured by Underlying Mortgaged Properties located in the United Kingdom, and all amounts at any time on deposit therein.

(p)  Article 9(xvii) of the Master Repurchase Agreement is hereby amended by inserting the following immediately after the third (3rd) sentence thereof:

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Income in respect of a Purchased Asset is payable to Seller without any withholding or deduction for, or in respect of, United Kingdom Tax, assuming for this purpose that any necessary procedural formalities are fulfilled in order for such Income to be paid without any withholding for or on account of such Tax.

(q)  The following is hereby added as Article 9(xxxviii) to the Master Repurchase Agreement in correct alphanumerical order:

(xxxviii)     Seller warrants, represents and covenants that it has not (A) taken   any action that would cause its “centre of main interests” (as such term is used in Section 3(1) of the European Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings (the “Insolvency Regulation”)) to be located in the United Kingdom or Europe or (B) registered as a company in any jurisdiction other than Delaware.

(r)  Article 10(d) of the Master Repurchase Agreement is hereby amended by adding the phrase “, the Security Deed” immediately after the phrase “pursuant to Article 6 of this Agreement”.

(s)  The following is hereby added as Article 10(k) to the Master Repurchase Agreement in correct alphanumerical order:

(k)       take any action that will cause its “centre of main interests” (as such term   is used in the Insolvency Regulation) to be located in the United Kingdom or Europe or register as a company in any jurisdiction other than Delaware.

(t)  Article 28(b) of the Master Repurchase Agreement is hereby amended by inserting the following immediately after the third (3rd) sentence thereof:

Sellers shall cause each Foreign Purchased Asset to be serviced by a servicer acceptable to Buyer and in accordance with a Servicing Agreement in form and substance acceptable to Buyer.

(u)  Exhibit V of the Master Repurchase Agreement is hereby amended by inserting the attached Schedule A containing the Form of Power of Attorney (English Law) immediately after existing Form of Attorney contained thereof.

(v)  Exhibit VI of the Master Repurchase Agreement is hereby amended by inserting the attached Schedule B containing Representations and Warranties Regarding Each Individual Purchased Asset that is a Senior Mortgage Loan Secured by Property in the United Kingdom immediately following the Representations and Warranties Regarding Each Individual Purchased Asset that is a Mezzanine Loan.

(w)  The Master Repurchase Agreement is hereby amended by inserting the attached Schedule C as new Exhibit XVIII thereto.

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2.    Post-Closing Obligations. Within forty-five (45) days after the date hereof, Seller shall, deliver, or cause to be delivered, to Buyer: (a) the Foreign Depository Agreement in form and substance reasonably acceptable to Buyer and with a Depository acceptable to Buyer, (b) opinions of outside counsel reasonably acceptable to Buyer as to such matters as Buyer may reasonably request, (c) a re- direction letter to the Servicer in respect of any Foreign Purchased Asset in form and substance acceptable to Buyer, and (d) any amendments to the Interim Servicing Agreement in connection with the execution of the Foreign Depository Agreement reasonably requested by Buyer.

3.    Effectiveness. The effectiveness of this Amendment is subject to receipt by Buyer of the following:

(a)  Amendment. This Amendment, duly executed and delivered by Sellers, Guarantor and Buyer.

(b)  Transaction Documents. Delivery of the Power of Attorney (English Law)  and Security Deed executed by the applicable Sellers.

(c)  Responsible Officer Certificate. A signed certificate from a Responsible Officer of Seller certifying: (i) that no amendments have been made to the organizational documents of Seller, Pledgor and Guarantor since April 25, 2016, unless otherwise stated therein; and (b) the authority of Seller and Guarantor to execute and deliver this Amendment and the other Transaction Documents to be executed and delivered in connection with this Amendment.

(d)  Good Standing. Certificates of existence and good standing for the Seller, Pledgor and Guarantor.

(e)  Legal Opinion. Opinions of outside counsel to Seller reasonably acceptable to Buyer as to such matters as Buyer may reasonably request.

(f)  Buyer’s Costs. Payment by Sellers of the actual costs and expenses,  including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with this Amendment and the transactions contemplated hereby.

4.    Representations and Warranties. All representations and warranties in the Master Repurchase Agreement are true, correct, complete and accurate in all respects as of the date hereof (except as may be set forth in any Requested Exceptions Report and except that if any such representation or warranty is expressly stated to have been made as of a specific date, then such representation or warranty shall be true and correct as of such specific date).

5.    Continuing Effect; Reaffirmation of Guarantee Agreement. As amended by this Amendment, all terms, covenants and provisions of the Master Repurchase are ratified and confirmed and shall remain in full force and effect. In addition, all terms, covenants and provisions of the Guarantee Agreement are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Buyer, and Guarantor hereby consents, acknowledges and agrees to the modifications set forth in this Amendment. By its execution hereof, Guarantor hereby reaffirms its obligations under the Guarantee Agreement.

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6.    Binding Effect; No Partnership; Counterparts. The provisions of the Master Repurchase Agreement, as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment in Portable Document Format (PDF) by email or facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.

7.    Further Agreements. Seller agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Buyer and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

8.    Governing Law. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

9.    Headings. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

10.    References to Transaction Documents. All references to the Master Repurchase Agreement in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement, as amended hereby, unless the context expressly requires otherwise.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the day first written above.

BUYER:
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, a national banking association
By:	/s/ Thomas N. Cassino
Name:	Thomas N. Cassino
Title:	Executive Director

Signature Page to Fifth Amendment to Uncommitted Master Repurchase Agreement

SELLERS:
STARWOOD PROPERTY MORTGAGE SUB-14,
L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Chief Operating Officer
STARWOOD PROPERTY MORTGAGE SUB-14-
A, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Chief Operating Officer
STARWOOD MORTGAGE FUNDING VI LLC, a
Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Chief Operating Officer
SPT CA FUNDINGS 2, LLC, a Delaware limited
liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Chief Operating Officer

Signature Page to Fifth Amendment to Uncommitted Master Repurchase Agreement

AGREED AND ACKNOWLEDGED:
GUARANTOR:
STARWOOD PROPERTY TRUST, INC., a
Maryland corporation
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Chief Operating Officer

Signature Page to Fifth Amendment to Uncommitted Master Repurchase Agreement

SCHEDULE A

(Attached)

POWER OF ATTORNEY (English Law)

THIS DEED OF POWER OF ATTORNEY is made and given on, by Starwood Property Mortgage Sub-14, L.L.C., a Delaware limited liability company (the “Seller”) in favour of JPMorgan Chase Bank, National Association (the “Attorney”), for the purposes and on the terms hereinafter set forth.

(A)       By an Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016, and that certain Second Amendment to Uncommitted Master Repurchase Agreement, dated as of April 25, 2016, and that certain Third Amendment to Uncommitted Master Repurchase Agreement and Amendment of Fee Letter, dated as of April 20, 2018, that certain Fourth Amendment to Uncommitted Master Repurchase Agreement, dated as of May 1, 2018, and that certain Fifth Amendment to Uncommitted Master Repurchase Agreement, dated as of the date hereof (as the same may be further amended, restated, modified or supplemented from time-to-time, the “Master Repurchase Agreement”), the Seller agreed to sell, and the Attorney agreed to purchase, the Purchased Assets on terms requiring the Seller to repurchase the same on the terms set out therein.

(B)       In connection with the agreement of the Attorney to purchase the Purchased Assets located in the United Kingdom and for the protection of the Attorney’s interest therein, the Seller has agreed to enter into these presents for the purposes hereinafter appearing.

NOW THIS DEED WITNESSETH and THE SELLER HEREBY IRREVOCABLY APPOINTS (within the meaning of Section 4 of the Powers of Attorney Act 1971 of England & Wales) and by way of security for the performance of its obligations as Seller under the Master Repurchase Agreement the Attorney to be its true and lawful attorney in the name of the Seller or otherwise, for and on behalf of the Seller, upon the occurrence and during the continuance of an Event of Default (as defined in the Master Repurchase Agreement) to do any of the following acts, deeds and things or any of them which the Attorney considers, in each case, necessary for the protection or preservation of the Attorney’s interests and rights in and to the Purchased Assets located in the United Kingdom (in each case, subject to the terms and conditions of the applicable Purchased Asset Documents (as defined in the Master Repurchase Agreement)) :

1         To execute under hand or under seal or otherwise perfect any deeds or documents, and take such action and do all other things, as may be necessary or desirable to effect the sale and transfer of the Purchased Assets located in the United Kingdom to the Attorney (or to perfect or register the same).

2         To exercise its rights, powers and discretions in respect of the Purchased Assets located in the United Kingdom, including without limitation.

(a)         to accelerate and enforce the same (including any Security therefor);

(b)         to collect, demand, sue for and receive all monies due or payable under the Purchased Assets; and

(c)         to exercise all rights, powers and discretions under or in respect of the Purchased Assets.

3         To assign, sell, create Security over or otherwise dispose of any Purchased Asset in such manner as it may think fit.

4         The Attorney shall have the power in writing under seal by an officer of the Attorney from time to time to appoint a substitute (each, a “Substitute Attorney”) who shall have the power to act on behalf of the Seller (whether concurrently with or independently of the Attorney) as if that Substitute Attorney shall have been originally appointed as the Attorney by this Deed and/or to revoke any such appointment at any time without assigning any reason therefor provided the Attorney shall continue to be liable for the negligence, wilful misconduct or bad faith of any such Substitute Attorney appointed by it.

5         To the extent necessary, the Seller undertakes to ratify and confirm whatever the Attorney (or any Substitute Attorney) does or purports to do in good faith in the exercise of any power conferred by this Power of Attorney.

6         As used herein “Security” shall mean a mortgage, charge (fixed or floating), standard security, pledge, lien, assignment for security, hypothecation, right of set-off, reservation of title or security interest or any other agreement, trust or arrangement (including, without limitation, a sale and repurchase agreement) having a similar effect and any agreement to enter into, create or establish any of the foregoing or the equivalent of any of the foregoing in any relevant jurisdiction.

7         Notwithstanding anything to the contrary contained herein, Buyer agrees not to exercise its rights under this instrument unless an Event of Default has occurred and is continuing.

THE SELLER DECLARES THAT:

The Seller declares that a person who deals with the Attorney in good faith may accept a written statement signed by the Attorney to the effect that this Power of Attorney has not been revoked as conclusive evidence of that fact.

Words and expressions defined in the Master Repurchase Agreement shall have the same meanings in this Power of Attorney except so far as the context otherwise requires.

It is intended that this Power of Attorney takes effect as a deed notwithstanding the fact that the Seller may only execute this document under hand.

This Power of Attorney and any dispute or claim (including any non-contractual disputes or claims) arising out of or in connection with it shall be governed by and construed in accordance with English law. The courts of England shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Power of Attorney or its subject matter or formation (including non-contractual disputes or claims).

[SIGNATURES ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF this Power of Attorney has been executed and delivered as a deed on the day and year first before written.

Seller:
EXECUTED as a deed by Starwood Property		)
Mortgage Sub-14, L.L.C., a company incorporated		)
in              Delaware,                acting                by		)
	being a person who,	)
in accordance with the laws of that territory, is		)
acting under the authority of that company			[Authorised Signatory]
			Name:
in the presence of:			Title
(Signature of Witness)
Name:
Address:
Occupation:

Signature Page to Power of Attorney (English Law) – Sub-14

SCHEDULE B

(Attached)

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET THAT IS A

SENIOR MORTGAGE LOAN SECURED BY PROPERTY IN THE UNITED KINGDOM

1.1.        Compliance with law

Such Senior Mortgage Loan complies in all material respects with (or is exempt from) all applicable Requirements of Law relating to such Senior Mortgage Loan.

1.2.        Ownership

(a)          Seller will immediately prior to the purchase of the same by Buyer from Seller have an Eligible Interest in such Senior Mortgage Loan.

(b)          Immediately prior to the purchase of such Senior Mortgage Loan by Buyer from Seller, Seller had good marketable title to, and was the sole legal and beneficial owner of, such Senior Mortgage Loan free and clear of any and all Liens.

(c)          The entry into by Seller of this Agreement (and the agreements contemplated hereby) in relation to such Senior Mortgage Loan does not require Seller to obtain any approval, consent, authorisation or order of or registration or filing with or notice to, any court or Governmental Authority that has not been obtained.

1.3.        No default

(a)          No Purchased Asset is twenty (20) days or more delinquent in payment of principal and interest (without giving effect to any applicable grace period) and no Purchased Asset has been twenty (20) days or more (without giving effect to any applicable grace period in the related Mortgage Loan) past due.

(b)          To Seller’s Knowledge (i) there is no other material default under any of the related Purchased Asset Documents, after giving effect to any applicable notice and/or grace period and no such material default or breach has been waived in writing by Seller or on its behalf or by Seller’s predecessors-in-interest with respect to the Purchased Asset; (ii) no event has occurred that, with the passing of time or giving notice, would constitute a material default under the related Purchased Asset Documents, which in the case of clause (i) or (ii) would materially and adversely affect the value of the Purchased Asset or the value, use or operation of the related Underlying Mortgaged Property. No Purchased Asset has been accelerated and no enforcement has been initiated in respect of the related Mortgage.

(c)          If the related Mortgage or other Purchased Asset Documents provide for a grace period for delinquent payments of principal and/or interest, such grace period is no longer than ten (10) days from the applicable payment date.

1.4.        Nature

The Purchased Assets (exclusive of any default interest, late charges or prepayment premiums) are fixed rate mortgage loans or floating rate mortgage loans with a fixed term.

1.5.        Information

To Seller’s Knowledge, all information contained in the related Due Diligence Package (or as otherwise provided to Administrative Agent) in respect of each Senior Mortgage Loan is true, complete and accurate in all material respects.

1.6.        Solvency

The relevant Mortgagor is not a debtor in any bankruptcy, receivership, conservatorship, reorganisation, insolvency, moratorium, administration, examinership or similar proceeding.

1.7.        Mortgages

Subject to the Reservations, the Mortgages related to and delivered in connection with such Senior Mortgage Loan constitute valid and enforceable first priority mortgages upon the related Underlying Mortgaged Property comprising real estate prior to all other Liens, except for:

(a)          matters to which like properties are commonly subject; and

(b)          any other matters expressly agreed by Buyer,

and none of which matters referred to in items (a) and (b) above materially interferes with the security provided by such Mortgage or the marketability or current use of the Underlying Mortgaged Property comprising real estate or the current ability of the Underlying Mortgaged Property comprising real estate to generate operating income sufficient to service the Senior Mortgage Loan (items (a) and (b) above being, the “Permitted Liens”).

1.8.        Assignment of Leases and Rents

(a)          The Assignment of Leases and Rents related to and delivered in connection with such Senior Mortgage Loan establishes and creates a legal, valid, subsisting, binding and, subject to the Reservations and Permitted Liens, enforceable first priority perfected (save for the giving of any notices to third parties required to perfect the same) Lien in the related Mortgagor’s interest in all leases, sub-leases, licenses or other agreements pursuant to which any person is entitled to occupy, use or possess all or any portion of the related Underlying Mortgaged Property comprising real estate (the “Assigned Property”).

(b)          Each assignor under each such Assignment of Leases and Rents has the full right to assign the relevant Assigned Property.

(c)          Each such Assignment of Leases and Rents is sufficient (if such security constituted by such Assignment of Leases and Rents was to be enforced) to convey (subject to the Reservations) to the assignee named therein all of the assignor’s right, title and interest in, to and under the relevant Assigned Property.

(d)          To Seller’s Knowledge, no Person other than the related Mortgagor and the Mortgagee owns any interest in any payments due under the related leases.

(e)          Subject to applicable Requirements of Law, the related Mortgage or such assignment of leases and rents provision provides for the appointment of a receiver of the rents or allows the holder of the related Mortgage to enter into possession of the related Underlying Mortgaged Property to collect rent or provides for rents to be paid directly to the holder of the related Mortgage in the event of a default beyond applicable notice and grace periods, if any, under the related Purchased Asset Documents.

1.9.        Hospitality properties

The Purchased Asset Documents for each Senior Mortgage Loan that is secured by a hospitality property operated pursuant to a franchise agreement includes an executed comfort letter or similar agreement signed by the Mortgagor and franchisor of such property enforceable against such franchisor by the holder of the Mortgage. The Mortgage or related security agreement for each Mortgage Loan secured by a hospitality property creates a registered and perfected security interest in the revenues of such property.

1.10.      Mortgage status; Waivers and modifications

(a)          Except for releases required or permitted under the terms and conditions of the related Purchased Asset Documents, no Mortgage has been satisfied, cancelled, rescinded or subordinated in whole or in material part, and the related Underlying Mortgaged Property comprising real estate has not been released from such Mortgage, in whole or in material part, nor has any instrument been executed that would effect any such satisfaction, cancellation, subordination, rescission or release except as specifically set forth by a document in the related Purchased Asset File.

(b)          None of the terms of any Mortgage, Assignment of Leases and Rents or other security document or instrument securing such Senior Mortgage Loan have been impaired, waived, altered or modified in any respect, except by written instruments, all of which are included in the related Purchased Asset File.

(c)          No Mortgage securing such Senior Mortgage Loan provides for or permits, without the prior written consent of the holder of the Mortgage, the related Underlying Mortgaged Property comprising real estate to secure any other debt or obligation.

1.11.      Fixtures

Subject to the Reservations and Permitted Liens, the Mortgage in respect of each Senior Loan contains valid and enforceable first priority Liens over those items of personal property located on the Underlying Mortgaged Property for such Senior Mortgage Loan that either: (a) are reasonably necessary for the Mortgagor in respect of the same to operate such Underlying Mortgaged Property; or (b) are (as indicated in the valuation obtained in connection with the origination of such Senior Mortgage Loan material to the value of the Underlying Mortgaged Property subject to Permitted Liens.

1.12.      Registrations and Filings

All acts and things have been done and all filings, recordings and registrations have been made (or will have been submitted in proper form for filing, recording and/or registration within any applicable time limits) in all public places necessary to perfect a valid first priority Lien in each Underlying Mortgaged Property securing such Senior Mortgage Loan.

1.13.      No further advances/no partly paid Assets

(a)          The proceeds of such Senior Mortgage Loan have been, or will be on the date of first utilisation of the Senior Mortgage Loan, fully disbursed and there is no obligation for future advances with respect thereto.

(b)          All escrow and reserve amounts required to be deposited by each Mortgagor on the date of first utilisation of the Senior Mortgage Loan under the related Purchased Asset Documents were deposited on such date.

(c)          All escrow deposits and payments required to be escrowed with lender by the terms of each Purchased Asset are in the possession, or under the control, of Seller (or agent of Seller), and there are no material deficiencies with regard thereto (subject to any applicable notice and cure period). All of Seller’s interest in such escrows and deposits will be secured by Seller in favour of Administrative Agent hereunder.

(d)          With respect to such Senior Mortgage Loan, any and all requirements as to completion of any on-site or off-site improvement and as to disbursements of any funds escrowed for such purpose that were to have been complied with on or before the Purchase Date for the same have been complied with, or any such funds so escrowed have not been released.

(e)          Neither Seller nor any of its Affiliates has any obligation to make any further capital contributions to any Mortgagor under such Senior Mortgage Loan.

(f)          Other than as described in paragraph (a) above, in connection with the origination of such Senior Mortgage Loan, Seller or its Affiliates has no obligation to make loans to, make guarantees on behalf of, or otherwise extend credit to, or make any of the foregoing for the benefit of, any Mortgagor or any other person under or in connection with such Senior Mortgage Loan.

1.14.      Purchased Asset Documents provisions

To the extent applicable, the Purchased Asset Documents for such Senior Mortgage Loan together with applicable law, contain customary and enforceable provisions for comparable Underlying Mortgaged Properties similarly situated such as to render the rights and remedies of the lender thereunder adequate for the practical realisation against the related Underlying Mortgaged Property of the principal benefits of the security intended to be provided thereby,

There is no exemption available to the related Mortgagor that would interfere with such right of enforcement except (a) any statutory right of redemption or (b) any limitation arising under anti- deficiency laws or by bankruptcy, receivership, conservatorship, reorganisation, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by

general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

1.15.      Security trusts

To the extent applicable, if any Mortgage or other Lien constituted in the Purchased Asset Documents for such Senior Mortgage Loan is held on trust for the lenders and/or related parties:

(a)          a trustee, duly qualified under applicable law to serve as such, is properly designated and serving as such; and

(b)          no fees or expenses other than customary fees, costs and indemnities (including annual agency/security agency fees, transfer fees and fees for management time) are payable to such trustee by Seller in the event the related Mortgagor does not fulfil its obligations to pay such amounts under the Senior Mortgage Loan.

1.16.      Status of the Purchased Asset Documents

The Purchased Asset Documents for such Senior Mortgage Loan that were executed by or on behalf of the related Mortgagor are the legal, valid and binding obligation of such Mortgagor(s) (subject to any non-recourse provisions contained therein), enforceable in accordance with its terms except as such enforcement may be limited by anti-deficiency laws or bankruptcy, receivership, conservatorship, reorganisation, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law), and except that certain provisions of such Purchased Asset Documents are or may be unenforceable in whole or in part under applicable laws, but the inclusion of such provisions does not render any of the Purchased Asset Documents invalid as a whole, and such Purchased Asset Documents taken as a whole are enforceable to the extent necessary and customary for the practical realisation of the principal rights and benefits afforded thereby.

1.17.      Insurance

(a)          Each Underlying Mortgaged Property securing such Senior Mortgage Loan is, and is required pursuant to the related Purchased Asset Documents to be, covered by insurance (including, without limitation with respect to fire and extended perils insurance included within the classification “All Risk of Physical Loss”) on the relevant Underlying Mortgaged Property and plant and machinery thereon (including fixtures and improvements) at least equal to the lesser of the replacement cost of improvements located on such Underlying Mortgaged Property, with no deduction for depreciation, and the outstanding principal balance of such Senior Mortgage Loan (subject to customary deductibles) and in any event, the amount necessary to avoid the operation of any co-insurance provisions on a full replacement cost basis of such underlying Mortgaged Property (in some cases exclusive of foundations and footings) with an agreed amount endorsement to avoid application of any coinsurance provision; such policies contain a standard mortgagee clause naming mortgagee and its successor-in-interest as additional insureds or loss payee, as applicable.

(b)          Each Underlying Mortgaged Property comprising real estate securing such Senior Mortgage Loan is covered by business interruption or rental loss insurance in an amount at least equal to (i) three (3) years of operations, with an extended indemnity for three (3) additional years after property is repaired or rebuilt as a result of casualty or condemnation or (ii) in some cases all rents and other amounts customarily insured under this type of insurance of the Underlying Mortgaged Property.

(c)          Each Underlying Mortgaged Property comprising real estate securing such Senior Mortgaged Loan is covered comprehensive general liability insurance in an amount equal to not less than £640,000.

(d)          The relevant insurance policy for any Underlying Mortgaged Property comprising real estate securing such Senior Mortgage Loan provides cover in respect of at least three years loss of rent.

(e)          Such insurance policy contains a standard mortgagee clause that names the Seller or any other lender (or agent or trustee therefor) in respect of such Senior Mortgage Loan (each a “Mortgagee”) in respect of such Senior Mortgage Loan as an additional insured and that requires at least thirty days’ (in the case of termination or cancellation other than for non- payment of premiums) and at least ten days’ (in the case of termination or cancellation for non- payment of premiums or where applicable law so requires) prior notice to the holder of the related Mortgage, and no such notice has been received, including any notice of non-payment of premiums, that has not been cured.

(f)          Each Mortgage securing such Senior Mortgage Loan obliges the related Mortgagor to maintain all such insurance and, upon such Mortgagor’s failure to do so, authorises the holder of the Mortgage to maintain such insurance at the related Mortgagor’s cost and expense and to seek reimbursement therefor from such Mortgagor.

(g)          Any insurance proceeds in respect of loss, damage or destruction, will be applied either: (i) to the repair or restoration of all or part of the related Underlying Mortgaged Property comprising real estate; or (ii) the reduction of the outstanding principal balance of such Senior Mortgage Loan, subject in either case to requirements with respect to leases at the related Underlying Mortgaged Property comprising real estate and to other exceptions customarily provided for by prudent institutional lenders for similar loans.

(h)          The related Underlying Mortgaged Property is insured by an insurance policy, issued by an insurer meeting the requirements of such Purchased Asset and having a claims-paying or financial strength rating of at least A-1 or higher by Standard & Poor's Rating Services or Fitch Ratings Ltd or A3 or higher by Moody's Investors Service Limited. The insurer issuing each of the foregoing insurance policies is qualified to write insurance in the jurisdiction where the related Underlying Mortgaged Property is located.

(i)           All premiums with respect to the insurance policies insuring each Underlying Mortgaged Property have been paid in a timely manner or escrowed to the extent required by the Purchased Asset Documents, and Seller has not received any notice of cancellation or termination. The

relevant Purchased Asset File contains the insurance policy required for such Purchased Asset or a certificate of insurance for such insurance policy.

(j)           None of the Purchased Asset Documents contain any provision that expressly excuses the related borrower from obtaining and maintaining insurance coverage for acts of terrorism and, in circumstances where terrorism insurance is not expressly required, the mortgagee is not prohibited from requesting that the related borrower maintain such insurance, in each case, to the extent such insurance coverage is generally available for like properties in such jurisdictions at commercially reasonable rates. Each Underlying Mortgaged Property is insured by an “all-risk” casualty insurance policy that does not contain an express exclusion for (or, alternatively, is covered by a separate policy that insures against property damage resulting from) acts of terrorism.

1.18.      Mortgagor

(a)          The owners of each Underlying Mortgaged Property securing such Senior Mortgage Loan were duly organised and validly existing and, as of the time of the origination of such Senior Mortgage Loan with requisite power and authority to own their assets and to transact the business in which they is now engaged, and such Underlying Mortgaged Properties constitute the principal assets of the owners of such Underlying Mortgaged Property.

(b)          The owners of each Underlying Mortgaged Property comprising real estate securing such Senior Mortgage Loan has good and marketable title to such Underlying Mortgaged Property comprising real estate and such owners have not received any written notice regarding any violation of any easement, restrictive covenant or similar instrument affecting the Underlying Mortgaged Property comprising real estate that would materially and adversely affect the value or marketability of the related Underlying Mortgaged Property comprising real estate.

1.19.      Leasehold Title

Each Underlying Mortgaged Property comprising real estate securing such Senior Mortgage Loan consists of the related Mortgagor’s freehold estate or, if such Senior Mortgage Loan is secured in whole or in part by the interest of a Mortgagor under a Ground Lease, by the related Mortgagor’s interest in the Ground Lease. With respect to any Senior Mortgage Loan secured by a Ground Lease:

(a)          such Ground Lease has, where registerable, been duly registered; such Ground Lease permits the current use of the Underlying Mortgaged Property comprising real estate and permits or does not prohibit the interest of the Ground Lessee thereunder to be encumbered by the related Mortgage and does not restrict the use of the related Underlying Mortgaged Property comprising real estate by such Ground Lessee, its successors or assigns in a manner that would adversely affect the security provided by the related Mortgage by limiting in any way its current use; and there has been no material change in the payment terms of such Ground Lease since the origination or acquisition of the related Purchased Loan, with the exception of material changes reflected in written documents that are a part of the related Purchased Asset File;

(b)          such Ground Lease is in full force and effect, and Seller has received no notice that an event of default has occurred thereunder, and, to Seller’s Knowledge, there exists no condition

that, but for the passage of time or the giving of notice, or both, would result in a breach of covenant under the terms of such Ground Lease;

(c)          such Ground Lease has an original term (including any extension options set forth therein) which extends at least twenty (20) years beyond the stated maturity date of such Senior Mortgage Loan;

(d)          under the terms of such Ground Lease, any estoppel or consent letter received by the Mortgagee from the Lessor and the related Mortgage, taken together, any related insurance proceeds will be applied either to the repair or restoration of all or part of the related Underlying Mortgaged Property comprising real estate, with the Mortgagee having the right to hold and disburse such proceeds as the repair or restoration progresses (except in such cases where a provision entitling another party (including the relevant insurer) to hold and disburse such proceeds would not be viewed as commercially unreasonable by a prudent commercial mortgage lender for conduit programs), or to the payment or defeasance of the outstanding principal balance of such Senior Mortgage Loan together with any accrued interest thereon;

(e)          such Ground Lease does not impose any restrictions on subletting which would be viewed as commercially unreasonable by Seller; such Ground Lease contains a covenant (or applicable laws provide) that the lessor thereunder is not permitted, in the absence of an uncured default, to disturb the possession, interest or quiet enjoyment of any lessee in the relevant portion of such Underlying Mortgaged Property subject to such Ground Lease for any reason, or in any manner, which would materially adversely affect the security provided by the related Mortgage;

(f)          such Ground Lease may not be amended, modified, cancelled or terminated without the prior written consent of Seller in its capacity as lender under the Purchased Asset Documents for such Senior Mortgage Loan and any such action without such consent is not binding on Seller in its capacity as lender under such Purchased Asset Documents, its successors or assigns, except termination or cancellation if (i) an event of default occurs under the Ground Lease, (ii) notice thereof is provided to Seller in its capacity as lender under such Purchased Asset Documents and (iii) (A) such default is curable by Seller in its capacity as lender under such Purchased Asset Documents provided in the Ground Lease but remains uncured beyond the applicable cure period, (B) in the case of any such default that is not curable by such Mortgagee, or in the event of the bankruptcy or insolvency of the lessee under such Ground Lease, such Mortgagee has the right, following termination of the existing Ground Lease or rejection thereof by a liquidator or similar party, to enter into a new ground lease with the lessor on substantially the same terms as the existing Ground Lease; and (C) all rights of the Mortgagor under such Ground Lease may be exercised by or on behalf of such Mortgagee under the related Mortgage upon enforcement;

(g)          upon the enforcement of the related Senior Mortgage Loan, the Mortgagor’s interest in such Ground Lease is assignable to the Mortgagee under the leasehold estate and its assigns without the consent of the lessor thereunder (or, if any such consent is required, it has been obtained prior to the date on which Seller purchases an Eligible Interest related to such Asset (or acceptance of a deed in lieu thereof);

(h)          the Ground Lease or ancillary agreement between the lessor and the Ground Lessee requires the lessor to give notice of any default by the Ground Lessee to the Mortgagee. The

Ground Lease or ancillary agreement further provides that no notice given is effective against the Mortgagee unless a copy has been given to the Mortgagee in a manner described in the Ground Lease or ancillary agreement;

(i)           a Mortgagee is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession under the Ground Lease) to cure any curable default under such Ground Lease before the lessor thereunder may terminate such Ground Lease;

(j)           if applicable and to the Knowledge of Seller, the lessor under such Ground Lease consented to and acknowledged: (i) the creation of the Mortgage for such Senior Mortgage Loan; and (ii) that any enforcement of such Senior Mortgage Loan and related change in ownership of the Ground Lessee will not require the consent of the lessor under such Ground Lease or constitute a default under such Ground Lease; and

(k)          such Ground Lease is not subject to any liens or encumbrances superior to, or of equal priority with, the related Mortgage, other than the related fee or long leasehold interest and Permitted Encumbrances and such Ground Lease is, and shall remain, prior to any mortgage or other lien upon the related fee or long leasehold interest unless a non-disturbance agreement is obtained from the holder of any mortgage on the fee or long leasehold interest that is assignable to or for the benefit of the related lessee and the related Mortgagee.

1.20.      Advancement of funds to Seller

No Seller or other lender to the owner of such Underlying Mortgaged Property has nor have any of its agents or predecessors in interest with respect to the Purchased Assets, in respect of such Purchased Asset, directly or indirectly, advanced funds or induced, solicited or knowingly received any advance of funds from a party other than the owner of the related Underlying Mortgaged Property other than (a) interest accruing on such Purchased Asset from the date of such disbursement of such Purchased Asset to the date which preceded by thirty (30) days the first payment date under the related Mortgage Loan and (b) application and commitment fees, escrow funds, points and reimbursements for fees and expenses, incurred in connection with the origination and funding of the Purchased Asset.

1.21.      Cross-collateralisation; Cross-default

Such Senior Mortgage Loan is not cross-collateralised or cross-defaulted with any loan or debt securities other than one or more other Senior Mortgage Loans.

1.22.      Releases of Underlying Mortgaged Property

The Purchased Asset Documents for such Senior Mortgage Loan do not require the Mortgagee to release all or any material portion of the related Underlying Mortgaged Property from the related Mortgage except upon payment in full of all amounts due under such Senior Mortgage Loan in relation to such Underlying Mortgaged Property; provided that notwithstanding the foregoing, certain of the Purchased Assets may allow partial release (a) upon payment or defeasance of an allocated loan amount which may be formula based, but in no event less than 110% of the allocated loan amount, or (b) in the event the portion of the Underlying Mortgaged Property

being released was not given any material value in connection with the underwriting or valuation of the related Purchased Asset.

1.23.      Acceleration Right

The Purchased Asset Documents for such Senior Mortgage Loan contain provisions for the acceleration of the payment of the unpaid principal balance of such Senior Mortgage Loan if, without complying with the requirements of the related Purchased Asset Documents, (a) the related Underlying Mortgaged Property, or any controlling interest in the related Mortgagor, is directly transferred or sold in a mortgagor, issuance of non-controlling new equity interests, transfers among existing members, partners or shareholders in such Mortgagor or an Affiliate thereof, transfers among affiliated Mortgagors with respect to such Senior Mortgage Loan which are cross-collateralised or cross-defaulted with other mortgage loans or multi-property loans or transfers of a similar nature (such as pledges of ownership interests that do not result in a change of control) or a substitution or release of collateral), or (b) the related Underlying Mortgaged Property or controlling interest in the borrower is encumbered in connection with subordinate financing by a Lien against the related Underlying Mortgaged Property, other than any existing permitted additional debt or debt otherwise permitted in the Purchased Asset Documents. The Purchased Asset Documents for such Senior Mortgage Loan require the borrower to pay all reasonable costs incurred by the Mortgagor with respect to any transfer (of any property which is subject to a Mortgage), assumption or encumbrance requiring lender’s approval.

1.24.      Approval Rights

Pursuant to the terms of the Purchased Asset Documents for such Senior Mortgage Loan: (a) no material terms of any related Mortgage may be waived, cancelled, subordinated or modified in any material respect and no material portion of such Senior Mortgage Loan or the Underlying Mortgaged Property may be released without the consent of the holder of such Senior Mortgage Loan, except to the extent such release is permitted under the terms of the related Purchased Asset Documents; (b) no material action affecting the value of the related Underlying Mortgaged Property may be taken by the owner of the related Underlying Mortgaged Property with respect to such Underlying Mortgaged Property without the consent of the holder of such Senior Mortgage Loan; (c) the holder of such Senior Mortgage Loan is entitled to approve the business plan or operational budget of the owner of the related Underlying Mortgaged Property as it relates to such Underlying Mortgaged Property; and (d) the consent of the holder of such Senior Mortgage Loan is required prior to the owner of the related Underlying Mortgaged Property incurring any additional indebtedness in each case, subject to such exceptions as are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located.

1.25.      No equity participation or contingent interest

Such Senior Mortgage Loan contains no equity participation by the lender or shared appreciation feature or profit participation feature, does not provide for negative amortisation, does not provide for any contingent or additional interest in the form of participation in the cash flow of

the related Underlying Mortgaged Property and does not have capitalised interest included in its principal balance.

1.26.      Inspections

Seller inspected or caused to be inspected each related Underlying Mortgaged Property within twelve (12) months of the related Purchase Date. An engineering report or property condition assessment was prepared in connection with the origination of each Purchased Asset no more than twelve (12) months prior to the related Purchase Date. To Seller’s Knowledge, there exists no material damage to any Underlying Mortgaged Property that would have a material adverse effect on the value of such Underlying Mortgaged Property as security for the related Purchased Asset other than those disclosed in the engineering report or property condition assessment.

1.27.      Subordinated interests

(a)          Such Senior Mortgage Loan does not permit the related Underlying Mortgaged Property to be encumbered by any Lien subordinate to or of equal priority with the related Mortgage without the prior written consent of the holder thereof subject to such exceptions as are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located.

(b)          To the Knowledge of Seller none of the Underlying Mortgaged Properties securing such Senior Mortgage Loan is subject to any Lien which is subordinate to or of equal priority with the related Mortgage subject to such exceptions as are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located.

1.28.      Origination and Servicing

(a)          The origination (or acquisition), servicing and collection practices used by Seller (and if the Senior Mortgage Loan was not originated by Seller, to the Knowledge of Seller, the origination, servicing and collection practices used by such originator) in respect of such Senior Mortgage Loan have been in all respects legal, proper and prudent and have met customary industry standards for origination (or acquisition) servicing of commercial property loans (similar to such Senior Mortgage Loans).

(b)          The originator of such Senior Mortgage Loan was authorised to do business in the jurisdiction in which the related Underlying Mortgaged Property is located at all times when it originated and held such Senior Mortgage Loan.

1.29.      Licenses and permits

The related Underlying Mortgaged Property is, in all material respects, in compliance with, and is used and occupied in accordance with, all restrictive covenants of record applicable to such Underlying Mortgaged Property and applicable planning laws and all inspections, licenses, permits and certificates of occupancy required by law, ordinance or regulation to be made or

issued with regard to the Underlying Mortgaged Property have been obtained and are in full force and effect, except to the extent the failure to obtain or maintain such inspections, licenses, permits or certificates of occupancy does not materially impair or materially and adversely affect the use and/or operation of the Underlying Mortgaged Property as it was used and operated as of the date of origination of the Purchased Asset or the rights of a holder of the related Purchased Asset.

1.30.      Intentionally omitted

1.31.      Single purpose entity

The Mortgagor in respect of such Senior Mortgage Loan was, as of the origination of such Senior Mortgage Loan, a Special Purpose Vehicle. For this purpose, a “Special Purpose Vehicle” shall mean an entity, other than an individual, in relation to who, the Purchased Asset Documents for such Senior Mortgage Loan provide that it was formed or organised solely for the purpose of owning and operating one or more related Underlying Mortgaged Properties securing such Senior Mortgage Loan and prohibit it from engaging in any business unrelated to such Underlying Mortgaged Property or Properties and the financing thereof does not have any assets other than those related to its interest in such Underlying Mortgaged Property or Properties or the financing thereof, or any indebtedness other than as permitted by the related Mortgage or the other related Purchased Asset Documents, that it has its own books and records and accounts separate and apart from any other person, and that it holds itself out as a legal entity, separate and apart from any other person, except as permitted by the related Mortgage or other Purchased Asset Documents.

1.32.      Business plan, operational budget or financial statement

The related Purchased Asset Documents for such Senior Mortgage Loan require the related Mortgagor to furnish to the mortgagee at least annually a business plan or operational budget statement with respect to the related Underlying Mortgaged Property showing amounts expected to be disbursed in the forthcoming year.

1.33.      No offsets, defences or counterclaims

Except with respect to the enforceability of any provisions requiring the payment of default interest, late fees, additional interest, prepayment premiums or yield maintenance charges, neither the Purchased Asset nor any of the related Purchased Asset Documents is subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defence, including the defence of usury, nor will the operation of any of the terms of any such Purchased Asset Documents, or the exercise (in compliance with procedures permitted under applicable law) of any right thereunder, render any Purchased Asset Documents subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defence, including the defence of usury (subject to anti-deficiency or one form of action laws and to bankruptcy, receivership, conservatorship, reorganisation, insolvency, moratorium or other similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law)), and no such right

of rescission, set-off, abatement, diminution, valid counterclaim or defence has been asserted with respect thereto.

1.34.      Transferability

Other than consents and approvals obtained as of the related Purchase Date, or those already granted in the related Mortgage and/or Mortgage Loan, no consent or approval by any Person is required in connection with Seller’s sale and/or Administrative Agent’s acquisition of such Purchased Asset, for Administrative Agent’s exercise of any rights or remedies in respect of such Purchased Asset (except for compliance with applicable Requirements of Law in connection with the exercise of any rights or remedies by Administrative Agent) or for Administrative Agent’s sale, pledge or other disposition of such Purchased Asset. No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

1.35.      Valuation

A valuation of the related Underlying Mortgaged Property was conducted in connection with the origination of such Purchased Asset, and to Seller’s Knowledge, such valuation satisfied in all material respects the requirements for a valuation on a market value basis as defined in the then current Royal Institution of Chartered Surveyors Appraisal and Valuation Manual in association with the Incorporated Society of Valuers and Auctioneers and the Institute of Revenues Rating and Valuation, Practice Statement 4 (or its successor) (or its equivalent in any applicable jurisdiction).

1.36.      No Fraud

No fraudulent acts were committed by Seller in connection with its acquisition or origination of such Senior Mortgage Loan nor, to Seller’s Knowledge, were any fraudulent acts committed by any Person in connection with the origination of such Senior Mortgage Loan.

1.37.      Title

Seller (or an agent thereof) has obtained from lawyers appointed by it (or by the related Mortgagor) or with its consent a Certificate of Title which showed no adverse entries, or, if such report did reveal any adverse entry, such entry would not have caused a reasonably prudent lender of money secured on commercial property to decline to proceed with the related advance on its agreed terms.

1.38.      Transfer Certificate

Each related Transfer Certificate (as defined in the related Purchased Asset) executed by Seller in blank, (assuming the insertion of an assignee’s name and date) will constitute the legal, valid and binding first priority assignment of such Purchased Asset from Seller to such named assignee (except as such enforcement may be limited by anti-deficiency laws or bankruptcy, receivership, conservatorship, reorganisation, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity

(regardless of whether such enforcement is considered in a proceeding in equity or at law)) (collectively, the “Standard Qualifications”).

1.39.      Improvements

None of the improvements that were included for the purpose of determining the valuation of the related Underlying Mortgaged Property at the time of the origination of such Purchased Asset lies outside the boundaries and building restriction lines of such Underlying Mortgaged Property, except Underlying Mortgaged Properties which are non-conforming uses, and no improvements on adjoining properties encroach upon such Underlying Mortgaged Property, with the exception in each case of immaterial encroachments that do not materially adversely affect the security intended to be provided by the related Mortgage or the use, enjoyment, value or marketability of such Underlying Mortgaged Property.  With respect to each Purchased Asset, the property legally described in the survey, if any, obtained for the related Underlying Mortgaged Property for purposes of the origination thereof is the same as the property legally described in the Mortgage.

1.40.      No compulsory purchase

To Seller’s Knowledge, there are no proceedings pending or threatened, for the total compulsory purchase of the relevant Underlying Mortgaged Property or a partial compulsory purchase of the relevant Underlying Mortgaged Property that would have a material adverse effect on the value of such Underlying Mortgaged Property as security for the related Purchased Asset.

1.41.      Environmental matters

(a)          An Environmental Site Assessment relating to each Underlying Mortgaged Property and prepared no earlier than twelve (12) months prior to the Purchase Date was obtained and reviewed by Seller in connection with the origination of such Purchased Asset and a copy is included in the Purchased Asset File.

(b)          To Seller’s Knowledge, except as may be set forth in the Environmental Site Assessment, there are no adverse circumstances or conditions with respect to or affecting the Underlying Mortgaged Property that would constitute or result in a material violation of any applicable environmental laws, rules and regulations (collectively, “Environmental Laws”), other than with respect to an Underlying Mortgaged Property (i) for which environmental insurance is maintained, (ii) that would require (x) any expenditure less than or equal to five percent (5%) of the outstanding principal balance of the Mortgage Loan to achieve or maintain compliance in all material respects with any Environmental Laws or (y) any expenditure greater than five percent (5%) of the outstanding principal balance of such Purchased Asset to achieve or maintain compliance in all material respects with any Environmental Laws for which, in connection with this clause (y), adequate sums, but in no event less than 125% of the estimated cost as set forth in the Environmental Site Assessment, were reserved in connection with the origination of the Purchased Asset and for which the related Mortgagor has covenanted to perform, (iii) as to which the related Mortgagor or one of its affiliates is currently taking or required to take such actions, if any, with respect to such conditions or circumstances as have been recommended by the Environmental Site Assessment or required by the applicable Governmental Authority, (iv)

as to which another responsible party not related to the Mortgagor with assets reasonably estimated by Seller at the time of origination to be sufficient to effect all necessary or required remediation identified in a notice or other action from the applicable Governmental Authority is currently taking or required to take such actions, if any, with respect to such regulatory authority’s order or directive, (v) as to which the conditions or circumstances identified in the Environmental Site Assessment were investigated further and based upon such additional investigation, an environmental consultant recommended no further investigation or remediation, (vi) as to which a party with financial resources reasonably estimated to be adequate to cure the condition or circumstance that would give rise to such material violation provided a guarantee or indemnity to the related Mortgagor or to the mortgagee to cover the costs of any required investigation, testing, monitoring or remediation, (vii) as to which the related Mortgagor or other responsible party obtained a “No Further Action” letter or other evidence reasonably acceptable to a prudent commercial mortgage lender that applicable Governmental Authorities had no current intention of taking any action, and are not requiring any action, in respect of such condition or circumstance, or (viii) that would not require substantial cleanup, remedial action or other extraordinary response under any Environmental Laws reasonably estimated to cost in excess of five percent (5%) of the outstanding principal balance of such Purchased Asset;

(c)          With respect to any material adverse environmental condition set forth in the Environmental Site Assessment, there exists either (i) environmental insurance with respect to such Underlying Mortgaged Property or (ii) an amount in an escrow account charged as security for such Purchased Asset under the relevant Purchased Asset Documents equal to no less than 125% of the amount estimated in such Environmental Site Assessment as sufficient to pay the cost of such remediation or other action in accordance with such Environmental Site Assessment. Except for any hazardous materials being handled in accordance with applicable Environmental Laws, (i) the related Underlying Mortgaged Property is not being used for the treatment or disposal of hazardous materials; (ii) no hazardous materials are being used or stored or generated for off-site disposal or otherwise present at such Underlying Mortgaged Property other than hazardous materials of such types and in such quantities as are customarily used or stored or generated for off-site disposal or otherwise present in or at properties of the relevant property type; and (iii) such Underlying Mortgaged Property is not subject to any environmental hazard (including, without limitation, any situation involving hazardous materials) that under the Environmental Laws would have to be eliminated before the sale of, or that could otherwise reasonably be expected to adversely affect in more than a de minimis manner the value or marketability of, such Underlying Mortgaged Property.

(d)          The related Mortgage or other Purchased Asset Documents contain covenants on the part of the related Mortgagor requiring its compliance with any present or future Environmental Laws and regulations in connection with the Underlying Mortgaged Property.

(e)          For each of the Purchased Assets that is covered by environmental insurance, each environmental insurance policy is in an amount equal to 125% of the outstanding principal balance of the related Purchased Asset and has a term ending no sooner than the date that is five years after the maturity date (or, in the case of an ARD Loan, the final maturity date) of the related Purchased Asset. All environmental assessments or updates that were in the possession of Seller and that relate to an Underlying Mortgaged Property as being insured by an

environmental insurance policy have been delivered to or disclosed to the environmental insurance carrier issuing such policy prior to the issuance of such policy.

1.42.      Governmental action

To Seller’s Knowledge, as of the date of first utilization of the Senior Mortgage Loan of the related Purchased Asset, and, as of the Purchase Date, there are no actions, suits, arbitrations or governmental investigations or proceedings by or before any court or other Governmental Authority or agency now pending against or affecting the Mortgagor under any Purchased Asset or any Underlying Mortgaged Property that, if determined against such Mortgagor or such Underlying Mortgaged Property, would materially and adversely affect the value of such Underlying Mortgaged Property, the security intended to be provided with respect to the related Purchased Asset, or the ability of such Mortgagor and/or the current use of such Underlying Mortgaged Property to generate net cash flow to pay principal, interest and other amounts due under the related Purchased Asset.

1.43.      Underwriting

Each Purchased Asset complied at origination, in all material respects, with all of the terms, conditions and requirements of Seller’s underwriting standards applicable to such Purchased Asset and since origination, the Purchased Asset has been serviced in all material respects in a legal manner in conformance with Seller’s servicing standards.

1.44.      Financial statements

The Purchased Asset Documents require the Mortgagor to provide the holder of the Purchased Asset with at least annual financial statements and as initial conditions precedent, rent rolls (if applicable).

1.45.      Easements

The following statements are true with respect to the related Underlying Mortgaged Property: (a) the Underlying Mortgaged Property is located on or adjacent to a dedicated road or has access to an irrevocable easement permitting ingress and egress and (b) the Underlying Mortgaged Property is served by public or private utilities, water and sewer (or septic facilities) and otherwise appropriate for the use in which the Underlying Mortgaged Property is currently being utilised.

1.46.      Withholding tax

All payments of principal interest and other sums due from any borrower to Seller in respect of any Underlying Mortgaged Property are made to it under any Mortgage Loan without any deduction or withholding for or on account of Tax.

Additional Required Defined Terms

“Appraised Value” means in relation to any Underlying Mortgaged Property comprising real estate the value set forth in a valuation made in connection with the origination of the related

Mortgage Loan (or, where available, the most recent valuation received by Seller prior to Seller’s purchase of a financial interest in such Underlying Mortgaged Property comprising real estate) equal to the value of such Underlying Mortgaged Property comprising real estate.

“Assignment of Leases and Rents” means any assignment of leases and rents pursuant to the terms of the relevant Mortgage in connection with each Senior Mortgage Loan.

“Eligible Interest” means, in relation to any Senior Mortgage Loan, 100 per cent. (100%) of Seller’s unencumbered ownership of any loan advanced by Seller on a secured basis to any company or entity (which interest, for the avoidance of doubt, refers to the lender’s participation in the relevant debt instrument held by the lender and shall not be construed as a requirement that the lender hold the entire loan facility which is made available to a borrower).

“Ground Lease” means a lease for all or any portion of the real property comprising the Underlying Mortgaged Property comprising real estate, the Ground Lessee’s interest in which is held by the Mortgagor in respect of the related Senior Mortgage Loan.

“Ground Lessee” means the ground lessee under a Ground Lease.

“Information” means, with respect to each Senior Mortgage Loan, the documents, reports and written information required to be provided by or on behalf of Seller in connection with the purchase of the same by Buyer under this Agreement, including any conditions precedent thereto.

“Reservations” means:

(a)          the principles that equitable remedies are remedies which may be granted or refused at the discretion of the court, the limitation of enforcement on public policy grounds or by laws relating to bankruptcy, administration, examinership, insolvency, liquidation, reorganisation, court schemes, moratoria, administration and other laws generally affecting the rights of creditors; and

(b)          the time barring of claims under any applicable limitation acts, statutes or equivalent laws, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim.

SCHEDULE C

(Attached)

EXHIBIT XVIII

FORM OF UNDERTAKING LETTER

[Letterhead of Law Firm]

[DATE]

JPMorgan Chase Bank, National Association
383 Madison Avenue
New York, New York 10179
Attention:	Thomas Nicholas Cassino
JPMorgan Chase Bank, National Association
Four Chase MetroTech Center
4th Floor
Brooklyn, New York 11245
Attention:	Nancy S. Alto
(as Buyer under the MRSA)

Dear Sirs,

Facility agreement made between, amongst others, (1) [] as borrower; (2) [applicable Seller] as original lender and (2) [] as agent (the "Agent") (the "Facility Agreement").

We have obtained instructions from the Agent on behalf of the Finance Parties (as defined in the Facility Agreement) to issue this undertaking.

We are holding the deeds and documents relating to the Facility Agreement set out in Schedule 1 to this letter (the “Documents”). We hereby undertake to hold all the Documents strictly to your order or as you direct at all times.

Yours faithfully,

[NAME OF LAW FIRM]

SCHEDULE 1

SCHEDULE OF DEEDS AND DOCUMENTS

RELATING TO

[NAME OF TRANSACTION]

Date Document Parties

SIXTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

EXECUTION VERSION

SIXTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

THIS SIXTH AMENDMENT TO UNCOMMITTED MASTER  REPURCHASE AGREEMENT (this “Amendment”), dated as of September 17, 2019, by and between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“Buyer”) and STARWOOD PROPERTY MORTGAGE  SUB-14,   L.L.C.  and  STARWOOD PROPERTY   MORTGAGE   SUB-14-A,L.L.C., each a Delaware limited liability company (collectively, “Original Seller”) and STARWOOD MORTGAGE FUNDING VI LLC, a Delaware limited liability company (“Funding VI Seller”), and SPT CA FUNDINGS 2, LLC, a Delaware limited liability company (“SPT CA Seller”; together with Original Seller and Funding VI Seller, individually and/or collectively as the context may require, “Seller”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Master Repurchase Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Original Seller and Buyer have entered into that certain Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016, and that certain Second Amendment to Uncommitted Master Repurchase Agreement, dated as of April 25, 2016, and that certain Third Amendment to Uncommitted Master Repurchase Agreement and Amendment of Fee Letter, dated as of April 20, 2018, and that certain Fourth Amendment to Uncommitted Master Repurchase Agreement, dated as of May 1, 2018, and that certain Fifth Amendment to Uncommitted Master Repurchase Agreement, dated as of January 10, 2019 (the “Master Repurchase Agreement”); and

WHEREAS, Seller and Buyer wish to modify certain terms and provisions of the Master Repurchase Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1.       Amendments to Master Repurchase Agreement. The Master Repurchase Agreement is hereby amended as follows:

(a)The following definitions in Article 2 of the Master Repurchase Agreement are hereby deleted in their entirety and replaced with the following:

“Acceptable Attorney” means (i) an attorney-at-law or notary (if required in the relevant jurisdiction) or (ii) a firm of solicitors regulated by the Solicitors Regulation Authority (with respect to any Foreign Purchased Asset secured by Underlying Mortgaged Property located in England) that has, in each case, delivered at the applicable Seller’s request a Bailee Letter or an Undertaking Letter, as applicable, with the exception of an attorney or notary that is not satisfactory to Buyer.

“Applicable Currency” shall mean U.S. dollars, Pounds Sterling or Euro, as applicable.

“Approved Valuation” shall mean a valuation in form and substance reasonably satisfactory to Buyer, prepared and issued by a Valuer valuing the Mortgagor’s interest in the relevant Underlying Mortgaged Property carried out on the basis of the market value as defined in the then current Statements of Asset Valuation Practice and Guidance Notes issued by the Royal Institution of Chartered Surveyors or its equivalent in any applicable jurisdiction.

“Depository” shall mean, individually or collectively, as the context may require, (i)   with respect to the Sub-14 Depository Account and the GBP Depository Account, Wells Fargo Bank, National Association, (ii) with respect to the Funding VI Depository Account, U.S. Bank, National Association, and (iii) with respect to the EUR Depository Account, a bank or financial institutional acceptable to Buyer in connection with the establishment of the EUR Depository Account, or any successor to each such bank appointed by Buyer in its sole discretion.

“Depository Agreement” shall mean, individually or collectively, as the context may require, (i) that certain Amended and Restated Deposit Account Control Agreement (Repo Collection Account), dated as of April 23, 2019 among Buyer, Original Seller and Wells Fargo Bank, National Association, relating to the Sub- 14 Depository Account and the GBP Depository Account, (ii) that certain Deposit Account Control Agreement (Repo Collection Account), dated as of April 25, 2016, among Buyer, Funding VI Seller and U.S. Bank, National Association relating to the Funding VI Depository Account, and (iii) the deposit account control agreement or charged account control deed in respect of the EUR Depository Account to be entered into in accordance with the terms and provisions of the Sixth Amendment, as such agreements may be amended, modified and/or restated from time to time, and/or any replacement agreement to such agreements.

“Foreign Mortgage” shall mean, with respect to a Foreign Purchased Asset, the related mortgage, debenture or equivalent security deed or other instrument creating a first priority lien, first priority mortgage or a first priority security interest in an estate in fee simple in real property and the improvements thereon, or in a freehold or crown leasehold interest therein, securing a mortgage note or similar evidence of indebtedness and any other security deed or other instrument or securing indebtedness under a loan or facility agreement (and any related finance documentation), in each case securing indebtedness under applicable Requirements of Law in the relevant non-U.S. jurisdiction.

“Foreign Mortgage Loan” shall mean a Senior Mortgage Loan relating to an Underlying Mortgaged Property located outside of the United States of America or any territory thereof.

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“Foreign Purchased Asset” shall mean (i) with respect to any Transaction, a Purchased Asset with respect to which the Underlying Mortgaged Property is located outside of the United States of America or any territory thereof and which is sold by the applicable Seller to Buyer in such Transaction and (ii) with respect to the Transactions for Foreign Purchased Assets in general, all Eligible Assets secured by Underlying Mortgage Property located outside of the United States of America or any territory thereof and which are sold by the applicable Seller to Buyer.

“Maximum Facility Amount” shall mean One Billion Three Hundred Million Dollars ($1,300,000,000.00).

“Maturity Date” shall mean September 17, 2022 or the immediately succeeding Business Day, if such day shall not be a Business Day (the “Initial Maturity Date”), as such date may be extended subject to, and in accordance with, Article 3(n) hereof. For the sake of clarity, the Maturity Date shall not be any date  beyond five (5) years from the effective date of the Sixth Amendment (the “Final Maturity Date”).

“Mortgage Note” shall mean (i) with respect to a U.S. Purchased Asset, a note or other evidence of indebtedness of a Mortgagor with respect to a Senior Mortgage Loan or Junior Mortgage Loan, and (ii) with respect to a Foreign Purchased Asset, any evidence of indebtedness of a Foreign Mortgage.

“Security Deed” shall mean, individually or collectively as the context may require, (i) with respect to Foreign Purchased Assets secured by Underlying Mortgaged Property located in the United Kingdom, the Security Deed executed and delivered concurrently with the execution and delivery of the Fifth Amendment, (ii) with respect to Foreign Purchased Assets secured by Underlying Mortgaged property located in Ireland, the Security Deed executed and delivered concurrently with the execution and delivery of the Sixth Amendment and (iii) with respect to Foreign Purchased Assets secured by Underlying Mortgaged Property located in an Additional Jurisdiction, the applicable security agreement or security deed entered into by Seller and Buyer from time to time, acceptable to Buyer, pursuant to which Seller assigns to Buyer all of its right, title and interest under and in relation to each Purchased Asset Document relating to such Foreign Purchased Assets in the related Additional Jurisdiction, as each may be amended, modified and/or restated from time to time.

“Spot Rate” shall mean, with respect to an Applicable Currency, as of any date of determination, the spot rate of such Applicable Currency with another Applicable Currency determined by Buyer at or about 11:00 a.m. New York Time such date of determination as obtained from the applicable screen on Bloomberg.

“Transfer Certificate” shall mean, with respect to each Purchased Asset, the form of transfer or substitution certificate or assignment (at Buyer’s option if an

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assignment is an available option in the applicable jurisdiction) used to effectuate a legal transfer or assignment of such Foreign Purchased Asset and as attached to the underlying facilities agreement, or the equivalent in the applicable jurisdiction and (if applicable) any accession or substitution certificate, if any, required for the Buyer to become a beneficiary of the security trust in respect of such Foreign Purchased Asset.

(b)  The following definitions are hereby added, in correct alphabetical order, to Article 2 of the Master Repurchase Agreement:

“Additional Jurisdiction” shall mean each jurisdiction that is a member state of the European Union relating to an Asset other than the United Kingdom or Ireland that is approved by Buyer in accordance with Article 30.

“Confirmation of Supplemental Provisions” shall mean a notice letter, executed by Buyer and acknowledged by Seller and Guarantor, substantially in the form set forth in Exhibit XIX, attached hereto and made a part hereof, which shall set forth additional schedules, exhibits, annexes and provisions relating to jurisdictional specific documents, covenants, representations and other requirements in connection with Eligible Assets subject to Additional Jurisdictions.

“EURIBOR” shall mean, with respect to each Pricing Rate Period, the rate determined by Buyer to be the per annum rate for deposits in Euros for a period equal to the applicable Pricing Rate Period that appears on the Thomson Reuters ICE EURIBOR # Rates – EURIBOR01 Page (or any successor thereto) as the Euro Interbank Offering Rate as of 11:00 a.m., London time, on the Pricing Rate Determination Date (rounded upwards, if necessary, to the nearest 1/1000 of 1%); (ii)  if such rate does not appear on said Thomson Reuters ICE EURIBOR # Rates - EURIBOR 01 Page, the arithmetic mean (rounded as aforesaid) of the offered quotations of rates obtained by Buyer from the Reference Banks for deposits in Euros for a period equal to the applicable Pricing Rate Period to prime banks in the Euro Interbank market as of approximately 11:00 a.m., London time, on the Pricing Rate Determination Date and in an amount that is representative for a single transaction in the relevant market at the relevant time; or (iii) if fewer than two (2) Reference Banks provide Buyer with such quotations, the rate per annum which Buyer determines to be the arithmetic mean (rounded as aforesaid) of the offered quotations of rates which major banks in New York, New York selected by Buyer are quoting at approximately 11:00 a.m., New York City time, on the Pricing Rate Determination Date for loans in Euros to leading European banks for a period equal to the applicable Pricing Rate Period in amounts of not less than U.S. $1,000,000.00; provided that, in each of clauses (i), (ii) and (iii) above, if such rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. Buyer’s determination of LIBOR shall be binding and conclusive on Sellers absent manifest error. LIBOR may or may not be the  lowest rate based upon the market for Euro deposits, as applicable, in the Euro Interbank Eurodollar Market at which Buyer prices loans on the date which EURIBOR is determined by Buyer as set forth above; provided, that any such

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determination by Buyer shall be made in the same manner as determinations made by Buyer for all similarly-situated counterparties in similar repurchase facilities.

“EUR Depository Account” shall have the meaning specified in Article 5(a).

“Euros” shall mean the lawful currency of the member states of the European Union that have adopted and retain the single currency in accordance with the treaty establishing the European Community, as amended from time to time, provided that if any member state or states ceases to have such single currency as its lawful currency (such member state(s) being the “Existing State(s)”), Euro shall, for the avoidance of doubt, mean for all purposes of this Agreement the single currency adopted and retained as the lawful currency of the remaining member states and shall not include any successor currency introduced by the Existing State(s).

“Foreign Purchased Asset (EUR)” shall mean a Foreign Purchased Asset for which the Currency is Euros.

“Foreign Purchased Asset (GBP)” shall mean a Foreign Purchased Asset for which the Currency is Pounds Sterling.

“GBP Depository Account” shall have the meaning specified in Article 5(a).

“Index Rate” shall mean LIBOR or EURIBOR, as applicable.

“Margin Deficit Satisfaction Amount” shall have the meaning set forth in the Fee Letter, which is incorporated herein by reference.

“Second Term Reset Structuring Fee” shall have the meaning set forth in the Fee Letter, which is incorporated herein by reference.

“Sixth Amendment” shall mean that certain Sixth Amendment to Uncommitted Master Repurchase Agreement, dated as of September 17, 2019, by and among, Seller, Guarantor and Buyer.

(c)  The definition of “Eligible Assets” is hereby amended by deleting the phrase “or the United Kingdom” contained in the thirteenth (13th) line of the introductory paragraph thereof and replacing the same with the following:

“the United Kingdom, Ireland or any other Additional Jurisdiction, in the sole discretion of Buyer, approved in accordance with Article 30 of this Agreement”

(d)  The definition of “Pricing Rate” contained in Article 2 of the Master Repurchase Agreement is hereby amended by deleting the phrase “LIBOR” contained in clause (i) thereof and replacing the same with “the Index Rate”.

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(e)  The definition of “Purchase Price” contained in Article 2 of the Master Repurchase Agreement is hereby amended by amending and restating the second (2nd) paragraph thereof in its entirety as follows:

Solely for purposes of calculations related to the Maximum Facility Amount, any Transaction denominated in Pound Sterling and/or Euro shall be converted to the U.S. Dollar equivalent by utilizing the Spot Rate quoted by Buyer on the related Purchase Date (which shall be set forth in the applicable Confirmation).

(f)  The flush paragraph contained at the end of Article 2 of the Master Repurchase Agreement immediately after the defined terms is hereby amended by inserting the following immediately after the fourth (4th) sentence thereof:

References to “equivalent” of an amount means the equivalent in any Applicable Currency other than U.S. Dollars of any amount denominated in U.S. Dollars converted at the Spot Rate for the purchase of U.S. Dollars with such Applicable Currency.

(g)  Article 3(h) of the Master Repurchase Agreement is hereby amended by deleting the phrase “LIBOR” and replacing the same with “the Index Rate”.

(h)  Article 3(n)(i) of the Master Repurchase Agreement is hereby amended by deleting the phrase “May 1, 2023” contained in the seventeenth (17th) line thereof and replacing the same with “September 17, 2024”.

(i)  Article 4(a) of the Master Repurchase Agreement is hereby amended and restated as follows:

(a)    If at any time on any date the Buyer’s Margin Amount for any Purchased Asset is less than the Repurchase Price for such Purchased Asset (a “Margin Deficit”), then, to the extent such Margin Deficit equals or exceeds the Minimum Transfer Amount for such Purchased Asset, Buyer may, by notice to Sellers in  the form of Exhibit X, which notice shall also include a calculation of available Margin Excess (a “Margin Deficit Notice”), require Sellers to, within the time limits set forth in Article 4(d) below, at Sellers’ option no later than the Margin Deficit Payment Date, (i) repurchase the Purchased Asset giving rise to such Margin Deficit at its respective Repurchase Price, (ii) make a payment in reduction of the Purchase Price of such Purchased Asset, or in lieu of a payment in reduction such Purchase Price, deliver Eligible Assets and/or Cash Equivalents, subject to Buyer’s determination of the market value of such Eligible Assets and/or Cash Equivalents and (x) with respect to Eligible Assets, Buyer’s sole and absolute satisfaction with such Eligible Assets as additional posted collateral,  and (y) with respect to Cash Equivalents, Buyer’s reasonable satisfaction with such Cash Equivalents as additional posted collateral, (iii) subject to the provisions of Article 4(c) below, apply available Margin Excess, or (iv) choose any combination of the foregoing, such that, after giving effect to such transfers, repurchases, payments and/or applications of Margin Excess, Buyer shall have

6

received an amount equal to the Margin Deficit Satisfaction Amount for each Purchased Asset, considered individually. In connection with the delivery of Eligible Assets and/or Cash Equivalents in accordance with clause (ii) above, Sellers shall deliver to Buyer any additional documents (including, without limitation, to the extent not covered by any previously delivered legal opinions, one or more opinions of counsel reasonably satisfactory to Buyer as to safe harbor treatment and enforceability of security interests in connection with such Eligible Assets and/or Cash Equivalents) and take any actions reasonably necessary in Buyer’s discretion for Buyer to have a first priority, perfected security interest in such Eligible Assets and/or Cash Equivalents. Buyer and the applicable Seller shall amend the related Confirmation relating to any Purchased Asset with respect to which the related Purchase Price has been reduced pursuant to this Article 4(a), as well as that of any related Purchased Asset where the Purchase Price has been increased due to Margin Excess pursuant to Article 4(c), and, if applicable, shall amend the related Confirmation to reflect the corresponding revised Advance Rate of any Purchased Asset with respect to which the applicable Seller has made payments in reduction of the related Purchase Price to satisfy the Margin Deficit Extension Threshold.

(j) Article 5(a) of the Master Repurchase Agreement is hereby amended by deleting the first sentence thereof and replacing the same with the following:

(a)  (i) Concurrently with the execution and delivery of this Agreement, Sellers shall establish a segregated deposit account (the “Sub-14 Depository Account”) for U.S. Purchased Assets in the name of Sub-14 Seller for the benefit of Buyer at Wells Fargo Bank, National Association, as Depository, (ii) on or prior to the date of the Second Amendment Date, a segregated deposit account (the “Funding VI Depository Account”) in the name of Funding VI Seller for the benefit of Buyer at U.S. Bank, National Association, as Depository, and (iii) following the Fifth Amendment Date and in accordance with the terms and provisions of the Fifth Amendment, a segregated deposit account (the “GBP Depository Account”) for Foreign Purchased Assets (GBP) and (iv) following the Sixth Amendment Date and in accordance with the terms and provisions of the Sixth Amendment, a segregated account (the “EUR Depository Account”; together with the Sub-14 Depository Account, the Funding VI Depository Account and the GBP Depository Account, collectively, the “Depository Accounts”) for Foreign Purchased Assets (EUR) at the applicable Depository in the name of Seller for the benefit of Buyer.

(k) Article 6(b) of the Master Repurchase Agreement is hereby amended by deleting the fourth (4th) and fifth (5th) sentences thereof and replacing the same with the following:

Buyer shall have all of the rights and may exercise all of the remedies of a secured creditor under the UCC, the other laws of the State of New York and any other applicable law (including the equivalent under applicable Requirements of Law in the relevant non-U.S. jurisdiction (with respect to Foreign Purchased Assets). In

7

furtherance of the foregoing, (a) Buyer, at Sellers’ sole cost and expense, as applicable, shall cause to be filed in such locations as may be necessary to perfect and maintain perfection and priority of the security interest granted hereby, UCC financing statements and continuation statements, and shall forward copies of such Filings to Sellers upon the filing thereof, (b) with respect to any Foreign Purchased Assets, Buyer, at Seller’s sole cost and expense, shall make any and all necessary and customary filings, notices or other required actions (if any) in the applicable non-U.S. jurisdiction to maintain the perfection and priority of the outright transfer and the security interest granted hereby and in any other Transaction Document (collectively, the items in (a) and (b), the “Filings”) and (c) Sellers shall from time to time take such further actions as may be reasonably requested by Buyer to maintain and continue the perfection and priority of the security interest granted hereby (including marking its records and files to evidence the interests granted to Buyer hereunder).

(l)  Article 9(x)(L) of the Master Repurchase Agreement is hereby amended and restated in its entirety as follows:

(L)  Upon execution and delivery of each Security Deed, Buyer shall have a   valid charge over, and security interest in, any deposit, escrow or reserve accounts maintained pursuant to the Purchased Asset Documents for any Foreign Purchased Asset secured by Underlying Mortgaged Properties located in the relevant non-U.S. jurisdiction named therein and all amounts at any time on deposit therein.

(m)  The following is hereby added as Article 30 to the Master Repurchase Agreement in correct numerical order:

ARTICLE 30.

ADDITIONAL JURISDICTIONS

(a)          At Seller’s request, Buyer may agree, in its sole discretion, to approve Additional Jurisdictions relating to Eligible Assets in order to enter into Transactions secured by Underlying Mortgaged Properties located in such Additional Jurisdictions. Seller shall provide Buyer with written notice of its request pursuant to this Article 30 and shall identify the requested Additional Jurisdiction(s). Upon the completion of satisfactory diligence, credit approval and consultation with legal counsel (including, without limitation, outside counsel in the relevant Additional Jurisdiction(s)) determined by Buyer in its sole discretion, Buyer shall notify Seller of its approval or non-approval of such requested Additional Jurisdiction(s).  In the event that  Buyer determines that such requested Additional Jurisdiction shall be an approved Additional Jurisdiction hereunder, the approval shall be effectuated upon the fulfillment of the following conditions:

(i)       A Confirmation of Supplemental Provisions shall be delivered, fully executed by the relevant parties thereto, together with such other documents or Transaction Documents as may be reasonably requested by Buyer;

8

(ii)      No Material Adverse Effect, Margin Deficit, Default or Event of Default shall have occurred and be continuing, or would result from the addition of such Additional Jurisdiction;

(iii)     The representations and warranties contained in Article 9 shall be true and correct in all material respects, as of the date of the related Confirmation of Supplemental Provisions;

(iv)     Buyer shall have received a legal opinion, dated as of the date of the related Confirmation of Supplemental Provisions described above, addressed to Buyer and its successors and/or assigns, relating to security interests under the laws of such Additional Jurisdiction in form and substance reasonably acceptable to Buyer; and

(v)      Such entity shall provide Buyer with such other documentation or information as Buyer may request with respect to such Additional Jurisdiction, and shall pay all reasonable out-of-pocket costs and expenses actually incurred by Buyer under this Article 30.

(n)      Exhibit I of the Master Repurchase Agreement is hereby deleted in its entirety and replaced with the attached Schedule A.

(o)      Exhibit V of the Master Repurchase Agreement is hereby amended by inserting the attached Schedule B containing the Form of Power of Attorney (Irish Law) immediately after the Form of Attorney (English Law) contained thereof.

(p)     Exhibit VI of the Master Repurchase Agreement is hereby amended by amending and restating the title of the section called “Representations and Warranties Regarding Each Individual Purchased Asset that is a Senior Mortgage Loan Secured by Property in the United Kingdom” as “Representations and Warranties Regarding Each Individual Purchased Asset that is a Senior Mortgage Loan Secured by Property in the United Kingdom or the Republic of Ireland”.

(q)    The Master Repurchase Agreement is hereby amended by inserting the attached Schedule C as new Exhibit XIX thereto.

2.          Second Term Reset Structuring Fee. As consideration for Buyer’s agreement to enter into this Amendment, Buyer shall have received payment from Sellers of the Second Term Reset Structuring Fee on the date hereof.

3.          Post-Closing Obligations. Within forty-five (45) days after the date hereof, Seller shall, deliver, or cause to be delivered, to Buyer: (a) the Depository Agreement (or an amendment to the existing Depository Agreement) with respect to the EUR Depository Account in form and substance reasonably acceptable to Buyer and with a Depository acceptable to Buyer, (b) opinions of outside counsel reasonably acceptable to Buyer as to such matters relating to the Depository Agreement regarding the EUR Depository Account as Buyer may reasonably request and (c) a re-direction letter to the Servicer in respect of any Foreign Purchased Asset in form and substance acceptable to Buyer.

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4.          Effectiveness. The effectiveness of this Amendment is subject to receipt by Buyer of the following:

(a)    Amendment. This Amendment, duly executed and delivered by Sellers, Guarantor and Buyer.

(b)    Amendment to Fee Letter. The Third Amendment to Fee Letter, dated as of the date hereof, by and between Buyer and Sellers.

(c)    Power of Attorney. The Power of Attorney (Irish Law), dated the date hereof, by Seller in favor of Buyer.

(d)    Security Deed. The Security Deed with respect to Irish Law, dated the date hereof, by Seller and Buyer.

(e)    Responsible Officer Certificate. A signed certificate from a Responsible Officer of Seller certifying: (i) that no amendments have been made to the organizational documents of Seller, Pledgor and Guarantor since April 25, 2016, unless otherwise stated therein; and (ii) the authority of Seller and Guarantor to execute and deliver this Amendment and the other Transaction Documents to be executed and delivered in connection with this Amendment.

(f)     Good Standing. Certificates of existence and good standing for the Seller, Pledgor and Guarantor.

(g)    Legal Opinion. Opinions of outside counsel to Seller and Guarantor reasonably acceptable to Buyer as to such matters as Buyer may reasonably request.

(h)    Buyer’s Costs. Payment by Sellers of the actual costs and expenses,  including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with this Amendment and the transactions contemplated hereby.

5.          Representations and Warranties. All representations and warranties in the Master Repurchase Agreement are true, correct, complete and accurate in all respects as of the date hereof (except as may be set forth in any Requested Exceptions Report and except that if any such representation or warranty is expressly stated to have been made as of a specific date, then such representation or warranty shall be true and correct as of such specific date).

6.          Continuing Effect; Reaffirmation of Guarantee Agreement. As amended by this Amendment and the Third Amendment to the Fee Letter, all terms, covenants and provisions of the Master Repurchase Agreement and the Fee Letter are ratified and confirmed and shall remain in full force and effect. In addition, all terms, covenants and provisions of the Guarantee Agreement are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Buyer, and Guarantor hereby consents, acknowledges and agrees to the modifications set forth in this Amendment. By its execution hereof, Guarantor hereby reaffirms its obligations under the Guarantee Agreement.

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7.          Binding Effect; No Partnership; Counterparts. The provisions of the Master Repurchase Agreement as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment in Portable Document Format (PDF) by email or facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.

8.          Further Agreements. Seller agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Buyer and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

9.          Governing Law. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

10.        Headings. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

11.        References to Transaction Documents. All references to the Master Repurchase Agreement or the Fee Letter in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement or the Fee Letter, as amended hereby and by the Third Amendment to Fee Letter, as applicable, unless the context expressly requires otherwise.

[NO FURTHER TEXT ON THIS PAGE]

11

IN WITNESS WHEREOF,the parties have executed this Amendment as of the day first written above.

BUYER:
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, a national banking association
By:	/s/ Anthony Shaskus
Name:	Anthony Shaskus
Title:	Vice President

Signature Page to Sixth Amendment to Uncommitted Master Repurchase Agreement

SELLER:
STARWOOD PROPERTY MORTGAGE SUB-
14, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

STARWOOD PROPERTY MORTGAGE SUB-
14-A, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

STARWOOD MORTGAGE FUNDING VI LLC,
a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

SPT CA FUNDINGS 2, LLC, a Delaware limited
liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to Sixth Amendment to Uncommitted Master Repurchase Agreement

AGREED AND ACKNOWLEDGED:
GUARANTOR:
STARWOOD PROPERTY TRUST, INC., a
Maryland corporation
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to Sixth Amendment to Uncommitted Master Repurchase Agreement

SCHEDULE A

(Attached)

AMENDED AND RESTATED FORM OF CONFIRMATION STATEMENT

EXHIBIT I

CONFIRMATION STATEMENT

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

Ladies and Gentlemen:

Seller is pleased to deliver our written CONFIRMATION of our agreement to enter into the Transaction pursuant to which JPMorgan Chase Bank, National Association shall purchase from us the Purchased Assets identified on the attached Schedule 1 pursuant to the Uncommitted Master Repurchase Agreement, dated as of December 10, 2015 (as amended, modified and/or restated, the “Agreement”), between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (“Buyer”) and STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C. [(“Seller”)], STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C. [(“Seller”)] and STARWOOD   MORTGAGE   FUNDING  VI  LLC [(“Seller”)] on the following terms. Capitalized terms used herein without definition have the meanings given in the Agreement.

Purchase Date:	[] [], 201[]
Purchased Assets:	[Name]: As identified on attached Schedule 1
Aggregate Principal Amount of
Purchased Assets:	$[]
Repurchase Date:
Purchase Price:	$[]
Maximum Purchase Price:	$[]
Market Value2:	$[]
Applicable Currency:	[U.S. Dollar / Pound Sterling / Euro]
Pricing Rate:	LIBOR/EURIBOR plus %
Requested Advance Rate:
Maximum Advance Rate:
Existing Mezzanine Debt:	[Yes/No]
Total Future Funding
Obligations of Seller:	$[]

2 As of the Purchase Date only.

Future Funding Amount:	$[] [the funding of which by Buyer shall be subject to the
	terms and conditions of Article 3(c) of the Agreement.]
Starwood Pari Passu
Participation Interest:
Companion Interest Aggregate
Principal Balance:	[Yes/No]
Starwood Pari Passu Mortgage
Loan Principal Balance:	$[]
SPP Mortgage Loan Maximum
Purchase Price:	$[]
Governing Agreements:	$[]
	As identified on attached Schedule 1
Type of Funding:	[Table/Non-table]
Wiring Instructions:
Primary Servicer:
Name and address for	Buyer:	JPMorgan Chase Bank, National Association
communications:		383 Madison Avenue
		New York, New York 10179
		Attention:	Ms. Nancy S. Alto
		Telephone:	(212) 834-3038
		Telecopy:	(917) 546-2564
	With a	JPMorgan Chase Bank, National Association
	copy to:	383 Madison Avenue
		New York, New York 10179
		Attention:	Mr. Thomas Nicholas Cassino
		Telephone:	(212) 834-5158
		Telecopy:	(212) 834-6029
	Seller:	[STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C.]
		[STARWOOD PROPERTY MORTGAGE SUB- 14-A, L.L.C.]
		[STARWOOD MORTGAGE FUNDING VI LLC]
		c/o Starwood Property Trust, Inc.
		591 West Putnam Avenue
		Greenwich, Connecticut 06830
		Attention:	General Counsel
		Telephone:	(203) 422-8191
		Telecopy:	(203) 422-8192

With	Sidley Austin LLP
copies	787 Seventh Avenue
to:	New York, New York 10019
	Attention:	Robert L. Boyd
	Telephone:	(212) 839-7352
	Telecopy:	(212) 839-5599

[STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C.]

[STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C.]

[STARWOOD MORTGAGE FUNDING VI LLC]

By:

Name:

Title:

AGREED AND ACKNOWLEDGED:

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

By:

Name:

Title:

1.         Schedule 1 to Confirmation Statement

Purchased Assets:

Aggregate Principal Amount:

SCHEDULE B

(Attached)

SCHEDULE C

(Attached)

EXHIBIT XIX

FORM OF CONFIRMATION OF SUPPLEMENTAL PROVISIONS

JPMorgan Chase Bank, National Association

383 Madison Avenue

New York, New York 10179

, 20[]

Starwood Property Mortgage Sub-14, L.L.C.

c/o Starwood Property Trust, Inc.

591 West Putnam Avenue

Greenwich, Connecticut 06830

Starwood Property Mortgage Sub-14-A, L.L.C.

c/o Starwood Property Trust, Inc.

591 West Putnam Avenue

Greenwich, Connecticut 06830

Starwood Mortgage Funding VI LLC

c/o Starwood Mortgage Capital

1601 Washington Avenue, Suite 800

Miami Beach, Florida 33139

Re:      Uncommitted Master Repurchase  Agreement,  dated  as  of  December 10, 2015, between Starwood Property Mortgage Sub-14, L.L.C., a Delaware limited liability company, and Starwood Property Mortgage Sub-14-A, L.L.C., a Delaware limited liability company (each an “Original Seller” and, collectively, “Original Sellers”), and JPMorgan Chase Bank, National Association, a national banking association (“Buyer”), as amended pursuant to that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016, by and between Buyer and Original Sellers, as further amended pursuant to that certain Second Amendment to Uncommitted Master Repurchase Agreement, dated as of April 25, 2016, by and between Buyer, Original Sellers and Starwood Mortgage Funding VI LLC, a Delaware limited liability company (“Funding VI Seller”), as further amended pursuant to that certain Third Amendment to Uncommitted Master Repurchase Agreement and Amendment of Fee Letter, dated as of April 20, 2018, by and between Buyer, Original Sellers, Funding VI Seller and SPT CA Fundings 2, LLC, a Delaware limited liability company (“SPT CA Seller”; together with Original Sellers and Funding VI Seller, each, a “Seller” and,

collectively, “Sellers”), as further amended pursuant to that certain Fourth Amendment to Uncommitted Master Repurchase Agreement, dated as of May 1, 2018, by and between Sellers and Buyer, and as further amended by that certain Fifth Amendment to Uncommitted Master Repurchase Agreement, dated as of January 10, 2019, by and between Sellers and Buyer (as so amended and as the same may be further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”).

Ladies and Gentlemen,

Pursuant to Article 30 of the Master Repurchase and Securities Contract Agreement, Buyer hereby notifies Seller of the approval of [INSERT RELEVANT ADDITIONAL JURISDICTION] as an Additional Jurisdiction for Transactions entered into following the date hereof. As a condition precedent to entering into any Transactions in such Additional Jurisdiction, the undersigned have agreed to supplement and amend the Master Repurchase and Securities Contract Agreement.

In connection with the foregoing, the Buyer and each Seller hereby acknowledge and agree to the following3:

1. Exhibit IV to the Master Repurchase and Securities Contract Agreement is hereby supplemented by the Form of Power of Attorney ([INSERT APPLICABLE JURISDICTION] Law) attached hereto as Exhibit A.

2. Exhibit V to the Master Repurchase and Securities Contract Agreement is hereby supplemented by the Representations and Warranties set forth on Exhibit B, attached hereto.

3. Exhibit XV to the Master Repurchase and Securities Contract Agreement is hereby supplemented by the Form of [Undertaking Letter]4  attached hereto as Exhibit C.

4. Exhibit XIV to the Master Repurchase and Securities Contract Agreement is hereby supplemented by the Form of [Security Deed]5  ([INSERT APPLICABLE JURISDICTION] Law) attached hereto as Exhibit D.

5. Exhibit XIII to the Master Repurchase and Securities Contract Agreement is hereby supplemented by the Form of [Bailee Letter]6  attached hereto as Exhibit E.

3To be tailored to the applicable Additional Jurisdiction’s requirements.

4Or the equivalent in the applicable jurisdiction, if any.

5 Or the equivalent in the applicable jurisdiction, if any.

6 Or the equivalent in the applicable jurisdiction, if any.

6. [INSERT RELEVANT SELLER] and Buyer shall cooperate in [executing/acknowledging/delivering/completion of any necessary procedural formalities] the form of certificate attached hereto as Exhibit F as required under [INSERT REFERENCE TO APPLICABLE TAX LAW IN THE ADDITIONAL JURISDICTION] to ensure that Income in respect of each Purchased Asset in such Additional Jurisdiction can be paid without deduction or withholding at source for or on account of Taxes.

7. The supplemental provisions and Exhibits set forth herein shall become effective as of the date hereof without any further action required.

8. This letter agreement shall governed by and construed in accordance with the laws of the State of New York pursuant to Section 5-1401 of the New York General Obligations Law without giving effect to the conflict of law principles thereof.

9. This letter agreement is, and shall be, one of the Transaction Documents as referred to and defined in the a Master Repurchase and Securities Contract Agreement, and it may be executed in any number of counterparts, each of which shall be an original, and such counterparts shall together constitute but one and the same instrument.

Please evidence your agreement to the terms of this letter agreement by signing a counterpart of this letter agreement and returning it to the undersigned.

JPMORGAN CHASE BANK, NATIONAL

ASSOCIATION, a national banking association

By:

Name:

Title:

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

Agreed to and accepted:

STARWOOD PROPERTY MORTGAGE SUB-14,

L.L.C., a Delaware limited liability company

By:

Name:

Title:

STARWOOD PROPERTY MORTGAGE SUB-14-A,

L.L.C., a Delaware limited liability company

By:

Name:

Title:

STARWOOD MORTGAGE FUNDING VI LLC, a

Delaware limited liability company

By:

Name:

Title:

Acknowledged and Agreed:

SPT CA FUNDINGS 2, LLC, a Delaware limited

liability company

By:

Name:

Title:

Exhibit A

Exhibit B

Exhibit C

Exhibit D

Exhibit E

Exhibit F

SEVENTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

Execution Version

SEVENTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

THIS    SEVENTH    AMENDMENT    TO    UNCOMMITTED    MASTER    REPURCHASE AGREEMENT (this “Amendment”), dated as of December 6, 2019, by and between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“Buyer”) and STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C. and STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C., each a Delaware limited liability company (collectively, “Original Seller”) and STARWOOD MORTGAGE FUNDING VI LLC, a Delaware limited liability company (“Funding VI Seller”), and SPT CA FUNDINGS 2, LLC, a Delaware limited liability company (“SPT CA Seller”; together with Original Seller and Funding VI Seller, individually and/or collectively as the context may require, “Seller”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Master Repurchase Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Original Seller and Buyer have entered into that certain Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016, and that certain Second Amendment to Uncommitted Master Repurchase Agreement, dated as of April 25, 2016, and that certain Third Amendment to Uncommitted Master Repurchase Agreement and Amendment of Fee Letter, dated as of April 20, 2018, and that certain Fourth Amendment to Uncommitted Master Repurchase Agreement, dated as of May 1, 2018, and that certain Fifth Amendment to Uncommitted Master Repurchase Agreement, dated as of January 10, 2019, and that certain Sixth Amendment to Uncommitted Master Repurchase Agreement, dated as of September 17, 2019 (the “Master Repurchase Agreement”); and

WHEREAS, Seller and Buyer wish to modify certain terms and provisions of the Master Repurchase Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1.   Amendments to Master Repurchase Agreement. The Master Repurchase Agreement is hereby amended as follows:

(a)   The following definitions in Article 2 of the Master Repurchase Agreement are hereby deleted in their entirety and replaced with the following:

“Depository Account” shall mean, individually or collectively, as the context may require, any segregated interest bearing account, in the name of Buyer, established on the books and records of the Depository pursuant to a Depository Agreement.

“Depository Agreement” shall mean, individually or collectively, as the context may require, (i) that certain Second Amended and Restated Deposit Account Control Agreement (Repo Collection Account), dated as of December 6, 2019 among Buyer, Original Seller and Wells Fargo Bank, National Association, relating

to the Sub- 14 Depository Account, the EUR Depository Account and the GBP Depository Account, and (ii) that certain Deposit Account Control Agreement (Repo Collection Account), dated as of April 25, 2016, among Buyer, Funding VI Seller and U.S. Bank, National Association relating to the Funding VI Depository Account, as such agreements may be amended, modified and/or restated from time to time, and/or any replacement agreement to such agreements.

“Maximum Facility Amount” shall mean One Billion Six Hundred Million and No/100 Dollars ($1,600,000,000.00).

2.    Upsize Fee. As consideration for Buyer’s agreement to enter into this Amendment, Buyer shall have received payment from Sellers of the Seventh Amendment Upsize Fee on the date hereof.

3.    Effectiveness. The effectiveness of this Amendment is subject to receipt by Buyer of the following:

(a)    Amendment. This Amendment, duly executed and delivered by Sellers, Guarantor and Buyer.

(b)   Amendment to Fee Letter. The Fourth Amendment to Fee Letter, dated as of the date hereof, by and between Buyer and Sellers.

(c)    Responsible Officer Certificate. A signed certificate from a Responsible Officer of Seller certifying: (i) that no amendments have been made to the organizational documents of Seller, Pledgor and Guarantor, unless otherwise stated therein; and (ii) the authority of Seller and Guarantor to execute and deliver this Amendment and the other Transaction Documents to be executed and delivered in connection with this Amendment.

(d)   Good Standing. Certificates of existence and good standing for the Seller, Pledgor and Guarantor.

(e)    Legal Opinion. Opinions of outside counsel to Seller and Guarantor reasonably acceptable to Buyer as to such matters as Buyer may reasonably request.

(f)    Buyer’s Costs. Payment by Sellers of the actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with this Amendment and the transactions contemplated hereby.

4.    Representations and Warranties. All representations and warranties in the Master Repurchase Agreement are true, correct, complete and accurate in all respects as of the date hereof (except as may be set forth in any Requested Exceptions Report and except that if any such representation or warranty is expressly stated to have been made as of a specific date, then such representation or warranty shall be true and correct as of such specific date).

5.    Continuing Effect; Reaffirmation of Guarantee Agreement. As amended by this Amendment and the Fourth Amendment to the Fee Letter, all terms, covenants and provisions of the Master Repurchase Agreement and the Fee Letter are ratified and confirmed and shall remain

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in full force and effect. In addition, all terms, covenants and provisions of the Guarantee Agreement are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Buyer, and Guarantor hereby consents, acknowledges and agrees to the modifications set forth in this Amendment. By its execution hereof, Guarantor hereby reaffirms its obligations under the Guarantee Agreement.

6.    Binding Effect; No Partnership; Counterparts. The provisions of the Master Repurchase Agreement as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment in Portable Document Format (PDF) by email or facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.

7.    Further Agreements. Seller agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Buyer and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

8.    Governing Law. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

9.    Headings. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

10.   References to Transaction Documents. All references to the Master Repurchase Agreement or the Fee Letter in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement or the Fee Letter, as amended hereby and by the Fourth Amendment to Fee Letter, as applicable, unless the context expressly requires otherwise.

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the day first written above.

BUYER:
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, a national banking association
By:	/s/ Thomas N. Cassino
Name:	Thomas N. Cassino
Title:	Executive Director

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

Signature Page to Seventh Amendment to Uncommitted Master Repurchase Agreement

SELLER:
STARWOOD PROPERTY MORTGAGE SUB-14,
L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD PROPERTY MORTGAGE SUB-
14-A, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD MORTGAGE FUNDING VI LLC,
a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
SPT CA FUNDINGS 2, LLC, a Delaware limited
liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

Signature Page to Seventh Amendment to Uncommitted Master Repurchase Agreement

AGREED AND ACKNOWLEDGED:
GUARANTOR:
STARWOOD PROPERTY TRUST,  INC.,  a
Maryland Corporation
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to Seventh Amendment to Uncommitted Master Repurchase Agreement

EIGHTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

Execution Version

EIGHTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT

THIS EIGHTH AMENDMENT TO UNCOMMITTED MASTER REPURCHASE AGREEMENT (this “Amendment”), dated as of February 6, 2020, by and between JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (“Buyer”) and STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C. and STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C., each a Delaware limited liability company (collectively, “Original Seller”) and STARWOOD MORTGAGE FUNDING VI LLC, a Delaware limited liability company (“Funding VI Seller”), and SPT CA FUNDINGS 2, LLC, a Delaware limited liability company (“SPT CA Seller”; together with Original Seller and Funding VI Seller, individually and/or collectively as the context may require, “Seller”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Master Repurchase Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, Original Seller and Buyer have entered into that certain Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016, and that certain Second Amendment to Uncommitted Master Repurchase Agreement, dated as of April 25, 2016, and that certain Third Amendment to Uncommitted Master Repurchase Agreement and Amendment of Fee Letter, dated as of April 20, 2018, and that certain Fourth Amendment to Uncommitted Master Repurchase Agreement, dated as of May 1, 2018, and that certain Fifth Amendment to Uncommitted Master Repurchase Agreement, dated as of January 10, 2019, and that certain Sixth Amendment to Uncommitted Master Repurchase Agreement, dated as of September 17, 2019, and that certain Seventh Amendment to Uncommitted Master Repurchase Agreement, dated as of December 6, 2019 (the “Master Repurchase Agreement”); and

WHEREAS, Seller and Buyer wish to modify certain terms and provisions of the Master Repurchase Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1.   Amendments to Master Repurchase Agreement. The Master Repurchase Agreement is hereby amended as follows:

(a)  The following definitions in Article 2 of the Master Repurchase Agreement are hereby deleted in their entirety and replaced with the following:

“Maximum Facility Amount” shall mean One Billion Eight Hundred Million and No/100 Dollars ($1,800,000,000.00).

2.   Upsize Fee. As consideration for Buyer’s agreement to enter into this Amendment, Buyer shall have received payment from Sellers of the Eighth Amendment Upsize Fee on the date hereof.

3.   Effectiveness. The effectiveness of this Amendment is subject to receipt by Buyer of the following:

(a)  Amendment. This Amendment, duly executed and delivered by Sellers, Guarantor and Buyer.

(b)  Amendment to Fee Letter. The Fifth Amendment to Fee Letter, dated as of the date hereof, by and between Buyer and Sellers.

(c)  Responsible Officer Certificate. A signed certificate from a Responsible Officer of Seller certifying: (i) that no amendments have been made to the organizational documents of Seller, Pledgor and Guarantor, unless otherwise stated therein; and (ii) the authority of Seller and Guarantor to execute and deliver this Amendment and the other Transaction Documents to be executed and delivered in connection with this Amendment.

(d)  Good Standing. Certificates of existence and good standing for the Seller, Pledgor and Guarantor.

(e)  Legal Opinion. Opinions of outside counsel to Seller and Guarantor reasonably acceptable to Buyer as to such matters as Buyer may reasonably request.

(f)  Buyer’s Costs. Payment by Sellers of the actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with this Amendment and the transactions contemplated hereby.

4.   Representations and Warranties. All representations and warranties in the Master Repurchase Agreement are true, correct, complete and accurate in all respects as of the date hereof (except as may be set forth in any Requested Exceptions Report and except that if any such representation or warranty is expressly stated to have been made as of a specific date, then such representation or warranty shall be true and correct as of such specific date).

5.   Continuing Effect; Reaffirmation of Guarantee Agreement. As amended by this Amendment and the Fifth Amendment to the Fee Letter, all terms, covenants and provisions of the Master Repurchase Agreement and the Fee Letter are ratified and confirmed and shall remain in full force and effect. In addition, all terms, covenants and provisions of the Guarantee Agreement are hereby ratified and confirmed and shall not be released, diminished, impaired, reduced or adversely affected by this Amendment, and each party indemnifying Buyer, and Guarantor hereby consents, acknowledges and agrees to the modifications set forth in this Amendment. By its execution hereof, Guarantor hereby reaffirms its obligations under the Guarantee Agreement.

6.   Binding Effect; No Partnership; Counterparts. The provisions of the Master Repurchase Agreement as amended hereby, shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between any of the parties hereto. For the purpose of facilitating the execution of this Amendment as herein provided, this Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and such counterparts when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment in Portable

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Document Format (PDF) by email or facsimile transmission shall be effective as delivery of a manually executed counterpart thereof.

7.   Further Agreements. Seller agrees to execute and deliver such additional documents, instruments or agreements as may be reasonably requested by Buyer and as may be necessary or appropriate from time to time to effectuate the purposes of this Amendment.

8.   Governing Law. The provisions of Article 18 of the Master Repurchase Agreement are incorporated herein by reference.

9.   Headings. The headings of the sections and subsections of this Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

10. References to Transaction Documents. All references to the Master Repurchase Agreement or the Fee Letter in any Transaction Document, or in any other document executed or delivered in connection therewith shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Master Repurchase Agreement or the Fee Letter, as amended hereby and by the Fifth Amendment to Fee Letter, as applicable, unless the context expressly requires otherwise.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the day first written above.

BUYER:
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, a national banking association
By:	/s/ Thomas N. Cassino
Name:	Thomas N. Cassino
Title:	Executive Director

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

Signature Page to Eighth Amendment to Uncommitted Master Repurchase Agreement

SELLER:
STARWOOD PROPERTY MORTGAGE SUB-
14, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD PROPERTY MORTGAGE SUB-
14-A, L.L.C., a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
STARWOOD MORTGAGE FUNDING VI LLC,
a Delaware limited liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory
SPT CA FUNDINGS 2, LLC, a Delaware limited
liability company
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

Signature Page to Eighth Amendment to Uncommitted Master Repurchase Agreement

AGREED AND ACKNOWLEDGED:
GUARANTOR:
STARWOOD PROPERTY TRUST, INC., a
Maryland corporation
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Authorized Signatory

Signature Page to Eighth Amendment to Uncommitted Master Repurchase Agreement

EX-10.24

Exhibit 10.24

SECOND AMENDED AND RESTATED GUARANTY

THIS SECOND AMENDED AND RESTATED GUARANTY (the “Guaranty”), dated November 22, 2019 (the “Effective Date”), is given by Starwood Property Trust, Inc., a Maryland corporation (the “Guarantor”), in favor of the Federal Home Loan Bank of Chicago (“FHLB Chicago”), an instrumentality of the United States of America, located at 200 E. Randolph Drive, Chicago, Illinois 60601. This Guaranty amends and restates in its entirety that certain Amended and Restated Guaranty Agreement dated March 15, 2019, from Guarantor to FHLB Chicago (as amended, the “Prior Guaranty”).

1.         Unconditional Guaranty.  In consideration of and to induce FHLB Chicago to make advances and other extensions of credit to Prospect Mortgage Insurance, LLC (“Member”) pursuant to that certain Amended and Restated Advances, Collateral Pledge, and Security Agreement dated July 7, 2017, as amended by the Amendments described below, and as supplemented by that certain Supplement to Amended and Restated Advances, Collateral Pledge, and Security Agreement dated July 7, 2017(collectively, the “ACPS Agreement”, and together with all other documents executed in connection with the ACPS Agreement and the Obligations (defined below) the “Credit Agreements”), which is and will be to the direct interest and advantage of the Guarantor, the Guarantor unconditionally guarantees to FHLB Chicago, and its successors and assigns, the prompt and complete payment when due, whether by acceleration or otherwise, of all of the Member’s present and future obligations and liabilities of any kind to FHLB Chicago arising out of the ACPS Agreement heretofore, now, or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether direct or acquired by FHLB Chicago by assignment or succession, whether originally incurred by or assumed by the Member, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether the Member may be liable individually or jointly with others, or whether recovery upon such Obligations may be or hereafter become barred by any statute of limitations, or whether such Obligations may be or hereafter become otherwise unenforceable (any and all such obligations and liabilities, the “Obligations”). Capitalized terms not defined herein shall have the meanings set forth in the ACPS Agreement.

This Guaranty is unconditional and shall not be affected by the genuineness, validity, regularity or enforceability of the Obligations or any instrument evidencing any Obligations, or by the existence, validity, enforceability, perfection, or extent of any collateral therefor, or by any circumstance relating to the Obligations which might otherwise constitute a defense to this Guaranty. This Guaranty is absolute and unconditional and shall remain in full force and effect and be binding upon the Guarantor and its successors and assigns so long as the ACPS Agreement remains in full force and effect. If at any time any payment by the Member in respect of any Obligations is rescinded or must otherwise be returned for any reason whatsoever, in whole or in part, the Guarantor shall remain liable hereunder in respect of such Obligations as if such payment had not been made, and this Guaranty shall remain in full force and effect or shall be reinstated (as the case may be) with respect to such Obligations.

This is a guaranty of payment and not a guaranty of collection. The Guarantor agrees that FHLB Chicago may proceed against the Guarantor for payment of any of the Obligations when due, whether or not FHLB Chicago has proceeded against any other obligor principally or secondarily liable for any Obligations, including Member, or against any collateral for the Obligations, and whether or not FHLB Chicago has pursued any other remedy available to it. FHLB Chicago shall not be obligated to file any claim in the event that the Member becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure to file any such claim shall not affect the Guarantor’s obligations hereunder. The Guarantor also specifically waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance, and all other notices whatsoever with respect to this Guaranty and of the existence, creation, or incurring of new or additional Obligations.

Member requested an increase to its advance capacity under the ACPS Agreement as of the date of the Prior Guaranty and Guarantor provided the Prior Guaranty as a condition thereto. Guarantor hereby consents to the ACPS, including the amendments set forth in each of (i) the Federal Home Loan Bank of Chicago Amendment to Amended and Restated Advances, Collateral Pledge, and Security Agreement dated October 16, 2018, (ii) the Letter Agreement dated October 16, 2018 executed by Member, FHLB Chicago and Guarantor, and (iii) the Letter Agreement executed contemporaneous with the Prior Guaranty by Member and FHLB Chicago (collectively, the “Amendments”), and agrees that the Obligations include all of the obligations of Member to FHLB Chicago arising out of the ACPS Agreement, as amended by the Amendments.

2.         Consents. The Guarantor agrees that FHLB Chicago may at any time, and from time to time (a) extend the time of payment of or renew any of the Obligations, (b) receive and hold security for the payment of any Obligations and enforce, waive, release, fail to perfect, sell or otherwise dispose of any such security, (c) release or substitute any other guarantor of any Obligations, or (d) make any agreement with the Member or with any other party or person liable on any of the Obligations, for the extension, renewal, payment, compromise, discharge or release of the Obligations (in whole or in part), or for any modification of the terms thereof or of any agreement between FHLB Chicago and the Member or any such other party or person, without in any way impairing or affecting this Guaranty for any outstanding Obligations, and the Guarantor waives any rights or defenses that it may have relating to any such action by FHLB Chicago consented to hereby. The Guarantor authorizes FHLB Chicago, without notice or demand and without affecting its liability hereunder, from time to time, to assign or transfer the Obligations, to waive, forbear, indulge or take other action or inaction in respect of this Guaranty or the Obligations, or to exercise or not exercise any right or remedy hereunder or otherwise with respect to the Obligations.

3.         Rights; Expenses. No failure by FHLB Chicago to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by FHLB Chicago of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power. Each and every right, remedy and power hereby granted to FHLB Chicago or allowed by law or other agreement shall be cumulative and not exclusive of any other right, remedy or power. The Guarantor agrees to pay on demand all reasonable out-of-pocket expenses (including the reasonable fees and expenses of

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FHLB Chicago’s outside counsel) in any way relating to the enforcement or protection of FHLB Chicago’s rights under this Guaranty.

4.         Benefit; Member. The Guarantor will benefit from FHLB Chicago entering transactions with the Member pursuant to the ACPS Agreement, and the Guarantor has determined that the execution and delivery by the Guarantor of this Guaranty is necessary and convenient to the conduct, promotion and attainment of the business of the Guarantor and/or the achievement of some pecuniary and/or other benefit. The Guarantor acknowledges and agrees that it shall have the sole responsibility for obtaining from the Member such information concerning the Obligations and the Member’s financial conditions or business operations as the Guarantor may require, and that FHLB Chicago has no duty at any time to disclose to the Guarantor any such information. The Guarantor acknowledges and agrees that it is not necessary for FHLB Chicago to inquire into the powers of the Member or of the officers, directors, partners or agents acting or purporting to act on its behalf, the appropriateness of any transaction for the Member, or the purpose of any transaction, and any Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.

5.         Subrogation. The Guarantor shall not exercise any rights against the Member with respect to the Obligations which it may have or acquire by way of subrogation until all of the Obligations are paid in full to FHLB Chicago. If any amounts are paid to the Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of FHLB Chicago and shall forthwith be paid to FHLB Chicago to reduce the amount of outstanding Obligations, whether matured or unmatured. Subject to the foregoing, upon payment of all of the Obligations to FHLB Chicago, the Guarantor shall be subrogated to the rights of FHLB Chicago against the Member, and FHLB Chicago agrees to take at the Guarantor’s expense such actions as the Guarantor may reasonably require to implement such subrogation.

6.         Subordination. The Guarantor agrees: (a) to subordinate the obligations for indebtedness for borrowed money now or hereafter owed by the Member to the Guarantor (exclusive of obligations for indebtedness relating to legitimate business expenses incurred by Guarantor on behalf of the Member) (the “Subordinated Debt”) to any and all Obligations until this Guaranty is terminated and no longer in effect; provided, that the Guarantor may receive principal and interest payments on the Subordinated Debt so long as (i) no “Event of Default” under the ACPS Agreement exists with respect to any sums then due and payable by the Member to FHLB Chicago with respect to the Obligations; and (ii) such principal and interest payments on the Subordinated Debt do not cause an Event of Default under the ACPS Agreement; (b) to the extent the Subordinated Debt is evidenced by a promissory note, it will either place a legend indicating such subordination on every note, ledger page or other document evidencing any part of the Subordinated Debt or deliver such documents to FHLB Chicago; and (c) except as permitted by this Section 6, it will not request or accept payment of or any security for any part of the Subordinated Debt, and any proceeds of the Subordinated Debt paid to the Guarantor, through error or otherwise, shall immediately be forwarded to the Bank by the Guarantor, properly endorsed to the order of FHLB Chicago, to apply to the Obligations.

7.         Assignment; Termination. The Guarantor shall not assign its rights, interest, duties or obligations hereunder to any other person without FHLB Chicago’s prior written consent, and any purported transfer without that consent shall be void. None of the terms or

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provisions of this Guaranty may be waived, amended, supplemented or otherwise modified, and no consent with respect to any departure by the Guarantor from the terms hereof shall be effective, except as set forth in a written instrument executed by the Guarantor and FHLB Chicago. This Guaranty and Guarantor’s obligations hereunder shall automatically terminate upon the occurrence of both (a) payment in full of the Obligations and (b) termination of the ACPS Agreement.

8.         Guarantor Financial Covenants.  Guarantor (on a consolidated basis, but adjusted to remove the impact of consolidating any variable interest entities under the requirements of Accounting Standards Codification (“ASC”) Section 810 and/or transfers of financial assets accounted for as secured borrowings under ASC Section 860, as both of such ASC sections are amended, modified and/or supplemented from time to time) shall satisfy each of the following covenants, as determined on a consolidated basis in conformity with GAAP:

(a)        Minimum Interest Coverage Ratio.  As of the close of each fiscal quarter, maintain a ratio of EBITDA to Interest Expense of not less than 1.40 to 1.00;

(b)        Maximum Leverage Ratio.  At all times, maintain a ratio of Total Indebtedness to Total Assets of not greater than 0.80 to 1.00;

(c)        Minimum Liquidity.  At all times, maintain an amount of Cash Liquidity of not less than $50,000,000, and a sum of Cash Liquidity and Near Cash Liquidity of not less than $150,000,000;

(d)        Minimum Tangible Net Worth.  At all times, maintain a Tangible Net Worth of not less than the sum of (1) seventy-five percent (75%) of the actual Tangible Net Worth of Guarantor as of the Effective Date, plus (2) seventy-five percent (75%) of the net cash proceeds (net of underwriting discounts and commissions and other out-of-pocket expenses incurred by Guarantor in connection with such issuance or sale) received by Guarantor from the issuance or sale of Equity Interests (other than Equity Interests constituting Convertible Debt Securities) occurring after the Effective Date, plus (3) seventy-five percent (75%) of any increase in capital or shareholders’ equity (or like caption) on the balance sheet of Guarantor resulting from the settlement, conversion or repayment of any Convertible Debt Securities occurring after the Effective Date; and

(e)        Minimum Fixed Charge Coverage Ratio.  As of the close of each fiscal quarter, maintain a ratio of EBITDA to Fixed Charges of not less than 1.50 to 1.00.

The defined terms as used in the Guarantor Financial Covenants shall have the following meanings:

“Capital Lease”, as applied to any Person, means any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person.

“Cash” shall mean money, currency or a credit balance in any demand or deposit account, other than an account evidenced by a negotiable certificate of deposit.

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“Cash Equivalents” shall mean, as of any date of determination:

(i)         marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, in each case maturing within one year from the date of acquisition thereof;

(ii)       marketable direct obligations issued by any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having a rating of at least A-2 from S&P or at least P-2 from Moody’s;

(iii)      commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-2 from S&P or at least P-2 from Moody’s;

(iv)       time deposits, demand deposits, certificates of deposit, Eurodollar time deposits, time deposit accounts, term deposit accounts or bankers’ acceptances maturing within one year from the date of acquisition thereof or overnight bank deposits, in each case, issued by any bank organized under the laws of the United States of America or any State thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $500,000,000; and

(v)        investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (iv) above.

“Cash Liquidity” shall mean, for any Person and its consolidated Subsidiaries, the amount of Unrestricted Cash held by such Persons at such time, as determined on a consolidated basis in accordance with GAAP.

“CMBS” shall mean, mortgage pass-through certificates or other securities issued pursuant to a securitization of commercial real estate loans.

“Convertible Debt Securities” means, for any Person, any debt securities convertible into Equity Interests of such Person, cash by reference to such Equity Interests, or a combination thereof.

“EBITDA” means, for any applicable period, with respect to any Person and its consolidated Subsidiaries, an amount equal to the sum of:

(i)         Net Income (or loss) of such Person (prior to any impact from minority interests or joint venture net income and before deduction of any dividends on preferred stock of such Person), plus the following (but only to the extent actually included in determination of such Net Income (or loss): (A) depreciation and amortization expense, (B) Interest Expense, (C) income tax expense and (D) extraordinary or non-recurring gains and losses, plus

(ii)       such Person’s proportionate share of Net Income of the joint venture investments and unconsolidated Subsidiaries of such Person, all with respect to such fiscal quarter, plus

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(iii)      amounts deducted in accordance with GAAP in respect of non-cash expenses in determining Net Income of such Person.

“Equity Interests” shall mean, with respect to any Person, (a) any share, interest, participation and other equivalent (however denominated) of capital stock of (or other ownership, equity or profit interests in) such Person, (b) any warrant, option or other right for the purchase or other acquisition from such Person of any of the foregoing, (c) any security convertible into or exchangeable for any of the foregoing, and (d) any other ownership or profit interest in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date.

“Fixed Charges” means, for any applicable period, with respect to any Person and its consolidated Subsidiaries, the amount of interest paid in cash with respect to Indebtedness as shown on such Person’s consolidated statement of cash flow in accordance with GAAP as offset by the amount of receipts pursuant to net receive interest rate swap agreements of such Person and its consolidated Subsidiaries during the applicable period.

“GAAP” means with respect to the financial statements or other financial information of any Person, generally accepted accounting principles in the United States which are in effect from time to time, consistently applied.

“Indebtedness” means, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within sixty (60) days of the date the respective goods are delivered or the respective services are rendered; (c) indebtedness of others secured by a Lien on the property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such person; (e) Capital Leases of such Person; and (f) indebtedness of others guaranteed by such Person.

“Intangible Assets” shall mean assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trademarks, patents, franchises, licenses, unamortized deferred charges, unamortized debt discount and capitalized research and development costs; provided, however, that “Intangible Assets” for any Person shall exclude hedging transactions to the extent related to any purchased mortgage loans and mortgage loan servicing rights and/or special servicing rights of such Person and its consolidated Subsidiaries.

“Interest Expense” means, for any applicable period, with respect to any Person and its consolidated Subsidiaries, the amount of total interest expense incurred by such Person,

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including capitalized or accruing interest (but excluding interest funded under a construction loan), all with respect to such applicable period, determined in accordance with GAAP.

“Lien” shall mean any mortgage, lien, encumbrance, charge or other security interest, whether arising under contract, by operation of law, judicial process or otherwise.

“Near Cash Liquidity” shall mean, with respect to any Person and its consolidated Subsidiaries, as of any date, the sum of (i) the market value of Near Cash Securities held by such Person and its consolidated Subsidiaries as of such date as determined on a consolidated basis in accordance with GAAP and (ii) the amount of Undrawn Borrowing Capacity of such Person and its consolidated Subsidiaries under repurchase and credit facilities to which they are a party as of such date. Market value of Near Cash Securities shall be determined on a quarterly basis by at least one independent third party financial institution reasonably acceptable to FHLB Chicago.

“Near Cash Securities” shall mean (i) CMBS having, at all times, a maturity or weighted average life of twelve (12) months or less, as determined by the applicable servicer, (ii) RMBS having a duration of twelve (12) months or less, for each of (i) and (ii) above, such securities having a rating of Baa3 or BBB (or the equivalent) or higher by at least one Rating Agency (it being acknowledged that such securities may also have a lower rating from one or more Rating Agencies) or (iii) other public or privately placed securities approved by FHLB Chicago.

“Net Income” means, with respect to any Person for any period, the consolidated net income for such period of such Person as reported in such Person’s financial statements prepared in accordance with GAAP.

“Person” means an individual, partnership, limited liability company, corporation, joint stock company, trust or unincorporated organization or a governmental agency or political subdivision thereof.

“RMBS” shall mean, mortgage pass-through certificates or other securities issued pursuant to a securitization of residential mortgage loans.

“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity are at the time owned, or the management of which is controlled, directly or indirectly through one or more intermediaries, or both, by such Person.

“Tangible Net Worth” means, with respect to any Person and its Subsidiaries on a consolidated basis, as of any date of determination, (a) all amounts which would be included under capital or shareholders’ equity (or like caption) on the balance sheet of such Person at such date, determined in accordance with GAAP as of such date, less (b)(i) amounts owing to such Person from any Subsidiaries or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or any Subsidiary thereof, (ii) Intangible Assets and (iii) prepaid taxes and/or expenses, all on or as of such date.

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“Total Assets” means, for any Person and any date of determination, an amount equal to the aggregate book value of all assets owned by such Person and its Subsidiaries on a consolidated basis and the proportionate share of assets owned by non-consolidated Subsidiaries of such Person, less (i) amounts owing to such Person from any Subsidiary thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or any Subsidiary thereof, (ii) Intangible Assets, and (iii) prepaid taxes and expenses, all on or as of such date and determined in accordance with GAAP.

“Total Indebtedness” means, for any Person and its Subsidiaries on a consolidated basis, as of any date of determination, the aggregate Indebtedness (other than contingent liabilities not reflected on such Person’s consolidated balance sheet) of such Person plus the proportionate share of all Indebtedness (other than contingent liabilities not reflected on such Person’s consolidated balance sheet) of all non-consolidated Subsidiaries of such Person as of such date, all on or as of such date and determined in accordance with GAAP.

“Undrawn Borrowing Capacity” shall mean, with respect to any Person and its consolidated Subsidiaries, as of any date, the total undrawn borrowing capacity available to such Person and its direct or indirect consolidated Subsidiaries under any repurchase and credit facilities and similar agreements to which they are a party as of such date, but (i) with respect to any such repurchase or credit facility or similar agreement that is a secured facility, solely to the extent that collateral has been approved by and pledged to the related buyer or lender under such facility, and (ii) with respect to any such credit facility or similar agreement that is an unsecured facility, solely to the extent that such undrawn borrowing capacity is committed by the related lender.

“Unrestricted Cash” shall mean, on any date, with respect to any Person and its Subsidiaries on a consolidated basis, (i) Cash and Cash Equivalents (other than prepaid rents and security deposits made under tenant leases) held by such Person or any of its Subsidiaries that are not subject to any Lien (excluding statutory liens in favor of any depository bank where such cash is maintained), minus (ii) amounts included in the foregoing clause (i) that are with an entity other than such Person or any of its Subsidiaries as deposits or security for contractual obligations.

9.         Payments. The Guarantor hereby guarantees that the Obligations will be paid to FHLB Chicago without set-off or counterclaim, in lawful currency of the United States of America.

10.       Representations. The Guarantor represents and warrants: (i) that it has the corporate power to execute this Guaranty and any other document executed or delivered in connection with this Guaranty; (ii) that all the necessary corporate actions have been taken to permit it to give this Guaranty; (iii) that the persons executing this guaranty are duly empowered to do so on the behalf of the Guarantor; (iv) that the execution or performance of this Guaranty is not a material breach or violation of any instrument concerning the Guarantor or any material agreement to which the Guarantor is a party or any law or regulation to which the Guarantor is subject; (v) that there is not pending or, to its knowledge, threatened against it any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that adversely affects its ability to perform its obligations under this Guaranty; (vi) that all applicable information that is furnished in writing by or on behalf of it to

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FHLB Chicago pursuant to this Guaranty as of the date of the information, is true, accurate and complete in all material respects; (vii) that all governmental and other consents that are required to have been obtained by it with respect to this Guaranty have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and (viii) that this Guaranty constitutes a valid, binding and enforceable agreement against the Guarantor in accordance with its terms.

11.       Delivery Obligations. The Guarantor shall deliver to FHLB Chicago within forty-five (45) calendar days after the last day of each calendar quarter a certification signed by an authorized signer stating whether it has been in compliance throughout the quarter and whether it remains in compliance with covenants set forth in Section 8 above. Notwithstanding the quarterly certification requirement, Guarantor shall notify FHLB Chicago promptly at any time intra-quarter if Guarantor is not in compliance with the covenants set forth in Section 8 above. In addition, Guarantor shall deliver such information as FHLB Chicago may reasonably request from time to time, including without limitation, copies of the quarterly unaudited or annual audited financial statements (prepared in accordance with generally accepted accounting principles in the country in which the entity to which they relate is organized) pertaining to the Guarantor’s financial condition, such quarterly reports to be provided within forty-five (45) calendar days after the end of each fiscal quarter and such annual reports to be provided within ninety (90) calendar days after the end of each fiscal year. Such information shall be true, complete, and accurate in all material respects. For the avoidance of doubt, quarterly and annual financial statements required to be delivered hereunder shall be deemed to be delivered by Guarantor to FHLB Chicago upon, the filing of such financial statements with the U.S. Securities and Exchange Commission; provided however, if Guarantor delays its filing beyond the time frames set forth in this Section 11, it will promptly notify Bank of such delay.

12.       Default. If an Event of Default occurs and is continuing, the Obligations shall be due immediately and payable, without notice, and FHLB Chicago may exercise any rights and remedies as provided in this Guaranty, or as provided at law or equity.

13.       Governing Law; Jurisdiction.  (a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE STATUTORY AND COMMON LAW OF THE UNITED STATES AND, TO THE EXTENT FEDERAL LAW INCORPORATES STATE LAW, THE LAWS (EXCLUSIVE OF THE CHOICE OF LAW PROVISIONS) OF THE STATE OF ILLINOIS. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING CONCERNING THIS GUARANTY, THE GUARANTOR SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, OR IF SUCH ACTION OR PROCEEDING MAY NOT BE BROUGHT IN FEDERAL COUT, THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS LOCATED IN THE CITY OF CHICAGO. THE GUARANTOR SPECIFICALLY AND IRREVOCABLY WAIVES (I) ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS, (II) ANY CLAIM THAT THE SAME HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND (III) THE RIGHT TO OBJECT THAT SUCH COURTS DO NOT HAVE JURISDICTION OVER IT. THE GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY

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ILLINOIS LAW, INCLUDING, WITHOUT LIMITATION, BY REGISTERED MAIL DIRECTED TO THE GUARANTOR’S PERSONAL RESIDENCE.

(b)        TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR BY EXECUTION HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO FHLB CHICAGO TO ACCEPT THIS GUARANTY.

14.       Miscellaneous.

(a)        This Guaranty contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein. This Guaranty supersedes all prior drafts and communications with respect thereto. The headings of paragraphs herein are inserted only for convenience and shall in no way define, describe or limit the scope or intent of any provision of this Guaranty. If any term or provision of this Guaranty shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Guaranty.

(b)        Regardless of any other provision of this Guaranty, if for any reason the effective interest on any of the Obligations should exceed the maximum lawful interest, the effective interest shall be deemed reduced to and shall be such maximum lawful interest, and any sums of interest which have been collected in excess of such maximum lawful interest shall be applied as a credit against the unpaid principal balance of the Obligations. Monies received from any source by FHLB Chicago for application toward payment of the Obligations may be applied to such Obligations in any manner or order deemed appropriate in the sole discretion of FHLB Chicago.

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IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered by the Guarantor to FHLB Chicago as of the date first above written.

STARWOOD PROPERTY TRUST, INC.
By:	/s/ Andrew J. Sossen
Name:	Andrew J. Sossen
Title:	Chief Operating Officer
Date:	November __, 2019

Address for notices:

591 West Putnam Avenue

Greenwich, Connecticut 06830

Attention: General Counsel

Email: asossen@starwood.com

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ACCEPTED AND AGREED:
FEDERAL HOME LOAN BANK OF CHICAGO
By:	/s/ Michael Zeifert
Name	Michael Zeifert
Title	SVP, Credit

By:	/s/ Matthew Zimmerman
Name	Matthew Zimmerman
Title	SVP, Credit

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EX-10.25

Exhibit 10.25

EXECUTION VERSION

FIFTH AMENDED AND RESTATED GUARANTEE AND SECURITY AGREEMENT

FIFTH AMENDED AND RESTATED GUARANTEE AND SECURITY AGREEMENT, dated as of April 10, 2019 (as amended, restated, supplemented, or otherwise modified from time to time, this “Guarantee”), made by STARWOOD PROPERTY TRUST, INC., a Maryland corporation having its principal place of business at 591 West Putnam Avenue, Greenwich, Connecticut 06830 (“Guarantor”), in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Buyer”) and any of its parent, subsidiary or affiliated companies.

RECITALS

Pursuant to that certain Sixth Amended and Restated Master Repurchase and Securities Contract, dated as of April 10, 2019, between and among SPT CA Fundings 2, LLC, a Delaware limited liability company (“SPT Seller”), Starwood Property Mortgage Sub-2, L.L.C. (“Seller 2”), Starwood Property Mortgage Sub-2-A, L.L.C. (“Seller 2-A”, and together with SPT Seller and Seller 2, individually and collectively as the context may require, “Seller”) and Buyer (as amended, restated, supplemented or otherwise modified from time to time, the “Repurchase Agreement”), Seller agreed to sell, from time to time, to Buyer certain Whole Loans, Senior Interests, Junior Interests, Mezzanine Loans and Mezzanine Participation Interests, each as defined in the Repurchase Agreement (collectively, the “Purchased Assets”), upon the terms and subject to the conditions as set forth therein.

Pursuant to the terms of that certain Amended and Restated Custodial Agreement by and between Wells Fargo Bank, National Association (“Custodian”), Buyer, Starwood 2 and Starwood 2-A dated as of February 28, 2011 (the “Custodial Agreement”), Custodian is required to take possession of the Purchased Assets, along with certain other documents specified in the Custodial Agreement, as Custodian of Buyer and any future purchaser, on several delivery dates, in accordance with the terms and conditions of the Custodial Agreement. The Repurchase Agreement, the Custodial Agreement, this Guarantee and any other agreements executed in connection with the Repurchase Agreement and the Custodial Agreement shall be referred to herein as the “Repurchase Documents”.

Pursuant to the Repurchase Agreement, Seller may be required, from time to time, to enter into Interest Rate Protection Agreements (as defined therein) in form and substance satisfactory to Buyer. In order to induce the Buyer to permit Seller's obligations to be satisfied  by Guarantor, Guarantor has agreed to (a) amend and restate the First Amended and Restated Guarantee in its entirety, (b) assign and grant to Buyer a security interest in any Interest Rate Protection Agreement entered into by Guarantor or Intermediate Starwood Entities for the purpose of satisfying Seller's requirements with respect to Interest Rate Protection Agreements under the Repurchase Agreement and (c) incur the covenants and obligations set forth herein.

It is a condition precedent to Buyer purchasing the Purchased Assets and permitting Guarantor or any of the Intermediate Starwood Entities to enter into Interest Rate Protection Agreements pursuant to the Repurchase Agreement that Guarantor shall have executed and delivered this Guarantee with respect to the due and punctual payment and

performance when due, whether at stated maturity, by acceleration or otherwise, of all of the following: (a) all payment obligations owing by Seller to Buyer under or in connection with the Repurchase Agreement and any other Repurchase Documents; (b) without duplication of payment obligations under the preceding clause (a), any amount that would otherwise be payable by any Hedge Counterparty to Buyer, as assignee of the related Seller Party, in connection with the termination of any Interest Rate Protection Agreement which covers any Other Hedged Asset, but for the reduction in such termination amount payable by the related Hedge Counterparty solely as a result of netting termination payments under any swap transaction under such Interest Rate Protection Agreement relating to such Other Hedged Asset or the exercise of any right of set-off, defense or counterclaim under such Interest Rate Protection Agreement by the related Hedge Counterparty, (c) any and all extensions, renewals, modifications, amendments or substitutions of the foregoing; (d) all expenses, including, without limitation, reasonable attorneys’ fees and disbursements, that are incurred by Buyer in the enforcement of any of the foregoing or any obligation of Guarantor hereunder; and (e) any other obligations of Seller with respect to Buyer under each of the Repurchase Documents (collectively, the “Obligations”).

NOW, THEREFORE, in consideration of the foregoing premises, to induce Buyer to enter into the Repurchase Documents and to enter into the transactions contemplated thereunder, Guarantor hereby agrees with Buyer, as follows:

1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Repurchase Agreement and used herein are so used as so defined.

“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

“U.S. Special Resolution Regime” means (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.

2. Guarantee.       (a) Guarantor hereby unconditionally and irrevocably guarantees to Buyer the prompt and complete payment and performance by Seller when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

(b) Notwithstanding anything herein to the contrary, but subject to clause (c) below, the maximum liability of Guarantor hereunder and under the Repurchase Documents  shall  in  no  event  exceed  the  sum  of  (I) for  all  Legacy  Purchased  Assets,  the  sum  of (w) twenty-five percent (25%) of the then-currently unpaid aggregate Repurchase Price of all Purchased  Assets  consisting  of  both  Core  Purchased  Assets  and  CMBS  Purchased  Assets, (x) one-hundred percent (100%) of the then-currently unpaid aggregate Repurchase Price of all Purchased Assets consisting of Flex Purchased Assets, (y) twenty-five percent (25%) of the then-currently unpaid aggregate Repurchase Price of all Purchased Assets consisting of Core Plus Purchased Assets and (z) one-hundred percent (100%) of all amounts due and payable by Guarantor  or  any  Intermediate  Starwood  Entity  under  any  and  all  Interest  Rate  Protection

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Agreements with an Affiliated Hedge Counterparty to which Guarantor or any Intermediate Starwood Entity is a party, (II) for all Purchased Assets other than Legacy Purchased Assets, the sum of (x) twenty-five percent (25%) of the then-currently unpaid aggregate Repurchase Price of all Purchased Assets with Debt Yields, as determined on each related Purchase Date, that are equal to or greater than seven percent (7.0%), (y) one-hundred percent (100%) of the then-currently unpaid aggregate Repurchase Price of all Purchased Assets with Debt Yields, as determined on each related Purchase Date, that are less than seven percent (7%) and (z) one-hundred percent (100%) of all amounts due and payable by Guarantor or any Intermediate Starwood Entity under any and all Interest Rate Protection Agreements with an Affiliated Hedge Counterparty to which Guarantor or any Intermediate Starwood Entity is a party, and (III) one hundred percent (100%) of that portion of the unpaid aggregate Repurchase Price that exceeds the Maximum Amount then in effect.

(c) Notwithstanding the foregoing, the limitation on recourse liability as set forth in subsection (b) above SHALL BECOME NULL AND VOID and shall be of no further force and effect and the Obligations shall be fully recourse to Seller and Guarantor, jointly and severally, upon the occurrence of any of the following:

(i) a voluntary bankruptcy or insolvency proceeding is commenced by Seller or any Intermediate Starwood Entity under the U.S. Bankruptcy Code or any similar federal or state law;

(ii) an involuntary bankruptcy or insolvency proceeding is commenced against Seller, any Intermediate Starwood Entity or Guarantor in connection with which Seller, Guarantor, any Intermediate Starwood Entity or any Affiliate of any of the foregoing has or have colluded in any way with the creditors commencing or filing such proceeding; or

(iii) fraud or intentional misrepresentation by Seller, Guarantor, any Intermediate Starwood Entity or any other Affiliate of Seller, Guarantor or any Intermediate Starwood Entity in connection with the execution and the delivery of this Guarantee, the Repurchase Agreement, or any of the other Repurchase Documents, or any certificate, report, financial statement or other instrument or document furnished to Buyer at the time of the closing of the Repurchase Agreement or during the term of the Repurchase Agreement.

(d) In addition to the foregoing and notwithstanding the limitation on recourse liability set forth in subsection (b) above, Guarantor shall be liable for any losses, costs, claims, expenses or other liabilities incurred by Buyer arising out of or attributable to the following items:

(i) any material breach of the separateness covenants set forth in Article 9 of the Repurchase Agreement; and

(ii) any material breach of any representations and warranties by Guarantor contained in any Repurchase Document and any material breach by Seller or Guarantor, or any of their respective Affiliates, of any representations and warranties

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relating to Environmental Laws, or any indemnity for costs incurred in connection with the violation of any Environmental Law, the correction of any environmental condition, or the removal of any Materials of Environmental Concern, in each case in any way affecting Seller’s or Guarantor’s properties or any of the Purchased Assets.

(e) Nothing herein shall be deemed to be a waiver of any right which Buyer may have under Section 506(a), 506(b), 1111(b) or any other provision of the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness secured by the Repurchase Agreement or to require that all collateral shall continue to secure all of the indebtedness owing to the Buyer in accordance with the Repurchase Agreement or any other Repurchase Documents.

(f) Guarantor further agrees to pay any and all reasonable expenses (including, without limitation, all reasonable fees and disbursements of counsel) which may be paid or incurred by Buyer in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guarantee. This Guarantee shall remain in full force and effect until the Obligations are paid in full, notwithstanding that from time to time prior thereto Seller may be free from any Obligations.

(g) No payment or payments made by Seller or any other Person or received or collected by Buyer from Seller or any other Person by virtue of any action or proceeding or any set-off or appropriation or application, at any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder which shall, notwithstanding any such payment or payments, remain liable for the amount of the Obligations until the Obligations are paid in full.

(h) Guarantor agrees that whenever, at any time, or from time to time, Guarantor shall make any payment to Buyer on account of Guarantor’s liability hereunder, Guarantor will notify Buyer in writing that such payment is made under this Guarantee for such purpose.

3. Subrogation. Upon making any payment hereunder, Guarantor shall be subrogated to the rights of Buyer against Seller and any collateral for any Obligations with respect to such payment; provided that Guarantor shall not seek to enforce any right or receive any payment by way of subrogation until all amounts due and payable by Seller to Buyer under the Repurchase Documents or any related documents have been paid in full; and further provided that such subrogation rights shall be subordinate in all respects to all amounts owing to the Buyer under the Repurchase Documents.

4. Amendments, etc. with Respect to the Obligations. Until the Obligations shall have been paid or performed in full, and subject to the provisions of Section 11 of this Guarantee, Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against Guarantor, and without notice to or further assent by Guarantor, any demand for payment of any of the Obligations made by Buyer may be rescinded by Buyer and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified,

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accelerated, compromised, waived, surrendered or released by Buyer, and any Repurchase Document and any other document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as Buyer may deem advisable from time to  time, and any collateral security, guarantee or right of offset at any time held by Buyer for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. Buyer shall have no obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against Guarantor, Buyer may, but shall be under no obligation to, make a similar demand on Seller or any other guarantor, and any failure by Buyer to make any such demand or to collect any payments from Seller or any such other guarantor or any release of Seller or such other guarantor shall not relieve Guarantor of its Obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of Buyer against Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

5. Guarantee Absolute and Unconditional. (a) Guarantor hereby agrees that its obligations under this Guarantee constitute a guarantee of payment when due and not of collection. Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by Buyer upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee; and all dealings between Seller or Guarantor, on the one hand, and Buyer, on the other hand, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. Guarantor waives promptness, diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon Seller or Guarantor with respect to the Obligations. This Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity, regularity or enforceability of any Agreement, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Buyer, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by Seller against Buyer, (iii) any requirement that Buyer exhaust any right to take any action against Seller or any other Person prior to or contemporaneously with proceeding to exercise any right against Guarantor under this Guarantee or (iv) any other circumstance whatsoever (with or without notice to or knowledge of Seller or Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of Seller for the Obligations or of Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against Guarantor, Buyer may, but shall be under no obligation, to pursue such rights and remedies that Buyer may have against Seller or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by Buyer to pursue such other rights or remedies or to collect any payments from Seller  or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of Seller or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Buyer or any Buyer against Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon Guarantor and its successors and assigns thereof, and shall inure to the benefit of Buyer,

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and its successors, endorsees, transferees and assigns, until all of the Obligations shall have been satisfied by payment in full, notwithstanding any sale by Buyer of any Purchased Asset as set forth in Article 10 of the Repurchase Agreement or the exercise by Buyer of any of the other rights and remedies set forth in any of the Repurchase Documents.

(b) Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges, and represents and warrants to Buyer as follows:

(i) Guarantor hereby waives any defense arising by reason of, and any and all right to assert against Buyer any claim or defense based upon, an election of remedies by Buyer which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s subrogation rights, rights to proceed against Seller, or any other guarantor for reimbursement or contribution, and/or any other rights of Guarantor to proceed against Seller against any other guarantor, or against any other person or security.

(ii) Guarantor is presently informed of the financial condition of Seller and of all other circumstances which diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Guarantor hereby covenants that it will make its own investigation and will continue to keep itself informed about each of Seller’s financial condition, the status of other guarantors, if any, of circumstances which bear upon the risk of nonpayment and that it will continue to rely upon sources other than Buyer for such information and will not rely upon Buyer or any Buyer for any such information. Absent a written request for such information by Guarantor to Buyer, Guarantor hereby waives the right, if any, to require Buyer to disclose to Guarantor any information which Buyer may now or hereafter acquire concerning such condition or circumstances including, but not limited to, the release of or revocation by any other guarantor.

(iii) Guarantor has independently reviewed the Repurchase Documents and related agreements and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Guarantee to Buyer, Guarantor is not in any manner relying upon the validity, and/or enforceability, and/or attachment, and/or perfection of any liens or security interests of any kind or nature granted by Seller or any other guarantor to Buyer or any Buyer, now or at any time and from time to time in the future.

6. Security Interest. As security for the prompt and complete performance and payment or repayment when due of the Obligations in accordance with the terms and conditions of this Guarantee and the Repurchase Agreement, Guarantor hereby pledges, assigns, conveys and transfers to Buyer, and hereby grants to Buyer, a continuing security interest in, to and under all of Guarantor’s right, title and interest, whether now owned or hereafter acquired, in and to the following (collectively, the “Collateral”): (i) all of Guarantor’s and any Intermediate Starwood Entities’ rights (but none of their obligations) under all Interest Rate Protection Agreements relating to any of the Purchased Assets to which it now or hereafter is or may become a party (“Guarantor’s Interest Rate Protection Agreements”), (ii) the Waterfall Account and all amounts at any time credited thereto, to the extent derived from any Guarantor’s Interest

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Rate Protection Agreements and (iii) any and all proceeds of the foregoing, including, without limitation, all interest, and other amounts, income or distributions paid thereon or in respect thereto, including, but not limited to any termination payments (howsoever occurring) to the extent derived from any of Guarantor’s Interest Rate Protection Agreements.

7. Other Provisions Regarding the Collateral.

(a) Further Assurances. Guarantor covenants and agrees that it will, at its  own expense, execute, deliver, file and record any financing statement, specific assignment or other paper and take any other action that may be reasonably necessary or desirable or that Buyer may reasonably require in order to create, preserve, perfect or validate any security interests granted to Buyer hereunder, or the priority thereof, or to enable Buyer to exercise and enforce the security interests granted to Buyer under Section 6 hereof with respect to any of the Collateral and the proceeds thereof.

(b) Access to Information. Guarantor shall afford to Buyer reasonable access to its books and records concerning the Collateral during customary business hours (including, if agreed, by electronic access) and shall permit Buyer to make copies of any records relating thereto.

(c) Notice of Actions. Guarantor will give notice to Buyer of, and defend the Collateral against, any suit, action or proceeding against the Collateral or which could adversely affect the security interests granted hereunder.

(d) Release of Security Interest. Upon the complete and final payment and performance of the Obligations, Buyer shall release its security interest hereunder; provided, that Buyer shall release its security interest in and to any Interest Rate Protection Agreement on the Repurchase Date for the related Purchased Asset and Buyer shall authorize Custodian to release to Guarantor all documents delivered to Custodian with respect to such Interest Rate Protection Agreement and, to the extent any UCC financing statement has been filed against Guarantor with respect to such Interest Rate Protection Agreement, Buyer shall deliver an amendment thereto or termination thereof evidencing the release of such Interest Rate Protection Agreement from Buyer’s security interest therein.

8. Remedies. If any Event of Default shall occur and be continuing, Buyer may, to the extent permitted by law, exercise any of the rights and remedies of a secured party with respect to the Collateral, including any such rights and remedies under the UCC, and, in addition, Buyer may, to the extent permitted by applicable law, without demand of performance and without notice to Guarantor except as provided below, sell the Collateral or any part thereof, in one lot or in separate parcels, for cash or on credit or for future delivery, at any public or private sale or other disposition, and at such price or prices as Buyer may deem appropriate, free from any claim or right of any nature whatsoever of Guarantor, including any equity or right of redemption of Guarantor. If the purchaser fails to take up and pay for the Collateral so sold, such Collateral may be again similarly sold. Buyer may be the purchaser of any or all of the  Collateral sold subject to any rights of Guarantor under, and other requirements of, the UCC and any other applicable law. Guarantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ notice to Guarantor of the time and place of any public sale or the

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time after which any private sale is to be made shall constitute reasonable notification. Buyer shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Buyer may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned

9. Power of Attorney. Upon and after the occurrence of an  Event  of  Default, Guarantor does hereby by way of security constitute and irrevocably appoint Buyer the true and lawful attorney of Guarantor, with full power (in the name of Guarantor or otherwise), to exercise all rights of Guarantor with respect to the Collateral held for the benefit and security of Buyer under the Guarantee and to ask, require, demand, receive, settle, compromise, compound and give acquittance for any and all moneys and claims for moneys due and to become due under or arising out of any of the Collateral held for the benefit and security of Buyer hereunder, to endorse any instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which Buyer may deem to be necessary or advisable in the premises. The power of attorney granted hereby and all authority hereby conferred are granted and conferred solely to protect Buyer’s interest in the Collateral held for its benefit and security and shall not impose any duty upon Buyer to exercise any power. This power of attorney shall be irrevocable as one coupled with an interest prior to the payment in full of all the Obligations secured under this Guarantee.

10. Application of Collateral and Proceeds. Any cash held by or on behalf of Buyer and any transfer, or the proceeds of any sale, of all or any part of the Collateral pursuant to Section 8 hereof (less the costs and expenses incurred by Buyer in selling such Collateral, including the fees and expenses of counsel) shall be applied by Secured Party in such order as Buyer may elect. Guarantor shall remain liable for any such Obligations remaining unpaid from the foregoing proceeds and shall be entitled to any surplus after any application of such proceeds.

11. Hedge Provisions.      (A) Guarantor covenants and agrees with Buyer that it: (a) will perform and observe in all material respects its covenants and obligations contained in each of Guarantor’s Interest Rate Protection Agreement, (b) will not, without the prior written consent of Buyer, amend, waive or modify any provision of any of Guarantor’s Interest Rate Protection Agreements, fail to deliver a copy of any notice received under any of Guarantor’s Interest Rate Protection Agreements to Buyer or fail to exercise any right thereunder, (c) will not change its name, or change its jurisdiction of organization or location of its chief executive office from its current jurisdiction and location, unless, in conjunction therewith, Guarantor delivers to Buyer such additional UCC financing statements and amendments as Buyer shall reasonably request to allow for Buyer’s continued prior and perfected security interest, (d) will fully and completely prosecute all of its claims and enforce all of its rights under all of Guarantor’s Interest Rate Protection Agreements available to Guarantor under applicable law, (e) will take all reasonable and necessary action to prevent the termination or cancellation of any of Guarantor’s Interest Rate Protection Agreements in accordance with the terms thereof or otherwise (except for any scheduled termination or any voluntary termination thereof by Guarantor, but only as permitted in the Repurchase Agreement), (f) will take all actions reasonably necessary to enforce against the Hedge Counterparty each covenant and obligation of each such Hedge Counterparty under each of Guarantor’s Interest Rate Protection Agreements and all related documents and instruments including, without limitation all irrevocable direction letters as to payment of

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proceeds, each of which shall be in form and substance substantially similar to the form attached as Exhibit B hereto (“Irrevocable Direction Letters”), (g) fully enforce and prosecute all claims against each related Hedge Counterparty (including but not limited to claims in bankruptcy or any Insolvency Proceeding) that arise under each related Interest Rate Protection Agreement, Irrevocable Direction Letter or under applicable law, (h) with respect to any ISDA Master Agreement that is a Guarantor’s Interest Rate Protection Agreement, Guarantor and the related Intermediate Starwood Entity may, upon prior written notice to Buyer, enter into any Confirmation thereunder relating to any asset that is not a Purchased Asset and (i) if any Hedge Counterparty pledges collateral to Guarantor in connection with any Interest Rate Protection Agreement, Guarantor shall pledge all such collateral to Buyer pursuant to a separate security agreement and any other related documents reasonably requested by Buyer in order to perfect the underlying security interest, each in form and substance satisfactory to Buyer.

(B) In addition, Guarantor shall not (i) waive any default under, or breach of, any Guarantor’s Interest Rate Protection Agreement; or (ii) petition, request or take any other legal or administrative action that seeks, or may reasonably be expected to, impair any of its rights under any Guarantor’s Interest Rate Protection Agreement; or (iii) amend, supplement, modify or agree to any variation of any of Guarantor’s Interest Rate Protection Agreement, in each case without the prior written consent of Buyer.

(C) Prior to entering into any Confirmations in respect of a Guarantor’s Interest Rate Protection Agreement, Guarantor and the related Intermediate Starwood Entity shall cause the counterparty to such Confirmation other than an Affiliated Hedge Counterparty to enter into a Consent and Acknowledgment in substantially the form attached as Exhibit A hereto. Any Confirmations entered into in respect of an Interest Rate Protection Agreement shall specify the Waterfall Account as the account to which any and all payments to Guarantor or the related Intermediate Starwood Entity in respect of all transactions to which such Confirmation relates are to be made.

12. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by Buyer upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Seller or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any of Seller or any substantial part of Seller’s property, or otherwise, all as though such payments had not been made.

13. Payments. Guarantor hereby agrees that the Obligations will be paid to Buyer without set-off or counterclaim in U.S. Dollars at the address specified in writing by Buyer.

14. Representations and Warranties. Guarantor represents and warrants that:

(a) Guarantor has the legal capacity and the legal right to execute and deliver this Guarantee and to perform Guarantor’s obligations hereunder;

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(b) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other Person (including, without limitation, any creditor of Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee;

(c) this Guarantee has been duly executed and delivered by Guarantor and constitutes a legal, valid and binding obligation of Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (whether enforcement is sought in proceedings in equity or at law);

(d) the execution, delivery and performance of this Guarantee will not violate any law, treaty, rule or regulation or determination of an arbitrator, a court or other governmental authority, applicable to or binding upon Guarantor or any of its property or to which Guarantor or any of its property is subject (“Requirement of Law”), or any provision of any security issued by Guarantor or of any agreement, instrument or other undertaking to which Guarantor is a party or by which it or any of its property is bound (“Contractual Obligation”), and will not result in or require the creation or imposition of any lien on any of the properties or revenues of Guarantor pursuant to any Requirement of Law or Contractual Obligation of Guarantor;

(e) no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the Knowledge of Guarantor, threatened by or against Guarantor or against any of Guarantor’s properties or revenues with respect to this Guarantee or any of the transactions contemplated hereby;

(f) except as disclosed in writing to Buyer prior to the date hereof, Guarantor has filed or caused to be filed all tax returns which, to the Knowledge of Guarantor, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against him or any of Guarantor’s property and all other taxes, fees or other charges imposed on him or any of Guarantor’s property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings); no tax lien has been filed, and, to the Knowledge of Guarantor, no claim is being asserted, with respect to any such tax, fee or other charge;

(g) Guarantor (i) has been duly organized and validly exists in good standing as a corporation under the laws of the State of Maryland, (ii) has all requisite power, authority, legal right, licenses and franchises, (iii) is duly qualified to do business in all jurisdictions necessary, and (iv) has been duly authorized by all necessary action, to (I) own, lease and operate its properties and assets, (II) conduct its business as presently conducted, and (III) execute, deliver and perform its obligations under the Repurchase Documents to which it is a party;

(h) Guarantor’s exact legal name is set forth in the preamble and signature pages of this Guarantee;

(i) Guarantor’s location (within the meaning of Article 9 of the UCC), and the office where Guarantor keeps all records (within the meaning of Article 9 of the UCC) is at

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the address of Seller referred to in Annex 1 of the Repurchase Agreement, and Guarantor has not changed its name or location within the past twelve (12) months;

(j) Guarantor’s organizational identification number is D13065958 and its tax identification number is 27-0247747; and

(k) Guarantor shall not cause Seller to make any of the representations and warranties of Seller set forth in Sections 7.17 or 7.18 of the Repurchase Agreement in a manner which such representations and warranties would be untrue or misleading when so made. Guarantor and all Affiliates of Guarantor are in compliance with the Foreign Corrupt Practices Act of 1977 and any foreign counterpart thereto. Neither Guarantor nor any Affiliate of Guarantor has made, offered, promised or authorized a payment of money or anything else of value (a) in order to assist in obtaining or retaining business for or with, or directing business to, any foreign official, foreign political party, party official or candidate for foreign political office, (b) to any foreign official, foreign political party, party official or candidate for foreign political office, or (c) with the intent to induce the recipient to misuse his or her official position to direct business wrongfully to Guarantor, any Affiliate of Guarantor or any other Person, in violation of the Foreign Corrupt Practices Act.

Guarantor agrees that the foregoing representations and warranties shall be deemed to have been made by Guarantor on the date of each Transaction under the Repurchase Agreement, on and as of such date of the Transaction, as though made hereunder on and as of such date.

15. Covenants.

Guarantor (on a consolidated basis, but adjusted to remove the impact of consolidating any variable interest entities under the requirements of Accounting Standards Codification (“ASC”) Section 810 and/or transfers of financial assets accounted for as secured borrowings under ASC Section 860, as both of such ASC sections are amended, modified and/or supplemented from time to time) shall satisfy each of the following covenants:

(a) Interest Coverage. Guarantor shall not permit the ratio of its EBITDA to its Interest Expense for any Test Period to be less than 1.4 to 1.0 at any time.

(b) Leverage. Guarantor shall not permit the ratio of its Total Indebtedness to its Total Assets for any Test Period to be greater than 0.80 to 1.0 at any time.

(c) Liquidity. Subject to Section 26 hereof, Guarantor shall not permit its Liquidity to be less than $175,000,000, at any time, and Guarantor shall not permit its Cash Liquidity to be less than $75,000,000 at any time.

(d) Tangible Net Worth. Guarantor shall not permit its Tangible Net Worth to be less than $3,103,735,000, plus (i) seventy-five percent (75%) of the net cash proceeds (net of underwriting discounts and commissions, and other out-of-pocket expenses incurred by Guarantor in connection with such issuance or sale) received by Guarantor from the issuance or sale of Capital Stock (other than Capital Stock constituting Convertible Debt Securities) occurring after the date hereof, plus (ii) seventy-five percent (75%) of any increase in capital or

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shareholders’ equity (or like caption) on the balance sheet of Guarantor resulting from the settlement, conversion or repayment of any Convertible Debt Securities occurring after the date hereof.

(e) Fixed Charge Coverage Ratio. Guarantor shall not permit its Fixed  Charge Coverage Ratio for any Test Period to be less than 1.50 to 1.00 at any time.

(f) REIT Status. Guarantor shall maintain at all times its status as a REIT.

(g) Interest Rate Protection Agreements. Guarantor and the Intermediate Starwood Entities shall not enter into any amendment, supplement or modification to any Interest Rate Protection Agreement without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed.

(h) AML Compliance. Guarantor shall not cause Seller to breach any of the covenants set forth in Sections 8.19 and 8.20 of the Repurchase Agreement.

16. Severability. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

17. Paragraph Headings. The paragraph headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

18. No Waiver; Cumulative Remedies.  Buyer shall not by any act (except by a written instrument pursuant to Section 19 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or event of default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of Buyer, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by Buyer of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Buyer would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.

19. Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except by a written instrument executed by Guarantor and Buyer, provided that, subject to any limitations set forth in the Repurchase Agreement, any provision of this Guarantee may be waived by Buyer in a letter or agreement executed by Buyer or by telex or facsimile transmission from Buyer. This Guarantee shall be binding upon the heirs, personal representatives, successors and assigns of Guarantor and shall inure to the benefit of Buyer, and their respective successors and assigns. THIS GUARANTEE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN

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CONNECTION WITH THIS GUARANTEE, THE RELATIONSHIP OF THE PARTIES, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

20. Notices. Notices by Buyer to Guarantor may be given by mail, or by telecopy transmission, addressed to Guarantor at the address or transmission number set forth under its signature below and shall be effective (a) in the case of mail, five days after deposit in the postal system, first class certified mail and postage pre-paid, (b) one Business Day following timely delivery to a nationally recognized overnight courier service for next Business Day delivery and (c) in the case of telecopy transmissions, when sent, transmission electronically confirmed. Notices to Buyer by Guarantor may be given in the manner set forth in the Repurchase Agreement.

21. SUBMISSION TO JURISDICTION; WAIVERS. EACH OF GUARANTOR AND BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(A)       SUBMITS FOR GUARANTOR AND GUARANTOR’S PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND THE OTHER REPURCHASE DOCUMENTS TO WHICH GUARANTOR IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

(B)       CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN  AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(C)       AGREES THAT SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING UNDER THIS GUARANTEE MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH PARTY AT SUCH PARTY’S ADDRESS, AS SET FORTH UNDER GUARANTOR’S SIGNATURE BELOW, WITH RESPECT TO DELIVERIES SENT TO GUARANTOR, OR, WITH RESPECT TO DELIVERIES SENT TO BUYER, AT THE ADDRESS SET FORTH IN THE REPURCHASE AGREEMENT, OR, IN EITHER CASE, AT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTY SHALL HAVE BEEN NOTIFIED; AND

(D)       AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

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22. Integration. This Guarantee represents the agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by Buyer or any Buyer relative to the subject matter hereof not reflected herein.

23. Acknowledgments. Guarantor hereby acknowledges that:

(a)        Guarantor has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the related documents;

(b)        neither Buyer nor any Buyer has any fiduciary relationship to Guarantor, and the relationship between Buyer and Guarantor is solely that of surety and creditor; and

(c)        no joint venture exists between or among any of Buyer, the Buyers, Guarantor and Seller.

24. Intent. Guarantor intends (a) this Guarantee to constitute a security agreement or arrangement or other credit enhancement within the meaning of Section 101 of the Bankruptcy Code related to a “securities contract” as defined in Section 741(7)(A)(xi) of the Bankruptcy Code and, to the extent that this Guarantee relates to a Transaction under the Repurchase Agreement that has a maturity date of less than one (1) year, a security agreement or arrangement or other credit enhancement related to a “repurchase agreement” as that term is defined in Section 101(47)(A)(v) of the Bankruptcy Code, and (b) that, with respect to this Guarantee, (x) Buyer (for so long as Buyer is a “financial institution”, a “financial participant” or other entity listed in Section 555 of the Bankruptcy Code) shall be entitled to the benefits and protections afforded under Section 555 of the Bankruptcy Code with respect to a “securities contract” and (y) to the extent that this Guarantee relates to a Transaction under the Repurchase Agreement that has a maturity date of less than one (1) year, Buyer (for so long as Buyer is a “repo participant” or a “financial participant”) shall be entitled to the benefits and protections afforded under Section 559 of the Bankruptcy Code.

25. WAIVERS OF JURY TRIAL.EACH OF GUARANTOR AND BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY RELATED DOCUMENT AND FOR ANY COUNTERCLAIM HEREIN OR THEREIN.

26. Effect of Amendment and Restatement; No Novation. From and after the date hereof, that certain Fourth Amended and Restated Guarantee and Security Agreement, dated as of September 16, 2016 (as amended, modified and/or restated prior to the date hereof, the “Existing Guarantee Agreement”), from Guarantor in favor of Buyer, is hereby amended, restated and superseded in its entirety by this Guarantee. The parties hereto acknowledge and agree that the liens and security interests granted under the Original Guarantee (as defined in the Existing Guarantee Agreement) and under the Existing Guarantee Agreement are, in each case, continuing in full force and effect and, upon the amendment and restatement of the Existing Guarantee Agreement pursuant to this Guarantee, such liens and security interests secure and continue to secure the payment of the Obligations. Guarantor entered into this Guarantee solely to amend and restate in their entirety the terms of the Existing Guarantee Agreement and does

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not intend this Guarantee to be, and this Guarantee shall not be construed to be, a novation of any of the obligations owing by Guarantor under or in connection with the Existing Guarantee Agreement. It is the intention of Guarantor that any reference to the Existing Guarantee Agreement in any Repurchase Document shall be deemed to reference this Guarantee.

For the avoidance of doubt, the parties hereto further acknowledge and agree that, notwithstanding the amendment and restatement of the Existing Guarantee Agreement, the provisions of Section 10 of that certain Amendment to Fourth Amended and Restated Guarantee and Security Agreement, dated as of March 15, 2019 between Buyer and Guarantor, shall apply, and be effective, with respect to the covenants set forth in Sections 15(a) and 15(b) of this Guarantee, mutatis mutandis, to the same extent as if the Existing Guarantee Agreement were still in effect.

Notwithstanding anything to the contrary contained in this Guarantee, Guarantor and Buyer agree that, if (a) Guarantor has entered into amendments of its liquidity covenants with each of the other repurchase buyers under all repurchase facilities that currently (or as of the Liquidity Covenant Modification Effective Date (as defined below)) have liquidity covenants more favorable to such repurchase buyers than the Requested Liquidity Covenant (as defined below) (such repurchase facilities, the “Other Facilities”) to which Guarantor is a party or with respect to which Guarantor is obligated (either as a primary or secondary obligor) on or before April 10, 2020, and (b) in all of such amendments to the Other Facilities, Guarantor’s liquidity covenant has been modified to be less restrictive to Guarantor than the liquidity covenant expressly set forth in Section 15(c) hereof, then Guarantor will give Buyer prompt notice thereof and, upon the earlier of (such earlier date, the “Liquidity Covenant Modification Effective Date”) (i) April 10, 2020 and (ii) the date upon which Guarantor has entered into such amendments of its liquidity covenants with respect to each of its Other Facilities, Section 15(c) of this Guarantee shall be deemed to be automatically modified to conform to the most restrictive of such less restrictive liquidity covenants of the Other Facilities (as amended) (such covenant, the “MFN Liquidity Covenant”); provided that, notwithstanding the foregoing, in no event shall the foregoing cause, and the foregoing shall not cause, the financial covenant in Section 15(c) of this Guarantee to be any less restrictive than a liquidity covenant requiring that Guarantor not permit at any time (x) its Liquidity (as defined in the Repurchase Documents on the date hereof) to be less than $150,000,000 or (y) its Cash Liquidity (as defined in the Repurchase Documents on the date hereof) to be less than $50,000,000 (such covenant as described in the preceding clauses (x) and (y), the “Requested Liquidity Covenant”), and in the event that the MFN Liquidity Covenant is less restrictive than the Requested Liquidity Covenant, then on the Liquidity Covenant Modification Effective Date, Section 15(c) of this Guarantee, with no further action required on the part of either Guarantor or Buyer, shall automatically be modified, mutatis mutandis, to conform to the Requested Liquidity Covenant; and provided,  further, that, for the avoidance of doubt, Section 15(c) of this Guarantee shall at all times be subject in all respects to Section 27 of this Guarantee. Guarantor agrees, at Buyer’s request, to execute and deliver any related amendments to this Guarantee to document the modifications contemplated by this paragraph, provided that the execution of any such amendments shall not be a precondition to the effectiveness thereof, but shall merely be for the convenience of Buyer and Guarantor.

27. Maintenance of Financial Covenants; Scope of Guarantee. Guarantor and Buyer each agree that, to the extent that Guarantor is obligated (either as a primary or secondary

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obligor) under any other repurchase agreement or warehouse facility or any amendments thereto (whether now in effect or in effect at any time during the term of the Repurchase Agreement) to comply with a financial covenant that is comparable to any of the financial covenants set forth in this Guarantee and such comparable financial covenant is more restrictive to Guarantor or otherwise more favorable to the related lender or buyer thereunder than any financial covenant hereunder, or is in addition to any financial covenant set forth in this Guarantee, then such comparable or additional financial covenant shall, with no further action required on the part of either Guarantor or Buyer, automatically become a part hereof and be incorporated herein, and Guarantor hereby covenants to maintain compliance with such comparable or  additional financial covenant at all times throughout the terms of this Guarantee. Guarantor agrees to promptly notify Buyer of the execution of any agreement, amendment or other document that would cause the provisions of this Section 27 to become effective. Guarantor further agrees, at Buyer’s request, to execute and deliver any related amendments to this Guarantee, provided that the execution of such amendment shall not be a precondition to the effectiveness of such amendment, but shall merely be for the convenience of Buyer and Guarantor.

28. Recognition of the U.S. Special Resolution Regimes.

(a)        In the event that Buyer becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from Buyer of this Guarantee,  and any interest and obligation in or under this Guarantee, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Guarantee, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.

(b)        In the event that Buyer or a BHC Act Affiliate of Buyer becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Guarantee that may be exercised against Buyer are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Guarantee were governed by the laws of the United States or a state of the United States.

[SIGNATURES COMMENCE ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, the undersigned has caused this Guarantee Agreement to be duly executed and delivered as of the date first above written.

STARWOOD PROPERTY TRUST, INC.,
a Maryland corporation
By:	/s/ Andrew J. Sossen
	Name:	Andrew J. Sossen
	Title:

Address for Notices:

Starwood Property Trust, Inc.

c/o Starwood Capital Group

591 West Putnam Avenue

Greenwich, Connecticut 06830

Attention: Andrew Sossen

With a copy to:

Robert L. Boyd, Esq.

Sidley Austin LLP

787 Seventh Avenue

New York, NY 10019

WF-Starwood - Fifth Amended and Restated Guarantee and Security Agreement

Acknowledged and Agreed:
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association
By:	/s/ H. Lee Goins III
	Name:	H. Lee Goins III
	Title:	Managing Director

WF-Starwood - Fifth Amended and Restated Guarantee and Security Agreement

EXHIBIT A

[Letterhead of Hedge Counterparty]

CONSENT AND ACKNOWLEDGEMENT

[] [], 20[]

Wells Fargo Bank, National Association

One Wells Fargo Center

301 South College Street

MAC D1053-053, 5th Floor

Charlotte, North Carolina 28202

Attention: H. Lee Goins III

Starwood Property Trust, Inc.

591 West Putnam Avenue Greenwich,

Connecticut 06830

Attention: Andrew Sossen

Ladies and Gentleman:

Reference is made to the Confirmation, dated as of  [] [], 20[]  and designated by reference number [] , entered into by and between Starwood Property Trust,    Inc. (“Starwood”) and [] (“Counterparty”) (the “Confirmation”) in the form attached hereto, which is governed by the ISDA Master Agreement (the “ISDA Form”) dated [] [], 20[] (the ISDA Form, together with the Schedule thereto and the Confirmation, the “Agreement”) between Starwood and Counterparty. Capitalized terms used herein and not otherwise defined shall have the meaning given in or incorporated by reference in the Agreement.

For purposes of Section 7 of the ISDA Form, Counterparty hereby consents to the collateral assignment and grant by Starwood to Wells Fargo Bank, National Association (“Wells Fargo”) pursuant to the Fifth Amended and Restated Guarantee and Security Agreement, dated April 10, 2019 (from Starwood in favor of Wells Fargo (the “Guarantee”), of all right, title and interest (but none of the obligations) of Starwood in the Agreement and in the transaction evidenced by the Confirmation (the “Transaction”), together with all present and future amounts payable by Counterparty to Starwood under or in connection with the Confirmation represented by the Transaction with respect to the period commencing on the Purchase Date (as defined in the Sixth Amended and Restated Master Repurchase and Securities Contract, dated as of April 10, 2019, by and among Wells Fargo, Starwood Property Mortgage Sub-2, L.L.C., Starwood Property Mortgage Sub-2-A, L.L.C. and SPT CA Fundings 2, LLC (the “MRA”)) for the related Transaction (as defined in the MRA and, for purposes of this Confirmation, hereinafter called the “MRA Transaction”) and ending on the date on which Starwood shall have repaid Wells Fargo

A-1

all amounts owing in respect of the MRA Transaction on the related Repurchase Date (as defined in the MRA) in full and the security interest of the MRA with respect to the MRA Transaction is released.

Each of Starwood and Counterparty hereby agrees that pursuant to the Irrevocable Direction Letter, dated as of the date hereof (the “Direction Letter”), Counterparty will make all payments represented by the Transaction otherwise due to Starwood under or pursuant to the terms of the Confirmation to Wells Fargo in accordance with written instructions set forth therein.  Further, each of Starwood and Counterparty hereby agrees that, upon the occurrence  and during the continuance of an Event of Default under the MRA, Wells Fargo shall have the right to exercise and enforce any and all rights of Starwood under the Confirmation.

In connection with the acknowledgement by Counterparty of the assignment and grant by Starwood of all its right, title and interest (but none of its obligations) under the Transaction, each of the Starwood and Counterparty hereby agree that the occurrence of an “Event of Default” under the MRA shall constitute an Additional Termination Event for which Counterparty shall be the Affected Party and the Transaction shall be the Affected Transaction, and Wells Fargo shall have the right to either: (i) deliver notice to Starwood and Counterparty designating an Early Termination Date with respect to such Additional Termination Event, or (ii) notwithstanding anything to the contrary in the Agreement (including Section 6 of the ISDA Form), direct Counterparty to enter into a novation agreement whereby Starwood would be replaced as a party to the Transaction with a replacement counterparty. All amounts payable to Counterparty in connection with such Early Termination Date or novation agreement shall be subject to the Direction Letter to Counterparty to make all payments under the Transaction in accordance with the written instructions set forth therein.

This Consent and Acknowledgement constitutes notification to the account debtor of the assignment of Starwood’s rights under the Agreement and the Confirmation for purposes of Section 9-404(a)(2) of the Uniform Commercial Code.

Counterparty hereby acknowledges the grant of the power of attorney conferred under Section 15 of the Guarantee, and agrees to accept any exercise by Wells Fargo of such power in connection therewith.

The pledge by Starwood to Wells Fargo referred to herein does not include the delegation to Wells Fargo of any of Starwood’s duties, responsibilities or obligations under the Agreement, and Starwood shall remain liable to perform all duties, responsibilities and obligations to be performed by Starwood thereunder. Without limitation of the foregoing, Wells Fargo shall not have any obligation or liability under the Agreement or by reason of or arising out of the pledge referred to herein or the receipt by Wells Fargo of any payment, and Starwood specifically agrees to indemnify and forever hold Wells Fargo harmless from any claim or liability on account thereof, including, without limitation, reasonable attorneys’ fees incurred, except to the extent arising solely from the fraud, gross negligence, or willful misconduct of Wells Fargo or its officers, directors, employees or agents.

THIS CONSENT AND ACKNOWLEDGEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

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[NO FURTHER TEXT ON THIS PAGE]

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[HEDGE COUNTERPARTY]
By:
	Name:
	Title:

STARWOOD PROPERTY TRUST, INC.
By:
	Name:
	Title:

WELLS FARGO BANK, NATIONAL ASSOCIATION
By:
	Name:
	Title:

A-4

EXHIBIT B

FORM OF IRREVOCABLE DIRECTION LETTER

[] [], 20[]

[HEDGE COUNTERPARTY]

Re:       ISDA Agreement and Master Repurchase and Securities Contract (each as defined below)

Ladies and Gentlemen:

This Irrevocable Direction Letter is hereby transmitted by Starwood Property Trust, Inc. (“Starwood Parent”) to [] pursuant to the ISDA Agreement defined below.

Wells Fargo Bank, National Association (“WFB”), Starwood Property Mortgage Sub-2, L.L.C., Starwood Property Mortgage Sub-2-A, L.L.C. and SPT CA Fundings 2, LLC, (individually and collectively, as the context may require, “Starwood Sub”) are parties to a Sixth Amended and Restated Master Repurchase and Securities Contract dated as of April 10, 2019 (the “Repurchase Agreement”), pursuant to which Starwood Sub is selling certain assets to WFB for future repurchase by Starwood Sub, all pursuant to the terms thereof.

Pursuant to the Repurchase Agreement, Starwood Sub is required, from time to time, to enter into Interest Rate Protection Agreements (as defined in the Repurchase Agreement) in form and substance satisfactory to WFB. In order to induce WFB to enter into the Repurchase Agreement with Starwood Sub, Starwood Property Trust, Inc. (“Starwood Parent”) has agreed to unconditionally guarantee the obligations of Starwood Sub under the Repurchase Agreement.

Pursuant to a separate Acknowledgment and Consent dated as of the date hereof, you have been notified and have acknowledged that Starwood Parent has, in order to secure the obligations of Starwood Sub under the Repurchase Agreement, assigned and granted a security interest in and collaterally assigned to WFB all of Starwood Parent’s right, title and interest in, to and under the ISDA  Master  Agreement dated [],  between  Starwood  Parent and [], together with all currently existing and subsequently arising Schedules, Confirmations and annexes thereto (collectively, the “ISDA Agreement”) and all proceeds thereof, to the extent relating to a Purchased Asset under the Repurchase Agreement.

Notwithstanding anything in the ISDA Agreement or any other payment information or direction provided to you thereunder, Starwood Parent hereby directs you to, and you hereby agree to, remit any and all amounts (including but not limited to any termination payments) otherwise due and payable to Starwood Parent or any other party under the ISDA Agreement, to the extent such amounts relate to a Purchased Asset under the Repurchase Agreement, directly to WFB, in immediately available funds, to the account set forth in Schedule 1 hereto, or to any other account as directed to you in writing by WFB.

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No provision of this letter may be amended, countermanded or otherwise modified without the prior written consent of WFB. WFB is an intended third party beneficiary of this letter.

Please acknowledge receipt and your agreement to the terms of this instruction letter by signing in the signature block below and forwarding executed copies to WFB and Starwood Parent promptly upon receipt.

Any notices to WFB should be delivered to the following address: One Wachovia Center, 301 South College Street, MAC D1053-053, 5th Floor, Charlotte, NC 28202; Attention: Karen Whittlesey; Telephone: (704) 374-7909; Facsimile: (704) 715-0066.

Very truly yours,
STARWOOD PROPERTY TRUST, INC.
By:
	Name:
	Title:

cc:   Wells Fargo Bank, National Association

One Wells Fargo Center

301 South College Street

MAC D1053-053, 5th Floor

Charlotte, North Carolina 28202

Attention: H. Lee Goins III

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ACKNOWLEDGED AND AGREED:

[HEDGE COUNTERPARTY]
By:
	Name:
	Title:

STARWOOD PROPERTY MORTGAGE
SUB-2, L.L.C., a Delaware limited liability company
By:
	Name:
	Title:

STARWOOD PROPERTY MORTGAGE
SUB-2-A, L.L.C., a Delaware limited liability company
By:
	Name:
	Title:

SPT CA FUNDINGS 2, LLC, a Delaware limited liability company
By:
	Name:
	Title:

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EX-10.26

Exhibit 10.26

Execution Version

GUARANTEE AGREEMENT

GUARANTEE AGREEMENT, dated as of December 10, 2015 (as amended, restated, supplemented, or otherwise modified from time to time, this “Guarantee”), made by Starwood Property Trust Inc., a Maryland corporation (“Guarantor”) in favor of JPMorgan Chase Bank, National Association, a national banking association organized under the laws of the United States (“Buyer”).

RECITALS

Pursuant to that certain Master Repurchase Agreement, dated as of December 10, 2015 (as amended, supplemented or otherwise modified from time to time, the “Repurchase Agreement”), by and among Buyer and STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C. and STARWOOD PROPERTY MORTGAGE SUB-14-A, L.L.C. (each a “Seller” and, collectively, “Sellers”), each Seller has agreed to sell, from time to time, to Buyer certain Eligible Assets (as defined in the Repurchase Agreement, upon purchase by Buyer, each a “Purchased Asset” and, collectively, the “Purchased Assets”), upon the terms and subject to the conditions as set forth therein. Pursuant to the terms of that certain Custodial Agreement dated December 10, 2015 (the “Custodial Agreement”) by and among Buyer, Sellers and Wells Fargo Bank, National Association (the “Custodian”), Custodian is required to take possession of the Purchased Assets, along with certain other documents specified in the Custodial Agreement, as Custodian of Buyer and any future purchaser, on several delivery dates, in accordance with the terms and conditions of the Custodial Agreement. Pursuant to the terms of that certain Pledge Agreement dated as of December 10, 2015 (the “SPM Pledge Agreement”) made by Starwood Property Mortgage, L.L.C. (“SPM”) in favor of Buyer, and that certain Pledge Agreement dated as of December 10, 2015 (the “SPM BC Pledge Agreement” and, together with the SPM Pledge Agreement, the “Pledge Agreements”) made by Starwood Property Mortgage BC, L.L.C. (“SPM BC” and, together with SPM, each a “Parent” and, collectively, the “Parents” ) in favor of Buyer, each Parent has pledged to Buyer all of the Pledged Collateral (as defined in the Pledge and Security Agreement). The Repurchase Agreement, the Custodial Agreement, the Depository Agreement, the Servicing Agreement, the Fee Letter, this Guarantee and any other agreements executed in connection with the Repurchase Agreement shall be referred to herein as the “Governing Agreements”.

It is a condition precedent to the purchase by Buyer of the Purchased Assets pursuant to the Repurchase Agreement that Guarantor shall have executed and delivered this Guarantee with respect to the due and punctual payment and performance when due, whether at stated maturity, by acceleration of the Repurchase Date or otherwise, of all of the following, in each case, subject to the terms and conditions of this Guarantee: (a) all payment obligations owing by each Seller to Buyer under the Repurchase Agreement or any other Governing Agreements; (b) any and all extensions, renewals, modifications, amendments or substitutions of the foregoing; (c) all fees and expenses, including, without limitation, reasonable attorneys’ fees and disbursements, that are incurred by Buyer in the enforcement of any of the foregoing or any obligation of Guarantor hereunder; and (d) any other obligations of any Seller and any Parent with respect to Buyer under each of the Governing Agreements (collectively, the “Obligations”).

NOW, THEREFORE, in consideration of the foregoing premises, to induce Buyer to enter into the Governing Agreements and to enter into the transaction contemplated thereunder, Guarantor hereby agrees with Buyer, as follows:

1.           Defined Terms. Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings given them in the Repurchase Agreement.

“Cash Liquidity” shall mean, at any time and with respect to any Person and its consolidated Subsidiaries, the amount of cash and cash equivalents (other than restricted cash) held by such Person and its consolidated Subsidiaries as of such date.

“CMBS” shall mean mortgage pass-through certificates or other securities issued pursuant to a securitization of commercial real estate loans.

“Consolidated Net Income” shall mean, with respect to any Person, for any period, the amount of consolidated net income (or loss) of such Person and its consolidated Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.

“Contingent Liabilities” shall mean, with respect to any Person as of any date of determination, all of the following as of such date: (a) liabilities and obligations (including any Guarantee Obligations) of such Person in respect of “off-balance sheet arrangements” (as defined in the Off-Balance Sheet Rules defined below in this definition), (b) obligations, including Guarantee Obligations, whether or not required to be disclosed in the footnotes to such Person’s financial statements, guaranteeing in whole or in part any Non-Recourse Indebtedness, lease, dividend or other obligation, excluding, however, (i) contractual indemnities (including any indemnity or price-adjustment provision relating to the purchase or sale of securities or other assets), and (ii) guarantees of non-monetary obligations that have not yet been called on or quantified, of such Person or any other Person, and (c) forward commitments or obligations to fund or provide proceeds with respect to any loan or other financing that is obligatory and non- discretionary on the part of the lender. The amount of any Contingent Liabilities described in the preceding clause (b) shall be deemed to be (i) with respect to a guarantee of interest or interest and principal, or operating income guarantee, the sum of all payments required to be made thereunder (which, in the case of an operating income guarantee, shall be deemed to be equal to the debt service for the note secured thereby), through (x) in the case of an interest or interest and principal guarantee, the stated date of maturity of the obligation (and commencing on the date interest could first be payable thereunder), or (y) in the case of an operating income guarantee, the date through which such guarantee will remain in effect, and (ii) with respect to all guarantees not covered by the preceding clause (i), an amount equal to the stated or determinable amount of the primary obligation in respect of which such guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as recorded on the balance sheet and in the footnotes to the most recent financial statements of such Person. “Off-Balance Sheet Rules” means the Disclosure in Management’s Discussion and Analysis About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, Securities Act Release Nos. 33-8182; 34-47264; FR-67

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International Series Release No. 1266 File No. S7-42-02, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17 CFR Parts 228, 229 and 249).

“Convertible Debt Securities” shall mean any debt securities of Guarantor, the terms of which provide for conversion into Capital Stock, cash by reference to such Capital Stock, or a combination thereof.

“EBITDA” shall mean, with respect to any Person and its consolidated Subsidiaries, for any period, an amount equal to the sum of (a) Consolidated Net Income, of such Person (prior to any impact from minority interests or joint venture net income and before deduction of any dividends on preferred stock of such Person), plus the following (but only to the extent actually included in determination of such Consolidated Net Income): (i) depreciation and amortization expense, (ii) Interest Expense, (iii) income tax expense, and (iv) extraordinary or non-recurring gains and losses, plus (b) such Person’s proportionate share of Consolidated Net Income of the joint venture investments and unconsolidated Affiliates of such Person, all with respect to such period, plus (c) amounts deducted in accordance with GAAP in respect of other non-cash expenses in determining such Consolidated Net Income for such Person.

“Fixed Charges” shall mean, with respect to any Person and its consolidated Subsidiaries, for any period, the sum of (a) all debt service, (b) all preferred dividends, (c) Capitalized Lease Obligations paid or accrued during such period, (d) capital expenditures (if any), and (e) any amounts payable under any Ground Lease.

“Guarantee Obligation” shall mean, with respect to any Person (the “guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of the obligations for which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends, contractual obligation, derivatives contract or other obligations or Indebtedness (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such  primary obligation  or  any property constituting  direct  or  indirect  security   therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation, or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided,  however, that the term “Guarantee Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the maximum stated amount of the primary obligation relating to such Guarantee Obligation (or, if less, the maximum stated liability set forth in the instrument embodying such Guarantee Obligation); and provided, further, that in the absence of any such stated amount or stated liability, the amount of such

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Guarantee Obligation shall be such guaranteeing person’s maximum anticipated liability in respect thereof as reasonably determined by such Person in good faith.

“Interest Expense” shall mean, with respect to any Person and its consolidated Subsidiaries, for any period, the amount of total interest expense incurred by such Person, including capitalized or accruing interest (but excluding interest funded under a construction loan), all with respect to such period.

“Liquidity” shall mean, at any time and with respect to any Person and its consolidated Subsidiaries, without duplication, the amount equal to the sum of Cash Liquidity and Near Cash Liquidity of such Person and its consolidated Subsidiaries.

“Near Cash Liquidity” shall mean, at any time and with respect to any Person and its consolidated Subsidiaries, the market value of Near Cash Securities held by such Person and its consolidated Subsidiaries as of such date.

“Near Cash Securities” shall mean (i) CMBS having, at all times, a maturity or weighted average life of twelve (12) months or less, as determined by the applicable servicer, (ii) RMBS having a duration of twelve (12) months or less as determined by Tilden Park Capital Management (and, at Buyer’s request, the assumptions used in such determination shall be provided to Buyer for Buyer’s review), in each case, having a rating of Baa3 or BBB (or the equivalent) or higher by at least one Rating Agency (it being acknowledged that such securities may also have a lower rating from one or more Rating Agencies) or (iii) other public or privately placed securities approved by Buyer.

“Non-Recourse Indebtedness” shall mean, with respect to any Person and any date, indebtedness of such Person as of such date for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, Acts of Insolvency, non-approved transfers or other events) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness.

“REIT” shall mean a Person satisfying the conditions and limitations set forth in Section 856(b), Section 856(c) and Section 857(a) of the Code and qualifying as a real estate investment trust, as defined in Section 856(a) of the Code.

“RMBS” shall mean mortgage pass-through certificates or other securities issued pursuant to a securitization of residential mortgage loans.

“Tangible Net Worth” shall mean with respect to any Person and its consolidated Subsidiaries, and as of a particular date (a) all amounts which would be included under capital or shareholders’ equity of such Person and its consolidated Subsidiaries on a balance sheet of such Person and its consolidated Subsidiaries at such date, determined in accordance with GAAP, less (b) (i) amounts owing to such Person or any such consolidated Subsidiary from any Affiliates or from officers, employees, partners, members, directors, shareholders or other Persons similarly

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affiliated with such Person or any Affiliate thereof, (ii) intangible assets (other than Hedging Transactions to the extent related to any Purchased Asset and excluding mortgage loan servicing and/or special servicing rights of such Person and its consolidated Subsidiaries) of such Person and its consolidated Subsidiaries, if any, and (iii) prepaid taxes and/or expenses.

“Total Assets” shall mean, with respect to any Person on any date, (i) an amount equal to the aggregate book value of all assets owned by such Person and its Subsidiaries on a consolidated basis and the proportionate share of assets owned by non-consolidated Subsidiaries of such Person, less (ii) (A) amounts owing to such Person or any of its Subsidiaries from any Affiliate thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or any Affiliate thereof, (B) intangible assets (other than Hedging Transactions specifically related to the Purchased Assets and excluding mortgage loan servicing and/or special servicing rights of such Person and its consolidated Subsidiaries) and (C) prepaid taxes and expenses, plus (iii) the amount of any future funding obligations of such Person and its Subsidiaries under any loans or financings (including any construction loans) outstanding as of any date, all on or as of such date and determined in accordance with GAAP.

“Total Indebtedness” shall mean with respect to any Person and its consolidated Subsidiaries, and as of a particular date, all amounts of Indebtedness (other than Contingent Liabilities not reflected on such Person’s consolidated balance sheet), plus the proportionate share of all Indebtedness (other than Contingent Liabilities not reflected on such Person’s consolidated balance sheet) of all non-consolidated Affiliates of such Person, on or as of such date.

2.           Guarantee.    (a)    Guarantor hereby unconditionally and irrevocably guarantees to Buyer the prompt and complete payment and performance of the Obligations by each Seller and each Parent when due (whether at the stated maturity, by acceleration or otherwise).

(b)         Notwithstanding anything in Section 2(a) to the contrary, but subject in all cases to Sections 2(c), and (d) below, the maximum liability of the Guarantor hereunder and under the Transaction Documents as of any date of determination shall in no event exceed twenty-five percent (25%) of the then-currently unpaid aggregate Repurchase Price of all Purchased Assets subject to Transaction as of such date of determination.

(c)         Notwithstanding the foregoing, the limitation on recourse liability as set forth in Section 2(b) above SHALL BECOME NULL AND VOID and shall be of no force and effect and the Obligations shall be fully recourse to Guarantor upon the occurrence of any of the following:

(i)          a voluntary bankruptcy or insolvency proceeding is commenced by any Seller or any Parent under the Bankruptcy Code or any similar federal or state law or any law of any other jurisdiction;

(ii)         an involuntary bankruptcy or insolvency proceeding is commenced against any Seller or any Parent in connection with which any Seller, any Parent or Guarantor or

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any Affiliate of any of the foregoing (alone or in any combination) has or have colluded in any way with the creditors commencing or filing such proceeding;

(iii)        any material  breach  of  the  separateness  covenants  set  forth  in  Articles 11(v) or (w) of the Repurchase Agreement that results in a legal or equitable consolidation of any Seller with Guarantor or any Subsidiary of Guarantor that is also a direct or indirect parent of such Seller in connection with any bankruptcy or insolvency proceeding of Guarantor or such parent of Seller; or

(d)          In addition to the foregoing and notwithstanding the limitation on recourse liability set forth in Section 2(b) above, Guarantor shall be liable for any actual losses, costs, claims, expenses or other liabilities actually incurred by Buyer arising out of or attributable to the following items:

(i)          fraud or intentional misrepresentation by any Seller, any Parent, Guarantor, or any other Affiliate of any Seller, any Parent or Guarantor in connection with the execution and the delivery of this Guarantee, the Repurchase Agreement, or any other Transaction Document, or any certificate, report, financial statement or other instrument or document furnished to Buyer by any such parties at the time of the closing of the Repurchase Agreement or during the term of the Repurchase Agreement;

(ii)         any material  breach  of  the  separateness  covenants  set  forth  in  Articles 11(v) or (w) of the Repurchase Agreement (other than as set forth in Section 2(c)(iii) above);

(iii)        any material breach of any representations and warranties relating to Environmental Laws by any Seller, Guarantor or any of their respective Affiliates, or any indemnity for costs incurred by Buyer in connection with the violation of any Environmental Law, the correction of any environmental condition, or the removal of any Materials of Environmental Concern, in each case in any way affecting any Seller’s or Guarantor’s properties or any of the Purchased Assets.

(e)          Guarantor further agrees to pay any and all reasonable out-of-pocket expenses (including, without limitation, all reasonable fees and disbursements of counsel) that may be paid or incurred by Buyer in connection with (i) enforcing any of its rights hereunder, (ii) obtaining advice of counsel with respect to the enforcement, potential enforcement or analysis of its rights hereunder, and (iii) collecting any amounts owed to it hereunder. This Guarantee shall remain in full force and effect and be fully enforceable against Guarantor in all respects until the later of (i) the date upon which the Obligations are paid in full and (ii) the termination of the Repurchase Agreement, notwithstanding that from time to time prior thereto, Sellers and/or Parents may be free from any Obligations.

(f)          No payment or payments made by any Seller, any Parent or any other Person or received or collected by Buyer from any Seller, any Parent or any other Person by virtue of any action or proceeding or any set-off or appropriation or application, at any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor hereunder, and Guarantor shall,

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notwithstanding any such payment or payments, remain liable for the full amount of the Obligations under this Guarantee until the Obligations are paid in full, but subject to the limitations on Guarantor’s liability under Section 2(b) above.

(g)          Guarantor agrees that whenever, at any time, or from time to time, Guarantor shall make any payment to Buyer on account of any liability hereunder, Guarantor will notify Buyer in writing that such payment is made under this Guarantee for such purpose.

3.           Subrogation. Upon making any payment hereunder, Guarantor shall be subrogated to the rights of Buyer against any Seller and any Parent and in any collateral for any Obligations with respect to such payment; provided, that Guarantor shall not seek to enforce any right or receive any payment by way of subrogation, or seek any contribution or reimbursement from any Seller, until all amounts then due and payable by Sellers or Parents to Buyer or any of its Affiliates under the Governing Agreements have been paid in full; provided,  further, that such subrogation rights shall be subordinate in all respects to all amounts owing to Buyer under the Governing Agreements. If any amount shall be paid to Guarantor on account of such  subrogation rights at any time when all of the Repurchase Obligations shall not have been paid in full, such amount shall be held by Guarantor in trust for Buyer, segregated from other funds of Guarantor, and shall, forthwith upon receipt by Guarantor, be turned over to Buyer in the exact form received by Guarantor (duly indorsed by Guarantor to Buyer, if required), to be applied against the Repurchase Obligations, whether matured or unmatured, in such order as Buyer may determine.

4.           Amendments, etc. with Respect to the Obligations. Guarantor shall  remain obligated hereunder notwithstanding that, without any reservation of rights against Guarantor, and without notice to or further assent by Guarantor, any demand for payment of any of the Obligations made by Buyer may be rescinded by Buyer and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by Buyer, and any Governing Agreement and any other document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as Buyer may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by Buyer for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. Buyer shall have no obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against Guarantor, Buyer may, but shall be under no obligation to, make a similar demand on any Seller, any Parent or any other Person, and any failure by Buyer to make any such demand or to collect any payments from any Seller, any Parent or any such other Person or any release of any Seller, any Parent or such other Person shall not relieve Guarantor of its Obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of Buyer against Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

5.           Guarantee Absolute and Unconditional. (a) Guarantor hereby agrees that

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its obligations under this Guarantee constitute a guarantee of payment when due and not of collection. Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by Buyer upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee; and all dealings between Sellers, Parents and Guarantor, on the one hand, and Buyer, on the other hand, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. Guarantor waives promptness, diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any Seller, any Parent or this Guarantee with respect to the Obligations. This Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity, regularity or enforceability of any Governing Agreement, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Buyer, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by any Seller or any Parent against Buyer, (iii) any requirement that Buyer exhaust any right to take any action against any Seller, any Parent or any other Person prior to or contemporaneously with proceeding to exercise any right against Guarantor under this Guarantee or (iv) any other circumstance whatsoever (with or without notice to, or knowledge of, any Seller, any Parent or Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of any Seller and/or any Parent for the Obligations or of Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against Guarantor, Buyer may, but shall be under no obligation, to pursue such rights and remedies that Buyer may have against any Seller, any Parent or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by Buyer to pursue such other rights or remedies or to collect any payments from any Seller, any Parent or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any Seller, Parent or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Buyer against Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon Guarantor and its successors and assigns thereof, and shall inure to the benefit of Buyer, and its permitted successors, endorsees, transferees and assigns, until all the Obligations and the obligations of Guarantor under this Guarantee shall have been satisfied by payment in full, notwithstanding that from time to time during the term of the Governing Agreements, Sellers or Parents may be free from any Obligations.

(b)         Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges, and represents and warrants to Buyer as follows:

(i)          Guarantor hereby waives any defense arising by reason of, and any and all right to assert against Buyer any claim or defense based upon, an election of remedies by Buyer that in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s subrogation rights, rights to proceed against any Seller, any Parent or any other guarantor for reimbursement or contribution, and/or any other rights of Guarantor to proceed against any Seller, any Parent, any other guarantor or any other person or security.

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(ii)         Guarantor is presently informed of the financial condition of each Seller and each Parent and of all other circumstances that diligent inquiry would reveal and that bear upon the risk of nonpayment of the Obligations. Guarantor hereby covenants that it will make its own investigation and will continue to keep itself informed about the financial condition of each Seller and each Parent and of all other circumstances that bear upon the risk of nonpayment and that it will continue to rely upon sources other than Buyer for such information and will not rely upon Buyer for any such information. Guarantor hereby waives the right, if any, to  require Buyer to disclose to Guarantor any information that Buyer may now or hereafter acquire concerning such condition or circumstances.

(iii)        Guarantor has independently reviewed the Governing Agreements and related agreements and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Guarantee to Buyer, Guarantor is not in any manner relying upon the validity, and/or enforceability, and/or attachment, and/or perfection of any liens or security interests of any kind or nature granted by any Seller or any Parent to Buyer, now or at any time and from time to time in the future.

6.           Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by Buyer upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Seller or any Parent or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for any Seller or any Parent or any substantial part of the property of any Seller or any Parent, or otherwise, all as though such payments had not been made.

7.           Payments. Guarantor hereby agrees that the Obligations will be paid to Buyer without set-off or counterclaim in U.S. Dollars at the address specified in writing by Buyer.

8.           Representations and Warranties. Guarantor represents and warrants as of the date hereof and as of each Purchase Date under the Repurchase Agreement that:

(a)          Guarantor is duly organized, validly existing and in good standing under the laws and regulations of its jurisdiction of incorporation or organization, as the case may be. Guarantor is duly licensed, qualified, and in good standing in every state where such licensing or qualification is necessary for the transaction of its business. Guarantor has the power to own and hold the assets it purports to own and hold, and to carry on its business as now being conducted and proposed to be conducted, and has the power to execute, deliver, and perform its obligations under this Guarantee and the other Governing Agreements.

(b)          This Guarantee has been duly executed and delivered by Guarantor, for good and valuable consideration. This Guarantee constitutes the legal, valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (whether enforcement is sought in proceedings in equity or at law).

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(c)          Neither the execution and delivery of this Guarantee nor compliance by Guarantor with the terms, conditions and provisions of this Guarantee will conflict with or result in a breach of any of the terms, conditions or provisions of (A) its organizational documents, (B) any contractual obligation to which it is now a party or constitute a default thereunder, or result thereunder in the creation or imposition of any lien upon any of its assets, (C) any judgment or order, writ, injunction, decree or demand of any court applicable to it, or (D) any applicable Requirement of Law.

(d)          There is no action, suit, proceeding, investigation, or arbitration pending or, to the Knowledge of Guarantor, threatened against Guarantor or any of its assets (A) with respect to any of the Transaction Documents or any of the transactions contemplated hereby or thereby, or (b) which if adversely determined with respect to Guarantor, would reasonably be expected to have a Material Adverse Effect.

(e)        No consent, approval, authorization, or order of any third party including any Governmental Authority is required that has not already been obtained in connection with (A) the execution and delivery by Guarantor of this Guarantee or to consummate the transactions contemplated hereby, (B) the legality, validity, binding effect or enforceability of this Guarantee against Guarantor or (C) the consummation of the transactions contemplated by this Guarantee.

(f)          Guarantor has timely filed (taking into account all applicable extensions) all required federal income tax returns and all other material tax returns, domestic and foreign, required to be filed by it and has paid all taxes, assessments, fees, and other governmental charges payable by it, or with respect to any of its properties or assets, that have become due and payable except to the extent such amounts are being contested in good faith by appropriate proceedings for which appropriate reserves have been established in accordance with GAAP, and there is no claim relating to any such taxes now pending that was made in writing by any Governmental Authority and that is not being contested in good faith as provided above.

(g)          There are no judgments against Guarantor unsatisfied of record or docketed in any court located in the United States of America which would reasonably be expected to have a Material Adverse Effect and no Act of Insolvency has ever occurred with respect to it.

9.           Financial and other Covenants.  Guarantor (on a consolidated basis, but adjusted to remove the impact of consolidating any variable interest entities under the requirements of Accounting Standards Codification (“ASC”) Section 810 and/or transfers of financial assets accounted for as secured borrowings under ASC Section 860, as both of such ASC sections are amended, modified and/or supplemented from time to time) shall satisfy each of the following financial covenants:

(a)          Guarantor shall not permit its Liquidity to be less than $125,000,000; of which not less than $50,000,000 shall be comprised of Cash Liquidity.

(b)          Guarantor shall not permit its Tangible Net Worth to be less than the sum of (A) $2,967,415,000, plus (B) seventy-five percent (75%) of the aggregate net cash proceeds (net of underwriting discounts and commissions, and other out-of-pocket expenses incurred by

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Guarantor in connection any issuance or sale) received by Guarantor from any issuance or sale of Capital Stock (other than Capital Stock constituting Convertible Debt Securities) occurring after the Closing Date, plus (C) seventy-five percent (75%) of any increase in capital or shareholders’ equity (or like caption however denominated) on the balance sheet of Guarantor resulting from the settlement, conversion or repayment of any Convertible Debt Security occurring after the Closing Date;

(c)          Guarantor shall not permit the ratio of its Total Indebtedness to Total Assets at any time to be greater than 0.75 to 1.00;

(d)          Guarantor shall not permit the ratio of Guarantor’s EBITDA for any fiscal quarter to Guarantor’s Interest Expense for such fiscal quarter to be less than 2.00 to 1.00;

(e)          Guarantor shall not permit the ratio of Guarantor’s EBITDA for any fiscal quarter to Guarantor’s Fixed Charges for such fiscal quarter to be less than 1.5 to 1.00; or

(f)          Guarantor shall not permit at any time Guarantor to fail to maintain its status as a REIT.

10.         Further Covenants of Guarantor.

(a)        Taxes.  As of the date hereof and as of each Purchase Date, each Future Funding Date and each Additional Advance Date under the Repurchase Agreement, no liens for material amounts of Taxes have been filed against Guarantor or any of Guarantor’s assets, and no claims have been asserted in writing with respect to any such Taxes (except for liens and with respect to Taxes not yet due and payable, liens or claims with respect to Taxes that are being contested in good faith and for which adequate reserves have been established in accordance with GAAP).PATRIOT Act.

(i)          Guarantor is in compliance, in all material respects, with (A) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other applicable enabling legislation or executive order relating thereto, and (B) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of any Transaction will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

(ii)         Guarantor agrees that, from time to time upon the prior written request of Buyer, it shall (A) execute and deliver such further documents, provide such additional information and reports and perform such other acts as Buyer may reasonably request in order to insure compliance with the provisions hereof (including, without limitation, compliance with the USA PATRIOT Act of 2001 and to fully effectuate the purposes of this Guarantee and (B) provide such opinions of counsel as Buyer may reasonably request due to any change in Requirements of Law or Buyer Compliance Policy concerning matters described in this Section

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10(b) or in Article 9(b)(xxxi) or Article 9(b)(xxxiii) of the Repurchase Agreement; provided,  however, that nothing in this Section 10(b) shall be construed as requiring Buyer to conduct any inquiry or decreasing Guarantor’s responsibility for its statements, representations, warranties or covenants hereunder. In order to enable Buyer and its Affiliates to comply with any anti-money laundering program and related responsibilities including, but not limited to, any obligations under the USA Patriot Act of 2001 and regulations thereunder, Guarantor on behalf of itself and its Affiliates represents to Buyer and its Affiliates that neither Guarantor, nor any of its Affiliates, is a Prohibited Investor, and Guarantor is not acting on behalf of or for the benefit of any Prohibited Investor. Guarantor agrees to promptly notify Buyer or a person appointed by Buyer to administer their anti-money laundering program, if applicable, of any change in information affecting this representation and covenant.

(c)          Financial Reporting.  Guarantor shall provide, or cause to be provided, to Buyer the following financial and reporting information:

(i)          Within forty-five (45) calendar days after the last day of each of the first three fiscal quarters in any fiscal year, a quarterly reporting package substantially in the form of Exhibit III-B attached to the Repurchase Agreement;

(ii)         Within ninety (90) calendar days after the last day of its fiscal year, an annual reporting package substantially in the form of Exhibit III-C attached to the Repurchase Agreement; and

(iii)        Upon Buyer’s request, copies of Guarantor’s consolidated Federal Income Tax returns, if any, delivered within thirty (30) days after the filing thereof.

11.         Right of Set-off. Guarantor hereby irrevocably authorizes Buyer and its Affiliates, without notice to Guarantor, any such notice being expressly waived by Guarantor, to set-off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Buyer to or for the credit or the account of Guarantor, or any part thereof in such amounts as Buyer may elect, against and on account of the obligations and liabilities of Guarantor to Buyer hereunder and claims of every nature and description of Buyer against Guarantor, in any currency, arising under any Governing Agreement, as Buyer may elect, whether or not Buyer has made any demand for payment. Buyer shall notify Guarantor promptly of any such set-off and the application made by Buyer, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of Buyer under this Section 11 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that the Buyer may have.

12.         Severability. Any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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13.         Section Headings. The section headings used in this Guarantee are for convenience of reference only and shall not affect the interpretation or construction of this Guarantee.

14.         No Waiver; Cumulative Remedies.  Buyer shall not by any act (except by a written instrument pursuant to Section 15 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or event of default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of Buyer, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by Buyer of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that Buyer would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.

15.         Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except by a written instrument executed by Guarantor and Buyer, except that any provision of this Guarantee may be waived by Buyer in a letter or agreement specifically waiving such terms and executed solely by Buyer. This Guarantee shall be binding upon Guarantor’s successors and assigns and shall inure to the benefit of Buyer, and Buyer’s permitted successors and assigns. THIS GUARANTEE AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS GUARANTEE, THE RELATIONSHIP OF THE PARTIES TO THIS GUARANTEE, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES TO THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF. THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS GUARANTEE.

16.         Notices. Notices by Buyer to Guarantor shall be given in writing, addressed to Guarantor at the address or transmission number set forth under its signature below and shall be effective for all purposes if hand delivered or sent by (a) hand delivery, with proof of delivery, (b) certified or registered United States mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of delivery or (d) by email, provided that such email notice must also be delivered by one of the means set forth above, to the address or transmission number set forth under its signature below or at such other address and person as shall be designated from time to time by Guarantor, as the case may be, in a written notice to Buyer. A notice shall be deemed to have been given: (w) in the case of hand delivery, at the time of delivery, (x) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day, (y) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day, or (z) in the case of email, upon receipt of confirmation, provided that such email notice was also delivered as required in this Section 16.

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If Guarantor receives a notice that does not comply with the technical requirements for notice under this Section 16 it may elect to waive any deficiencies and treat the notice as having been properly given. Notice by Guarantor to Buyer shall be given in the manner set forth in Article 15 of the Repurchase Agreement.

17.         SUBMISSION TO JURISDICTION; WAIVERS. GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(A)        SUBMITS IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTEE OR THE OTHER LOAN DOCUMENTS TO WHICH GUARANTOR IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

(B)         CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(C)         AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO GUARANTOR AT ITS ADDRESS SET FORTH UNDER GUARANTOR’S SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH BUYER SHALL HAVE BEEN NOTIFIED IN WRITING BY GUARANTOR; AND

(D)         AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

18.         Integration. This Guarantee represents the agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by Buyer relative to the subject matter hereof not reflected herein.

19.         Execution. This Guarantee may be executed in counterparts, each  of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. Delivery by telecopier or other electronic transmission (including a .pdf e-mail transmission) of an executed counterpart of a signature page to this Guarantee shall be effective as delivery of an original executed counterpart of this Guarantee.

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20.         Acknowledgments. Guarantor hereby acknowledges that:

(a)          it has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the related documents;

(b)          Buyer has no fiduciary relationship to Guarantor, and the relationship between Buyer and Guarantor is solely that of surety and creditor; and

(c)          no joint venture exists between or among any of Buyer, on the one hand, and Sellers, Parents and/or Guarantor on the other hand.

21.         Intent. Guarantor intends for this Guarantee to be a credit enhancement related to a repurchase agreement, within the meaning of Section 101(47) of the Bankruptcy Code and, therefore, for this Guarantee to be itself a repurchase agreement, within the meaning of Section 101(47) and Section 559 of the Bankruptcy Code.

22.         WAIVERS OF JURY TRIAL. EACH OF GUARANTOR AND BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTEE OR ANY RELATED DOCUMENT AND FOR ANY COUNTERCLAIM HEREIN OR THEREIN.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered as of the date first above written.

STARWOOD PROPERTY TRUST INC., a  Maryland corporation
By:	/s/ Andrew J. Sossen
	Name:	Andrew J. Sossen
	Title:	Chief Operating Officer
Address:
STARWOOD PROPERTY MORTGAGE SUB-14, L.L.C.
STARWOOD PROPERTY MORTGAGE SUB­14-A, L.L.C.
c/o Starwood Property Trust, Inc.
591 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: General Counsel
Telephone: (203) 422-8191
Facsimile: (203) 422-8192
Email: asossen@starwood.com
With a copy to:
Sidley Austin, LLP
787 Seventh Ave.
New York, NY 10019
Telephone: (212) 839-7352
Facsimile: (212) 839-5599
Attention: Robert L. Boyd
Email: rboyd@sidley.com

FIRST AMENDMENT TO GUARANTY AGREEMENT

FIRST AMENDMENT TO

GUARANTY AGREEMENT

FIRST AMENDMENT TO GUARANTY AGREEMENT, dated as of September 15, 2017 (this ”Amendment”), made by STARWOOD PROPERTY TRUST INC., a corporation organized under the laws of the State of Maryland (“Guarantor”), for the benefit of JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (including any successor thereto, “Buyer”). Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Guarantee (as defined below).

RECITALS

WHEREAS, Purchaser, Starwood Property Mortgage Sub-14, L.L.C.,  Starwood Property Mortgage Sub-14-A, L.L.C. and Starwood Mortgage Funding VI LLC, each a Delaware limited liability company (collectively, the “Seller”) are  parties  to  that  certain  Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by that certain First Amendment to Master Repurchase Agreement, dated as of March  31,  2016,  and  that  certain Second Amendment to Uncommitted  Master  Repurchase  Agreement, dated as of April  25, 2016  (as so amended, the “Repurchase Agreement”), and the other Transaction Documents (as defined therein);

WHEREAS, in connection with the Repurchase Agreement, Guarantor made that certain Guarantee, dated as of December 10, 2015, for the benefit of Buyer (the “Guarantee”); and

WHEREAS, Guarantor and Buyer desire to make certain modifications to the Guarantee.

NOW THEREFORE, in consideration of the foregoing recitals, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I.

AMENDMENT

(a)          The definition of “Contingent Liabilities” set forth in Section 1 of the Guarantee is hereby amended and restated in its entirety as follows:

“Contingent Liabilities” shall mean, with respect to any Person as of any date of determination, all of the following as of such date: (a) liabilities and obligations (including any Guarantee Obligations) of such Person in respect of "off-balance sheet arrangements" (as defined inthe Off-Balance Sheet Rules defined below in this definition), and (b) obligations, including Guarantee Obligations, whether or not required to be disclosed in the footnotes to such Person's financial statements, guaranteeing in whole or in part any Non-Recourse Indebtedness, lease, dividend or other obligation, excluding, however,

(i) contractual indemnities (including any indemnity or price-adjustment provision relating to the purchase or sale of securities or other assets), and (ii) guarantees of non-monetary obligations that have not yet been called on or quantified, of such Person or any other Person. The amount of any Contingent Liabilities described in the preceding clause (b) shall be deemed to be (i) with respect to a guarantee of interest or interest and principal,  or operating income guarantee,  the sum of all payments required to be made thereunder (which, in the case of an operating income guarantee,  shall be deemed to be equal to the debt service for the note secured thereby), through (x) in the case of an interest or interest and principal guarantee, the stated date of maturity of the obligation (and commencing on the date interest could first be payable thereunder), or (y) in the case of an operating income guarantee,  the date through which such guarantee will remain in effect, and (ii)  with respect to all guarantees not covered by the preceding clause (i), an amount equal to the stated or determinable amount of the primary obligation in respect of which such guarantee is made or, if not stated or determinable,  the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as recorded on the balance sheet and in the footnotes to the most recent financial statements of such Person. “Off­Balance Sheet Rules” means the Disclosure in Management’s Discussion and Analysis About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, Securities Act Release Nos. 33-8182; 34-47264; FR-67 International Series Release No.  1266 File No.  S7-42-02, 68 Fed.  Reg.  5982 (Feb. 5, 2003) (codified at 17 CFR Parts 228, 229 and 249).

(b)          The definition of “Fixed Charges”set forth in Section  1 of the Guarantee is hereby  deleted in its entirety.

(c)          The definition of “Near Cash Liquidity” set forth in Section 1 of the Guarantee is hereby amended and restated in its entirety as follows:

“Near Cash Liquidity” shall mean, at any time and with respect to any Person and its Subsidiaries on a consolidated basis,  the sum of (i) the  market value of Near Cash Securities held by such Person and its Subsidiaries as of such date  as determined on a consolidated basis in accordance with GAAP and (ii) the amount of Undrawn Borrowing Capacity of such Person and  its Subsidiaries under repurchase and credit facilities to which they are a party as of such date. Market Value of Near Cash Securities shall be determined on a quarterly basis through bids obtained from independent third party broker-dealers reasonably  acceptable to Buyer.

(d)          The definition of “Total (d) Assets” set forth in Section 1 of the Guarantee is hereby amended and restated in its entirety as follows:

“Total Assets” shall mean, with respect to any Person on any date,  (i) an amount equal to the aggregate book value of all assets owned by  such Person and its Subsidiaries on a consolidated basis and the proportionate share of assets owned by non-consolidated Subsidiaries of such Person, less  (ii) (A) amounts

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owing to such Person or any of its Subsidiaries from any Affiliate thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or any Affiliate thereof, (B) intangible assets (other than Hedging Transactions specifically related to the Purchased Assets and excluding mortgage loan .servicing and/or special servicing rights of such Person and its consolidated Subsidiaries) and (C) prepaid taxes and expenses, all on or as of such date and determined in accordance with GAAP.

(e)          Section 1 of the Guarantee is hereby amended by adding the following defined term in its appropriate alphabetical order:

“Undrawn Borrowing Capacity” shall mean, with respect to any Person as of any date, the total undrawn borrowing capacity available to such Person and its direct or indirect Subsidiaries under any repurchase and credit facilities and similar agreements to which they are a party as of such date,  but (i) with respect to any such repurchase or committed credit facility or similar agreement that is a secured facility, solely to the extent that collateral has been approved by and pledged to the related buyer or lender under such facility and such amounts are available to such Person and its direct or indirect Subsidiaries without restriction or any other condition other than notice, and (ii) with respect to any such credit facility or similar agreement that is an unsecured facility, solely to the extent that such undrawn borrowing capacity is committed by the related lender.

(f)           Section 9 of the Guarantee is hereby amended and restated in its entirety as follows:

(9)        Financial Covenants. Guarantor (on a consolidated basis, but adjusted to remove the impact of consolidating any variable interest entities under the requirements of Accounting Standards Codification (“ASC”) Section 810 and/or transfers of financial assets accounted for as secured borrowings under ASC 860, as both ASC sections are amended, modified and/or supplemented from time to time) shall satisfy each of the following financial covenants:

(a)        Guarantor shall not permit its Liquidity at any time to be less than $175,000,000; of which not less than $75,000,000 shall be comprised of Cash Liquidity.

(b)        Guarantor shall not permit its Tangible Net Worth  to be less than  the sum of (A) $3,124,857,000, plus (B) seventy-five percent (75%) of the aggregate net cash proceeds (net of underwriting discounts and commissions, and other out-of-pocket expenses incurred by Guarantor in connection any issuance or sale) received by Guarantor from any issuance or sale of Capital Stock (other than Capital  Stock  constituting Convertible Debt Securities)

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occurring after September 15, 2017, plus (C) seventy-five percent (75%) of any increase in capital or shareholders’ equity (or like caption however denominated) on the balance sheet of Guarantor resulting from the settlement, conversion or repayment of any Convertible Debt Security occurring after September 15, 2017;

(c)        Guarantor shall not permit the ratio of its Total Indebtedness to Total Assets at any time to be greater than 0.75 to 1.00;

(d)        Guarantor shall not permit the ratio of Guarantor’s EBITDA for any fiscal quarter to Guarantor’s Interest Expense for such fiscal quarter to be less than 2.00 to 1.00; or

(e)        Guarantor shall not permit at any time Guarantor to fail to maintain its status as a REIT.

ARTICLE II.

REPRESENTATIONS

Guarantor represents and warrants to Buyer, as of the date of this Amendment, as follows:

(i)         all representations and warranties made by it in Section 8 of the Guarantee are true and correct in all material respects;

(ii)        it is duly authorized to execute and deliver this Amendment and has taken all necessary action to authorize such execution, delivery and performance;

(iii)       the person signing this Amendment on its behalf is duly authorized to do so on its behalf;

(iv)       the execution, delivery and performance of this Amendment will not violate any Requirement of Law applicable to it or its organizational documents or any agreement by which it is bound or by which any of its assets are affected;

(v)        this Amendment has been duly executed and delivered by it; and

(vi)       Guarantor is not subject to financial covenants that are more favorable to the lender or repurchase buyer, as applicable, under any corporate credit facility or any repurchase agreement or loan agreement entered into for the purpose of financing the purchase or origination by Guarantor and/or its direct or indirect Subsidiaries of commercial real estate CMBS-type loans than the financial covenants set forth in Article l(d) above.

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ARTICLE III.

GOVERNING LAW

THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

ARTICLE IV.

MISCELLANEOUS

(a)          Except as expressly amended or modified hereby, the Guarantee and the other Transaction Documents shall each be and shall remain in full force and effect in accordance with their terms.

(b)          This Amendment may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.

(c)          The headings in this Amendment are for convenience of reference only and shall not affect the interpretation or construction of this Amendment.

(d)          This Amendment may not be amended or otherwise modified, waived or supplemented except as provided in the Guarantee.

(e)          This Amendment contains a final and complete integration of all prior expressions by the parties with respect to the subject matter hereof and shall constitute the entire agreement among the parties with respect to such subject matter, superseding all prior oral or written understandings.

(f)           The Guarantee, as amended by this Amendment, is a Transaction Document.

[SIGNATURES FOLLOW]

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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the date first above written.

			GUARANTOR:
			STARWOOD PROPERTY TRUST INC., a corporation organized under the laws of the State of Maryland
			By:	/s/ Andrew J. Sossen
				Name:	Andrew J. Sossen
				Title:	Authorized Signatory
ACCEPTED AND AGREED BY:
BUYER:
JPMORGAN CHASE BANK,  NATIONAL ASSOCIATION, a  national banking association organized  under the laws of the United States
By:	/s/ Thomas Cassino
	Name:	Thomas Cassino
	Title:	Executive Director

Signature Page to First Amendment to Guarantee

SECOND AMENDMENT TO GUARANTEE AGREEMENT

SECOND AMENDMENT TO GUARANTEE AGREEMENT

THIS SECOND AMENDMENT TO GUARANTEE AGREEMENT, dated as of March 15, 2019 (this “Amendment”), between STARWOOD PROPERTY TRUST INC., a corporation organized under the laws of the State of Maryland (“Guarantor”), and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national bank association organized under the laws of the United States (“Buyer”). Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Guarantee (as defined below).

RECITALS

WHEREAS, Buyer, Starwood Property Mortgage Sub-14, L.L.C. (“Seller 14”), Starwood Property Mortgage Sub-14-A, L.L.C. (“Seller 14-A”), Starwood Mortgage Funding VI LLC (“Funding VI Seller”) and SPT CA Fundings 2, LLC (“SPT CA Seller”, together with Seller 14, Seller 14-A and Funding VI Seller, collectively, “Seller”) are parties to that certain Uncommitted Master Repurchase Agreement, dated as of December 10, 2015, as amended by: (i) that certain First Amendment to Uncommitted Master Repurchase Agreement, dated as of March 31, 2016, (ii) that certain Second Amendment to Uncommitted Master Repurchase Agreement, dated as of April 25, 2016, (iii) that certain Third Amendment to Uncommitted Master Repurchase Agreement and Amendment of Fee Letter, dated as of April 20, 2018, (iv) that certain Fourth Amendment to Uncommitted Master Repurchase Agreement, dated as of May 1, 2018, and (v) that certain Fifth Amendment to Uncommitted Master Repurchase Agreement, dated as of January 10, 2019 (as amended, modified and/or restated from time to time, the “Repurchase Agreement”), and the other Transaction Documents (as defined therein);

WHEREAS, Guarantor indirectly owns one hundred percent (100%) of the Capital Stock of Seller;

WHEREAS, in connection with the Repurchase Agreement, Guarantor made that certain Guarantee, dated as of December 10, 2015, for the benefit of Buyer, as amended by that certain First Amendment to Guarantee Agreement, dated as of September 15, 2017, (as amended or modified prior to the date hereof, the “Existing Guarantee”; and, as amended by this Amendment, and as same may be hereafter further amended, modified and/or restated, the “Guarantee”), for the benefit of Buyer; and

WHEREAS, Guarantor and Buyer desire to make certain amendments and modifications to the Existing Guarantee.

NOW THEREFORE, in consideration of the foregoing recitals, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I.

AMENDMENT

Sections 9(c) and 9(d) of the Existing Guarantee are hereby deleted in their entirety and replaced with the following:

“(c)    Guarantor shall not permit the ratio of its Total Indebtedness to Total Assets at any time to be greater than 0.80 to 1.00;

(d)      Guarantor shall not permit the ratio of Guarantor’s EBITDA for any fiscal quarter to Guarantor’s Interest Expense for such fiscal quarter to be less than 1.40 to 1.00;”.

ARTICLE II.

REPRESENTATIONS

Guarantor represents and warrants to Buyer, as of the date of this Amendment, as follows:

(i)       all representations and warranties made by it in Section 8 of the Existing Guarantee are true and correct in all material respects;

(ii)      it is duly authorized to execute and deliver this Amendment and has taken all necessary action to authorize such execution, delivery and performance;

(iii)     the person signing this Amendment on its behalf is duly authorized to do so on its behalf;

(iv)     the execution, delivery and performance of this Amendment will not violate any Requirement of Law applicable to it or its organizational documents or any agreement by which it is bound or by which any of its assets are affected; and

(v)      this Amendment has been duly executed and delivered by it.

ARTICLE III.

FEES AND EXPENSES

Guarantor shall promptly pay all of Buyer’s reasonable out-of-pocket costs and expenses, including reasonable attorney’s fees and expenses incurred in connection with the preparation, negotiation, execution and delivery of this Amendment.

ARTICLE IV.

GOVERNING LAW

THIS AMENDMENT (AND ANY CLAIM OR CONTROVERSY HEREUNDER) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES  HEREUNDER  SHALL  BE  DETERMINED  IN  ACCORDANCE  WITH  SUCH

2

LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

ARTICLE V.

MISCELLANEOUS

(a)        Except as expressly amended or modified hereby, the Guarantee and the other Transaction Documents shall each be and shall remain in full force and effect in accordance with their terms.

(b)        This Amendment may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures (such as PDF files) shall constitute original signatures and are binding on all parties.

(c)        The headings in this Amendment are for convenience of reference only and shall not affect the interpretation or construction of this Amendment.

(d)        This Amendment may not be amended or otherwise modified, waived or supplemented except as provided in the Guarantee.

(e)        This Amendment contains a final and complete integration of all prior expressions by the parties with respect to the subject matter hereof and shall constitute the entire agreement among the parties with respect to such subject matter, superseding all prior oral or written understandings.

[SIGNATURES FOLLOW]

3

INWITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered as of the date first above written.

GUARANTOR:
STARWOOD PROPERTY TRUST INC.,  a  Maryland corporation
By:	/s/ Andrew J Sossen
	Name:	Andrew J Sossen
	Title:	Authorized Signatory
BUYER:
JPMORGAN CHASE BANK, A NATIONAL  ASSOCIATION, a national banking  association
By:	/s/ Thomas N. Cassino
	Name:	Thomas N. Cassino
	Title:	Executive Director

Signature Page to Second Amendment to Guarantee Agreement

EX-21.1

Exhibit 21.1

Subsidiaries of the Registrant

As of December 31, 2019

Subsidiary	Jurisdiction Name
10301 Jacksonville Office, LLC	Delaware
16th Street Partners, LLC	Florida
200 Lincoln Retail, LLC	Delaware
2425 North Bergen Self Storage, LLC	Delaware
300 Interpace Parkway Holdings, LLC	Delaware
3755 Dublin Retail, LLC	Delaware
4021 Durham Office, LLC	Delaware
4900 Long Beach Office, LLC	Delaware
4900 Long Beach Intermediate, LLC	Delaware
5025 Plano Office, LLC	Delaware
5060 Loxahatchee Retail, LLC	Delaware
5175 Depew Retail Outparcel, LLC	Delaware
5175 Depew Retail, LLC	Delaware
6200 Raleigh Apartments, LLC	Delaware
629 Sierra Vista Retail, LLC	Delaware
6711 Glen Burnie Retail, LLC	Delaware
701 Seventh Intermediate LLC	Delaware
7047 Scottsdale Office, LLC	Delaware
7300 Bryan Dairy Industrial, LLC	Delaware
787 Gresham Apartments, LLC	Delaware
823 Dayton Hotel Intermediate, LLC	Delaware
823 Dayton Hotel Owner, LLC	Delaware
823 Dayton Hotel Tenant, LLC	Delaware
900 Atlanta Office, LLC	Delaware
Archetype Holdings LLC	Delaware
Archetype Investment Management LLC	Delaware
Bert L. Smokler, LLC	Delaware
Cypresswood Retail Partners, LLC	Delaware
DCA Homes, LLC	Florida
DCA Management, LLC	Florida
Diesel Ltd.	Bermuda
Diesel Mortgage Investments, LLC	Delaware
DSHI Opco LLC	Delaware
Dunns Mill Road Retail, LLC	Delaware
Island C-III Holdings, LLC	Delaware
Island C-III Holding IIs, LLC	Delaware
LEI Euro Holdings Sarl	Luxembourg
Leisure Colony Management LLC	Florida
Leisure Communities Management, LLC	Florida
LNR AFIS Asset Services LLC	Delaware
LNR AFIS Holding I LLC	Delaware
LNR AFIS Holding II LLC	Delaware
LNR AFIS Holding III LLC	Delaware
LNR AFIS Holdings LLC	Delaware
LNR AFIS Investments LLC	Delaware
LNR Alabama Partners, LLC	Delaware

1

Subsidiary	Jurisdiction Name
LNR California Partners, LLC	California
LNR Capital Services, LLC	Florida
LNR CCR, LLC	Delaware
LNR CDO 2002-1 Ltd.	Cayman Islands
LNR CDO 2002-1, LLC	Delaware
LNR CDO 2003-1 Ltd.	Cayman Islands
LNR CDO 2003-1, LLC	Delaware
LNR CDO Depositor, LLC	Delaware
LNR CDO III Ltd.	Cayman Islands
LNR CDO III, LLC	Delaware
LNR CDO IV Ltd.	Cayman Islands
LNR CDO IV, LLC	Delaware
LNR CDO V LLC	Delaware
LNR CDO V Ltd.	Cayman Islands
LNR Dakota Partners, LLC	North Dakota
LNR DSHI Legacy, LLC	Florida
LNR Illinois Partners, LLC	Illinois
LNR Madison Square, LLC	Delaware
LNR Massachusetts Partners, LLC	Massachusetts
LNR New Jersey Partners, LLC	New Jersey
LNR Partners California Manager, LLC	California
LNR Partners Europa Associates Management, LLC	Florida
LNR Partners Parent, LLC	Delaware
LNR Partners, LLC	Florida
LNR Property LLC	Delaware
LNR Property Payroll LLC	Florida
LNR REFSG Holdings, LLC	Florida
LNR REFSG Investments, LLC	Delaware
LNR Retail Corners Manager, LLC	Delaware
LNR Securities CDO Legacy, LLC	Delaware
LNR Securities Equity, LLC	Delaware
LNR Securities Holdings II, LLC	Delaware
LNR Securities Holdings III, LLC	Delaware
LNR Securities Holdings IV, LLC	Delaware
LNR Securities Holdings, LLC	Delaware
LNR Securities Preferred, LLC	Delaware
LNR Securities Reliance VI, LLC	Delaware
LNR Securities Reliance, LLC	Delaware
LNR Texas Partners, LLC	Texas
LNR Utah Partners, LLC	Utah
Madison Square 2004-1 Corp.	Delaware
Madison Square 2004-1 Ltd.	Cayman Islands
Madison Square Company LLC	Delaware
Madison Square Mortgage Securities, LLC	Delaware
MRF Trust i	Delaware
MRF Sub 1, LLC	Delaware
MSCI 2007-IQ16 Granville Retail, LLC	Ohio
North Troy Timberland Office II, LLC	Delaware
North Troy Timberland Office III, LLC	Delaware
North Troy Timberland Office IV, LLC	Delaware

2

Subsidiary	Jurisdiction Name
Prospect Mortgage Insurance, LLC	Vermont
SGH Holdco LLC	Delaware
SMRF Depositor, LLC	Delaware
SMRF TRS, LLC	Delaware
SMRF Trust Holdings II, LLC	Delaware
SMRF Trust Holdings II-A, LLC	Delaware
SMRF Trust I	Delaware
SMRF Trust I-A	Delaware
SMRF Trust II	Delaware
SMRF Trust II-A	Delaware
SMRF Trust III	Delaware
SMRF Trust III-A	Delaware
SPT 1166 Holdings, LLC	Delaware
SPT 701 Lender, L.L.C.	Delaware
SPT Acquisitions Holdco, LLC	Delaware
SPT Acquisitions Sub-1, LLC	Delaware
SPT Acquisitions Sub-1-A, LLC	Delaware
SPT Atlanta Partner, LLC	Delaware
SPT Bordentown Partner, LLC	Delaware
SPT CA Fundings 2, LLC	Delaware
SPT CA Fundings, LLC	Delaware
SPT Cedar Parent, LLC	Delaware
SPT CLO Sub-REIT, LLC	Delaware
SPT CLO Sub-REIT SH, LLC	Delaware
SPT CRE Property Holdings 2015, LLC	Delaware
SPT Dolphin Avalon Reserve, LLC	Delaware
SPT Dolphin Buena Vista I, LLC	Delaware
SPT Dolphin Buena Vista II, LLC	Delaware
SPT Dolphin Camelia Pointe, LLC	Delaware
SPT Dolphin Congress Park, LLC	Delaware
SPT Dolphin Cyprus Point, LLC	Delaware
SPT Dolphin Glen Oaks, LLC	Delaware
SPT Dolphin Hickory Pointe, LLC	Delaware
SPT Dolphin Hidden Creek, LLC	Delaware
SPT Dolphin Holdings, LLC	Delaware
SPT Dolphin Holdings Parent, LLC	Delaware
SPT Dolphin Homestead Colony, LLC	Delaware
SPT Dolphin ICB LLC	Delaware
SPT Dolphin Intermediate, LLC	Delaware
SPT Dolphin Madison Chase, LLC	Delaware
SPT Dolphin Madison Commons, LLC	Delaware
SPT Dolphin Magnolia Pointe, LLC	Delaware
SPT Dolphin Mariners Cove, LLC	Delaware
SPT Dolphin Metro Place I, LLC	Delaware
SPT Dolphin Metro Place II, LLC	Delaware
SPT Dolphin Osprey Ridge LLC	Delaware
SPT Dolphin Palmetto Trace LLC	Delaware
SPT Dolphin Parent, LLC	Delaware
SPT Dolphin Park Avenue, LLC	Delaware
SPT Dolphin Pointe Vista I, LLC	Delaware

3

Subsidiary	Jurisdiction Name
SPT Dolphin Pointe Vista II, LLC	Delaware
SPT Dolphin Providence Reserve, LLC	Delaware
SPT Dolphin Sand Lake, LLC	Delaware
SPT Dolphin Spring Harbor, LLC	Delaware
SPT Dolphin Waterford Pointe, LLC	Delaware
SPT Dolphin West Pointe, LLC	Delaware
SPT Dolphin Whistlers Cove, LLC	Delaware
SPT FDS Troy JV, LLC	Delaware
SPT Friedman Sierra Vista JV, LLC	Delaware
SPT GBIV Holdings, LLC	Delaware
SPT Glen Burnie Partner, LLC	Delaware
SPT Goodman Bordentown JV, LLC	Delaware
SPT Goodman Glen Burnie JV, LLC	Delaware
SPTIF Parent, LLC	Delaware
SPTIF Sub-5 (DT) Holdings, LLC	Delaware
SPTIF Sub-5 (OT) Holdings, Ltd.	Cayman Islands
SPTIF Sub-5 Holdings, LLC	Delaware
SPTIF Sub-6 (DT) Holdings, LLC	Delaware
SPTIF Sub-6 (OT) Holdings, Ltd.	Cayman Islands
SPTIF Sub-6 Holdings, LLC	Delaware
SPT IMC Partner, LLC	Delaware
SPT Infrastructure Finance Domestic TRS, LLC	Delaware
SPT Infrastructure Finance Holdings, LLC	Delaware
SPT Infrastructure Finance Offshore TRS, Ltd.	Cayman Islands
SPT Infrastructure Finance Sub-1, LLC	Delaware
SPT Infrastructure Finance Sub-2, Ltd.	Cayman Islands
SPT Infrastructure Finance Sub-3, LLC	Delaware
SPT Infrastructure Finance Sub-4 (DT), LLC	Delaware
SPT Infrastructure Finance Sub-4 (OT), Ltd.	Cayman Islands
SPT Infrastructure Finance Sub-4, LLC	Delaware
SPT Infrastructure Finance, LLC	Delaware
SPT Infrastructure Finance Servicer, LLC	Delaware
SPT Infrastructure Finance Sub-5, LLC	Delaware
SPT Infrastructure Finance Sub-5 (DT), LLC	Delaware
SPT Infrastructure Finance Sub-5 (OT), Ltd.	Cayman Islands
SPT Infrastructure Finance Sub-6, LLC	Delaware
SPT Infrastructure Finance Sub-6 (DT), LLC	Delaware
SPT Infrastructure Finance Sub-6 (OT), Ltd.	Cayman Islands
SPT Insurance Holdings, LLC	Delaware
SPT Ivey 1 Rykowski MOB LLC	Delaware
SPT Ivey 109 Rykowski MOB LLC	Delaware
SPT Ivey 155 Crystal Run MOB LLC	Delaware
SPT Ivey 300 Crystal Run MOB LLC	Delaware
SPT Ivey 61 Emerald MOB LLC	Delaware
SPT Ivey 8220 Naab Rd MOB LLC	Delaware
SPT Ivey 8260 Naab Rd MOB LLC	Delaware
SPT Ivey 95 Crystal Run MOB LLC	Delaware
SPT Ivey Abilene MOB LLC	Delaware
SPT Ivey Amarillo MOB LLC	Delaware
SPT Ivey Boynton MOB LLC	Delaware

4

Subsidiary	Jurisdiction Name
SPT Ivey Brentwood CA MOB LLC	Delaware
SPT Ivey Brownsburg MOB LLC	Delaware
SPT Ivey Dowell Springs MOB LLC	Delaware
SPT Ivey Eagle Carson City MOB LLC	Delaware
SPT Ivey El Paso MOB LLC	Delaware
SPT Ivey Frisco MOB LLC	Delaware
SPT Ivey Greeley Cottonwood MOB LLC	Delaware
SPT Ivey Greeley MOB LLC	Delaware
SPT Ivey Hendersonville MOB LLC	Delaware
SPT Ivey Holdings 2, LLC	Delaware
SPT Ivey Holdings Parent, LLC	Delaware
SPT Ivey Holdings, LLC	Delaware
SPT Ivey Intermediate LLC	Delaware
SPT Ivey Jersey City MOB LLC	Delaware
SPT Ivey Johns Creek GA MOB LLC	Delaware
SPT Ivey Parent LLC	Delaware
SPT Ivey Rockwall MOB II LLC	Delaware
SPT Ivey Rockwall MOB LLC	Delaware
SPT Ivey Santa Rosa MOB LLC	Delaware
SPT Ivey Shenandoah TX MOB LLC	Delaware
SPT Ivey St. Francis Lafayette MOB I LLC	Delaware
SPT Ivey St. Francis Lafayette MOB II LLC	Delaware
SPT Ivey St. Petersburg MOB LLC	Delaware
SPT Ivey Sub-Manager, LLC	Delaware
SPT Ivey Sylva MOB LLC	Delaware
SPT Ivey Tempe MOB LLC	Delaware
SPT Ivey Tempe MOB Intermediate LLC	Delaware
SPT Ivey Treeline San Antonio MOB LLC	Delaware
SPT Ivey Urbana MOB LLC	Delaware
SPT Jacksonville Partner, LLC	Delaware
SPT LNR CDO Cayman Ltd.	Cayman Islands
SPT LNR HP UK Ltd	United Kingdom
SPT LNR LEI UK Ltd	United Kingdom
SPT LNR Property Sub, LLC	Delaware
SPT LNR Property TRS, LLC	Delaware
SPT LNR Property, LLC	Delaware
SPT LNR Securities Holdings Parent, LLC	Delaware
SPT Operations 2, LLC	Delaware
SPT Parmenter Atlanta JV, LLC	Delaware
SPT Parmenter Jacksonville JV, LLC	Delaware
SPT Prairie 1 CB Drive, LLC	Delaware
SPT Prairie 100 Distribution Road, LLC	Delaware
SPT Prairie 1000 CB Drive, LLC	Delaware
SPT Prairie 10501 Palm River Road, LLC	Delaware
SPT Prairie 10670 CB Drive, LLC	Delaware
SPT Prairie 110 CB Blvd. East, LLC	Delaware
SPT Prairie 17907 IH-10 West, LLC	Delaware
SPT Prairie 200 BP Drive, LLC	Delaware
SPT Prairie 2000 West CB Way, LLC	Delaware
SPT Prairie 20200 Rogers Drive, LLC	Delaware

5

Subsidiary	Jurisdiction Name
SPT Prairie 210 Demers Avenue, LLC	Delaware
SPT Prairie 2250 Gatlin Blvd., LLC	Delaware
SPT Prairie 2427 N. Greenwich Road, LLC	Delaware
SPT Prairie 2502 W. CB Drive, LLC	Delaware
SPT Prairie 2700 Market Place Drive, LLC	Delaware
SPT Prairie 33901 State Highway 35, LLC	Delaware
SPT Prairie 3900 CB Drive, LLC	Delaware
SPT Prairie 391 North CB Drive, LLC	Delaware
SPT Prairie 5500 Cornerstone North Blvd., LLC	Delaware
SPT Prairie 7090 CB Drive NW, LLC	Delaware
SPT Prairie 7700 CB Drive, LLC	Delaware
SPT Prairie Holdings II, LLC	Delaware
SPT Prairie Holdings III, LLC	Delaware
SPT Prairie Holdings Parent, LLC	Delaware
SPT Prairie Holdings, LLC	Delaware
SPT Prairie Springing Member LLC	Delaware
SPT Raleigh Partner TRS, LLC	Delaware
SPT Raleigh Partner, LLC	Delaware
SPT Real Estate AU, LLC	Delaware
SPT Real Estate BM, LLC	Delaware
SPT Real Estate Capital, LLC	Delaware
SPT Real Estate Sub III, LLC	Delaware
SPT Red1 Ltd.	Cayman Islands
SPT Securities Holdings, LLC	Delaware
SPT Sierra Vista Partner, LLC	Delaware
SPT Special Member, Inc.	Delaware
SPT TCO Acquisition, LLC	Delaware
SPT Ten-X Holdings, LLC	Delaware
SPT TLA BB Holdings TRS, LLC	Delaware
SPT TLA BB Holdings, LLC	Delaware
SPT TLA Parent, LLC	Delaware
SPT TLB BB Holdings TRS Parent, LLC	Delaware
SPT TLB BB Holdings TRS, LLC	Delaware
SPT TLB BB Holdings, LLC	Delaware
SPT TLB BB Intermediate, LLC	Delaware
SPT TLB BB PE Holdings, LLC	Delaware
SPT Troy Partner, LLC	Delaware
SPT WAH Holdings LLC	Delaware
SPT WAH Walden Park LLC	Delaware
SPT WAH Waterford LLC	Delaware
SPT WAH Waverly LLC	Delaware
SPT WAH Wedgewood LLC	Delaware
SPT WAH Wellesley LLC	Delaware
SPT WAH Wellington LLC	Delaware
SPT WAH Wentworth I LLC	Delaware
SPT WAH Wentworth II LLC	Delaware
SPT WAH Westbrook LLC	Delaware
SPT WAH Westchase LLC	Delaware
SPT WAH Westchester LLC	Delaware
SPT WAH Westminster LLC	Delaware

6

Subsidiary	Jurisdiction Name
SPT WAH Weston Oaks LLC	Delaware
SPT WAH Westwood LLC	Delaware
SPT WAH Wexford LLC	Delaware
SPT WAH Whispering Pines LLC	Delaware
SPT WAH Whispering Woods LLC	Delaware
SPT WAH Willow Lake LLC	Delaware
SPT WAH Wilmington LLC	Delaware
SPT WAH Windchase LLC	Delaware
SPT WAH Windermere I LLC	Delaware
SPT WAH Windermere II LLC	Delaware
SPT WAH Windsong I LLC	Delaware
SPT WAH Windsong II LLC	Delaware
SPT WAH Windsor Park LLC	Delaware
SPT WAH Woodbridge LLC	Delaware
SPT WAH Woodcrest LLC	Delaware
SPT WAH Woodhill LLC	Delaware
SPT WAH Woodridge LLC	Delaware
SPT WAH Worthington LLC	Delaware
SPT WAH Wyndham Place LLC	Delaware
SPT WAH Wyngate LLC	Delaware
SPT WD Holdings, LLC	Delaware
SPT Wilkinson Raleigh JV, LLC	Delaware
SPT-IX 701 Lender GP, L.L.C.	Delaware
SPT-IX 701 Lender, L.P.	Delaware
Starwood CMBS Fund GP, LLC	Delaware
Starwood CMBS Horizontal Retention BBCMS 2018-C2 LLC	Delaware
Starwood CMBS Horizontal Retention CF 2019-CF-1 LLC	Delaware
Starwood CMBS Horizontal Retention CF 2019-CF-2 LLC	Delaware
Starwood CMBS Horizontal Retention CF 2019-C7 LLC	Delaware
Starwood Commercial Mortgage Depositor, LLC	Delaware
Starwood Conduit CMBS Vertical Retention I LLC	Delaware
Starwood Mortgage Capital LLC	Delaware
Starwood Mortgage Funding I LLC	Delaware
Starwood Mortgage Funding II LLC	Delaware
Starwood Mortgage Funding III LLC	Delaware
Starwood Mortgage Funding IV LLC	Delaware
Starwood Mortgage Funding V LLC	Delaware
Starwood Mortgage Funding VI LLC	Delaware
Starwood Mortgage WD, L.L.C	Delaware
Starwood Non-Agency Lending, LLC	Delaware
Starwood Non-Agency Securities Holdings, LLC	Delaware
Starwood Property Mortgage BC, L.L.C.	Delaware
Starwood Property Mortgage Depositor, LLC	Delaware
Starwood Property Mortgage Sub-10 HoldCo, L.L.C.	Delaware
Starwood Property Mortgage Sub-10, L.L.C.	Delaware
Starwood Property Mortgage Sub-10-A Holdco, L.L.C.	Delaware
Starwood Property Mortgage Sub-10-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-11, L.L.C.	Delaware
Starwood Property Mortgage Sub-12, L.L.C.	Delaware
Starwood Property Mortgage Sub-12-A, L.L.C.	Delaware

7

Subsidiary	Jurisdiction Name
Starwood Property Mortgage Sub-14, L.L.C.	Delaware
Starwood Property Mortgage Sub-14-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-15, L.L.C.	Delaware
Starwood Property Mortgage Sub-15-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-16, L.L.C.	Delaware
Starwood Property Mortgage Sub-16-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-17, L.L.C	Delaware
Starwood Property Mortgage Sub-18 Holdings, L.L.C.	Delaware
Starwood Property Mortgage Sub-18, L.L.C	Delaware
Starwood Property Mortgage Sub-18-A Holdings, L.L.C	Delaware
Starwood Property Mortgage Sub-18-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-19 Holdings, L.L.C.	Delaware
Starwood Property Mortgage Sub-19, L.L.C	Delaware
Starwood Property Mortgage Sub-19-A Holdings, L.L.C.	Delaware
Starwood Property Mortgage Sub-19-A, L.L.C	Delaware
Starwood Property Mortgage Sub-2, L.L.C.	Delaware
Starwood Property Mortgage Sub-20, L.L.C	Delaware
Starwood Property Mortgage Sub-20-A, L.L.C	Delaware
Starwood Property Mortgage Sub-21, L.L.C	Delaware
Starwood Property Mortgage Sub-21-A, L.L.C	Delaware
Starwood Property Mortgage Sub-2-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-22, L.L.C	Delaware
Starwood Property Mortgage Sub-22-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-23, L.L.C	Delaware
Starwood Property Mortgage Sub-23-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-24, L.L.C.	Delaware
Starwood Property Mortgage Sub-24-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-25, L.L.C.	Delaware
Starwood Property Mortgage Sub-25-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-26, L.L.C	Delaware
Starwood Property Mortgage Sub-27, L.L.C.	Delaware
Starwood Property Mortgage Sub-27-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-3, L.L.C.	Delaware
Starwood Property Mortgage Sub-4, L.L.C.	Delaware
Starwood Property Mortgage Sub-5, L.L.C.	Delaware
Starwood Property Mortgage Sub-5-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-6(P), L.L.C.	Delaware
Starwood Property Mortgage Sub-6, L.L.C.	Delaware
Starwood Property Mortgage Sub-6-A Holdings, L.L.C.	Delaware
Starwood Property Mortgage Sub-6-A(P), L.L.C.	Delaware
Starwood Property Mortgage Sub-6-A, L.L.C.	Delaware
Starwood Property Mortgage Sub-9, L.L.C.	Delaware
Starwood Property Mortgage Sub-9-A, L.L.C.	Delaware
Starwood Property Mortgage, L.L.C.	Delaware
Starwood Residential Finance, LLC	Delaware
Starwood WD Montgomery Holdings, LLC	Delaware
STWD CLO Seller, LLC	Delaware
STWD CLO Retention Holder, LLC	Delaware
STWD CMBS Venture Holdings LLC	Delaware
STWD Co-Investment 2015, L.P.	Delaware

8

Subsidiary	Jurisdiction Name
STWD Co-Investment Fund GP, LLC	Delaware
STWD 2019-FL 1, Ltd.	Cayman Islands
STWD 2019-FL 1, LLC	Delaware
STWD Investment Management, LLC	Delaware
STWD JV Holdings, LLC	Delaware
STWD CMBS Liquid Holdings LLC	Delaware
STWD CMBS RR Holdings LLC	Delaware
SW-YB 1166 LLC	Delaware
WD Mobile Highway AL Property, LLC	Delaware
WD Coast Line Drive FL Property, LLC	Delaware

9

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements of our reports dated February 25, 2020, relating to the consolidated financial statements and financial statement schedules of Starwood Property Trust, Inc. and subsidiaries (the “Company”), and the effectiveness of the Company’s internal control over financial reporting, appearing in the Annual Report on Form 10‑K of Starwood Property Trust, Inc. for the year ended December 31, 2019:

1. Registration Statement No. 333‑161402 on Form S‑8 pertaining to the Starwood Property Trust, Inc. Non‑Executive Director Stock Plan; and

2. Registration Statement No. 333-202536 on Form S-8 pertaining to the Starwood Property Trust, Inc. Equity Plan; and

3. Registration Statement No. 333-218828 on Form S-8 pertaining to the Starwood Property Trust, Inc. 2017 Equity Plan; and

4. Registration Statement No. 333‑231469 on Form S‑3 of Starwood Property Trust, Inc. pertaining to an automatic shelf registration statement of securities of well‑known seasoned issuers.

/s/ DELOITTE & TOUCHE LLP

Miami, Florida

February 25, 2020

EX-31.1

Exhibit 31.1

Certification Pursuant to

Section 302 of the Sarbanes‑Oxley Act of 2002

I, Barry S. Sternlicht, certify that:

1. I have reviewed this Annual Report on Form 10‑K of Starwood Property Trust, Inc. for the period ended December 31, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 25, 2020	/s/ Barry S. Sternlicht
	Barry S. Sternlicht
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to

Section 302 of the Sarbanes‑Oxley Act of 2002

I, Rina Paniry, certify that:

1. I have reviewed this Annual Report on Form 10‑K of Starwood Property Trust, Inc. for the period ended December 31, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 25, 2020	/s/ RINA PANIRY
	Rina Paniry
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes‑Oxley Act of 2002

In connection with Starwood Property Trust, Inc.’s (the “Company”) Annual Report on Form 10‑K for the period ended December 31, 2019 (the “Report”), I, Barry S. Sternlicht, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes‑Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 25, 2020	/s/ BARRY S. STERNLICHT
	Barry S. Sternlicht
	Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes‑Oxley Act of 2002

In connection with Starwood Property Trust, Inc.’s (the “Company”) Annual Report on Form 10‑K for the period ended December 31, 2019 (the “Report”), I, Rina Paniry, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes‑Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 25, 2020	/s/ RINA PANIRY
	Rina Paniry
	Chief Financial Officer

XML

Acquisitions and Divestitures (Details) $ / shares in Units, € in Millions, ft² in Millions						1 Months Ended		3 Months Ended								12 Months Ended					13 Months Ended
	Dec. 23, 2019 EUR (€)	Dec. 23, 2019 USD ($)	Oct. 15, 2018 USD ($) item	Sep. 19, 2018 USD ($)	Sep. 25, 2017 USD ($) ft² property	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) property	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) ft² property item shares	Dec. 31, 2018 USD ($) property $ / shares shares	Dec. 31, 2017 USD ($) property $ / shares shares	Dec. 31, 2016 USD ($) ft² item property	Dec. 31, 2015 USD ($) item property	Dec. 31, 2018 USD ($) property	Dec. 23, 2019 USD ($)
Acquisitions and Divestitures
Payments to Acquire Businesses, Net of Cash Acquired	€ 507.6																	$ 17,639,000
Number of properties acquired by a third party which already held a non-controlling interest in the property | property																	1
Non-controlling interest																	$ 300,000
Principal Amount								$ 1,950,000,000				$ 2,027,969,000				$ 1,950,000,000	$ 2,027,969,000				$ 2,027,969,000
Number of properties sold | property																	16	6
Gain on sale of property																59,700,000	$ 55,100,000	$ 19,900,000
Liabilities assumed:
Revenues								286,428,000	$ 288,330,000	$ 311,181,000	$ 310,480,000	293,418,000	$ 285,719,000	$ 269,556,000	$ 260,587,000	1,196,419,000	1,109,280,000	879,888,000
Net income (loss)								177,980,000	$ 150,001,000	$ 132,446,000	$ 76,508,000	99,932,000	$ 89,381,000	$ 117,090,000	$ 104,794,000	536,935,000	411,197,000	412,767,000
(Loss) gain on derivative financial instruments, net																(6,310,000)	34,603,000	(72,532,000)
Goodwill								$ 259,846,000				259,846,000				$ 259,846,000	259,846,000				259,846,000
Pro forma revenue and net income
Revenues																	1,182,892,000	966,636,000
Net income attributable to STWD																	$ 392,505,000	$ 395,150,000
Net income per share - Basic | $ / shares																	$ 1.47	$ 1.51
Net income per share - Diluted | $ / shares																	$ 1.44	$ 1.50
Ireland Portfolio
Acquisitions and Divestitures
Accumulated depreciation | €	67.5
Basis in assets | €	394.7
Gain (Loss) on Disposition of Assets	108.0	$ 119,700,000
Withhold Tax Reduction Of Purchase Price | €	20.7
Aggregate gross acquisition price | €	530.0
Infrastructure Lending Segment of GE Capital
Acquisitions and Divestitures
Purchase price			$ 147,100,000	$ 2,000,000,000.0													$ 2,158,553,000
Funded commitments			$ 2,100,000,000
Number of additional loans acquired | item			2
Unfunded commitments			$ 466,300,000
Percentage of floating rate				97.00%
Principal Amount			$ 1,700,000,000
Assets acquired:
Loans held-for-investment												1,649,630,000					1,649,630,000				1,649,630,000
Loans held-for-sale												319,710,000					319,710,000				319,710,000
Investment securities												65,060,000					65,060,000				65,060,000
Accrued interest receivable												13,843,000					13,843,000				13,843,000
Total assets acquired												2,048,243,000					2,048,243,000				2,048,243,000
Liabilities assumed:
Accounts payable, accrued expenses and other liabilities												8,817,000					8,817,000				8,817,000
Derivative liabilities												282,000					282,000				282,000
Total liabilities assumed												9,099,000					9,099,000				9,099,000
Net assets acquired												2,039,144,000					2,039,144,000				2,039,144,000
Goodwill				$ 119,400,000								119,409,000					$ 119,409,000				119,409,000
Infrastructure Lending Segment of GE Capital | MEXICO
Acquisitions and Divestitures
Percentage of floating rate				12.00%
Infrastructure Lending Segment of GE Capital | UNITED KINGDOM
Acquisitions and Divestitures
Percentage of floating rate								5.00%								5.00%
Infrastructure Lending Segment of GE Capital | US
Acquisitions and Divestitures
Percentage of floating rate				74.00%
Master Lease Mortgages
Acquisitions and Divestitures
Number of retail properties acquired | property					20											16
Number of industrial properties acquired | property					3
Purchase price					$ 553,300,000
Acquisition-related costs					$ 3,700,000
Term of master lease agreements					24 years 7 months 6 days			24 years 7 months 6 days								24 years 7 months 6 days
Number of square feet of properties | ft²					5.3											1.9
Maximum borrowing capacity					$ 265,900,000
Liabilities assumed:
Total liabilities assumed								$ 192,400,000								$ 192,400,000
Master Lease Mortgages | Utah, Florida, Texas and Minnesota
Acquisitions and Divestitures
Concentration risk (as a percent)					50.00%											50.00%
Master Lease Mortgages | Disposed of by sale
Acquisitions and Divestitures
Number of industrial properties acquired | property																	3
Number of properties sold | property																	4
Proceeds from sale of property																	$ 235,400,000
Gain on sale of property																	$ 28,500,000
Medical Office Portfolio
Acquisitions and Divestitures
Area of property | ft²																			1.9
Number of acquired properties closed | item																			34
Liabilities assumed:
Total liabilities assumed								590,900,000								$ 590,900,000
Woodstar Portfolio
Acquisitions and Divestitures
Number of properties in portfolio investment | property																32
Number of acquired properties closed | item																			14	18
Number of units acquired | item																8,948
Liabilities assumed:
Total liabilities assumed								$ 478,200,000								$ 478,200,000
Ireland Portfolio
Acquisitions and Divestitures
Fair Value Hedge Assets																						$ 16,600,000
Number of properties sold | property																4	0	1
Proceeds from sale of property																		$ 3,900,000
Ireland Portfolio | Ireland Portfolio
Acquisitions and Divestitures
Third party debt | €	€ 316.3
REIS Equity Portfolio
Acquisitions and Divestitures
Non-controlling interest						$ 300,000
Assets acquired:
Properties							$ 38,770,000											38,770,000
Intangible assets							11,955,000											11,955,000
Other assets							85,000											85,000
Total assets acquired							50,810,000											50,810,000
Liabilities assumed:
Accounts payable, accrued expenses and other liabilities							1,516,000											1,516,000
Total liabilities assumed							1,516,000											1,516,000
Net assets acquired							49,294,000											49,294,000
Woodstar II Portfolio
Acquisitions and Divestitures
Purchase price							156,200,000										$ 408,900,000
Contingent consideration							$ 10,800,000					29,200,000					$ 29,200,000	10,800,000			29,200,000
Maturity period							10 years										10 years
Amount issued							$ 116,700,000											$ 116,700,000
Interest rate (as a percent)							3.81%	3.82%								3.82%		3.81%
Number of properties acquired | property																	19
Percentage of occupied portfolio																	100.00%
Capitalized acquisition costs												4,100,000					$ 4,100,000				4,100,000
Principal Amount												300,900,000					$ 300,900,000				300,900,000
Number of properties in portfolio investment | property							8									27	27
Initial aggregate purchase price												438,100,000					$ 438,100,000				$ 438,100,000
Number of units acquired | property							1,740										4,369				6,109
Liabilities assumed:
Total liabilities assumed								$ 436,900,000								$ 436,900,000
Woodstar II Portfolio | Class A Units
Acquisitions and Divestitures
Shares issued | shares																100,000	1,700,000
Right to receive additional shares | shares																1,900,000
Woodstar II Portfolio | SPT Dolphin
Acquisitions and Divestitures
Aggregate gross acquisition price																	$ 225,800,000	$ 310,700,000
Woodstar II Portfolio | SPT Dolphin | Class A Units
Acquisitions and Divestitures
Shares issued | shares																10,200,000	7,403,731	10,183,505
Number of Shares Issued for contingent consideration | shares																120,926	1,727,314
Right to receive additional shares | shares																1,910,563	1,411,642	1,910,563
Redemption of units | shares																974,176	0
Number of common stock per unit																1	1
Woodstar II Portfolio | Additional Mortgage Facilities Acquired
Acquisitions and Divestitures
Amount issued												$ 27,000,000.0					$ 27,000,000.0				$ 27,000,000.0
Interest rate (as a percent)												3.06%					3.06%				3.06%
Woodstar II Portfolio | Additional Mortgage Facilities Acquired | Weighted-average
Acquisitions and Divestitures
Maturity period																27 years 6 months
Master Lease Portfolio, REO Portfolio, Medical Office Portfolio and Woodstar Portfolio | Disposed of by sale
Acquisitions and Divestitures
Number of properties sold | property																0		0
Non-Controlling Interests
Acquisitions and Divestitures
Gain on sale of property																$ 5,300,000	$ 5,100,000	$ 3,300,000
Liabilities assumed:
Net income (loss)																$ 27,271,000	$ 25,367,000	$ 11,997,000
Non-Controlling Interests | Woodstar II Portfolio | SPT Dolphin | Class A Units
Acquisitions and Divestitures
Redemption of units | shares																235,900,000	254,900,000
Investing and Servicing Segment
Acquisitions and Divestitures
Payment to acquire investment property																$ 8,600,000	$ 52,700,000
Number of retail properties acquired | property																		3
Number of industrial properties acquired | property																	3
Purchase price																	$ 227,300,000	$ 227,300,000	$ 227,300,000	$ 227,300,000
Number of properties acquired by a third party which already held a non-controlling interest in the property | property																	1
Non-controlling interest																	$ 300,000
Number of real estate businesses acquired | property																	15	15	15	15
Number of properties in portfolio investment | property																16
Aggregate gross acquisition price																$ 8,800,000	$ 53,100,000	$ 48,700,000
Number of properties sold | property																4	9	5
Proceeds from sale of property																$ 145,900,000	$ 77,900,000	$ 52,400,000
Gain on sale of property																59,700,000	26,600,000	19,800,000
Liabilities assumed:
Total liabilities assumed								187,900,000								187,900,000
Goodwill								$ 140,400,000				$ 140,400,000				140,400,000	140,400,000				$ 140,400,000
Investing and Servicing Segment | Non-Controlling Interests
Acquisitions and Divestitures
Gain on sale of property																$ 5,300,000	$ 5,100,000	$ 3,300,000

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Stockholders' Equity and Non-Controlling Interests - Equity Incentive Plans (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended															12 Months Ended
	Jan. 15, 2014	Nov. 30, 2019	Sep. 30, 2019	Mar. 31, 2019	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018	Apr. 30, 2018	Mar. 31, 2018	Nov. 30, 2017	Aug. 31, 2017	May 31, 2017	Mar. 31, 2017	Feb. 28, 2017	May 31, 2015	Jan. 31, 2014	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Equity Incentive Plans
Share-based compensation expense, before tax																	$ 46,237	$ 43,458	$ 39,223
Granted (in shares)																	1,720,236
Vested immediately on the grant date
Equity Incentive Plans
Granted (in shares)																	218,898
Remaining vesting
Equity Incentive Plans
Award vesting period																	3 years
Starwood Property Trust, Inc. Equity Plan and Manager Equity Plan
Equity Incentive Plans
Number of shares of authorized for issuance												11,000,000
Number of shares available for future grants																	7,498,820
Starwood Property Trust, Inc. Equity Plan and Manager Equity Plan | Restricted stock units
Equity Incentive Plans
Granted (in shares)	2,000,000		1,200,000					775,000					1,000,000		675,000	489,281
Awards granted, fair value	$ 55,420		$ 29,484					$ 16,329					$ 22,240		$ 16,511	$ 14,776
Award vesting period	3 years							3 years					3 years		3 years	3 years
Starwood Property Trust, Inc. Equity Plan
Equity Incentive Plans
Granted (in shares)																	520,236
Award vesting period																	3 years
Starwood Property Trust, Inc. Equity Plan | Restricted stock
Equity Incentive Plans
Granted (in shares)																	520,236	851,170	742,516
Starwood Property Trust, Inc. Equity Plan | Restricted stock units
Equity Incentive Plans
Granted (in shares)																	0	0	0
Starwood Property Trust, Inc. Manager Equity Plan
Equity Incentive Plans
Granted (in shares)																	1,200,000
Shares of common stock issued		38,942		495,363	98,026	131,179	224,071		545,641	239,757	98,061	123,478		418,016
Price per share		$ 24.08		$ 22.16	$ 21.94	$ 21.67	$ 21.49		$ 20.13	$ 21.64	$ 22.10	$ 21.83		$ 22.84
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units
Equity Incentive Plans
Share-based compensation expense, before tax																	$ 20,200	$ 12,600	$ 10,400
Granted (in shares)			1,200,000					775,000					1,000,000		675,000
Award vesting period																	3 years

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Earnings per Share - Dilutive and Antidilutive securities (Details) - shares shares in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Class A Units
Antidilutive securities and effect of dilutive securities
Number of anti-dilutive common shares excluded from the calculation of diluted income per share	11.0	11.9
Restricted stock
Antidilutive securities and effect of dilutive securities
Number of anti-dilutive common shares excluded from the calculation of diluted income per share	13.3	13.8	4.2

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Loans - Variable Rate Loans Held for Investment (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Variable rate loans held-for-investment
Total variable rate loans held-for-investment, carrying value	$ 9,427,947
Weighted average spread of loans (as a percent)	4.20%
Commercial loans
Variable rate loans held-for-investment
Total variable rate loans held-for-investment, carrying value	$ 8,030,499
Weighted average spread of loans (as a percent)	4.20%
First priority infrastructure receivables
Variable rate loans held-for-investment
Total variable rate loans held-for-investment, carrying value	$ 1,397,448
Weighted average spread of loans (as a percent)	3.80%

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Investment Securities - AFS and Fair Value Option (Details) $ in Thousands	Dec. 31, 2019 USD ($) security	Dec. 31, 2018 USD ($) security
CMBS/RMBS | Fair value option
Unrealized Losses
Fair value of investment securities before consolidation of VIEs	$ 1,400,000
RMBS | Available-for-sale
Estimated Fair Value
Securities with a loss less than 12 months		$ 2,148
Securities with a loss greater than 12 months	1,380
Unrealized Losses
Securities with a loss less than 12 months		$ (31)
Securities with a loss greater than 12 months	$ (314)
Number of securities with unrealized loss position | security	1	1
Portion of securities with variable rate	$ 160,900	$ 177,400
RMBS | Fair value option
Unrealized Losses
Fair value of investment securities before consolidation of VIEs	147,000
Unpaid principal balance of investment securities before consolidation of VIEs	87,400
Portion of securities with variable rate	0
CMBS | Fair value option
Unrealized Losses
Fair value of investment securities before consolidation of VIEs	1,300,000
Unpaid principal balance of investment securities before consolidation of VIEs	3,000,000
Portion of securities with variable rate	118,200
VIE eliminations
Unrealized Losses
Fair value of investment securities before consolidation of VIEs eliminated against VIE liabilities	$ 37,400

XML

Fair Value - Level III (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Total realized and unrealized gains (losses):
Included in earnings: OTTI			$ (109)
Included in earnings: Net accretion	$ 11,791	$ 15,253	15,208
Level III
Changes in financial assets classified as Level III
Balance at the beginning of the period	52,931,064	49,904,651
Total realized and unrealized gains (losses):
Included in earnings: Change in fair value / gain on sale	(1,135,425)	(4,776,228)
Included in earnings: Net accretion	9,945	10,932
Included in OCI	(2,519)	(4,374)
Purchases / Originations	4,020,332	2,280,409
Sales	(2,959,039)	(2,068,061)
Issuances	116,273	102,474
Cash repayments / receipts	(198,436)	(292,352)
Transfers into Level III	1,723,212	1,027,075
Transfers out of Level III	765,565	727,475
Consolidations of VIEs	10,057,069	9,672,943
Deconsolidations of VIEs	(331,593)	(1,394,782)
Balance at the end of the period	61,317,478	52,931,064	49,904,651
Amount of total (losses) gains included in earnings attributable to assets still held at period end	(1,202,534)	(4,816,247)
Loans held-for-sale | Level III
Changes in financial assets classified as Level III
Balance at the beginning of the period	671,282	745,743
Total realized and unrealized gains (losses):
Included in earnings: Change in fair value / gain on sale	71,337	40,217
Purchases / Originations	4,015,167	2,276,788
Sales	(2,951,713)	(2,051,634)
Cash repayments / receipts	(144,066)	(144,322)
Transfers out of Level III	(225,813)	(195,510)
Balance at the end of the period	1,436,194	671,282	745,743
Amount of total (losses) gains included in earnings attributable to assets still held at period end	(4,459)	(3,753)
RMBS | Level III
Changes in financial assets classified as Level III
Balance at the beginning of the period	209,079	247,021
Total realized and unrealized gains (losses):
Included in earnings: Change in fair value / gain on sale		3,527
Included in earnings: Net accretion	9,945	10,932
Included in OCI	(2,519)	(4,374)
Sales		(13,264)
Cash repayments / receipts	(26,929)	(34,763)
Balance at the end of the period	189,576	209,079	247,021
Amount of total (losses) gains included in earnings attributable to assets still held at period end	9,858	10,398
CMBS | Level III
Changes in financial assets classified as Level III
Balance at the beginning of the period	25,228	24,191
Total realized and unrealized gains (losses):
Included in earnings: Change in fair value / gain on sale	505	2,568
Purchases / Originations	5,165	3,621
Sales	(7,326)	(3,163)
Cash repayments / receipts	(11,348)	(23,520)
Transfers into Level III	(5,350)	(16,845)
Deconsolidations of VIEs	7,434	4,686
Balance at the end of the period	25,008	25,228	24,191
Amount of total (losses) gains included in earnings attributable to assets still held at period end	(666)	(352)
Domestic Servicing Rights | Level III
Changes in financial assets classified as Level III
Balance at the beginning of the period	20,557	30,759
Total realized and unrealized gains (losses):
Included in earnings: Change in fair value / gain on sale	(3,640)	(10,202)
Balance at the end of the period	16,917	20,557	30,759
Amount of total (losses) gains included in earnings attributable to assets still held at period end	(3,640)	(10,202)
VIE Assets | Level III
Changes in financial assets classified as Level III
Balance at the beginning of the period	53,446,364	51,045,874
Total realized and unrealized gains (losses):
Included in earnings: Change in fair value / gain on sale	(1,250,935)	(5,835,225)
Consolidations of VIEs	10,368,817	9,885,200
Deconsolidations of VIEs	(377,071)	(1,649,485)
Balance at the end of the period	62,187,175	53,446,364	51,045,874
Amount of total (losses) gains included in earnings attributable to assets still held at period end	(1,250,935)	(5,835,225)
VIE liabilities | Level III
Changes in financial assets classified as Level III
Balance at the beginning of the period	(1,441,446)	(2,188,937)
Total realized and unrealized gains (losses):
Included in earnings: Change in fair value / gain on sale	47,308	1,022,887
Issuances	116,273	102,474
Cash repayments / receipts	(16,093)	(89,747)
Transfers into Level III	1,728,562	1,043,920
Transfers out of Level III	991,378	922,985
Consolidations of VIEs	(311,748)	(212,257)
Deconsolidations of VIEs	38,044	250,017
Balance at the end of the period	(2,537,392)	(1,441,446)	$ (2,188,937)
Changes in financial liabilities classified as Level III
Amount of total gains (losses) included in earnings attributable to assets still held at end of period	$ 47,308	$ 1,022,887

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Derivatives and Hedging Activity (Tables)

12 Months Ended

Dec. 31, 2019

Derivatives and Hedging Activity

Summary of foreign exchange ("Fx") forwards, interest rate swaps, interest rate caps and credit index instruments

The following table summarizes our non-designated derivatives as of December 31, 2019 (notional amounts in thousands):

Type of Derivative	Number of Contracts	Aggregate Notional Amount	Notional Currency	Maturity
Fx contracts – Sell Euros ("EUR")	168	199,183	EUR	January 2020 – June 2023
Fx contracts – Sell Pounds Sterling ("GBP")	93	444,236	GBP	January 2020 – December 2023
Fx contracts – Sell Australian dollar ("AUD")	4	25,850	AUD	March 2020 – November 2021
Interest rate swaps – Paying fixed rates	37	1,299,466	USD	July 2022 – January 2030
Interest rate swaps – Receiving fixed rates	2	970,000	USD	January 2021- March 2025
Interest rate caps	12	742,299	USD	January 2020 – August 2023
Credit index instruments	5	89,000	USD	November 2054 – August 2061
Interest rate swap guarantees	6	394,671	USD	March 2022 – June 2025
Interest rate swap guarantees	1	9,390	GBP	December 2024
Total	328

Schedule of fair values of derivative financial instruments

The table below presents the fair value of our derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2019 and 2018 (amounts in thousands):

	Fair Value of Derivatives				Fair Value of Derivatives
	in an Asset Position (1)				in a Liability Position (2)
	as of December 31,				as of December 31,
	2019		2018		2019		2018
Interest rate contracts		14,385		30,791		—		14,457
Interest rate swap guarantees		—		—		614		396
Foreign exchange contracts		14,558		21,346		7,834		562
Credit index instruments		—		554		292		—
Total derivatives	$	28,943	$	52,691	$	8,740	$	15,415

(1) Classified as derivative assets in our consolidated balance sheets.

(2) Classified as derivative liabilities in our consolidated balance sheets.

Schedule of effect of derivative financial instruments on the consolidated statements of operations and of comprehensive income

a
		Amount of Gain (Loss)
		Recognized in Income for the
Derivatives Not Designated	Location of Gain (Loss)	Year Ended December 31,
as Hedging Instruments	Recognized in Income	2019		2018		2017
Interest rate contracts	(Loss) gain on derivative financial instruments	$	(10,516)	$	(1,593)	$	(5,165)
Interest rate swap guarantees	(Loss) gain on derivative financial instruments		(3,350)		(114)		—
Foreign exchange contracts	(Loss) gain on derivative financial instruments		8,801		36,040		(65,645)
Credit index instruments	(Loss) gain on derivative financial instruments		(1,245)		270		(1,722)
		$	(6,310)	$	34,603	$	(72,532)

Schedule of Gain / (Loss) recognized in Income for Derivatives Not Designated as Hedging Instruments

			Gain
	Gain		Reclassified
	Recognized		from AOCI		Gain Recognized
Derivatives Designated as Hedging Instruments	in OCI		into Income		in Income		Location of Gain
For the Year Ended December 31,	(effective portion)		(effective portion)		(ineffective portion)		Recognized in Income
2019	$	—	$	—	$	—	Interest expense
2018	$	8	$	33	$	—	Interest expense
2017	$	54	$	3	$	—	Interest expense

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Goodwill and Intangibles (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangibles

Summary of intangibles assets

The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of December 31, 2019 and 2018 (amounts in thousands):

	As of December 31, 2019						As of December 31, 2018
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Value		Amortization		Value		Value		Amortization		Value
Domestic servicing rights, at fair value	$	16,917	$	—	$	16,917	$	20,557	$	—	$	20,557
In-place lease intangible assets		135,293		(84,383)		50,910		198,220		(100,873)		97,347
Favorable lease intangible assets		24,218		(6,345)		17,873		36,895		(9,766)		27,129
Total net intangible assets	$	176,428	$	(90,728)	$	85,700	$	255,672	$	(110,639)	$	145,033

Summary of activity within intangible assets

The following table summarizes the activity within intangible assets for the years ended December 31, 2019 and 2018 (amounts in thousands):

	Domestic		In-place Lease		Favorable Lease
	Servicing		Intangible		Intangible
	Rights		Assets		Assets		Total
Balance as of January 1, 2018	$	30,759	$	122,465	$	29,868	$	183,092
Acquisition of Woodstar II Portfolio properties		—		10,792		—		10,792
Acquisition of additional REIS Equity Portfolio properties		—		7,342		2,687		10,029
Amortization		—		(39,830)		(4,046)		(43,876)
Sales		—		(1,791)		(1,036)		(2,827)
Foreign exchange loss		—		(1,270)		(344)		(1,614)
Impairment (1)		—		(361)		—		(361)
Changes in fair value due to changes in inputs and assumptions		(10,202)		—		—		(10,202)
Balance as of December 31, 2018	$	20,557	$	97,347	$	27,129	$	145,033
Sale of Ireland Portfolio		—		(20,271)		(5,654)		(25,925)
Sale of certain REIS Equity Portfolio properties		—		(5,208)		(13)		(5,221)
Acquisition of additional REIS Equity Portfolio property		—		277		—		277
Amortization		—		(19,297)		(3,256)		(22,553)
Foreign exchange loss		—		(806)		(221)		(1,027)
Impairment (1)		—		(1,132)		(112)		(1,244)
Changes in fair value due to changes in inputs and assumptions		(3,640)		—		—		(3,640)
Balance as of December 31, 2019	$	16,917	$	50,910	$	17,873	$	85,700

(1) Impairment of intangible lease assets is recognized within other expense in our consolidated statements of operations.

Schedule of future amortization expense

The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands):

2020	$	11,699
2021		9,674
2022		7,892
2023		6,136
2024		4,742
Thereafter		28,640
Total	$	68,783

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Commitments and Contingencies - Weighted average lease (Details)	Dec. 31, 2019
Commitments and Contingencies.
Weighted-average remaining lease term	6 years
Weighted-average discount rate	4.40%

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Income Taxes - Reconciliation of Tax Rate (Details) - USD ($)			12 Months Ended
	Jan. 01, 2018	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of statutory tax to effective tax
Federal statutory tax rate		$ 35	$ 115,535,000	$ 89,571,000	$ 155,501,000
REIT and other non-taxable income			(106,301,000)	(77,972,000)	(135,830,000)
State income taxes			3,034,000	3,038,000	3,091,000
Federal benefit of state tax deduction			(637,000)	(638,000)	(1,082,000)
Valuation allowance			0	0	5,500,000
Changes in tax law					10,365,000
Other			1,601,000	1,331,000	(523,000)
Total income tax provision			13,232,000	15,330,000	31,522,000
Discrete income tax provision					18,300,000
Earnings from unconsolidated entities					53,900,000
Pre-tax income (loss) from foreign operations			$ 900,000	$ 1,400,000	$ (26,600,000)
Reconciliation of statutory tax rate to effective tax rate
Federal statutory tax rate (as a percent)	21.00%		21.00%	21.00%	35.00%
REIT and other non-taxable income (as a percent)			(19.30%)	(18.30%)	(30.60%)
State income taxes (as a percent)			0.50%	0.70%	0.70%
Federal benefit of state tax deduction (as a percent)			(0.10%)	(0.10%)	(0.20%)
Changes in federal tax code (as a percent)					2.30%
Other (as a percent)			0.30%	0.30%	(0.10%)
Effective tax rate (as a percent)			2.40%	3.60%	7.10%

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Offsetting Assets and Liabilities

12 Months Ended

Dec. 31, 2019

Offsetting Assets and Liabilities

Offsetting Assets and Liabilities

14. Offsetting Assets and Liabilities

The following tables present the potential effects of netting arrangements on our financial position for financial assets and liabilities within the scope of ASC 210-20, Balance Sheet—Offsetting, which for us are derivative assets and liabilities as well as repurchase agreement liabilities (amounts in thousands):

							(iv)
							Gross Amounts Not
							Offset in the Statement
			(ii)		(iii) = (i) - (ii)		of Financial Position
			Gross Amounts		Net Amounts				Cash
	(i)		Offset in the		Presented in				Collateral
	Gross Amounts		Statement of		the Statement of		Financial		Received /		(v) = (iii) - (iv)
	Recognized		Financial Position		Financial Position		Instruments		Pledged		Net Amount
As of December 31, 2019
Derivative assets	$	28,943	$	—	$	28,943	$	5,312	$	14,208	$	9,423
Derivative liabilities	$	8,740	$	—	$	8,740	$	5,312	$	292	$	3,136
Repurchase agreements		4,609,457		—		4,609,457		4,609,457		—		—
	$	4,618,197	$	—	$	4,618,197	$	4,614,769	$	292	$	3,136
As of December 31, 2018
Derivative assets	$	52,691	$	—	$	52,691	$	1,408	$	—	$	51,283
Derivative liabilities	$	15,415	$	—	$	15,415	$	1,408	$	8,658	$	5,349
Repurchase agreements		4,289,750		—		4,289,750		4,289,750		—		—
	$	4,305,165	$	—	$	4,305,165	$	4,291,158	$	8,658	$	5,349

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Earnings per Share

12 Months Ended

Dec. 31, 2019

Earnings per Share

Earnings per Share

18. Earnings per Share

The following table provides a reconciliation of net income and the number of shares of common stock used in the computation of basic EPS and diluted EPS (amounts in thousands, except per share amounts):

	For the Year Ended December 31,
	2019		2018		2017
Basic Earnings
Income attributable to STWD common stockholders	$	509,664	$	385,830	$	400,770
Less: Income attributable to participating shares not already deducted as non-controlling interests		(3,873)		(3,592)		(3,183)
Basic earnings	$	505,791	$	382,238	$	397,587
Diluted Earnings
Income attributable to STWD common stockholders	$	509,664	$	385,830	$	400,770
Less: Income attributable to participating shares not already deducted as non-controlling interests		(3,873)		(3,592)		(3,183)
Add: Interest expense on Convertible Notes (1)		12,354		25,148		—
Add: Loss on extinguishment of Convertible Notes (1)		—		2,099		—
Diluted earnings	$	518,145	$	409,485	$	397,587
Number of Shares:
Basic — Average shares outstanding		279,337		265,279		259,620
Effect of dilutive securities — Convertible Notes (1)		9,805		22,659		1,899
Effect of dilutive securities — Contingently issuable shares		360		546		508
Effect of dilutive securities — Unvested non-participating shares		210		—		52
Diluted — Average shares outstanding		289,712		288,484		262,079
Earnings Per Share Attributable to STWD Common Stockholders:
Basic	$	1.81	$	1.44	$	1.53
Diluted	$	1.79	$	1.42	$	1.52

(1) Prior to June 30, 2018, the Company had asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. Accordingly, under GAAP, the dilutive effect to EPS was previously determined using the treasury stock method by dividing only the “conversion spread value” of the “in-the-money” Convertible Notes by the Company’s average share price and including the resulting share amount in the diluted EPS denominator. The conversion value of the principal amount of the Convertible Notes was not included. Effective June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the years ended December 31, 2019 and 2018 is determined using the “if-converted” method whereby interest expense or any loss on extinguishment of our Convertible Notes is added back to the diluted EPS numerator and the full number of potential shares contingently issuable upon their conversion is included in the diluted EPS denominator, if dilutive. Refer to Note 11 for further discussion.

As of December 31, 2019, 2018 and 2017, participating shares of 13.3 million, 13.8 million and 4.2 million, respectively, were excluded from the computation of diluted shares as their effect was already considered under the more dilutive two-class method used above. Such participating shares at December 31, 2019 and 2018 include 11.0 million and 11.9 million potential shares, respectively, of our common stock issuable upon redemption of the Class A Units in SPT Dolphin, as discussed in Note 17.

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Consolidated Statements of Equity (Parenthetical) - $ / shares													12 Months Ended
	Nov. 08, 2019	Aug. 07, 2019	May 08, 2019	Feb. 28, 2019	Nov. 09, 2018	Aug. 08, 2018	May 04, 2018	Feb. 28, 2018	Nov. 08, 2017	Aug. 09, 2017	May 09, 2017	Feb. 23, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Consolidated Statements of Equity
Dividends declared per common share	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 1.92	$ 1.92	$ 1.92

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Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2019

Acquisitions and Divestitures

Summary of assets acquired and liabilities assumed

The following table summarizes the identified assets acquired and liabilities assumed as of the respective acquisition dates (amounts in thousands):

	2018		2017
	Infrastructure		REIS Equity
Assets acquired:	Lending Segment		Portfolio
Loans held-for-investment	$	1,649,630	$	—
Loans held-for-sale		319,710		—
Investment securities		65,060		—
Properties		—		38,770
Intangible assets		—		11,955
Accrued interest receivable		13,843		—
Other assets		—		85
Total identifiable assets acquired		2,048,243		50,810
Liabilities assumed:
Accounts payable, accrued expenses and other liabilities		8,817		1,516
Derivative liabilities		282		—
Total liabilities assumed		9,099		1,516
Net assets acquired	$	2,039,144	$	49,294

Schedule of the determination of goodwill

Goodwill represents the excess of the purchase price over the fair value of the underlying assets acquired and liabilities assumed. This determination of goodwill resulting from the Infrastructure Lending Segment acquisition is as follows (amounts in thousands):

	2018
	Infrastructure
	Lending Segment
Purchase price	$	2,158,553
Fair value of net assets acquired		2,039,144
Goodwill	$	119,409

Schedule of pro forma revenue and net income

The unaudited pro forma revenues and net income attributable to the Company for the years ended December 31, 2018 and 2017, assuming the Infrastructure Lending Segment was acquired on January 1, 2017, are as follows (amounts in thousands, except per share amounts):

	For the Year Ended
	December 31,
(Unaudited)	2018		2017
Revenues	$	1,182,892	$	966,636
Net income attributable to STWD		392,505		395,150
Net income per share - Basic		1.47		1.51
Net income per share - Diluted		1.44		1.50

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Loans held-for-investment, net held at fair value	$ 671,572	$ 0
Loans-held-for-sale held at fair value	764,622	671,282
Investment securities held at fair value	239,600	262,319
Intangible assets held at fair value	$ 16,917	$ 20,557
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	287,380,891	280,839,692
Common stock, shares outstanding	282,200,751	275,659,552
Treasury stock, shares	5,180,140	5,180,140
Total Assets	$ 78,042,336	$ 68,262,453
Total Liabilities	72,905,322	63,362,264
Primary beneficiary
Total Assets	62,187,175	53,446,364
Total Liabilities	60,743,494	$ 52,195,042
Primary beneficiary | Collateralized Loan Obligation
Total Assets	1,100,000
Total Liabilities	$ 900,000

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Subsequent Events

12 Months Ended

Dec. 31, 2019

Subsequent Events

Subsequent Events

25. Subsequent Events

Our significant events subsequent to December 31, 2019 were as follows:

Residential Mortgage Loan Securitization

In February 2020, we securitized residential mortgage loans held-for-sale with a principal balance of $381.3 million.

Dividend Declaration

On February 25, 2020, our board of directors declared a dividend of $0.48 per share for the first quarter of 2020, which is payable on April 15, 2020 to common stockholders of record as of March 31, 2020.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Balance Sheet Presentation of Securitization Variable Interest Entities

We operate investment businesses that acquire unrated, investment grade and non-investment grade rated CMBS and RMBS. These securities represent interests in securitization structures (commonly referred to as special purpose entities, or “SPEs”). These SPEs are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. Under accounting principles generally accepted in the United States of America (“GAAP”), SPEs typically qualify as VIEs. These are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.

Because we often serve as the special servicer or servicing administrator of the trusts in which we invest, or we have the ability to remove and replace the special servicer without cause, consolidation of these structures is required pursuant to GAAP as outlined in detail below. This results in a consolidated balance sheet which presents the gross assets and liabilities of the VIEs. The assets and other instruments held by these VIEs are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the VIEs do not have any recourse to the general credit of any other consolidated entities, nor to us as the consolidator of these VIEs.

The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.

Refer to the segment data in Note 23 for a presentation of our business segments without consolidation of these VIEs.

Basis of Accounting and Principles of Consolidation

The accompanying consolidated financial statements include our accounts and those of our consolidated subsidiaries and VIEs. Intercompany amounts have been eliminated in consolidation.

Entities not deemed to be VIEs are consolidated if we own a majority of the voting securities or interests or hold the general partnership interest, except in those instances in which the minority voting interest owner or limited partner can remove us as general partner without cause, dissolve the partnership without cause or effectively participate through substantive participative rights. Substantive participative rights include the ability to select, terminate and set compensation of the investee’s management, if applicable, and the ability to participate in capital and operating decisions of the investee, including budgets, in the ordinary course of business.

We invest in entities with varying structures, many of which do not have voting securities or interests, such as general partnerships, limited partnerships, and limited liability companies. In many of these structures, control of the entity rests with the general partners or managing members, while other members hold passive interests. The general partner or managing member may hold anywhere from a relatively small percentage of the total financial interests to a majority of the financial interests. For entities not deemed to be VIEs, where we serve as the sole general partner or managing member, we are considered to have the controlling financial interest and therefore the entity is consolidated, regardless of our financial interest percentage, unless there are other limited partners or investing members that can remove us as general partner without cause, dissolve the partnership without cause or effectively participate through substantive participative rights. In those circumstances where we, as majority controlling interest owner, can be removed without cause or cannot cause the entity to take actions that are significant in the ordinary course of business, because such actions could be vetoed by the minority controlling interest owner, we do not consolidate the entity.

When we consolidate entities other than securitization VIEs, the third party ownership interests are reflected as non-controlling interests in consolidated subsidiaries, a separate component of equity, in our consolidated balance sheet. When we consolidate securitization VIEs, the third party ownership interests are reflected as VIE liabilities in our consolidated balance sheet because the beneficial interests payable to these third parties are legally issued in the form of debt. Our presentation of net income attributes earnings to controlling and non-controlling interests.

Variable Interest Entities

In addition to the securitization VIEs, we have financed a pool of our loans through a collateralized loan obligation (“CLO”) which is considered a VIE. We also hold interests in certain other entities which are considered VIEs as the limited partners of those entities with equity at risk do not collectively possess (i) the right to remove the general partner or dissolve the partnership without cause or (ii) the right to participate in significant decisions made by the partnership.

We evaluate all of our interests in VIEs for consolidation. When our interests are determined to be variable interests, we assess whether we are deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification (“ASC”) 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. We consider our variable interests as well as any variable interests of our related parties in making this determination. Where both of these factors are present, we are deemed to be the primary beneficiary and we consolidate the VIE. Where either one of these factors is not present, we are not the primary beneficiary and do not consolidate the VIE.

To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes: (i) identifying the activities that most significantly impact the VIE’s economic performance; and (ii) identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. The right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has the power to direct the activities of a VIE.

To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, including debt and equity investments, servicing fees and other arrangements deemed to be variable interests in the VIE. This assessment requires that we apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by us.

Our purchased investment securities include unrated and non-investment grade rated securities issued by securitization trusts. In certain cases, we may contract to provide special servicing activities for these trusts, or, as holder of the controlling class, we may have the right to name and remove the special servicer for these trusts. In our role as special servicer, we provide services on defaulted loans within the trusts, such as foreclosure or work-out procedures, as permitted by the underlying contractual agreements. In exchange for these services, we receive a fee. These rights give us the ability to direct activities that could significantly impact the trust’s economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove us as special servicer without cause, we do not have the power to direct activities that most significantly impact the trust’s economic performance. We evaluated all of our positions in such investments for consolidation.

For securitization VIEs in which we are determined to be the primary beneficiary, all of the underlying assets, liabilities and equity of the structures are recorded on our books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these

structures, as well as the fees paid by these trusts to us in our capacity as special servicer, are eliminated in consolidation. Further, an allocable portion of the identified servicing intangible asset associated with the servicing fee streams, and the corresponding allocable amortization or change in fair value of the servicing intangible asset, are also eliminated in consolidation.

We perform ongoing reassessments of: (i) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and (ii) whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion regarding the VIE to change.

We elect the fair value option for initial and subsequent recognition of the assets and liabilities of our consolidated securitization VIEs. Interest income and interest expense associated with these VIEs are no longer relevant on a standalone basis because these amounts are already reflected in the fair value changes. We have elected to present these items in a single line on our consolidated statements of operations. The residual difference shown on our consolidated statements of operations in the line item “Change in net assets related to consolidated VIEs” represents our beneficial interest in the VIEs.

We separately present the assets and liabilities of our consolidated securitization VIEs as individual line items on our consolidated balance sheets. The liabilities of our consolidated securitization VIEs consist solely of obligations to the bondholders of the related trusts, and are thus presented as a single line item entitled “VIE liabilities.” The assets of our consolidated securitization VIEs consist principally of loans, but at times, also include foreclosed loans which have been temporarily converted into real estate owned (“REO”). These assets in the aggregate are likewise presented as a single line item entitled “VIE assets.”

Loans comprise the vast majority of our securitization VIE assets and are carried at fair value due to the election of the fair value option. When an asset becomes REO, it is due to nonperformance of the loan. Because the loan is already at fair value, the carrying value of an REO asset is also initially at fair value. Furthermore, when we consolidate a trust, any existing REO would be consolidated at fair value. Once an asset becomes REO, its disposition time is relatively short. As a result, the carrying value of an REO generally approximates fair value under GAAP.

In addition to sharing a similar measurement method as the loans in a trust, the securitization VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our securitization VIEs are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective. Also creating limitations from a valuation perspective is our role as special servicer, which provides us very limited visibility, if any, into the performing loans of a trust.

REO assets generally represent a very small percentage of the overall asset pool of a trust. In new issue trusts there are no REO assets. We estimate that REO assets constitute approximately 1% of our consolidated securitization VIE assets, with the remaining 99% representing loans. However, it is important to note that the fair value of our securitization VIE assets is determined by reference to our securitization VIE liabilities as permitted under Accounting Standards Update (“ASU”) 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. In other words, our VIE liabilities are more reliably measurable than the VIE assets, resulting in our current measurement methodology which utilizes this value to determine the fair value of our securitization VIE assets as a whole. As a result, these percentages are not necessarily indicative of the relative fair values of each of these asset categories if the assets were to be valued individually.

Due to our accounting policy election under ASU 2014-13, separately presenting two different asset categories would result in an arbitrary assignment of value to each, with one asset category representing a residual amount, as opposed to its fair value. However, as a pool, the fair value of the assets in total is equal to the fair value of the liabilities.

For these reasons, the assets of our securitization VIEs are presented in the aggregate.

Fair Value Option

The guidance in ASC 825, Financial Instruments, provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our consolidated balance sheets from those instruments using another accounting method.

We have elected the fair value option for certain eligible financial assets and liabilities of our consolidated securitization VIEs, residential loans held-for-investment, loans held-for-sale originated or acquired for future securitization and purchased CMBS issued by VIEs we could consolidate in the future. The fair value elections for VIE and securitization related items were made in order to mitigate accounting mismatches between the carrying value of the instruments and the related assets and liabilities that we consolidate at fair value. The fair value elections for residential mortgage loans held-for-investment were made in order to maintain consistency across all our residential mortgage loans. The fair value elections for mortgage loans held-for-sale were made due to the expected short-term holding period of these instruments.

Fair Value Measurements

We measure our mortgage-backed securities, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.

As discussed above, we measure the assets and liabilities of consolidated securitization VIEs at fair value pursuant to our election of the fair value option. The securitization VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the securitization VIEs, we maximize the use of observable inputs over unobservable inputs. Refer to Note 20 for further discussion regarding our fair value measurements.

Business Combinations

Under ASC 805, Business Combinations, the acquirer in a business combination must recognize, with certain exceptions, the fair values of assets acquired, liabilities assumed, and non-controlling interests when the acquisition constitutes a change in control of the acquired entity. As goodwill is calculated as a residual, all goodwill of the acquired business, not just the acquirer’s share, is recognized under this “full goodwill” approach. During the measurement period, a period which shall not exceed one year, we prospectively adjust the provisional amounts recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized.

Effective with our early adoption of ASU 2017-01, Business Combinations (Topic 805) – Clarifying the Definition of a Business, in December 2017, we apply the asset acquisition provisions of ASC 805 in accounting for acquisitions of real estate with in-place leases where substantially all of the fair value of the assets acquired is concentrated in either a single identifiable asset or group of similar identifiable assets. This results in the acquired properties being recognized initially at their purchase price inclusive of acquisition costs, which are capitalized. All other acquisitions of real estate with in-place leases are accounted for in accordance with the business combination provisions of ASC 805. We also apply the asset acquisition provisions of ASC 805 for acquired real estate assets where a lease is entered into concurrently with the acquisition of the asset, such as in sale leaseback transactions.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and short-term investments. Short-term investments are comprised of highly liquid instruments with original maturities of three months or less. The Company maintains its cash and cash equivalents in multiple financial institutions and at times these balances exceed federally insurable limits.

Restricted Cash

Restricted cash includes cash and cash equivalents that are legally or contractually restricted as to withdrawal or usage and primarily includes (i) loan payments received by our Infrastructure Lending Segment which are restricted by our lender and periodically applied, in part, to the outstanding balance of the Infrastructure Lending debt facility, (ii) cash collateral associated with derivative financial instruments and (iii) funds held on behalf of borrowers and tenants.

Loans Held-for-Investment

Loans that are held for investment are carried at cost, net of unamortized acquisition premiums or discounts, loan fees and origination costs as applicable, unless the loans are deemed impaired or we have elected to apply the fair value option at purchase.

Loan Impairment

We evaluate each loan classified as held-for-investment not under the fair value option for impairment at least quarterly. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral.

There may be circumstances where we modify a loan by granting the borrower a concession that we might not otherwise consider when a borrower is experiencing financial difficulty or is expected to experience financial difficulty in the foreseeable future. Such concessionary modifications are classified as troubled debt restructurings (“TDRs”) unless the modification solely results in a delay in payment that is insignificant. Loans classified as TDRs are considered impaired loans for reporting and measurement purposes.

Loans Held-For-Sale

Our loans that we intend to sell or liquidate in the short-term are classified as held-for-sale and are carried at the lower of amortized cost or fair value, unless we have elected to apply the fair value option at origination or purchase. With regards to our Investing and Servicing Segment’s conduit business, we periodically enter into derivative financial instruments to hedge unpredictable changes in fair value of loans held-for-sale, including changes resulting from both interest rates and credit quality. Because these derivatives are not designated, changes in their fair value are recorded in earnings. In order to best reflect the results of the hedged loan portfolio in earnings, we have elected the fair value option for these loans. As a result, changes in the fair value of the loans are also recorded in earnings.

Investment Securities

We designate our debt investment securities as held-to-maturity, available-for-sale, or trading depending on our investment strategy and ability to hold such securities to maturity. Held-to-maturity debt securities where we have not elected to apply the fair value option are stated at cost plus any premiums or discounts, which are amortized or accreted through the consolidated statements of operations using the effective interest method. Debt securities we (i) do not hold for the purpose of selling in the near-term, or (ii) may dispose of prior to maturity, are classified as available-for-sale and are carried at fair value in the accompanying financial statements. Unrealized gains or losses on available-for-sale debt securities where we have not elected the fair value option are reported as a component of accumulated other comprehensive income (loss) (“AOCI”) in stockholders’ equity.

When the estimated fair value of a debt security for which we have not elected the fair value option is less than its amortized cost, we consider whether there is OTTI in the value of the security. An impairment is deemed an OTTI if (i) we intend to sell the security, (ii) it is more likely than not that we will be required to sell the security before recovering our cost basis or (iii) we do not expect to recover the entire amortized cost basis of the security even if we do not intend to sell the security or do not believe it is more likely than not that we will be required to sell the security before recovering our cost basis. If the impairment is deemed to be an OTTI, the resulting accounting treatment depends on the factors causing the OTTI. If the OTTI has resulted from (i) our intention to sell the security, or (ii) our judgment that it is more likely than not that we will be required to sell the security before recovering our cost basis, an impairment loss is recognized in earnings equal to the entire difference between our amortized cost basis and fair value. Whereas, if the OTTI has resulted from our conclusion that we will not recover our cost basis even if we do not intend to sell the security or do not believe it is more likely than not that we will be required to sell the security before recovering our cost basis, only the credit loss portion of the impairment is recorded in earnings, and the portion of the loss related to other factors, such as changes in interest rates, continues to be recognized in AOCI. Following the recognition of an OTTI through earnings, a new cost basis is established for the security. Determining whether there is an OTTI may require us to exercise significant judgment and make significant assumptions, including, but not limited to, estimated cash flows, estimated prepayments, loss assumptions, and assumptions regarding changes in interest rates.

Our only equity investment security is carried at fair value, with unrealized holding gains and losses recorded in earnings.

Properties Held-For-Investment

Properties, net, as reported on our consolidated balance sheets, consist of commercial real estate properties held-for-investment and are recorded at cost, less accumulated depreciation and impairments, if any. Properties consist primarily of land, buildings and improvements. Land is not depreciated, and buildings and improvements are depreciated on a straight-line basis over their estimated useful lives. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments are capitalized and depreciated on a straight-line basis over their estimated useful lives. We review properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability is determined by comparing the carrying amount of the property to the undiscounted future net cash flows it is expected to generate. If such carrying amount exceeds the expected undiscounted future net cash flows, we adjust the carrying amount of the property to its estimated fair value.

Properties Held-For-Sale

Properties and any associated intangible assets are presented within properties held-for-sale on our consolidated balance sheet when the sale of the property is considered probable, at which time we cease depreciation and amortization of the property and the associated intangibles. Held-for-sale properties are reported at the lower of their carrying value or fair value less costs to sell. There were no properties held-for-sale at December 31, 2019 or 2018.

Servicing Rights Intangibles

Our identifiable intangible assets include domestic special servicing rights for which we have elected to apply the fair value measurement method, which is necessary to conform to our election of the fair value option for measuring the assets and liabilities of the VIEs consolidated pursuant to ASC 810.

Lease Intangibles

In connection with our acquisition of properties, we recognize intangible lease assets and liabilities associated with certain noncancelable operating leases of the acquired properties. These intangible lease assets and liabilities include in-place lease intangible assets, favorable lease intangible assets and unfavorable lease liabilities. In-place lease intangible assets reflect the acquired benefit of purchasing properties with in-place leases and are measured based on estimates of direct costs associated with leasing the property and lost rental income during projected lease-up and free rent periods, both of which are avoided due to the presence of in-place leases at the acquisition date. Favorable and unfavorable lease intangible assets and liabilities reflect the terms of in-place tenant leases being either favorable or

unfavorable relative to market terms at the acquisition date. The estimated fair values of our favorable and unfavorable lease assets and liabilities at the respective acquisition dates represent the discounted cash flow differential between the contractual cash flows of such leases and the estimated cash flows that comparable leases at market terms would generate. Our intangible lease assets and liabilities are recognized within intangible assets and other liabilities, respectively, in our consolidated balance sheets. Our in-place lease intangible assets are amortized to amortization expense while our favorable and unfavorable lease intangible assets and liabilities where we are the lessor are amortized to rental income. Favorable and unfavorable lease intangible assets and liabilities where we are the lessee are amortized to costs of rental operations, except in the case of our unfavorable lease liability associated with office space occupied by the Company, which is amortized to general and administrative expense. Both our favorable and unfavorable lease intangible assets and liabilities are amortized over the remaining noncancelable term of the respective leases on a straight-line basis.

Leases

On January 1, 2019, ASC 842, Leases, became effective for the Company. ASC 842 establishes a right-of-use model for lessee accounting which results in the recognition of most leased assets and lease liabilities on the balance sheet of the lessee. Lessor accounting was not significantly affected by this ASC. We elected to apply the provisions of ASC 842 as of January 1, 2019 and not to retrospectively adjust prior periods presented. Such application did not result in any cumulative-effect adjustment as of January 1, 2019. We elected the “package of practical expedients” for transition purposes, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs for leases that commenced prior to January 1, 2019. We also elected not to apply the recognition provisions of ASC 842 to short-term leases, which have original lease terms of 12 months or less. As a lessor, we elected not to separate nonlease components, such as reimbursements from tenants for common area maintenance (“CAM”), from lease components for all classes of underlying assets, and continue to recognize such nonlease components ratably in rental income. We also elected to continue to exclude from rental income all sales, use and other similar taxes collected from lessees. As required by ASC 842, we no longer record as revenues and expenses lessor costs (such as property taxes) paid directly by the lessees. The application of ASC 842 has had no material effect on our consolidated financial statements, as all of our leases, as both lessor and lessee, are currently classified as operating leases, which are subject to essentially the same straight-line revenue and expense recognition as in the past. As a lessee, our only significant long-term lease as of January 1, 2019 resulted in the recognition of a $12.0 million lease liability and corresponding right-of-use asset, which are classified within “Accounts payable, accrued expenses and other liabilities” and “Other assets”, respectively, in our consolidated balance sheet as of December 31, 2019.

Investment in Unconsolidated Entities

We own non-controlling equity interests in various privately-held partnerships and limited liability companies. Unless we elect the fair value option under ASC 825, we use the fair value practicability exception described below to account for investments in which our interest is so minor that we have virtually no influence over the underlying investees. We use the equity method to account for all other non-controlling interests in partnerships and limited liability companies. Equity method investments are initially recorded at cost and subsequently adjusted for our share of income or loss, as well as contributions made or distributions received.

Prior to January 1, 2018, all cost method investments were initially recorded at cost with income generally recorded when distributions were received. On January 1, 2018, ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, became effective prospectively for public companies with a calendar fiscal year. This ASU requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies, at fair value with changes in fair value recognized within net income. This ASU does not apply to equity method investments, investments in Federal Home Loan Bank (“FHLB”) stock, investments that result in consolidation of the investee or investments in certain investment companies. For investments in equity securities without a readily determinable fair value, an entity is permitted to elect a practicability exception, under which the investment will be measured at cost, less impairment, plus or minus observable price changes from orderly transactions of an identical or similar investment of the same issuer.

Our equity investments within the scope of this ASU are limited to our other equity investments set forth in Note 8, with the exception of our FHLB stock which is outside the scope of this ASU, and to our marketable equity security discussed in Note 6 for which we had previously elected the fair value option. Our other equity investments within the scope of this ASU do not have readily determinable fair values. Therefore, we have elected the practicability exception whereby we measure these investments at cost, less impairment, plus or minus observable price changes from orderly transactions of identical or similar investments of the same issuer.

Additionally, this ASU eliminated the requirement to assess whether an impairment of an equity investment is other than temporary. The impairment model for equity investments subject to this election is now a single-step model whereby an entity performs a qualitative assessment to identify impairment. If the qualitative assessment indicates that an impairment exists, the entity would estimate the fair value of the investment and recognize in net income an impairment loss equal to the difference between the fair value and the carrying amount of the equity investment.

We continue to review our equity method and other investments not subject to this election for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods, estimated fair values of underlying assets and available information at the time the analyses are prepared.

Goodwill

Goodwill is not amortized, but rather tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment. Goodwill at December 31, 2019 represents the excess of the consideration paid over the fair value of net assets acquired in connection with the acquisitions of LNR Property LLC (“LNR”) in April 2013 and the Infrastructure Lending Segment in September 2018 and October 2018.

In testing goodwill for impairment, we follow ASC 350, Intangibles—Goodwill and Other, which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or we choose not to perform the qualitative assessment, then we compare the fair value of that reporting unit with its carrying value, including goodwill. If the carrying value of a reporting unit exceeds its fair value, goodwill is considered impaired with the impairment loss equal to the amount by which the carrying value of the goodwill exceeds the implied fair value of that goodwill.

Derivative Instruments and Hedging Activities

We record all derivatives on our consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on whether we have elected to designate a derivative in a hedging relationship and have satisfied the criteria necessary to apply hedge accounting under GAAP. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We regularly enter into derivative contracts that are intended to economically hedge certain of our risks, even though the transactions may not qualify for, or we may not elect to pursue, hedge accounting. In such cases, changes in the fair value of the derivatives are recorded in earnings.

Generally, our derivatives are subject to master netting arrangements, though we elect to present all derivative assets and liabilities on a gross basis within our consolidated balance sheets.

Convertible Senior Notes

ASC 470, Debt, requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. The equity components of our convertible senior notes (the “Convertible Notes”) have been reflected within additional paid-in capital in our consolidated balance sheets. The resulting debt discount is being amortized over the period during which the convertible senior notes are expected to be outstanding (the maturity date) as additional non-cash interest expense.

Upon settlement of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration, inclusive of transaction costs, amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component, including unamortized debt issuance costs, is recognized as gain (loss) on extinguishment of debt in our consolidated statements of operations. The remaining settlement consideration allocated to the equity component is recognized as a reduction of additional paid-in capital in our consolidated balance sheets.

Revenue Recognition

On January 1, 2018, new accounting rules regarding revenue recognition became effective for public companies with a calendar fiscal year. None of our significant revenue sources – interest income from loans and investment securities, loan servicing fees, and rental income – are within the scope of the new revenue recognition guidance. The revenue recognition guidance also included revisions to existing accounting rules regarding the determination of whether a company is acting as a principal or agent in an arrangement and accounting for sales of nonfinancial assets where the seller has continuing involvement. These additional revisions also did not materially impact the Company.

Interest Income

Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms of the instrument. For loans where we do not elect the fair value option, origination fees and direct loan origination costs are also recognized in interest income over the loan term as a yield adjustment using the effective interest method. When we elect the fair value option, origination fees and direct loan costs are recorded directly in income and are not deferred. Discounts or premiums associated with the purchase of non-performing loans and investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections.

We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan’s outstanding principal balance is only recognized when received in cash. If a full recovery of principal is doubtful, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms.

For loans acquired with deteriorated credit quality, interest income is only recognized to the extent that our estimate of undiscounted expected principal and interest exceeds our investment in the loan. Accretable yield, if any, is recognized as interest income on a level-yield basis over the life of the loan.

For the majority of our available-for-sale RMBS, which have been purchased at a discount to par value, we do not expect to collect all amounts contractually due at the time we acquired the securities. Accordingly, we expect that a portion of the purchase discount will not be recognized as interest income, which is referred to as non-accretable

difference. This amount of non-accretable difference may change over time based on the actual performance of these securities, their underlying collateral, actual and projected cash flow from such collateral, economic conditions and other factors. If the performance of a credit deteriorated security is more favorable than forecasted, we will generally accrete more credit discount into interest income than initially or previously expected. These adjustments are made prospectively beginning in the period subsequent to the determination that a favorable change in performance is projected. Conversely, if the performance of a credit deteriorated security is less favorable than forecasted, an OTTI may be taken, and the amount of discount accreted into income will generally be less than previously expected.

Upon the sale of loans or securities which are not accounted for pursuant to the fair value option, the excess (or deficiency) of net proceeds over the net carrying value of such loans or securities is recognized as a realized gain (loss).

Servicing Fees

We typically seek to be the special servicer on CMBS transactions in which we invest. When we are appointed to serve in this capacity, we earn special servicing fees from the related activities performed, which consist primarily of overseeing the workout of under-performing and non-performing loans underlying the CMBS transactions. These fees are recognized in income in the period in which the services are performed and the revenue recognition criteria have been met.

Rental Income

Rental income is recognized when earned from tenants. For leases that provide rent concessions or fixed escalations over the lease term, rental income is recognized on a straight-line basis over the noncancelable term of the lease. In net lease arrangements, costs reimbursable from tenants are recognized in rental income in the period in which the related expenses are incurred as we are generally the primary obligor with respect to purchasing goods and services for property operations. In instances where the tenant is responsible for property maintenance and repairs and contracts and settles such costs directly with third party service providers, we do not reflect those expenses in our consolidated statement of operations as the tenant is the primary obligor.

Securitizations, Sales and Financing Arrangements

We periodically sell our financial assets, such as commercial mortgage loans, residential mortgage loans, CMBS, RMBS and other assets. In connection with these transactions, we may retain or acquire senior or subordinated interests in the related assets. Gains and losses on such transactions are recognized in accordance with ASC 860, Transfers and Servicing, which is based on a financial components approach that focuses on control. Under this approach, after a transfer of financial assets that meets the criteria for treatment as a sale—legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint, and transferred control—an entity recognizes the financial assets it retains and any liabilities it has incurred, derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished. We determine the gain or loss on sale of the assets by allocating the carrying value of the sold asset between the sold asset and the interests retained based on their relative fair values, as applicable. The gain or loss on sale is the difference between the cash proceeds from the sale and the amount allocated to the sold asset. If the sold asset is being accounted for pursuant to the fair value option, there is no gain or loss.

Deferred Financing Costs

Costs incurred in connection with debt issuance are capitalized and amortized to interest expense over the terms of the respective debt agreements. Such costs are presented as a direct deduction from the carrying value of the related debt liability.

Acquisition and Investment Pursuit Costs

Costs incurred in connection with acquisitions of investments, loans and businesses, as well as in pursuing unsuccessful acquisitions and investments, are recorded within acquisition and investment pursuit costs in our consolidated statements of operations when incurred. Costs incurred in connection with acquisitions of real estate not

accounted for as business combinations are capitalized within the purchase price. These costs reflect services performed by third parties and principally include due diligence and legal services.

Share-Based Payments

The fair value of the restricted stock (“RSAs”) or restricted stock units (“RSUs”) granted is recorded as expense on a straight-line basis over the vesting period for the award, with an offsetting increase in stockholders’ equity. For grants to employees and directors, the fair value is determined based upon the stock price on the grant date.

Effective July 1, 2018, we early adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718) –Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for nonemployee share-based compensation with the existing accounting model for employee share based compensation. Prior to our adoption of ASU 2018-07, nonemployee share awards were recognized as an expense on a straight-line basis over the vesting period of the award with the fair value of the award remeasured at each vesting date. After our adoption of ASU 2018-07, nonemployee share awards continue to be recorded as expense on a straight-line basis over their vesting period, however, the fair value of the award is only determined on the grant date and not remeasured at subsequent vesting dates, consistent with the accounting for employee share awards. For non-employee awards granted prior to our July 1, 2018 adoption date, the awards were remeasured at fair value as of our July 1, 2018 adoption date with no subsequent remeasurement.

Foreign Currency Translation

Our assets and liabilities denominated in foreign currencies are translated into U.S. dollars using foreign currency exchange rates at the end of the reporting period. Income and expenses are translated at the average exchange rates for each reporting period. The effects of translating the assets, liabilities and income of our foreign investments held by entities with a U.S. dollar functional currency are included in foreign currency gain (loss) in the consolidated statements of operations or other comprehensive income (“OCI”) for debt securities available-for-sale for which the fair value option has not been elected. The effects of translating the assets, liabilities and income of our foreign investments held by entities with functional currencies other than the U.S. dollar are included in OCI. Realized foreign currency gains and losses and changes in the value of foreign currency denominated monetary assets and liabilities are included in the determination of net income and are reported as foreign currency gain (loss) in our consolidated statements of operations.

Income Taxes

The Company has elected to be taxed as a REIT under the Code. The Company is subject to federal income taxation at corporate rates on its REIT taxable income, however, the Company is allowed a deduction for the amount of dividends paid to its stockholders in arriving at its REIT taxable income. As a result, distributed net income of the Company is subjected to taxation at the stockholder level only. The Company intends to continue operating in a manner that will permit it to maintain its qualification as a REIT for tax purposes.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company evaluates the realizability of its deferred tax assets and recognizes a valuation allowance if, based on the available evidence, both positive and negative, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers, among other matters, estimates of expected future taxable income, nature of current and cumulative losses, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods.

We recognize tax positions in the financial statements only when it is more likely than not that, based on the technical merits of the tax position, the position will be sustained upon examination by the relevant taxing authority. A tax position is measured at the largest amount of benefit that will more likely than not be realized upon settlement. If, as a result of new events or information, a recognized tax position no longer is considered more likely than not to be

sustained upon examination, a liability is established for the unrecognized benefit with a corresponding charge to income tax expense in our consolidated statement of operations. We report interest and penalties, if any, related to income tax matters as a component of income tax expense.

Earnings Per Share

We present both basic and diluted earnings per share (“EPS”) amounts in our financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from (i) our share-based compensation, consisting of unvested RSAs and RSUs, (ii) shares contingently issuable to our Manager, (iii) the conversion options associated with our outstanding Convertible Notes (see Notes 11 and 18), and (iv) non-controlling interests that are redeemable with our common stock (see Note 17). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period.

Nearly all of the Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. In addition, the non-controlling interests that are redeemable with our common stock are considered participating securities because they earn a preferred return indexed to the dividend rate on our common stock (see Note 17). Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. For the years ended December 31, 2019, 2018 and 2017, the two-class method resulted in the most dilutive EPS calculation.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, CMBS, RMBS, loan investments and interest receivable. We may place cash investments in excess of insured amounts with high quality financial institutions. We perform an ongoing analysis of credit risk concentrations in our investment portfolio by evaluating exposure to various counterparties, markets, underlying property types, contract terms, tenant mix and other credit metrics.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our loans, investment securities and intangible assets, which has a significant impact on the amounts of interest income, credit losses (if any) and fair values that we record and/or disclose. In addition, the fair value of financial assets and liabilities that are estimated using a discounted cash flows method is significantly impacted by the rates at which we estimate market participants would discount the expected cash flows.

Recent Accounting Developments

On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments, which mandates use of an “expected loss” credit model for estimating future credit losses of certain financial instruments instead of the “incurred loss” credit model that current GAAP requires. The “expected loss” model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event in accordance with the current “incurred loss” methodology. This ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. We expect this ASU to result in our recognition of higher levels of potential credit losses earlier in the credit cycle. Though we are still in the process of finalizing the effect of this ASU, we expect to record an initial increase in our allowance for credit losses of between $30 million and $40 million as of January 1, 2020 through a cumulative-effect adjustment to accumulated deficit.

On January 26, 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, which simplifies the method applied for measuring impairment in cases where goodwill is impaired.  This ASU specifies that goodwill impairment will be measured as the excess of the reporting unit’s carrying value (inclusive of goodwill) over its fair value, eliminating the requirement that all assets and liabilities of the reporting unit be remeasured individually in connection with measurement of goodwill impairment.  This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019 and is applied prospectively.  Early application is permitted.  We do not expect the application of this ASU to materially impact the Company.

On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework, which adds new disclosure requirements and modifies or eliminates existing disclosure requirements of ASC 820. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted. We do not expect the application of this ASU to materially impact the Company, as it only affects fair value disclosures.

On October 31, 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810) – Targeted Improvements to Related Party Guidance for Variable Interest Entities, which requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted. We do not expect the application of this ASU to materially impact the Company.

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Investment Securities

12 Months Ended

Dec. 31, 2019

Investment Securities

Investment Securities

6. Investment Securities

Investment securities were comprised of the following as of December 31, 2019 and 2018 (amounts in thousands):

	Carrying Value as of
	December 31, 2019		December 31, 2018
RMBS, available-for-sale	$	189,576	$	209,079
RMBS, fair value option (1)		147,034		87,879
CMBS, fair value option (1), (2)		1,295,363		1,157,508
Held-to-maturity (“HTM”) debt securities, amortized cost		570,638		644,149
Equity security, fair value		12,664		11,893
Subtotal—Investment securities		2,215,275		2,110,508
VIE eliminations (1)		(1,405,037)		(1,204,040)
Total investment securities	$	810,238	$	906,468

(1) Certain fair value option CMBS and RMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810.

(2) Includes $186.6 million and $8.4 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of December 31, 2019 and 2018, respectively.

Purchases, sales and principal collections for all investment securities were as follows (amounts in thousands):

	RMBS,		RMBS, fair		CMBS, fair		HTM		Equity		Securitization
	available-for-sale		value option		value option		Securities		Security		VIEs (1)		Total
Year Ended December 31, 2019
Purchases	$	—	$	120,103	$	238,213	$	91,162	$	—	$	(351,220)	$	98,258
Sales		—		41,501		150,365		—		—		(184,540)		7,326
Principal collections		26,929		16,500		40,490		167,383		—		(45,642)		205,660
Year Ended December 31, 2018
Purchases	$	—	$	90,982	$	323,071	$	463,810	$	—	$	(385,463)	$	492,400
Acquisition of Infrastructure Lending Portfolio		—		—		—		65,060		—		—		65,060
Sales		13,264		—		105,637		—		—		(102,474)		16,427
Principal collections		34,763		1,439		114,545		327,207		—		(95,030)		382,924
Year Ended December 31, 2017
Purchases	$	7,433	$	—	$	125,776	$	79,163	$	—	$	(113,978)	$	98,394
Sales		—		—		37,184		—		—		(25,605)		11,579
Principal collections		40,635		—		109,354		182,919		—		(100,115)		232,793

(1) Represents RMBS and CMBS, fair value option amounts eliminated due to our consolidation of securitization VIEs. These amounts are reflected as repayment of debt of consolidated VIEs in our consolidated statements of cash flows.

RMBS, Available-for-Sale

The Company classified all of its RMBS not eliminated in consolidation as available-for-sale as of December 31, 2019 and 2018. These RMBS are reported at fair value in the balance sheet with changes in fair value recorded in AOCI.

The tables below summarize various attributes of our investments in available-for-sale RMBS as of December 31, 2019 and 2018 (amounts in thousands):

							Unrealized Gains or (Losses)
							Recognized in AOCI
	Purchase				Recorded				Gross		Gross		Net
	Amortized		Credit		Amortized		Non-Credit		Unrealized		Unrealized		Fair Value
	Cost		OTTI		Cost		OTTI		Gains		Losses		Adjustment		Fair Value
December 31, 2019
RMBS	$	148,385	$	(9,805)	$	138,580	$	(314)	$	51,310	$	—	$	50,996	$	189,576
December 31, 2018
RMBS	$	165,461	$	(9,897)	$	155,564	$	(31)	$	53,546	$	—	$	53,515	$	209,079

	Weighted Average Coupon (1)		Weighted Average Rating	WAL  (Years) (2)
December 31, 2019
RMBS	3.1	%	BB-	5.6
December 31, 2018
RMBS	3.7	%	CCC-	6.0

(1) Calculated using the December 31, 2019 and 2018 one-month LIBOR rate of 1.763% and 2.503%, respectively, for floating rate securities.

(2) Represents the remaining WAL of each respective group of securities as of the respective balance sheet date. The WAL of each individual security is calculated using projected amounts and projected timing of future principal payments.

As of December 31, 2019, approximately $160.9 million, or 84.9%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.24%. As of December 31, 2018, approximately $177.4 million, or 84.9%, of RMBS were variable rate and paid interest at LIBOR plus a weighted average spread of 1.22%. We purchased all of the RMBS at a discount, a portion of which will be accreted into income over the expected remaining life of the security. The majority of the income from this strategy is earned from the accretion of this accretable discount.

The following table contains a reconciliation of aggregate principal balance to amortized cost for our RMBS as of December 31, 2019 and 2018 (amounts in thousands):

	December 31, 2019		December 31, 2018
Principal balance	$	278,853	$	309,497
Accretable yield		(56,108)		(54,779)
Non-accretable difference		(84,165)		(99,154)
Total discount		(140,273)		(153,933)
Amortized cost	$	138,580	$	155,564

The principal balance of credit deteriorated RMBS was $263.7 million and $290.8 million as of December 31, 2019 and 2018, respectively. Accretable yield related to these securities totaled $50.3 million and $49.5 million as of December 31, 2019 and 2018, respectively.

The following table discloses the changes to accretable yield and non-accretable difference for our RMBS during the years ended December 31, 2019 and 2018 (amounts in thousands):

			Non-Accretable
	Accretable Yield		Difference
Balance as of January 1, 2018	$	55,712	$	121,867
Accretion of discount		(10,932)		—
Principal write-downs, net		—		(3,682)
Sales		(9,032)		—
Transfer to/from non-accretable difference		19,031		(19,031)
Balance as of December 31, 2018		54,779		99,154
Accretion of discount		(9,945)		—
Principal write-downs, net		—		(3,715)
Transfer to/from non-accretable difference		11,274		(11,274)
Balance as of December 31, 2019	$	56,108	$	84,165

We have engaged a third party manager who specializes in RMBS to execute the trading of RMBS, the cost of which was $1.5 million, $1.8 million and $1.9 million for the years ended December 31, 2019, 2018 and 2017, respectively, recorded as management fees in the accompanying consolidated statements of operations.

During the year ended December 31, 2018, we sold RMBS for proceeds of $13.3 million and realized gross gains of $3.5 million using the specific identification cost method. There were no sales of RMBS during the years ended December 31, 2019 and 2017.

The following table presents the gross unrealized losses and estimated fair value of any available-for-sale securities that were in an unrealized loss position as of December 31, 2019 and 2018, and for which OTTIs (full or partial) have not been recognized in earnings (amounts in thousands):

	Estimated Fair Value				Unrealized Losses
	Securities with a		Securities with a		Securities with a		Securities with a
	loss less than		loss greater than		loss less than		loss greater than
	12 months		12 months		12 months		12 months
As of December 31, 2019
RMBS	$	—	$	1,380	$	—	$	(314)
As of December 31, 2018
RMBS	$	2,148	$	—	$	(31)	$	—

As of both December 31, 2019 and 2018, there was one security with unrealized losses reflected in the table above. After evaluating the security and recording adjustments for credit-related OTTI, we concluded that the remaining unrealized losses reflected above were noncredit-related and would be recovered from the security’s estimated future cash flows. We considered a number of factors in reaching this conclusion, including that we did not intend to sell the security, it was not considered more likely than not that we would be forced to sell the security prior to recovering our amortized cost, and there were no material credit events that would have caused us to otherwise conclude that we would not recover our cost. Credit losses, which represent most of the OTTI we record on securities, are calculated by comparing (i) the estimated future cash flows of each security discounted at the yield determined as of the initial acquisition date or, if since revised, as of the last date previously revised, to (ii) our amortized cost basis. Significant judgment is used in projecting cash flows for our non-agency RMBS. As a result, actual income and/or impairments could be materially different from what is currently projected and/or reported.

CMBS and RMBS, Fair Value Option

As discussed in the “Fair Value Option” section of Note 2 herein, we elect the fair value option for certain CMBS and RMBS in an effort to eliminate accounting mismatches resulting from the current or potential consolidation of securitization VIEs. As of December 31, 2019, the fair value and unpaid principal balance of CMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of

securitization VIEs, were $1.3 billion and $3.0 billion, respectively. As of December 31, 2019, the fair value and unpaid principal balance of RMBS where we have elected the fair value option, excluding the notional value of interest-only securities and before consolidation of securitization VIEs, were $147.0 million and $87.4 million, respectively. The $1.4 billion total fair value balance of CMBS and RMBS represents our economic interests in these assets. However, as a result of our consolidation of securitization VIEs, the vast majority of this fair value (all except $37.4 million at December 31, 2019) is eliminated against VIE liabilities before arriving at our GAAP balance for fair value option investment securities.

As of December 31, 2019, $118.2 million of our CMBS were variable rate and none of our RMBS were variable rate.

HTM Debt Securities, Amortized Cost

The table below summarizes unrealized gains and losses of our investments in HTM debt securities as of December 31, 2019 and 2018 (amounts in thousands):

	Net Carrying Amount		Gross Unrealized		Gross Unrealized
	(Amortized Cost)		Holding Gains		Holding Losses		Fair Value
December 31, 2019
CMBS	$	383,473	$	946	$	(3,001)	$	381,418
Preferred interests		142,012		1,148		(353)		142,807
Infrastructure bonds		45,153		—		(651)		44,502
Total	$	570,638	$	2,094	$	(4,005)	$	568,727
December 31, 2018
CMBS	$	408,556	$	2,435	$	(3,349)	$	407,642
Preferred interests		174,825		703		—		175,528
Infrastructure bonds		60,768		178		(168)		60,778
Total	$	644,149	$	3,316	$	(3,517)	$	643,948

The table below summarizes the maturities of our HTM debt securities by type as of December 31, 2019 (amounts in thousands):

			Preferred		Infrastructure
	CMBS		Interests		Bonds		Total
Less than one year	$	284,251	$	—	$	5,371	$	289,622
One to three years		99,222		141,659		—		240,881
Three to five years		—		353		—		353
Thereafter		—		—		39,782		39,782
Total	$	383,473	$	142,012	$	45,153	$	570,638

As of December 31, 2019 and 2018, $19.8 million and $21.2 million, respectively, of our infrastructure bonds with an aggregate principal balance of $32.8 million and $34.2 million, respectively, were originally acquired with deteriorated credit quality and had no accretable yield and an aggregate non-accretable difference of $13.0 million.

Equity Security, Fair Value Option

During 2012, we acquired 9,140,000 ordinary shares from a related-party in Starwood European Real Estate Finance Limited (“SEREF”), a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange. The fair value of the investment remeasured in USD was $12.7 million and $11.9 million as of December 31, 2019 and 2018, respectively. As of December 31, 2019, our shares represent an approximate 2% interest in SEREF.

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Secured Borrowings

12 Months Ended

Dec. 31, 2019

Secured financing agreements

Secured Financing Agreements

Secured Borrowings

10. Secured Borrowings

Secured Financing Agreements

The following table is a summary of our secured financing agreements in place as of December 31, 2019 and 2018 (dollars in thousands):

												Outstanding Balance at
	Current		Extended		Weighted Average	Pledged Asset			Maximum			December 31,		December 31,
	Maturity		Maturity (a)		Pricing	Carrying Value			Facility Size			2019		2018
Repurchase Agreements:
Commercial Loans	Aug 2020 to Jan 2024	(b)	Aug 2021 to Apr 2028	(b)	(c)	$	5,327,761		$	9,066,480	(d)	$	3,640,620	$	3,598,311
Residential Loans	Feb 2021		N/A		LIBOR + 2.10%		14,704			400,000			11,835		—
Infrastructure Loans	Feb 2020		Feb 2021		LIBOR + 1.75%		227,463			500,000			188,198		—
Conduit Loans	Feb 2020 to Jun 2022		Feb 2021 to Jun 2023		LIBOR + 2.10%		109,864			350,000			86,575		35,034
CMBS/RMBS	Sep 2020 to Dec 2029	(e)	Dec 2020 to June 2030	(e)	(f)		1,005,348			837,566			682,229		656,405
Total Repurchase Agreements							6,685,140			11,154,046			4,609,457		4,289,750
Other Secured Financing:
Borrowing Base Facility	Apr 2022		Apr 2024		LIBOR + 2.25%		542,281			650,000	(g)		198,955		—
Infrastructure Acquisition Facility	Sep 2021		Sep 2022		(h)		754,443			771,534			603,642		1,551,148
Infrastructure Financing Facilities	Jul 2022 to Oct 2022		Oct 2024 to Jul 2027		LIBOR + 2.12%		524,197			1,000,000			428,206		—
Property Mortgages - Fixed rate	Nov 2024 to Aug 2052	(i)	N/A		3.94%		1,499,356			1,196,698			1,196,492		1,475,382
Property Mortgages - Variable rate	May 2020 to Jun 2026		N/A		LIBOR + 2.49%		783,460			714,810			696,503		645,344
Term Loan and Revolver	(j)		N/A		(j)		N/A	(j)		519,000			399,000		300,000
FHLB	Feb 2021		N/A		(k)		1,262,250			2,000,000			867,870		500,000
Total Other Secured Financing							5,365,987			6,852,042			4,390,668		4,471,874
						$	12,051,127		$	18,006,088			9,000,125		8,761,624
Unamortized net discount													(8,347)		(963)
Unamortized deferred financing costs													(85,730)		(77,096)
												$	8,906,048	$	8,683,565

(a) Subject to certain conditions as defined in the respective facility agreement.

(b) For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions.

(c) Certain facilities with an outstanding balance of $874.9 million as of December 31, 2019 are indexed to GBP LIBOR and EURIBOR. The remainder have a weighted average rate of LIBOR + 1.90%.

(d) The aggregate initial maximum facility size of $8.9 billion may be increased at our option, subject to certain conditions. This amount includes such upsizes.

(e) Certain facilities with an outstanding balance of $295.0 million as of December 31, 2019 carry a rolling 11-month or 12-month term which may reset monthly with the lender's consent. These facilities carry no maximum facility size.

(f) A facility with an outstanding balance of $184.7 million as of December 31, 2019 has a fixed annual interest rate of 3.49%. All other facilities are variable rate with a weighted average rate of LIBOR + 1.58%.

(g) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions.

(h) Consists of an annual interest rate of the applicable currency benchmark index + 1.50%. The spread increases 25 bps in each of the second and third years of the facility, which was entered into in September 2018.

(i) The weighted average maturity is 9.8 years as of December 31, 2019.

(j) Consists of: (i) a $399.0 million term loan facility that matures in July 2026 with an annual interest rate of LIBOR + 2.50%; and (ii) a $120.0 million revolving credit facility that matures in July 2024 with an annual interest rate of LIBOR + 3.00%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $3.1 billion as of December 31, 2019.

(k) FHLB financing with an outstanding balance of $438.5 million as of December 31, 2019 has a weighted average fixed annual interest rate of 2.01%. The remainder is variable rate with a weighted average rate of LIBOR + 0.28%.

In the normal course of business, the Company is in discussions with its lenders to extend or amend any financing facilities which contain near term expirations.

In February 2019, we entered into a $500.0 million Infrastructure Loans repurchase facility. The facility carries a one-year initial term with a one-year extension option and an annual interest rate of LIBOR + 1.75%.

In February 2019, we amended a Residential Loans repurchase facility to increase available borrowings by $200.0 million and extend the current maturity from June 2019 to February 2021.

In March 2019, we amended the FHLB facility to increase available borrowings from $500.0 million to $2.0 billion, subject to scheduled reductions to available capacity from September 2020 through maturity in February 2021.

In April 2019, we amended the Borrowing Base Facility to extend the current maturity from February 2021 to April 2022 with two one-year extension options.

In July 2019, we entered into the following credit agreements: (i) a $400.0 million term loan facility that carries a seven-year term and an annual interest rate of LIBOR + 2.50%; and (ii) a $100.0 million revolving credit facility that carries a five-year term and an annual interest rate of LIBOR + 3.00%. A portion of the net proceeds from the term loan was used to repay the amount outstanding under our previous term loan. We recognized a loss on extinguishment of debt of $1.5 million in our consolidated statement of operations in connection with the repayment of our previous term loan. In December 2019, the revolving credit facility was amended to increase available borrowings from $100.0 million to $120.0 million.

In July 2019, we entered into a $500.0 million Infrastructure Financing Facility to finance loans within the Infrastructure Lending Segment. The facility carries a three-year revolving period with two one-year extension options, one of which is at our discretion. The facility also carries a term-match to the respective collateral for an additional five-year term after the last day of the revolving period, with such term-match not to exceed the eight-year life of the facility. The facility has an annual interest rate between 2.00% to 2.85% over the applicable currency benchmark index rate, plus fees associated with the facility as well as each advance.

In October 2019, we entered into a $500.0 million Infrastructure Financing Facility to finance loans within the Infrastructure Lending Segment. The facility carries a three-year revolving period with two one-year extension options and an annual interest rate of LIBOR + 1.75%.

In October 2019, we entered into a $600.0 million first mortgage and mezzanine loan to refinance our existing Medical Office Portfolio debt of $494.3 million. The facility carries a two-year term with three one-year extension options and a weighted average floating rate of interest of LIBOR + 2.07%. Using proceeds from the unwind of our hedge on the existing debt, we swapped the interest to a fixed rate of 3.3%. We recognized loss on extinguishment of debt of $4.7 million in our consolidated statement of operations in connection with this refinancing.

In November 2019, we entered into mortgage loans with total borrowings of $84.5 million to finance our Woodstar I Portfolio. The loans carry six-year terms and weighted average fixed annual interest rates of 4.79%. A portion of the net proceeds from the mortgage loans was used to repay $9.2 million of outstanding government sponsored mortgage loans.

In December 2019, we amended a CMBS/RMBS repurchase facility to increase available borrowings from $150.0 million to $300.0 million.

During the year ended December 31, 2019, we entered into and amended several Commercial Loans repurchase facilities resulting in an aggregate upsize of $2.8 billion.

Our secured financing agreements contain certain financial tests and covenants. As of December 31, 2019, we were in compliance with all such covenants.

We seek to mitigate risks associated with our repurchase agreements by managing risk related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value. The margin call provisions under the majority of our repurchase facilities, consisting of 78% of these agreements, do not permit valuation adjustments based on capital markets activity. Instead, margin calls on these facilities are limited to collateral-specific credit marks. To monitor credit risk associated with the performance and value of our loans and investments, our asset management team regularly reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary. For repurchase agreements containing margin call provisions for general capital markets activity, approximately 22% of these pertain to our loans held-for-sale, for which we manage credit risk through the purchase of credit index instruments. We further seek to manage risks associated with our repurchase agreements by matching the maturities and interest rate characteristics of our loans with the related repurchase agreement.

For the years ended December 31, 2019, 2018 and 2017, approximately $34.3 million, $27.0 million and $19.5 million, respectively, of amortization of deferred financing costs from secured financing agreements was included in interest expense on our consolidated statements of operations.

Collateralized Loan Obligations

In August 2019, we refinanced a pool of our commercial loans held-for-investment through a CLO, STWD 2019-FL1. On the closing date, the CLO issued $1.1 billion principal amount of notes, of which $936.4 million was purchased by third party investors. We retained $86.6 million of notes, along with preferred shares with a liquidation preference of $77.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO in exchange for cash. During the year ended December 31, 2019, we utilized the reinvestment feature, contributing $88.4 million of additional interests into the CLO.

The following table is a summary of our CLO as of December 31, 2019 (amounts in thousands):

		Face		Carrying		Weighted
	Count	Amount		Value		Average Spread		Maturity
Collateral assets	20	$	1,073,504	$	1,073,504	LIBOR + 3.34%	(a)	Nov 2023	(b)
Financing	1		936,375		928,060	LIBOR + 1.65%	(c)	July 2038	(d)

(a) Represents the weighted-average coupon earned on variable rate loans during the year ended December 31, 2019. Of the loans financed by the CLO, 9% earned fixed weighted average interest of 6.84%.

(b) Represents the weighted-average maturity, assuming the extended contractual maturity of the collateral assets.

(c) Represents the weighted-average cost of financing incurred during the year ended December 31, 2019, inclusive of deferred issuance costs.

(d) Repayments of the CLO are tied to timing of the related collateral asset repayments. The term of the CLO financing obligation represents the legal final maturity date.

We incurred $9.2 million of issuance costs in connection with the CLO, which are amortized on an effective yield basis over the estimated life of the CLO. As of December 31, 2019, our unamortized issuance costs were $8.3 million.

The CLO is considered a VIE, for which we are deemed the primary beneficiary. We therefore consolidate the CLO. Refer to Note 15 for further discussion.

Maturities

Our credit facilities generally require principal to be paid down prior to the facilities’ respective maturities if and when we receive principal payments on, or sell, the investment collateral that we have pledged. The following table sets forth our principal repayments schedule for secured financings based on the earlier of (i) the extended contractual maturity of each credit facility or (ii) the extended contractual maturity of each of the investments that have been pledged as collateral under the respective credit facility (amounts in thousands):

	Repurchase		Other Secured
	Agreements		Financing		CLO			Total
2020	$	480,249	$	564,886	$	—		$	1,045,135
2021		625,956		857,429		—			1,483,385
2022		1,010,970		552,175		—			1,563,145
2023		1,056,812		705,283		—			1,762,095
2024		1,065,312		284,235		—			1,349,547
Thereafter		370,158		1,426,660		936,375	(a)		2,733,193
Total	$	4,609,457	$	4,390,668	$	936,375		$	9,936,500

(a) Assumes utilization of the reinvestment feature.

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Stockholders' Equity and Non-Controlling Interests (Details) - USD ($)													1 Months Ended			12 Months Ended
	Nov. 08, 2019	Aug. 07, 2019	May 08, 2019	Feb. 28, 2019	Nov. 09, 2018	Aug. 08, 2018	May 04, 2018	Feb. 28, 2018	Nov. 08, 2017	Aug. 09, 2017	May 09, 2017	Feb. 23, 2017	Dec. 31, 2019	Mar. 31, 2018	Sep. 30, 2014	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Nov. 30, 2019	Mar. 29, 2017	Jan. 31, 2016	May 31, 2014
Stockholders' Equity
Dividend declared (in dollars per share)	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48				$ 1.92	$ 1.92	$ 1.92
Shares issued under ATM Agreement																0	0	0
Authorized amount of share repurchases															$ 250,000,000						$ 500,000,000.0
Number of shares that may be issued under the DRIP Plan																						11,000,000.0
Value of shares that may be issued under the ATM Agreement																						$ 500,000,000.0
Period for repurchase of common stock															1 year
Common stock repurchased (in shares)																	573,255
Repurchase of common stock																	$ 12,090,000
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures													$ 84,329,000			$ 84,329,000	171,765,000
Net income attributable to non-controlling interests																27,271,000	25,367,000	$ 11,997,000
Investment securities													810,238,000			810,238,000	906,468,000
Accrued interest receivable													64,087,000			64,087,000	60,355,000
Amount of non-controlling interest already held by a purchaser of a property																	300,000
Payment to acquire non-controlling interest																$ 49,958,000	$ 256,404,000	96,010,000
2019 Notes
Stockholders' Equity
Shares issued to settle redemption																3,600,000	12,400,000
Value of shares issued to settle redemption																$ 78,000,000.0	$ 263,400,000
Convertible Senior Notes
Stockholders' Equity
Face amount of debt repurchased																				$ 250,700,000
Convertible Senior Notes | 2019 Notes
Stockholders' Equity
Shares issued to settle redemption																3,600,000
Value of shares issued to settle redemption																$ 78,000,000.0
Face amount of debt repurchased																	0
Convertible Senior Notes | 2019 Notes | Common stock
Stockholders' Equity
Face amount of debt repurchased													$ 0			0		$ 0
Class A Units
Stockholders' Equity
Net income attributable to non-controlling interests																$ 21,600,000	$ 17,600,000
CMBS JV
Stockholders' Equity
Equity Method Investment, Ownership Percentage													51.00%			51.00%
Assets sold to joint venture													$ 333,000,000.0			$ 333,000,000.0
Investment securities													318,300,000			318,300,000			$ 24,500,000
Investments in existing CMBS JV													13,300,000			13,300,000
Accrued interest receivable													1,400,000			1,400,000
Amount of equity method investment funded													169,800,000
Non-controlling interest													$ 175,600,000			$ 175,600,000			$ 11,200,000
CMBS JV | Joint Venture Partner
Stockholders' Equity
Equity Method Investment, Ownership Percentage													49.00%			49.00%
Amount of equity method investment funded													$ 163,200,000
Woodstar II Portfolio | Class A Units
Stockholders' Equity
Shares issued																100,000	1,700,000
Right to receive additional shares																1,900,000
Woodstar II Portfolio | Class A Units | SPT Dolphin
Stockholders' Equity
Shares issued																10,200,000	7,403,731	10,183,505
Right to receive additional shares																1,910,563	1,411,642	1,910,563
Number of common stock per unit																1	1
Redemption of units																974,176	0
Woodstar II Portfolio | Class A Units | SPT Dolphin | Non-Controlling Interests
Stockholders' Equity
Redemption of units																235,900,000	254,900,000
REIS Equity Portfolio
Stockholders' Equity
Amount of non-controlling interest already held by a purchaser of a property														$ 300,000
Payment to acquire non-controlling interest														$ 3,300,000

XML

Unsecured Secured Notes (Details) $ / shares in Units, shares in Thousands				1 Months Ended	12 Months Ended
	Jan. 29, 2018 USD ($)	Dec. 04, 2017 USD ($)	Dec. 16, 2016 USD ($)	Jul. 31, 2019 USD ($)	Dec. 31, 2019 USD ($) item $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Mar. 29, 2017 USD ($)	Oct. 08, 2014 USD ($)	Jul. 03, 2013 USD ($)	Feb. 15, 2013 USD ($)
Unsecured Senior Notes
Principal Amount					$ 1,950,000,000	$ 2,027,969,000
Unamortized deferred financing costs					(5,624,000)	(8,078,000)
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes					3,755,000	3,755,000
Carrying amount of debt components					1,928,622,000	1,998,831,000
Interest expense					508,729,000	408,188,000	$ 295,666,000
Loss on extinguishment of debt				$ (1,500,000)	19,270,000	$ 5,808,000	$ 5,915,000
Conversion Spread Value - Shares | shares						91	1,899
Principal amount of notes, basis for conversion					$ 1,000
Closing share price (in dollars per share) | $ / shares					$ 24.86	$ 19.71	$ 21.35
Conversion upon satisfaction of closing market price condition | Maximum
Unsecured Senior Notes
Period of average closing market price of common stock as a basis for debt conversion					10 days
2018 Notes
Unsecured Senior Notes
Coupon Rate (as a percent)											4.55%
Amount issued											$ 600,000,000.0
Conversion Spread Value - Shares | shares							541
2019 Notes
Unsecured Senior Notes
Coupon Rate (as a percent)										4.00%
Principal Amount						$ 77,969,000
Amount issued						263,400,000				$ 460,000,000.0
Debt conversion original amount						$ 296,800,000
Shares issued to settle redemption | shares					3,600	12,400
Cash payments to settle redemptions						$ 25,500,000
Settlement consideration attributable to the liability component						264,400,000
Loss on extinguishment of debt						2,100,000
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital						32,400,000
Fair value of shares issued						271,200,000
Value of shares issued to settle redemption					$ 78,000,000.0	$ 263,400,000
Conversion Spread Value - Shares | shares						91	1,358
2021 Senior Notes 3.625%
Unsecured Senior Notes
Coupon Rate (as a percent)	3.625%				3.63%
Effective Rate (as a percent)					3.89%
Remaining Period of Amortization					1 year 1 month 6 days
Principal Amount					$ 500,000,000	$ 500,000,000
Amount issued	$ 500,000,000.0
2021 Senior Notes 3.625% | Maximum
Unsecured Senior Notes
Percentage of principal amount that may be redeemed	40.00%
2021 Senior Notes 3.625% | Debt instrument redemption period one
Unsecured Senior Notes
Percentage of principal amount that may be redeemed	100.00%
2021 Senior Notes 3.625% | Conversion upon satisfaction of trading price condition
Unsecured Senior Notes
Percentage of principal amount that may be redeemed	100.00%
2021 Senior Notes 5.00%
Unsecured Senior Notes
Coupon Rate (as a percent)			5.00%		5.00%
Effective Rate (as a percent)					5.32%
Remaining Period of Amortization					2 years
Principal Amount					$ 700,000,000	700,000,000
Amount issued			$ 700,000,000.0
2021 Senior Notes 5.00% | Maximum
Unsecured Senior Notes
Percentage of principal amount that may be redeemed			35.00%
2021 Senior Notes 5.00% | Debt instrument redemption period one
Unsecured Senior Notes
Percentage of principal amount that may be redeemed			100.00%
2021 Senior Notes 5.00% | Debt instrument redemption period two
Unsecured Senior Notes
Percentage of principal amount that may be redeemed			100.00%
2023 Notes
Unsecured Senior Notes
Coupon Rate (as a percent)					4.38%			4.375%	3.75%
Effective Rate (as a percent)					4.86%
Remaining Period of Amortization					3 years 3 months 18 days
Principal Amount					$ 250,000,000	250,000,000
Amount issued								$ 250,000,000.0	$ 431,300,000
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital							$ 3,755,000
Conversion Rate					38.5959
Conversion price (in dollars per share) | $ / shares					$ 25.91
Closing share price (in dollars per share) | $ / shares					$ 24.86
If-converted value					$ 239,900,000
Amount by which if-converted value of the Notes are less than principal amount					$ 10,100,000
2025 Senior Notes
Unsecured Senior Notes
Coupon Rate (as a percent)		4.75%			4.75%
Effective Rate (as a percent)					5.04%
Remaining Period of Amortization					5 years 2 months 12 days
Principal Amount					$ 500,000,000	500,000,000
Amount issued		$ 500,000,000.0
2025 Senior Notes | Maximum
Unsecured Senior Notes
Percentage of principal amount that may be redeemed		40.00%
2025 Senior Notes | Debt instrument redemption period one
Unsecured Senior Notes
Percentage of principal amount that may be redeemed		100.00%
2025 Senior Notes | Debt instrument redemption period two
Unsecured Senior Notes
Percentage of principal amount that may be redeemed		100.00%
Convertible Senior Notes
Unsecured Senior Notes
Unamortized discount					(3,610,000)	(4,644,000)
Interest expense					$ 12,354,000	25,148,000
Loss on extinguishment of debt						2,099,000
Amount of debt repurchased								250,700,000
Minimum number of conditions to be satisfied for conversion of debt | item					1
Convertible Senior Notes | Conversion upon satisfaction of closing market price condition
Unsecured Senior Notes
Minimum trading period as a basis for debt conversion					20 days
Consecutive trading period as a basis for debt conversion					30 days
Convertible Senior Notes | Conversion upon satisfaction of closing market price condition | Minimum
Unsecured Senior Notes
Percentage of per share value of distributions that exceeds the market price of the entity's common stock as a basis for debt conversion					10.00%
Convertible Senior Notes | Conversion upon satisfaction of trading price condition
Unsecured Senior Notes
Consecutive trading period as a basis for debt conversion					5 days
Convertible Senior Notes | Conversion upon satisfaction of trading price condition | Maximum
Unsecured Senior Notes
Percentage of conversion price and last reported sales price as a basis for debt conversion					98.00%
Convertible Senior Notes | 2017 Notes | Conversion upon satisfaction of closing market price condition | Minimum
Unsecured Senior Notes
Percentage of conversion price as a basis for debt conversion					110.00%
Convertible Senior Notes | 2018 Notes
Unsecured Senior Notes
Loss on extinguishment of debt							5,900,000
Portion of repurchase price attributable to equity component recognized as a reduction of additional paid-in-capital							18,100,000
Amount of debt repurchased								$ 230,000,000.0
Convertible Senior Notes | 2019 Notes
Unsecured Senior Notes
Interest expense					$ 12,300,000	28,900,000	$ 72,200,000
Shares issued to settle redemption | shares					3,600
Cash payments to settle redemptions					$ 12,000,000.0
Value of shares issued to settle redemption					78,000,000.0
Amount of debt repurchased						0
Senior Notes
Unsecured Senior Notes
Unamortized discount					$ (12,144,000)	$ (16,416,000)

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Secured Borrowings (Details) $ in Thousands	1 Months Ended						12 Months Ended
	Dec. 31, 2019 USD ($)	Nov. 30, 2019 USD ($)	Oct. 31, 2019 USD ($) Option item	Jul. 31, 2019 USD ($) Option	Apr. 30, 2019 item	Feb. 28, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Aug. 31, 2019 USD ($)	Mar. 31, 2019 USD ($)
Secured Financing Agreements
Pricing margin (as a percent)							1.50%
Increase in spread in each of the second and third years of the facility							0.25%
Principal Amount	$ 1,950,000						$ 1,950,000	$ 2,027,969
Carrying Value	8,906,048						8,906,048	8,683,565
Loss on extinguishment of debt				$ 1,500			(19,270)	(5,808)	$ (5,915)
Purchased by investors	928,060						928,060
Long-term Debt	1,928,622						1,928,622	1,998,831
Payment of debt							8,671,085	6,360,610	$ 4,586,509
Revolving credit facility
Secured Financing Agreements
Equity interests in certain subsidiaries used to secure facilities							3,100
Maximum borrowing capacity	$ 120,000	$ 100,000		$ 100,000			$ 120,000
Maturity period				5 years
Revolving credit facility | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)				3.00%
Interest rate (as a percent)	3.00%						3.00%
Lender 7 Secured Financing
Secured Financing Agreements
Number of extension options | item					2
Extended term / option					1 year
Woodstar I Portfolio
Secured Financing Agreements
Interest rate (as a percent)		4.79%
Maximum Facility Size		$ 84,500
Maturity period		6 years
Payment of debt		$ 9,200
Infrastructure Loans Repurchase Facility
Secured Financing Agreements
Maximum Facility Size						$ 500,000
Maturity period						1 year
Extended term / option						1 year
Infrastructure Loans Repurchase Facility | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)						1.75%
Infrastructure Loans Repurchase Facility | Revolving credit facility | Minimum
Secured Financing Agreements
Pricing margin (as a percent)							2.00%
Infrastructure Loans Repurchase Facility | Revolving credit facility | Maximum
Secured Financing Agreements
Pricing margin (as a percent)							2.85%
Residential Loans repurchase facility
Secured Financing Agreements
Increase in available borrowings						$ 200,000
Medical Office Portfolio
Secured Financing Agreements
Loss on extinguishment of debt			$ 4,700
Maturity period			2 years
Number of extension options | item			3
Extended term / option			1 year
Long-term Debt			$ 494,300
Medical Office Portfolio | Weighted-average
Secured Financing Agreements
Interest rate (as a percent)			3.30%
Medical Office Portfolio | LIBOR | Weighted-average
Secured Financing Agreements
Pricing margin (as a percent)			2.07%
Revolving Credit Agreement
Secured Financing Agreements
Maximum Facility Size	$ 300,000						$ 300,000
Maximum facility size subject to certain conditions	650,000						$ 650,000
Property Mortgages - Fixed rate
Secured Financing Agreements
Maturity period							9 years 9 months 18 days
FHLB
Secured Financing Agreements
Carrying Value	$ 438,500						$ 438,500
Maximum borrowing capacity						$ 500,000					$ 2,000,000
FHLB | Weighted-average
Secured Financing Agreements
Interest rate (as a percent)	2.01%						2.01%
FHLB | LIBOR | Weighted-average
Secured Financing Agreements
Pricing margin (as a percent)							0.28%
Collateralized Loan Obligation
Secured Financing Agreements
Principal Amount										$ 86,600
Principal amount of notes										1,100,000
Purchased by investors										936,400
Liquidation preference										$ 77,000
Additional Contribution to CLO							$ 88,400
Term loan facility
Secured Financing Agreements
Maximum borrowing capacity	$ 399,000			$ 400,000			$ 399,000
Maturity period				7 years
Term loan facility | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)				2.50%			2.50%
Commercial Loans
Secured Financing Agreements
Maximum Facility Size	8,900,000						$ 8,900,000
Carrying Value	$ 874,900						$ 874,900
Commercial Loans | LIBOR | Weighted-average
Secured Financing Agreements
Interest rate (as a percent)	1.90%						1.90%
Commercial Loans | Repurchase facility
Secured Financing Agreements
Aggregate upsize							$ 2,800,000
Infrastructure Loans | Revolving credit facility
Secured Financing Agreements
Maximum borrowing capacity			$ 500,000	$ 500,000
Maturity period			3 years	3 years
Number of extension options			2	2
Number of extension options at Company's discretion | Option				1
Extended term / option			1 year	1 year
Maximum term of the facility				8 years
Extension term				5 years
Infrastructure Loans | Revolving credit facility | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)			1.75%
Mezzanine [Member] | Revolving credit facility
Secured Financing Agreements
Maximum borrowing capacity			$ 600,000
CMBS/RMBS
Secured Financing Agreements
Pricing margin (as a percent)							3.49%
Carrying Value	$ 184,700						$ 184,700
Increase in available borrowings	$ 300,000	$ 150,000
CMBS/RMBS | LIBOR | Weighted-average
Secured Financing Agreements
Interest rate (as a percent)	1.58%						1.58%
CMBS/RMBS | Certain Facilities
Secured Financing Agreements
Maximum Facility Size	$ 295,000						$ 295,000
Rolling maturity period							11 months
Maturity period							12 months
Secured financing agreements
Secured Financing Agreements
Pledged Asset Carrying Value	12,051,127						$ 12,051,127
Maximum Facility Size	18,006,088						18,006,088
Principal Amount	9,000,125						9,000,125	8,761,624
Unamortized net discount	(8,347)						(8,347)	(963)
Unamortized deferred financing costs	(85,730)						(85,730)	(77,096)
Carrying Value	8,906,048						8,906,048	8,683,565
Secured financing agreements | Other Secured Financing
Secured Financing Agreements
Pledged Asset Carrying Value	5,365,987						5,365,987
Maximum Facility Size	6,852,042						6,852,042
Principal Amount	4,390,668						4,390,668	4,471,874
Secured financing agreements | Revolving Credit Agreement
Secured Financing Agreements
Pledged Asset Carrying Value	542,281						542,281
Maximum Facility Size	650,000						650,000
Principal Amount	198,955						$ 198,955
Secured financing agreements | Revolving Credit Agreement | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)							2.25%
Secured financing agreements | Infrastructure Acquisition Facility
Secured Financing Agreements
Pledged Asset Carrying Value	754,443						$ 754,443
Maximum Facility Size	771,534						771,534
Principal Amount	603,642						603,642	1,551,148
Secured financing agreements | Infrastructure Revolvers
Secured Financing Agreements
Pledged Asset Carrying Value	524,197						524,197
Maximum Facility Size	1,000,000						1,000,000
Principal Amount	428,206						$ 428,206
Secured financing agreements | Infrastructure Revolvers | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)							2.12%
Secured financing agreements | Property Mortgages - Fixed rate
Secured Financing Agreements
Pledged Asset Carrying Value	1,499,356						$ 1,499,356
Maximum Facility Size	1,196,698						1,196,698
Principal Amount	1,196,492						$ 1,196,492	1,475,382
Secured financing agreements | Property Mortgages - Fixed rate | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)							3.94%
Secured financing agreements | Property Mortgages - Variable rate
Secured Financing Agreements
Pledged Asset Carrying Value	783,460						$ 783,460
Maximum Facility Size	714,810						714,810
Principal Amount	696,503						$ 696,503	645,344
Secured financing agreements | Property Mortgages - Variable rate | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)							2.49%
Secured financing agreements | Term Loan and Revolver
Secured Financing Agreements
Maximum Facility Size	519,000						$ 519,000
Principal Amount	399,000						399,000	300,000
Secured financing agreements | FHLB
Secured Financing Agreements
Pledged Asset Carrying Value	1,262,250						1,262,250
Maximum Facility Size	2,000,000						2,000,000
Principal Amount	867,870						867,870	500,000
Secured financing agreements | Repurchase Agreements
Secured Financing Agreements
Pledged Asset Carrying Value	6,685,140						6,685,140
Maximum Facility Size	11,154,046						11,154,046
Principal Amount	4,609,457						4,609,457	4,289,750
Secured financing agreements | Commercial Loans
Secured Financing Agreements
Pledged Asset Carrying Value	5,327,761						5,327,761
Maximum Facility Size	9,066,480						9,066,480
Principal Amount	3,640,620						3,640,620	3,598,311
Secured financing agreements | Residential Loans
Secured Financing Agreements
Pledged Asset Carrying Value	14,704						14,704
Maximum Facility Size	400,000						400,000
Principal Amount	11,835						$ 11,835
Secured financing agreements | Residential Loans | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)							2.10%
Secured financing agreements | Infrastructure Loans
Secured Financing Agreements
Pledged Asset Carrying Value	227,463						$ 227,463
Maximum Facility Size	500,000						500,000
Principal Amount	188,198						$ 188,198
Secured financing agreements | Infrastructure Loans | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)							1.75%
Secured financing agreements | Conduit Loans
Secured Financing Agreements
Pledged Asset Carrying Value	109,864						$ 109,864
Maximum Facility Size	350,000						350,000
Principal Amount	86,575						$ 86,575	35,034
Secured financing agreements | Conduit Loans | LIBOR
Secured Financing Agreements
Pricing margin (as a percent)							2.10%
Secured financing agreements | CMBS/RMBS
Secured Financing Agreements
Pledged Asset Carrying Value	1,005,348						$ 1,005,348
Maximum Facility Size	837,566						837,566
Principal Amount	$ 682,229						$ 682,229	$ 656,405

XML

Variable Interest Entities - Assets and Liabilities of Consolidated CLO (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Assets:
Total Assets	$ 78,042,336	$ 68,262,453
Liabilities
Total Liabilities	72,905,322	$ 63,362,264
Collateralized Loan Obligation
Assets:
Loans held-for-investment, net	1,073,504
Accrued interest receivable	3,129
Other assets	26,496
Total Assets	1,103,129
Liabilities
Accounts payable, accrued expenses and other liabilities	1,362
Collateralized loan obligations, net	928,060
Total Liabilities	$ 929,422

XML

Derivatives and Hedging Activity - Designated and Non-Designated Hedges (Details) $ in Thousands	Dec. 31, 2019 USD ($) item
Derivatives
Number of contracts	328
Foreign exchange contracts | EUR | Short
Derivatives
Number of contracts	168
Aggregate notional amount | $	$ 199,183
Foreign exchange contracts | AUD | Short
Derivatives
Number of contracts	4
Aggregate notional amount | $	$ 25,850
Foreign exchange contracts | GBP | Short
Derivatives
Number of contracts	93
Aggregate notional amount | $	$ 444,236
Interest rate swaps - Paying fixed rates | USD
Derivatives
Number of contracts	37
Aggregate notional amount | $	$ 1,299,466
Interest rate swaps - Receiving fixed rates | USD
Derivatives
Number of contracts	2
Aggregate notional amount | $	$ 970,000
Interest Rate Swap Guarantees | GBP
Derivatives
Number of contracts	1
Aggregate notional amount | $	$ 9,390
Interest Rate Swap Guarantees | USD
Derivatives
Number of contracts	6
Aggregate notional amount | $	$ 394,671
Interest rate caps | USD
Derivatives
Number of contracts	12
Aggregate notional amount | $	$ 742,299
Credit spread instrument | USD
Derivatives
Number of contracts	5
Aggregate notional amount | $	$ 89,000

XML

Properties (Details) $ in Thousands, ft² in Millions		1 Months Ended	12 Months Ended					13 Months Ended
	Sep. 25, 2017 ft² property	Dec. 31, 2017 property	Dec. 31, 2019 USD ($) ft² property item	Dec. 31, 2018 USD ($) property	Dec. 31, 2017 USD ($) property	Dec. 31, 2016 ft² item	Dec. 31, 2015 item	Dec. 31, 2018 USD ($) property
Properties
Number of properties sold | property				16	6
Proceeds from sale of operating properties				$ 313,300	$ 56,400
Gain on sale of property			$ 59,700	$ 55,100	19,900
Number of properties acquired by a third party which already held a non-controlling interest in the property | property				1
Amount of non-controlling interest already held by a purchaser of a property				$ 300
Summary of properties
Properties, cost			2,490,630	2,972,803				$ 2,972,803
Less: accumulated depreciation			(224,190)	(187,913)				(187,913)
Properties, net			2,266,440	2,784,890				2,784,890
Future rental payments due from tenants under existing non-cancellable operating leases
2020			177,516
2021			95,524
2022			89,602
2023			79,177
2024			71,271
Thereafter			688,437
Total			1,201,527
Non-Controlling Interests
Properties
Gain on sale of property			5,300	5,100	$ 3,300
Property Segment
Summary of properties
Land and land improvements			484,397	648,972				648,972
Buildings and building improvements			1,687,756	1,980,283				1,980,283
Furniture & fixtures			$ 52,567	$ 46,048				46,048
Property Segment | Minimum
Summary of properties
Land improvements, useful life			0 years	0 years
Building and building improvements, useful life			5 years	5 years
Furniture & fixtures, useful life			3 years	3 years
Property Segment | Maximum
Summary of properties
Land improvements, useful life			15 years	15 years
Building and building improvements, useful life			45 years	45 years
Furniture & fixtures, useful life			7 years	7 years
Investing and Servicing Segment
Properties
Number of properties in portfolio investment | property			16
Total gross properties and lease intangibles			$ 277,800
Total liabilities assumed			$ 187,900
Number of retail properties acquired | property					3
Number of equity interests in unconsolidated commercial real estate properties | property			1
Number of industrial properties acquired | property				3
Number of properties sold | property			4	9	5
Gain on sale of property			$ 59,700	$ 26,600	$ 19,800
Number of properties acquired by a third party which already held a non-controlling interest in the property | property				1
Amount of non-controlling interest already held by a purchaser of a property				$ 300
Summary of properties
Land and land improvements			54,052	82,332				82,332
Buildings and building improvements			182,048	213,010				213,010
Furniture & fixtures			$ 2,139	$ 2,158				$ 2,158
Investing and Servicing Segment | Minimum
Summary of properties
Land improvements, useful life			0 years	0 years
Building and building improvements, useful life			3 years	3 years
Furniture & fixtures, useful life			2 years	2 years
Investing and Servicing Segment | Maximum
Summary of properties
Land improvements, useful life			15 years	15 years
Building and building improvements, useful life			40 years	40 years
Furniture & fixtures, useful life			5 years	5 years
Investing and Servicing Segment | Non-Controlling Interests
Properties
Gain on sale of property			$ 5,300	$ 5,100	$ 3,300
Commercial and Residential Lending Segment
Summary of properties
Land and land improvements			11,386
Buildings and building improvements			$ 16,285
Commercial and Residential Lending Segment | Minimum
Summary of properties
Land improvements, useful life			0 years
Building and building improvements, useful life			10 years
Commercial and Residential Lending Segment | Maximum
Summary of properties
Land improvements, useful life			7 years
Building and building improvements, useful life			23 years
Ireland Portfolio
Properties
Number of properties sold | property			4	0	1
Proceeds from sale of operating properties			$ 407,200
Woodstar Portfolio
Properties
Number of properties in portfolio investment | property			32
Total gross properties and lease intangibles			$ 629,500
Total liabilities assumed			$ 478,200
Number of units acquired | item			8,948
Number of acquired properties closed | item						14	18
Woodstar II Portfolio
Properties
Number of properties in portfolio investment | property		8	27	27
Total gross properties and lease intangibles			$ 605,500
Total liabilities assumed			436,900
Number of units acquired | property		1,740		4,369				6,109
Percentage of occupied portfolio				100.00%
Medical Office Portfolio
Properties
Area of property | ft²						1.9
Total gross properties and lease intangibles			759,900
Total liabilities assumed			590,900
Number of acquired properties closed | item						34
Master Lease Mortgages
Properties
Total gross properties and lease intangibles			343,800
Total liabilities assumed			$ 192,400
Number of retail properties acquired | property	20		16
Number of industrial properties acquired | property	3
Number of square feet of properties | ft²	5.3		1.9
Term of master lease agreements	24 years 7 months 6 days		24 years 7 months 6 days
Master Lease Mortgages | Disposed of by sale
Properties
Number of industrial properties acquired | property				3
Number of properties sold | property				4
Gain on sale of property				$ 28,500
REIS Equity Portfolio
Properties
Proceeds from sale of operating properties			$ 145,900
Utah, Florida, Texas and Minnesota | Master Lease Mortgages
Properties
Concentration risk (as a percent)	50.00%		50.00%

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Schedule III-Real Estate and Accumulated Depreciation (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Schedule III-Residential Real Estate
Encumbrances	$ 1,892,995
Initial Cost to Company
Land	446,973
Depreciable Property	1,981,150
Costs Capitalized Subsequent to Acquisition
Land	0
Depreciable Property	62,507
Gross Amounts Carried
Land	447,002
Depreciable Property	2,043,628
Total	2,490,630	$ 2,972,803	$ 2,755,050	$ 1,986,285
Accumulated Depreciation	(224,190)	$ (187,913)	$ (107,569)	$ (41,565)
Aggregate cost for federal income tax purposes	$ 2,600,000
Hotel - U. S. Midwest
Schedule III-Residential Real Estate
Number of properties | property	(1)
Initial Cost to Company
Depreciable Property	$ 5,565
Costs Capitalized Subsequent to Acquisition
Depreciable Property	929
Gross Amounts Carried
Depreciable Property	6,494
Total	6,494
Accumulated Depreciation	$ (1,807)
Medical office - U.S. Midwest
Schedule III-Residential Real Estate
Number of properties | property	(7)
Encumbrances	$ 78,048
Initial Cost to Company
Land	2,764
Depreciable Property	97,802
Costs Capitalized Subsequent to Acquisition
Depreciable Property	503
Gross Amounts Carried
Land	2,764
Depreciable Property	98,305
Total	101,069
Accumulated Depreciation	$ (9,705)
Medical office - U.S. North East
Schedule III-Residential Real Estate
Number of properties | property	(7)
Encumbrances	$ 191,661
Initial Cost to Company
Land	11,283
Depreciable Property	176,999
Gross Amounts Carried
Land	11,283
Depreciable Property	176,999
Total	188,282
Accumulated Depreciation	$ (16,437)
Medical office - U.S. South East
Schedule III-Residential Real Estate
Number of properties | property	(6)
Encumbrances	$ 107,252
Initial Cost to Company
Land	7,930
Depreciable Property	117,740
Costs Capitalized Subsequent to Acquisition
Depreciable Property	159
Gross Amounts Carried
Land	7,930
Depreciable Property	117,899
Total	125,829
Accumulated Depreciation	$ (11,555)
Medical office - U.S. South West
Schedule III-Residential Real Estate
Number of properties | property	(8)
Encumbrances	$ 125,345
Initial Cost to Company
Land	15,921
Depreciable Property	126,842
Costs Capitalized Subsequent to Acquisition
Depreciable Property	667
Gross Amounts Carried
Land	15,921
Depreciable Property	127,509
Total	143,430
Accumulated Depreciation	$ (13,493)
Medical office - U.S. West
Schedule III-Residential Real Estate
Number of properties | property	(6)
Encumbrances	$ 97,694
Initial Cost to Company
Land	13,415
Depreciable Property	107,844
Costs Capitalized Subsequent to Acquisition
Depreciable Property	488
Gross Amounts Carried
Land	13,415
Depreciable Property	108,332
Total	121,747
Accumulated Depreciation	$ (12,243)
Mixed Use - U.S., West
Schedule III-Residential Real Estate
Number of properties | property	(1)
Encumbrances	$ 8,667
Initial Cost to Company
Land	1,002
Depreciable Property	14,323
Costs Capitalized Subsequent to Acquisition
Depreciable Property	246
Gross Amounts Carried
Land	1,002
Depreciable Property	14,569
Total	15,571
Accumulated Depreciation	$ (1,659)
Multifamily - U.S., South East (64 properties)
Schedule III-Residential Real Estate
Number of properties | property	(60)
Encumbrances	$ 930,351
Initial Cost to Company
Land	251,084
Depreciable Property	926,809
Costs Capitalized Subsequent to Acquisition
Depreciable Property	31,202
Gross Amounts Carried
Land	251,113
Depreciable Property	957,982
Total	1,209,095
Accumulated Depreciation	$ (113,293)
Office - U.S. North East
Schedule III-Residential Real Estate
Number of properties | property	(1)
Encumbrances	$ 17,474
Initial Cost to Company
Land	7,250
Depreciable Property	10,614
Costs Capitalized Subsequent to Acquisition
Depreciable Property	2,538
Gross Amounts Carried
Land	7,250
Depreciable Property	13,152
Total	20,402
Accumulated Depreciation	$ (1,505)
Office - U.S., South East
Schedule III-Residential Real Estate
Number of properties | property	(2)
Encumbrances	$ 23,809
Initial Cost to Company
Land	7,081
Depreciable Property	31,528
Costs Capitalized Subsequent to Acquisition
Depreciable Property	3,503
Gross Amounts Carried
Land	7,081
Depreciable Property	35,031
Total	42,112
Accumulated Depreciation	$ (7,585)
Office - U.S., South West
Schedule III-Residential Real Estate
Number of properties | property	(2)
Encumbrances	$ 28,334
Initial Cost to Company
Land	8,188
Depreciable Property	28,019
Costs Capitalized Subsequent to Acquisition
Depreciable Property	2,252
Gross Amounts Carried
Land	8,188
Depreciable Property	30,271
Total	38,459
Accumulated Depreciation	$ (2,735)
Office - U.S., West
Schedule III-Residential Real Estate
Number of properties | property	(1)
Encumbrances	$ 15,448
Initial Cost to Company
Depreciable Property	4,261
Costs Capitalized Subsequent to Acquisition
Depreciable Property	5,592
Gross Amounts Carried
Depreciable Property	9,853
Total	9,853
Accumulated Depreciation	$ (1,301)
Retail - U.S., Mid Atlantic
Schedule III-Residential Real Estate
Number of properties | property	(1)
Encumbrances	$ 11,438
Initial Cost to Company
Land	6,432
Depreciable Property	6,315
Costs Capitalized Subsequent to Acquisition
Depreciable Property	11,940
Gross Amounts Carried
Land	6,432
Depreciable Property	18,255
Total	24,687
Accumulated Depreciation	$ (1,985)
Retail - U.S., Midwest (7 properties)
Schedule III-Residential Real Estate
Number of properties | property	(7)
Encumbrances	$ 79,300
Initial Cost to Company
Land	24,384
Depreciable Property	109,445
Costs Capitalized Subsequent to Acquisition
Depreciable Property	1,354
Gross Amounts Carried
Land	24,384
Depreciable Property	110,799
Total	135,183
Accumulated Depreciation	$ (9,573)
Retail - U.S., North East
Schedule III-Residential Real Estate
Number of properties | property	(1)
Encumbrances	$ 11,580
Initial Cost to Company
Land	472
Depreciable Property	12,260
Costs Capitalized Subsequent to Acquisition
Depreciable Property	568
Gross Amounts Carried
Land	472
Depreciable Property	12,828
Total	13,300
Accumulated Depreciation	$ (1,877)
Retail - U.S., South East (5 properties)
Schedule III-Residential Real Estate
Number of properties | property	(5)
Encumbrances	$ 42,200
Initial Cost to Company
Land	21,353
Depreciable Property	60,618
Costs Capitalized Subsequent to Acquisition
Depreciable Property	49
Gross Amounts Carried
Land	21,353
Depreciable Property	60,667
Total	82,020
Accumulated Depreciation	$ (4,352)
Retail - U.S., South West (6 properties)
Schedule III-Residential Real Estate
Number of properties | property	(6)
Encumbrances	$ 76,894
Initial Cost to Company
Land	37,458
Depreciable Property	78,579
Costs Capitalized Subsequent to Acquisition
Depreciable Property	90
Gross Amounts Carried
Land	37,458
Depreciable Property	78,669
Total	116,127
Accumulated Depreciation	$ (8,012)
Retail - U.S., West
Schedule III-Residential Real Estate
Number of properties | property	(2)
Encumbrances	$ 33,000
Initial Cost to Company
Land	18,633
Depreciable Property	36,794
Gross Amounts Carried
Land	18,633
Depreciable Property	36,794
Total	55,427
Accumulated Depreciation	$ (2,875)
Self-storage - U.S., North East
Schedule III-Residential Real Estate
Number of properties | property	(1)
Encumbrances	$ 14,500
Initial Cost to Company
Land	2,202
Depreciable Property	11,498
Costs Capitalized Subsequent to Acquisition
Depreciable Property	172
Gross Amounts Carried
Land	2,202
Depreciable Property	11,670
Total	13,872
Accumulated Depreciation	$ (1,361)
Industrial - U.S. South East
Schedule III-Residential Real Estate
Number of properties | property	(2)
Initial Cost to Company
Land	$ 10,121
Depreciable Property	17,295
Costs Capitalized Subsequent to Acquisition
Depreciable Property	255
Gross Amounts Carried
Land	10,121
Depreciable Property	17,550
Total	27,671
Accumulated Depreciation	$ (837)

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2019

Accumulated Other Comprehensive Income

Schedule of changes in AOCI by component

The changes in AOCI by component are as follows (amounts in thousands):

			Cumulative
			Unrealized Gain
	Effective Portion of		(Loss) on		Foreign
	Cumulative Loss on		Available-for-		Currency
	Cash Flow Hedges		Sale Securities		Translation		Total
Balance at January 1, 2017	$	(26)	$	44,929	$	(8,765)	$	36,138
OCI before reclassifications		54		13,055		20,775		33,884
Amounts reclassified from AOCI		(3)		(95)		—		(98)
Net period OCI		51		12,960		20,775		33,786
Balance at December 31, 2017		25		57,889		12,010		69,924
OCI before reclassifications		8		(1,390)		(6,865)		(8,247)
Amounts reclassified from AOCI		(33)		(2,984)		—		(3,017)
Net period OCI		(25)		(4,374)		(6,865)		(11,264)
Balance at December 31, 2018		—		53,515		5,145		58,660
OCI before reclassifications		—		(2,460)		(3,665)		(6,125)
Amounts reclassified from AOCI		—		(59)		(1,544)		(1,603)
Net period OCI		—		(2,519)		(5,209)		(7,728)
Balance at December 31, 2019	$	—	$	50,996	$	(64)	$	50,932

Schedule of reclassifications out of AOCI that impacted the condensed consolidated statements of operations

The reclassifications out of AOCI impacted the consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 as follows (amounts in thousands):

	Amounts Reclassified from
	AOCI during the Year						Affected Line Item
	Ended December 31,						in the Statements
Details about AOCI Components	2019		2018		2017		of Operations
Gain (loss) on cash flow hedges:
Interest rate contracts	$	—	$	33	$	3	Interest expense
Unrealized gains on available-for-sale securities:
Interest realized upon collection		59		46		95	Interest income from investment securities
Net realized gain on sale of investment		—		2,938		—	Gain on sale of investments and other assets, net
Total		59		2,984		95
Foreign currency translation:
Foreign currency gain from sale of Ireland Portfolio		1,544		—		—	Gain on sale of investments and other assets, net
Total reclassifications for the period	$	1,603	$	3,017	$	98

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Segment Data (Tables)

12 Months Ended

Dec. 31, 2019

Segment Data and Geographic Data

Schedule of results of operations by business segment

The table below presents our results of operations for the year ended December 31, 2019 by business segment (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	$	610,316	$	99,580	$	—	$	14,117	$	—	$	724,013	$	—	$	724,013
Interest income from investment securities		81,255		6,318		—		117,663		—		205,236		(128,607)		76,629
Servicing fees		423		—		—		69,962		—		70,385		(16,089)		54,296
Rental income		—		—		287,094		50,872		—		337,966		—		337,966
Other revenues		1,038		751		409		1,317		26		3,541		(26)		3,515
Total revenues		693,032		106,649		287,503		253,931		26		1,341,141		(144,722)		1,196,419
Costs and expenses:
Management fees		1,495		—		—		72		117,404		118,971		161		119,132
Interest expense		222,118		62,836		76,838		33,621		113,964		509,377		(648)		508,729
General and administrative		29,481		18,260		6,232		87,115		13,681		154,769		343		155,112
Acquisition and investment pursuit costs		1,351		75		217		(587)		—		1,056		—		1,056
Costs of rental operations		2,691		—		95,370		24,921		—		122,982		—		122,982
Depreciation and amortization		1,091		83		92,561		19,587		—		113,322		—		113,322
Loan loss provision, net		2,616		4,510		—		—		—		7,126		—		7,126
Other expense		307		—		1,693		365		—		2,365		—		2,365
Total costs and expenses		261,150		85,764		272,911		165,094		245,049		1,029,968		(144)		1,029,824
Other income (loss):
Change in net assets related to consolidated VIEs		—		—		—		—		—		—		236,309		236,309
Change in fair value of servicing rights		—		—		—		(1,468)		—		(1,468)		(2,172)		(3,640)
Change in fair value of investment securities, net		(1,084)		—		—		89,206		—		88,122		(87,289)		833
Change in fair value of mortgage loans held-for-sale, net		10,462		—		—		61,139		—		71,601		—		71,601
Earnings (loss) from unconsolidated entities		10,649		—		(114,362)		4,166		—		(99,547)		(1,807)		(101,354)
Gain on sale of investments and other assets, net		4,619		3,041		119,746		60,622		—		188,028		—		188,028
(Loss) gain on derivative financial instruments, net		(20,325)		(3,349)		(1,284)		(7,414)		26,062		(6,310)		—		(6,310)
Foreign currency gain (loss), net		17,342		205		37		(2)		—		17,582		—		17,582
Loss on extinguishment of debt		(857)		(11,357)		(4,745)		(845)		(1,466)		(19,270)		—		(19,270)
Other (loss) income, net		—		(50)		(100)		16		(73)		(207)		—		(207)
Total other income (loss)		20,806		(11,510)		(708)		205,420		24,523		238,531		145,041		383,572
Income (loss) before income taxes		452,688		9,375		13,884		294,257		(220,500)		549,704		463		550,167
Income tax (provision) benefit		(4,818)		89		(393)		(8,110)		—		(13,232)		—		(13,232)
Net income (loss)		447,870		9,464		13,491		286,147		(220,500)		536,472		463		536,935
Net income attributable to non-controlling interests		(392)		—		(21,630)		(4,786)		—		(26,808)		(463)		(27,271)
Net income (loss) attributable to Starwood Property Trust, Inc.	$	447,478	$	9,464	$	(8,139)	$	281,361	$	(220,500)	$	509,664	$	—	$	509,664

The table below presents our results of operations for the year ended December 31, 2018 by business segment (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	$	576,564	$	28,995	$	—	$	14,984	$	—	$	620,543	$	—	$	620,543
Interest income from investment securities		50,063		1,095		—		127,100		—		178,258		(121,419)		56,839
Servicing fees		421		—		—		103,866		—		104,287		(25,521)		78,766
Rental income		—		—		292,453		57,231		—		349,684		—		349,684
Other revenues		902		619		444		1,299		360		3,624		(176)		3,448
Total revenues		627,950		30,709		292,897		304,480		360		1,256,396		(147,116)		1,109,280
Costs and expenses:
Management fees		1,838		—		—		72		127,133		129,043		412		129,455
Interest expense		160,769		20,949		75,192		27,459		124,805		409,174		(986)		408,188
General and administrative		26,324		5,631		7,113		84,978		11,747		135,793		339		136,132
Acquisition and investment pursuit costs		2,490		6,806		(46)		(663)		—		8,587		—		8,587
Costs of rental operations		—		—		99,632		27,436		—		127,068		—		127,068
Depreciation and amortization		76		—		110,684		21,889		—		132,649		—		132,649
Loan loss provision, net		34,821		—		—		—		—		34,821		—		34,821
Other expense		307		—		(27)		452		—		732		—		732
Total costs and expenses		226,625		33,386		292,548		161,623		263,685		977,867		(235)		977,632
Other income (loss):
Change in net assets related to consolidated VIEs		—		—		—		—		—		—		165,892		165,892
Change in fair value of servicing rights		—		—		—		(14,373)		—		(14,373)		4,171		(10,202)
Change in fair value of investment securities, net		(2,765)		—		—		33,229		—		30,464		(20,119)		10,345
Change in fair value of mortgage loans held-for-sale, net		(6,851)		—		—		47,373		—		40,522		—		40,522
Earnings from unconsolidated entities		5,063		—		3,658		3,809		—		12,530		(1,990)		10,540
Gain on sale of investments and other assets, net		4,019		—		28,468		26,557		—		59,044		—		59,044
Gain (loss) on derivative financial instruments, net		17,654		1,821		22,756		(298)		(7,330)		34,603		—		34,603
Foreign currency loss, net		(7,816)		(1,425)		(2)		(2)		—		(9,245)		—		(9,245)
Loss on extinguishment of debt		(730)		—		(2,661)		(318)		(2,099)		(5,808)		—		(5,808)
Other income (loss), net		43		—		508		(1,363)		—		(812)		—		(812)
Total other income (loss)		8,617		396		52,727		94,614		(9,429)		146,925		147,954		294,879
Income (loss) before income taxes		409,942		(2,281)		53,076		237,471		(272,754)		425,454		1,073		426,527
Income tax provision		(2,801)		(292)		(7,549)		(4,688)		—		(15,330)		—		(15,330)
Net income (loss)		407,141		(2,573)		45,527		232,783		(272,754)		410,124		1,073		411,197
Net income attributable to non-controlling interests		(1,451)		—		(17,623)		(5,220)		—		(24,294)		(1,073)		(25,367)
Net income (loss) attributable to Starwood Property Trust, Inc.	$	405,690	$	(2,573)	$	27,904	$	227,563	$	(272,754)	$	385,830	$	—	$	385,830

The table below presents our results of operations for the year ended December 31, 2017 by business segment (amounts in thousands):

	Commercial and
	Residential				Investing
	Lending		Property		and Servicing						Securitization
	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 provision, 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
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

The table below presents our consolidated balance sheet as of December 31, 2019 by business segment (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	$	26,278	$	2,209	$	30,123	$	61,693	$	356,864	$	477,167	$	1,221	$	478,388
Restricted cash		36,135		41,967		7,171		10,370		—		95,643		—		95,643
Loans held-for-investment, net		9,187,332		1,397,448		—		1,294		—		10,586,074		—		10,586,074
Loans held-for-sale		605,384		119,528		—		159,238		—		884,150		—		884,150
Investment securities		992,974		45,153		—		1,177,148		—		2,215,275		(1,405,037)		810,238
Properties, net		26,834		—		2,029,024		210,582		—		2,266,440		—		2,266,440
Intangible assets		—		—		47,303		64,644		—		111,947		(26,247)		85,700
Investment in unconsolidated entities		46,921		25,862		—		32,183		—		104,966		(20,637)		84,329
Goodwill		—		119,409		—		140,437		—		259,846		—		259,846
Derivative assets		14,718		7		3		7		14,208		28,943		—		28,943
Accrued interest receivable		45,996		3,134		133		2,388		13,242		64,893		(806)		64,087
Other assets		59,170		6,101		82,910		54,238		8,911		211,330		(7)		211,323
VIE assets, at fair value		—		—		—		—		—		—		62,187,175		62,187,175
Total Assets	$	11,041,742	$	1,760,818	$	2,196,667	$	1,914,222	$	393,225	$	17,306,674	$	60,735,662	$	78,042,336
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	30,594	$	6,443	$	48,370	$	73,021	$	53,494	$	211,922	$	84	$	212,006
Related-party payable		—		—		—		5		40,920		40,925		—		40,925
Dividends payable		—		—		—		—		137,427		137,427		—		137,427
Derivative liabilities		7,698		750		—		292		—		8,740		—		8,740
Secured financing agreements, net		5,038,876		1,217,066		1,698,334		574,507		391,215		8,919,998		(13,950)		8,906,048
Collateralized loan obligations, net		928,060		—		—		—		—		928,060		—		928,060
Unsecured senior notes, net		—		—		—		—		1,928,622		1,928,622		—		1,928,622
VIE liabilities, at fair value		—		—		—		—		—		—		60,743,494		60,743,494
Total Liabilities		6,005,228		1,224,259		1,746,704		647,825		2,551,678		12,175,694		60,729,628		72,905,322
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock		—		—		—		—		2,874		2,874		—		2,874
Additional paid-in capital		1,522,360		529,668		208,650		(123,210)		2,995,064		5,132,532		—		5,132,532
Treasury stock		—		—		—		—		(104,194)		(104,194)		—		(104,194)
Accumulated other comprehensive income (loss)		50,996		—		—		(64)		—		50,932		—		50,932
Retained earnings (accumulated deficit)		3,463,158		6,891		5,431		1,194,998		(5,052,197)		(381,719)		—		(381,719)
Total Starwood Property Trust, Inc. Stockholders’ Equity		5,036,514		536,559		214,081		1,071,724		(2,158,453)		4,700,425		—		4,700,425
Non-controlling interests in consolidated subsidiaries		—		—		235,882		194,673		—		430,555		6,034		436,589
Total Equity		5,036,514		536,559		449,963		1,266,397		(2,158,453)		5,130,980		6,034		5,137,014
Total Liabilities and Equity	$	11,041,742	$	1,760,818	$	2,196,667	$	1,914,222	$	393,225	$	17,306,674	$	60,735,662	$	78,042,336

The table below presents our consolidated balance sheet as of December 31, 2018 by business segment (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	$	14,385	$	13	$	27,408	$	31,449	$	164,015	$	237,270	$	2,554	$	239,824
Restricted cash		28,324		175,659		25,144		11,679		7,235		248,041		—		248,041
Loans held-for-investment, net		7,072,220		1,456,779		—		3,357		—		8,532,356		—		8,532,356
Loans held-for-sale		670,155		469,775		—		47,622		—		1,187,552		—		1,187,552
Loans transferred as secured borrowings		74,346		—		—		—		—		74,346		—		74,346
Investment securities		1,050,920		60,768		—		998,820		—		2,110,508		(1,204,040)		906,468
Properties, net		—		—		2,512,847		272,043		—		2,784,890		—		2,784,890
Intangible assets		—		—		90,889		78,219		—		169,108		(24,075)		145,033
Investment in unconsolidated entities		35,274		—		114,362		44,129		—		193,765		(22,000)		171,765
Goodwill		—		119,409		—		140,437		—		259,846		—		259,846
Derivative assets		18,174		1,066		32,733		718		—		52,691		—		52,691
Accrued interest receivable		39,862		6,982		359		616		13,177		60,996		(641)		60,355
Other assets		13,958		20,472		67,098		49,363		2,057		152,948		(26)		152,922
VIE assets, at fair value		—		—		—		—		—		—		53,446,364		53,446,364
Total Assets	$	9,017,618	$	2,310,923	$	2,870,840	$	1,678,452	$	186,484	$	16,064,317	$	52,198,136	$	68,262,453
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	26,508	$	26,476	$	67,415	$	75,655	$	21,467	$	217,521	$	142	$	217,663
Related-party payable		—		—		—		53		43,990		44,043		—		44,043
Dividends payable		—		—		—		—		133,466		133,466		—		133,466
Derivative liabilities		1,290		477		37		1,423		12,188		15,415		—		15,415
Secured financing agreements, net		4,405,599		1,524,551		1,884,187		585,258		297,920		8,697,515		(13,950)		8,683,565
Unsecured senior notes, net		—		—		—		—		1,998,831		1,998,831		—		1,998,831
Secured borrowings on transferred loans		74,239		—		—		—		—		74,239		—		74,239
VIE liabilities, at fair value		—		—		—		—		—		—		52,195,042		52,195,042
Total Liabilities		4,507,636		1,551,504		1,951,639		662,389		2,507,862		11,181,030		52,181,234		63,362,264
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock		—		—		—		—		2,808		2,808		—		2,808
Additional paid-in capital		1,430,503		761,992		645,561		87,779		2,069,321		4,995,156		—		4,995,156
Treasury stock		—		—		—		—		(104,194)		(104,194)		—		(104,194)
Accumulated other comprehensive income (loss)		53,516		—		5,208		(64)		—		58,660		—		58,660
Retained earnings (accumulated deficit)		3,015,676		(2,573)		13,570		913,642		(4,289,313)		(348,998)		—		(348,998)
Total Starwood Property Trust, Inc. Stockholders’ Equity		4,499,695		759,419		664,339		1,001,357		(2,321,378)		4,603,432		—		4,603,432
Non-controlling interests in consolidated subsidiaries		10,287		—		254,862		14,706		—		279,855		16,902		296,757
Total Equity		4,509,982		759,419		919,201		1,016,063		(2,321,378)		4,883,287		16,902		4,900,189
Total Liabilities and Equity	$	9,017,618	$	2,310,923	$	2,870,840	$	1,678,452	$	186,484	$	16,064,317	$	52,198,136	$	68,262,453

Schedule of condensed consolidated balance sheet by business segment

	Commercial and
	Residential				Investing
	Lending		Property		and Servicing						Securitization
	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 provision, 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
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

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Consolidated Statements of Equity - USD ($) $ in Thousands	Total Starwood Property Trust, Inc. Stockholders' Equity 2018 Notes	Total Starwood Property Trust, Inc. Stockholders' Equity 2019 Notes	Total Starwood Property Trust, Inc. Stockholders' Equity 2023 Notes	Total Starwood Property Trust, Inc. Stockholders' Equity	Common stock 2019 Notes	Common stock	Additional Paid-In Capital 2018 Notes	Additional Paid-In Capital 2019 Notes	Additional Paid-In Capital 2023 Notes	Additional Paid-In Capital	Treasury Stock 2023 Notes	Treasury Stock	Accumulated Deficit	Accumulated Other Comprehensive Income	Non-Controlling Interests	2018 Notes	2019 Notes	2023 Notes	Total
Balance at Dec. 31, 2016				$ 4,522,274		$ 2,639				$ 4,691,180		$ (92,104)	$ (115,579)	$ 36,138	$ 37,799				$ 4,560,073
Balance (in shares) at Dec. 31, 2016						263,893,806						4,606,885
Increase (Decrease) in Stockholders' Equity
Proceeds from DRIP Plan				702						702									702
Proceeds from DRIP Plan (in shares)						31,626
Equity offering costs				(15)						(15)									(15)
Equity component of Convertible Senior Notes issuance			$ 3,755						$ 3,755									$ 3,755
Equity component of Convertible Senior Notes repurchase	$ (18,105)						$ (18,105)									$ (18,105)
Share-based compensation				18,151		$ 12				18,139									18,151
Share-based compensation (in shares)						1,178,565
Manager incentive fee paid in stock				19,599		$ 9				19,590									19,599
Manager incentive fee paid in stock (in shares)						879,312
Net income				400,770									400,770		11,997				412,767
Dividends declared				(502,503)									(502,503)						(502,503)
Other comprehensive loss, net				33,786										33,786					33,786
VIE non-controlling interests															1,718				1,718
Contributions from non-controlling interests															145,283				145,283
Distributions to non-controlling interests															(96,010)				(96,010)
Balance at Dec. 31, 2017				4,478,414		$ 2,660				4,715,246		$ (92,104)	(217,312)	69,924	100,787				4,579,201
Balance (in shares) at Dec. 31, 2017						265,983,309						4,606,885
Increase (Decrease) in Stockholders' Equity
Proceeds from DRIP Plan				608						608									608
Proceeds from DRIP Plan (in shares)						28,406
Equity offering costs				(22)						(22)									$ (22)
Conversion of 2019 Convertible Notes		$ 238,884			$ 124			$ 238,760									$ 238,884
Conversion of 2019 Convertible Notes (Shares)					12,407,081
Common stock repurchased			$ (12,090)								$ (12,090)							$ (12,090)
Common stock repurchased (in shares)											573,255								573,255
Equity component of Convertible Senior Notes issuance																	32,400
Share-based compensation				22,758		$ 14				22,744									$ 22,758
Share-based compensation (in shares)						1,421,979
Manager incentive fee paid in stock				20,792		$ 10				20,782									20,792
Manager incentive fee paid in stock (in shares)						998,917
Net income				385,830									385,830		25,367				411,197
Dividends declared				(517,516)									(517,516)						(517,516)
Other comprehensive loss, net				(11,264)										(11,264)					(11,264)
VIE non-controlling interests															(5,669)				(5,669)
Contributions from non-controlling interests															430,033				430,033
Distributions to non-controlling interests				(2,962)						(2,962)					(253,442)				(256,404)
Sale of controlling interest in majority owned property asset															(319)				(319)
Balance at Dec. 31, 2018				4,603,432		$ 2,808				4,995,156		$ (104,194)	(348,998)	58,660	296,757				$ 4,900,189
Balance (in shares) at Dec. 31, 2018						280,839,692						5,180,140							280,839,692
Increase (Decrease) in Stockholders' Equity
Proceeds from DRIP Plan				767						767									$ 767
Proceeds from DRIP Plan (in shares)						33,454
Redemption of Class A Units for common stock				21,070		$ 10				21,060					(21,070)				21,070
Redemption of Class A Units for common stock (in shares)						974,176
Equity offering costs				(27)						(27)									(27)
Conversion of 2019 Convertible Notes		$ 67,562			$ 36			$ 67,526									$ 67,562
Conversion of 2019 Convertible Notes (Shares)					3,611,918
Share-based compensation				36,155		$ 15				36,140									36,155
Share-based compensation (in shares)						1,387,346
Manager incentive fee paid in stock				11,915		$ 5				11,910									11,915
Manager incentive fee paid in stock (in shares)						534,305
Net income				509,664									509,664		27,271				536,935
Dividends declared				(542,385)									(542,385)						(542,385)
Other comprehensive loss, net				(7,728)										(7,728)					(7,728)
VIE non-controlling interests															(2,808)				(2,808)
Contributions from non-controlling interests															186,397				186,397
Distributions to non-controlling interests															(49,958)				(49,958)
Balance at Dec. 31, 2019				$ 4,700,425		$ 2,874				$ 5,132,532		$ (104,194)	$ (381,719)	$ 50,932	$ 436,589				$ 5,137,014
Balance (in shares) at Dec. 31, 2019						287,380,891						5,180,140							287,380,891

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Balance Sheet Presentation of Securitization Variable Interest Entities

Balance Sheet Presentation of Securitization Variable Interest Entities

We operate investment businesses that acquire unrated, investment grade and non-investment grade rated CMBS and RMBS. These securities represent interests in securitization structures (commonly referred to as special purpose entities, or “SPEs”). These SPEs are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. Under accounting principles generally accepted in the United States of America (“GAAP”), SPEs typically qualify as VIEs. These are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity.

Because we often serve as the special servicer or servicing administrator of the trusts in which we invest, or we have the ability to remove and replace the special servicer without cause, consolidation of these structures is required pursuant to GAAP as outlined in detail below. This results in a consolidated balance sheet which presents the gross assets and liabilities of the VIEs. The assets and other instruments held by these VIEs are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the VIEs do not have any recourse to the general credit of any other consolidated entities, nor to us as the consolidator of these VIEs.

The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.

Refer to the segment data in Note 23 for a presentation of our business segments without consolidation of these VIEs.

Basis of Accounting and Principles of Consolidation

Basis of Accounting and Principles of Consolidation

The accompanying consolidated financial statements include our accounts and those of our consolidated subsidiaries and VIEs. Intercompany amounts have been eliminated in consolidation.

Entities not deemed to be VIEs are consolidated if we own a majority of the voting securities or interests or hold the general partnership interest, except in those instances in which the minority voting interest owner or limited partner can remove us as general partner without cause, dissolve the partnership without cause or effectively participate through substantive participative rights. Substantive participative rights include the ability to select, terminate and set compensation of the investee’s management, if applicable, and the ability to participate in capital and operating decisions of the investee, including budgets, in the ordinary course of business.

We invest in entities with varying structures, many of which do not have voting securities or interests, such as general partnerships, limited partnerships, and limited liability companies. In many of these structures, control of the entity rests with the general partners or managing members, while other members hold passive interests. The general partner or managing member may hold anywhere from a relatively small percentage of the total financial interests to a majority of the financial interests. For entities not deemed to be VIEs, where we serve as the sole general partner or managing member, we are considered to have the controlling financial interest and therefore the entity is consolidated, regardless of our financial interest percentage, unless there are other limited partners or investing members that can remove us as general partner without cause, dissolve the partnership without cause or effectively participate through substantive participative rights. In those circumstances where we, as majority controlling interest owner, can be removed without cause or cannot cause the entity to take actions that are significant in the ordinary course of business, because such actions could be vetoed by the minority controlling interest owner, we do not consolidate the entity.

When we consolidate entities other than securitization VIEs, the third party ownership interests are reflected as non-controlling interests in consolidated subsidiaries, a separate component of equity, in our consolidated balance sheet. When we consolidate securitization VIEs, the third party ownership interests are reflected as VIE liabilities in our consolidated balance sheet because the beneficial interests payable to these third parties are legally issued in the form of debt. Our presentation of net income attributes earnings to controlling and non-controlling interests.

Variable Interest Entities

Variable Interest Entities

In addition to the securitization VIEs, we have financed a pool of our loans through a collateralized loan obligation (“CLO”) which is considered a VIE. We also hold interests in certain other entities which are considered VIEs as the limited partners of those entities with equity at risk do not collectively possess (i) the right to remove the general partner or dissolve the partnership without cause or (ii) the right to participate in significant decisions made by the partnership.

We evaluate all of our interests in VIEs for consolidation. When our interests are determined to be variable interests, we assess whether we are deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification (“ASC”) 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. We consider our variable interests as well as any variable interests of our related parties in making this determination. Where both of these factors are present, we are deemed to be the primary beneficiary and we consolidate the VIE. Where either one of these factors is not present, we are not the primary beneficiary and do not consolidate the VIE.

To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes: (i) identifying the activities that most significantly impact the VIE’s economic performance; and (ii) identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE. The right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has the power to direct the activities of a VIE.

To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests, including debt and equity investments, servicing fees and other arrangements deemed to be variable interests in the VIE. This assessment requires that we apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by us.

Our purchased investment securities include unrated and non-investment grade rated securities issued by securitization trusts. In certain cases, we may contract to provide special servicing activities for these trusts, or, as holder of the controlling class, we may have the right to name and remove the special servicer for these trusts. In our role as special servicer, we provide services on defaulted loans within the trusts, such as foreclosure or work-out procedures, as permitted by the underlying contractual agreements. In exchange for these services, we receive a fee. These rights give us the ability to direct activities that could significantly impact the trust’s economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove us as special servicer without cause, we do not have the power to direct activities that most significantly impact the trust’s economic performance. We evaluated all of our positions in such investments for consolidation.

For securitization VIEs in which we are determined to be the primary beneficiary, all of the underlying assets, liabilities and equity of the structures are recorded on our books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these

structures, as well as the fees paid by these trusts to us in our capacity as special servicer, are eliminated in consolidation. Further, an allocable portion of the identified servicing intangible asset associated with the servicing fee streams, and the corresponding allocable amortization or change in fair value of the servicing intangible asset, are also eliminated in consolidation.

We perform ongoing reassessments of: (i) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework, and (ii) whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion regarding the VIE to change.

We elect the fair value option for initial and subsequent recognition of the assets and liabilities of our consolidated securitization VIEs. Interest income and interest expense associated with these VIEs are no longer relevant on a standalone basis because these amounts are already reflected in the fair value changes. We have elected to present these items in a single line on our consolidated statements of operations. The residual difference shown on our consolidated statements of operations in the line item “Change in net assets related to consolidated VIEs” represents our beneficial interest in the VIEs.

We separately present the assets and liabilities of our consolidated securitization VIEs as individual line items on our consolidated balance sheets. The liabilities of our consolidated securitization VIEs consist solely of obligations to the bondholders of the related trusts, and are thus presented as a single line item entitled “VIE liabilities.” The assets of our consolidated securitization VIEs consist principally of loans, but at times, also include foreclosed loans which have been temporarily converted into real estate owned (“REO”). These assets in the aggregate are likewise presented as a single line item entitled “VIE assets.”

Loans comprise the vast majority of our securitization VIE assets and are carried at fair value due to the election of the fair value option. When an asset becomes REO, it is due to nonperformance of the loan. Because the loan is already at fair value, the carrying value of an REO asset is also initially at fair value. Furthermore, when we consolidate a trust, any existing REO would be consolidated at fair value. Once an asset becomes REO, its disposition time is relatively short. As a result, the carrying value of an REO generally approximates fair value under GAAP.

In addition to sharing a similar measurement method as the loans in a trust, the securitization VIE assets as a whole can only be used to settle the obligations of the consolidated VIE. The assets of our securitization VIEs are not individually accessible by the bondholders, which creates inherent limitations from a valuation perspective. Also creating limitations from a valuation perspective is our role as special servicer, which provides us very limited visibility, if any, into the performing loans of a trust.

REO assets generally represent a very small percentage of the overall asset pool of a trust. In new issue trusts there are no REO assets. We estimate that REO assets constitute approximately 1% of our consolidated securitization VIE assets, with the remaining 99% representing loans. However, it is important to note that the fair value of our securitization VIE assets is determined by reference to our securitization VIE liabilities as permitted under Accounting Standards Update (“ASU”) 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. In other words, our VIE liabilities are more reliably measurable than the VIE assets, resulting in our current measurement methodology which utilizes this value to determine the fair value of our securitization VIE assets as a whole. As a result, these percentages are not necessarily indicative of the relative fair values of each of these asset categories if the assets were to be valued individually.

Due to our accounting policy election under ASU 2014-13, separately presenting two different asset categories would result in an arbitrary assignment of value to each, with one asset category representing a residual amount, as opposed to its fair value. However, as a pool, the fair value of the assets in total is equal to the fair value of the liabilities.

For these reasons, the assets of our securitization VIEs are presented in the aggregate.

Fair Value Option

Fair Value Option

The guidance in ASC 825, Financial Instruments, provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our consolidated balance sheets from those instruments using another accounting method.

We have elected the fair value option for certain eligible financial assets and liabilities of our consolidated securitization VIEs, residential loans held-for-investment, loans held-for-sale originated or acquired for future securitization and purchased CMBS issued by VIEs we could consolidate in the future. The fair value elections for VIE and securitization related items were made in order to mitigate accounting mismatches between the carrying value of the instruments and the related assets and liabilities that we consolidate at fair value. The fair value elections for residential mortgage loans held-for-investment were made in order to maintain consistency across all our residential mortgage loans. The fair value elections for mortgage loans held-for-sale were made due to the expected short-term holding period of these instruments.

Fair Value Measurements

Fair Value Measurements

We measure our mortgage-backed securities, derivative assets and liabilities, domestic servicing rights intangible asset and any assets or liabilities where we have elected the fair value option at fair value. When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.

As discussed above, we measure the assets and liabilities of consolidated securitization VIEs at fair value pursuant to our election of the fair value option. The securitization VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the securitization VIEs, we maximize the use of observable inputs over unobservable inputs. Refer to Note 20 for further discussion regarding our fair value measurements.

Business Combinations

Business Combinations

Under ASC 805, Business Combinations, the acquirer in a business combination must recognize, with certain exceptions, the fair values of assets acquired, liabilities assumed, and non-controlling interests when the acquisition constitutes a change in control of the acquired entity. As goodwill is calculated as a residual, all goodwill of the acquired business, not just the acquirer’s share, is recognized under this “full goodwill” approach. During the measurement period, a period which shall not exceed one year, we prospectively adjust the provisional amounts recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized.

Effective with our early adoption of ASU 2017-01, Business Combinations (Topic 805) – Clarifying the Definition of a Business, in December 2017, we apply the asset acquisition provisions of ASC 805 in accounting for acquisitions of real estate with in-place leases where substantially all of the fair value of the assets acquired is concentrated in either a single identifiable asset or group of similar identifiable assets. This results in the acquired properties being recognized initially at their purchase price inclusive of acquisition costs, which are capitalized. All other acquisitions of real estate with in-place leases are accounted for in accordance with the business combination provisions of ASC 805. We also apply the asset acquisition provisions of ASC 805 for acquired real estate assets where a lease is entered into concurrently with the acquisition of the asset, such as in sale leaseback transactions.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and short-term investments. Short-term investments are comprised of highly liquid instruments with original maturities of three months or less. The Company maintains its cash and cash equivalents in multiple financial institutions and at times these balances exceed federally insurable limits.

Restricted Cash

Restricted Cash

Restricted cash includes cash and cash equivalents that are legally or contractually restricted as to withdrawal or usage and primarily includes (i) loan payments received by our Infrastructure Lending Segment which are restricted by our lender and periodically applied, in part, to the outstanding balance of the Infrastructure Lending debt facility, (ii) cash collateral associated with derivative financial instruments and (iii) funds held on behalf of borrowers and tenants.

Loans Held-for-Investment

Loans Held-for-Investment

Loans that are held for investment are carried at cost, net of unamortized acquisition premiums or discounts, loan fees and origination costs as applicable, unless the loans are deemed impaired or we have elected to apply the fair value option at purchase.

Loan Impairment

Loan Impairment

We evaluate each loan classified as held-for-investment not under the fair value option for impairment at least quarterly. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, we record an allowance through the provision for loan losses to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral.

There may be circumstances where we modify a loan by granting the borrower a concession that we might not otherwise consider when a borrower is experiencing financial difficulty or is expected to experience financial difficulty in the foreseeable future. Such concessionary modifications are classified as troubled debt restructurings (“TDRs”) unless the modification solely results in a delay in payment that is insignificant. Loans classified as TDRs are considered impaired loans for reporting and measurement purposes.

Loans Held-For-Sale

Loans Held-For-Sale

Our loans that we intend to sell or liquidate in the short-term are classified as held-for-sale and are carried at the lower of amortized cost or fair value, unless we have elected to apply the fair value option at origination or purchase. With regards to our Investing and Servicing Segment’s conduit business, we periodically enter into derivative financial instruments to hedge unpredictable changes in fair value of loans held-for-sale, including changes resulting from both interest rates and credit quality. Because these derivatives are not designated, changes in their fair value are recorded in earnings. In order to best reflect the results of the hedged loan portfolio in earnings, we have elected the fair value option for these loans. As a result, changes in the fair value of the loans are also recorded in earnings.

Investment Securities

Investment Securities

We designate our debt investment securities as held-to-maturity, available-for-sale, or trading depending on our investment strategy and ability to hold such securities to maturity. Held-to-maturity debt securities where we have not elected to apply the fair value option are stated at cost plus any premiums or discounts, which are amortized or accreted through the consolidated statements of operations using the effective interest method. Debt securities we (i) do not hold for the purpose of selling in the near-term, or (ii) may dispose of prior to maturity, are classified as available-for-sale and are carried at fair value in the accompanying financial statements. Unrealized gains or losses on available-for-sale debt securities where we have not elected the fair value option are reported as a component of accumulated other comprehensive income (loss) (“AOCI”) in stockholders’ equity.

When the estimated fair value of a debt security for which we have not elected the fair value option is less than its amortized cost, we consider whether there is OTTI in the value of the security. An impairment is deemed an OTTI if (i) we intend to sell the security, (ii) it is more likely than not that we will be required to sell the security before recovering our cost basis or (iii) we do not expect to recover the entire amortized cost basis of the security even if we do not intend to sell the security or do not believe it is more likely than not that we will be required to sell the security before recovering our cost basis. If the impairment is deemed to be an OTTI, the resulting accounting treatment depends on the factors causing the OTTI. If the OTTI has resulted from (i) our intention to sell the security, or (ii) our judgment that it is more likely than not that we will be required to sell the security before recovering our cost basis, an impairment loss is recognized in earnings equal to the entire difference between our amortized cost basis and fair value. Whereas, if the OTTI has resulted from our conclusion that we will not recover our cost basis even if we do not intend to sell the security or do not believe it is more likely than not that we will be required to sell the security before recovering our cost basis, only the credit loss portion of the impairment is recorded in earnings, and the portion of the loss related to other factors, such as changes in interest rates, continues to be recognized in AOCI. Following the recognition of an OTTI through earnings, a new cost basis is established for the security. Determining whether there is an OTTI may require us to exercise significant judgment and make significant assumptions, including, but not limited to, estimated cash flows, estimated prepayments, loss assumptions, and assumptions regarding changes in interest rates.

Our only equity investment security is carried at fair value, with unrealized holding gains and losses recorded in earnings.

Properties Held-For-Investment

Properties Held-For-Investment

Properties, net, as reported on our consolidated balance sheets, consist of commercial real estate properties held-for-investment and are recorded at cost, less accumulated depreciation and impairments, if any. Properties consist primarily of land, buildings and improvements. Land is not depreciated, and buildings and improvements are depreciated on a straight-line basis over their estimated useful lives. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments are capitalized and depreciated on a straight-line basis over their estimated useful lives. We review properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability is determined by comparing the carrying amount of the property to the undiscounted future net cash flows it is expected to generate. If such carrying amount exceeds the expected undiscounted future net cash flows, we adjust the carrying amount of the property to its estimated fair value.

Properties Held-For-Sale

Properties Held-For-Sale

Properties and any associated intangible assets are presented within properties held-for-sale on our consolidated balance sheet when the sale of the property is considered probable, at which time we cease depreciation and amortization of the property and the associated intangibles. Held-for-sale properties are reported at the lower of their carrying value or fair value less costs to sell. There were no properties held-for-sale at December 31, 2019 or 2018.

Servicing Rights Intangibles

Servicing Rights Intangibles

Our identifiable intangible assets include domestic special servicing rights for which we have elected to apply the fair value measurement method, which is necessary to conform to our election of the fair value option for measuring the assets and liabilities of the VIEs consolidated pursuant to ASC 810.

Lease Intangibles

Lease Intangibles

In connection with our acquisition of properties, we recognize intangible lease assets and liabilities associated with certain noncancelable operating leases of the acquired properties. These intangible lease assets and liabilities include in-place lease intangible assets, favorable lease intangible assets and unfavorable lease liabilities. In-place lease intangible assets reflect the acquired benefit of purchasing properties with in-place leases and are measured based on estimates of direct costs associated with leasing the property and lost rental income during projected lease-up and free rent periods, both of which are avoided due to the presence of in-place leases at the acquisition date. Favorable and unfavorable lease intangible assets and liabilities reflect the terms of in-place tenant leases being either favorable or

unfavorable relative to market terms at the acquisition date. The estimated fair values of our favorable and unfavorable lease assets and liabilities at the respective acquisition dates represent the discounted cash flow differential between the contractual cash flows of such leases and the estimated cash flows that comparable leases at market terms would generate. Our intangible lease assets and liabilities are recognized within intangible assets and other liabilities, respectively, in our consolidated balance sheets. Our in-place lease intangible assets are amortized to amortization expense while our favorable and unfavorable lease intangible assets and liabilities where we are the lessor are amortized to rental income. Favorable and unfavorable lease intangible assets and liabilities where we are the lessee are amortized to costs of rental operations, except in the case of our unfavorable lease liability associated with office space occupied by the Company, which is amortized to general and administrative expense. Both our favorable and unfavorable lease intangible assets and liabilities are amortized over the remaining noncancelable term of the respective leases on a straight-line basis.

Leases (Lessee)

Leases

On January 1, 2019, ASC 842, Leases, became effective for the Company. ASC 842 establishes a right-of-use model for lessee accounting which results in the recognition of most leased assets and lease liabilities on the balance sheet of the lessee. Lessor accounting was not significantly affected by this ASC. We elected to apply the provisions of ASC 842 as of January 1, 2019 and not to retrospectively adjust prior periods presented. Such application did not result in any cumulative-effect adjustment as of January 1, 2019. We elected the “package of practical expedients” for transition purposes, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs for leases that commenced prior to January 1, 2019. We also elected not to apply the recognition provisions of ASC 842 to short-term leases, which have original lease terms of 12 months or less. As a lessor, we elected not to separate nonlease components, such as reimbursements from tenants for common area maintenance (“CAM”), from lease components for all classes of underlying assets, and continue to recognize such nonlease components ratably in rental income. We also elected to continue to exclude from rental income all sales, use and other similar taxes collected from lessees. As required by ASC 842, we no longer record as revenues and expenses lessor costs (such as property taxes) paid directly by the lessees. The application of ASC 842 has had no material effect on our consolidated financial statements, as all of our leases, as both lessor and lessee, are currently classified as operating leases, which are subject to essentially the same straight-line revenue and expense recognition as in the past. As a lessee, our only significant long-term lease as of January 1, 2019 resulted in the recognition of a $12.0 million lease liability and corresponding right-of-use asset, which are classified within “Accounts payable, accrued expenses and other liabilities” and “Other assets”, respectively, in our consolidated balance sheet as of December 31, 2019.

Investment in Unconsolidated Entities

Investment in Unconsolidated Entities

We own non-controlling equity interests in various privately-held partnerships and limited liability companies. Unless we elect the fair value option under ASC 825, we use the fair value practicability exception described below to account for investments in which our interest is so minor that we have virtually no influence over the underlying investees. We use the equity method to account for all other non-controlling interests in partnerships and limited liability companies. Equity method investments are initially recorded at cost and subsequently adjusted for our share of income or loss, as well as contributions made or distributions received.

Prior to January 1, 2018, all cost method investments were initially recorded at cost with income generally recorded when distributions were received. On January 1, 2018, ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, became effective prospectively for public companies with a calendar fiscal year. This ASU requires entities to carry all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies, at fair value with changes in fair value recognized within net income. This ASU does not apply to equity method investments, investments in Federal Home Loan Bank (“FHLB”) stock, investments that result in consolidation of the investee or investments in certain investment companies. For investments in equity securities without a readily determinable fair value, an entity is permitted to elect a practicability exception, under which the investment will be measured at cost, less impairment, plus or minus observable price changes from orderly transactions of an identical or similar investment of the same issuer.

Our equity investments within the scope of this ASU are limited to our other equity investments set forth in Note 8, with the exception of our FHLB stock which is outside the scope of this ASU, and to our marketable equity security discussed in Note 6 for which we had previously elected the fair value option. Our other equity investments within the scope of this ASU do not have readily determinable fair values. Therefore, we have elected the practicability exception whereby we measure these investments at cost, less impairment, plus or minus observable price changes from orderly transactions of identical or similar investments of the same issuer.

Additionally, this ASU eliminated the requirement to assess whether an impairment of an equity investment is other than temporary. The impairment model for equity investments subject to this election is now a single-step model whereby an entity performs a qualitative assessment to identify impairment. If the qualitative assessment indicates that an impairment exists, the entity would estimate the fair value of the investment and recognize in net income an impairment loss equal to the difference between the fair value and the carrying amount of the equity investment.

We continue to review our equity method and other investments not subject to this election for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods, estimated fair values of underlying assets and available information at the time the analyses are prepared.

Goodwill

Goodwill

Goodwill is not amortized, but rather tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment. Goodwill at December 31, 2019 represents the excess of the consideration paid over the fair value of net assets acquired in connection with the acquisitions of LNR Property LLC (“LNR”) in April 2013 and the Infrastructure Lending Segment in September 2018 and October 2018.

In testing goodwill for impairment, we follow ASC 350, Intangibles—Goodwill and Other, which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or we choose not to perform the qualitative assessment, then we compare the fair value of that reporting unit with its carrying value, including goodwill. If the carrying value of a reporting unit exceeds its fair value, goodwill is considered impaired with the impairment loss equal to the amount by which the carrying value of the goodwill exceeds the implied fair value of that goodwill.

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

We record all derivatives on our consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on whether we have elected to designate a derivative in a hedging relationship and have satisfied the criteria necessary to apply hedge accounting under GAAP. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We regularly enter into derivative contracts that are intended to economically hedge certain of our risks, even though the transactions may not qualify for, or we may not elect to pursue, hedge accounting. In such cases, changes in the fair value of the derivatives are recorded in earnings.

Generally, our derivatives are subject to master netting arrangements, though we elect to present all derivative assets and liabilities on a gross basis within our consolidated balance sheets.

Convertible Senior Notes

Convertible Senior Notes

ASC 470, Debt, requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. The equity components of our convertible senior notes (the “Convertible Notes”) have been reflected within additional paid-in capital in our consolidated balance sheets. The resulting debt discount is being amortized over the period during which the convertible senior notes are expected to be outstanding (the maturity date) as additional non-cash interest expense.

Upon settlement of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration, inclusive of transaction costs, amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component, including unamortized debt issuance costs, is recognized as gain (loss) on extinguishment of debt in our consolidated statements of operations. The remaining settlement consideration allocated to the equity component is recognized as a reduction of additional paid-in capital in our consolidated balance sheets.

Revenue Recognition

Revenue Recognition

On January 1, 2018, new accounting rules regarding revenue recognition became effective for public companies with a calendar fiscal year. None of our significant revenue sources – interest income from loans and investment securities, loan servicing fees, and rental income – are within the scope of the new revenue recognition guidance. The revenue recognition guidance also included revisions to existing accounting rules regarding the determination of whether a company is acting as a principal or agent in an arrangement and accounting for sales of nonfinancial assets where the seller has continuing involvement. These additional revisions also did not materially impact the Company.

Interest Income

Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms of the instrument. For loans where we do not elect the fair value option, origination fees and direct loan origination costs are also recognized in interest income over the loan term as a yield adjustment using the effective interest method. When we elect the fair value option, origination fees and direct loan costs are recorded directly in income and are not deferred. Discounts or premiums associated with the purchase of non-performing loans and investment securities are amortized or accreted into interest income as a yield adjustment on the effective interest method, based on expected cash flows through the expected maturity date of the investment. On at least a quarterly basis, we review and, if appropriate, make adjustments to our cash flow projections.

We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan’s outstanding principal balance is only recognized when received in cash. If a full recovery of principal is doubtful, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms.

For loans acquired with deteriorated credit quality, interest income is only recognized to the extent that our estimate of undiscounted expected principal and interest exceeds our investment in the loan. Accretable yield, if any, is recognized as interest income on a level-yield basis over the life of the loan.

For the majority of our available-for-sale RMBS, which have been purchased at a discount to par value, we do not expect to collect all amounts contractually due at the time we acquired the securities. Accordingly, we expect that a portion of the purchase discount will not be recognized as interest income, which is referred to as non-accretable

difference. This amount of non-accretable difference may change over time based on the actual performance of these securities, their underlying collateral, actual and projected cash flow from such collateral, economic conditions and other factors. If the performance of a credit deteriorated security is more favorable than forecasted, we will generally accrete more credit discount into interest income than initially or previously expected. These adjustments are made prospectively beginning in the period subsequent to the determination that a favorable change in performance is projected. Conversely, if the performance of a credit deteriorated security is less favorable than forecasted, an OTTI may be taken, and the amount of discount accreted into income will generally be less than previously expected.

Upon the sale of loans or securities which are not accounted for pursuant to the fair value option, the excess (or deficiency) of net proceeds over the net carrying value of such loans or securities is recognized as a realized gain (loss).

Servicing Fees

We typically seek to be the special servicer on CMBS transactions in which we invest. When we are appointed to serve in this capacity, we earn special servicing fees from the related activities performed, which consist primarily of overseeing the workout of under-performing and non-performing loans underlying the CMBS transactions. These fees are recognized in income in the period in which the services are performed and the revenue recognition criteria have been met.

Rental Income

Rental income is recognized when earned from tenants. For leases that provide rent concessions or fixed escalations over the lease term, rental income is recognized on a straight-line basis over the noncancelable term of the lease. In net lease arrangements, costs reimbursable from tenants are recognized in rental income in the period in which the related expenses are incurred as we are generally the primary obligor with respect to purchasing goods and services for property operations. In instances where the tenant is responsible for property maintenance and repairs and contracts and settles such costs directly with third party service providers, we do not reflect those expenses in our consolidated statement of operations as the tenant is the primary obligor.

Securitizations, Sales and Financing Arrangements

Securitizations, Sales and Financing Arrangements

We periodically sell our financial assets, such as commercial mortgage loans, residential mortgage loans, CMBS, RMBS and other assets. In connection with these transactions, we may retain or acquire senior or subordinated interests in the related assets. Gains and losses on such transactions are recognized in accordance with ASC 860, Transfers and Servicing, which is based on a financial components approach that focuses on control. Under this approach, after a transfer of financial assets that meets the criteria for treatment as a sale—legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint, and transferred control—an entity recognizes the financial assets it retains and any liabilities it has incurred, derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished. We determine the gain or loss on sale of the assets by allocating the carrying value of the sold asset between the sold asset and the interests retained based on their relative fair values, as applicable. The gain or loss on sale is the difference between the cash proceeds from the sale and the amount allocated to the sold asset. If the sold asset is being accounted for pursuant to the fair value option, there is no gain or loss.

Deferred Financing Costs

Deferred Financing Costs

Costs incurred in connection with debt issuance are capitalized and amortized to interest expense over the terms of the respective debt agreements. Such costs are presented as a direct deduction from the carrying value of the related debt liability.

Acquisition and Investment Pursuit Costs

Acquisition and Investment Pursuit Costs

Costs incurred in connection with acquisitions of investments, loans and businesses, as well as in pursuing unsuccessful acquisitions and investments, are recorded within acquisition and investment pursuit costs in our consolidated statements of operations when incurred. Costs incurred in connection with acquisitions of real estate not

accounted for as business combinations are capitalized within the purchase price. These costs reflect services performed by third parties and principally include due diligence and legal services.

Share-Based Payments

Share-Based Payments

The fair value of the restricted stock (“RSAs”) or restricted stock units (“RSUs”) granted is recorded as expense on a straight-line basis over the vesting period for the award, with an offsetting increase in stockholders’ equity. For grants to employees and directors, the fair value is determined based upon the stock price on the grant date.

Effective July 1, 2018, we early adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718) –Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for nonemployee share-based compensation with the existing accounting model for employee share based compensation. Prior to our adoption of ASU 2018-07, nonemployee share awards were recognized as an expense on a straight-line basis over the vesting period of the award with the fair value of the award remeasured at each vesting date. After our adoption of ASU 2018-07, nonemployee share awards continue to be recorded as expense on a straight-line basis over their vesting period, however, the fair value of the award is only determined on the grant date and not remeasured at subsequent vesting dates, consistent with the accounting for employee share awards. For non-employee awards granted prior to our July 1, 2018 adoption date, the awards were remeasured at fair value as of our July 1, 2018 adoption date with no subsequent remeasurement.

Foreign Currency Translation

Foreign Currency Translation

Our assets and liabilities denominated in foreign currencies are translated into U.S. dollars using foreign currency exchange rates at the end of the reporting period. Income and expenses are translated at the average exchange rates for each reporting period. The effects of translating the assets, liabilities and income of our foreign investments held by entities with a U.S. dollar functional currency are included in foreign currency gain (loss) in the consolidated statements of operations or other comprehensive income (“OCI”) for debt securities available-for-sale for which the fair value option has not been elected. The effects of translating the assets, liabilities and income of our foreign investments held by entities with functional currencies other than the U.S. dollar are included in OCI. Realized foreign currency gains and losses and changes in the value of foreign currency denominated monetary assets and liabilities are included in the determination of net income and are reported as foreign currency gain (loss) in our consolidated statements of operations.

Income Taxes

Income Taxes

The Company has elected to be taxed as a REIT under the Code. The Company is subject to federal income taxation at corporate rates on its REIT taxable income, however, the Company is allowed a deduction for the amount of dividends paid to its stockholders in arriving at its REIT taxable income. As a result, distributed net income of the Company is subjected to taxation at the stockholder level only. The Company intends to continue operating in a manner that will permit it to maintain its qualification as a REIT for tax purposes.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company evaluates the realizability of its deferred tax assets and recognizes a valuation allowance if, based on the available evidence, both positive and negative, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers, among other matters, estimates of expected future taxable income, nature of current and cumulative losses, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods.

We recognize tax positions in the financial statements only when it is more likely than not that, based on the technical merits of the tax position, the position will be sustained upon examination by the relevant taxing authority. A tax position is measured at the largest amount of benefit that will more likely than not be realized upon settlement. If, as a result of new events or information, a recognized tax position no longer is considered more likely than not to be

sustained upon examination, a liability is established for the unrecognized benefit with a corresponding charge to income tax expense in our consolidated statement of operations. We report interest and penalties, if any, related to income tax matters as a component of income tax expense.

Earnings Per Share

Earnings Per Share

We present both basic and diluted earnings per share (“EPS”) amounts in our financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from (i) our share-based compensation, consisting of unvested RSAs and RSUs, (ii) shares contingently issuable to our Manager, (iii) the conversion options associated with our outstanding Convertible Notes (see Notes 11 and 18), and (iv) non-controlling interests that are redeemable with our common stock (see Note 17). Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period.

Nearly all of the Company’s unvested RSUs and RSAs contain rights to receive non-forfeitable dividends and thus are participating securities. In addition, the non-controlling interests that are redeemable with our common stock are considered participating securities because they earn a preferred return indexed to the dividend rate on our common stock (see Note 17). Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. For the years ended December 31, 2019, 2018 and 2017, the two-class method resulted in the most dilutive EPS calculation.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, CMBS, RMBS, loan investments and interest receivable. We may place cash investments in excess of insured amounts with high quality financial institutions. We perform an ongoing analysis of credit risk concentrations in our investment portfolio by evaluating exposure to various counterparties, markets, underlying property types, contract terms, tenant mix and other credit metrics.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant and subjective estimate that we make is the projection of cash flows we expect to receive on our loans, investment securities and intangible assets, which has a significant impact on the amounts of interest income, credit losses (if any) and fair values that we record and/or disclose. In addition, the fair value of financial assets and liabilities that are estimated using a discounted cash flows method is significantly impacted by the rates at which we estimate market participants would discount the expected cash flows.

Recent Accounting Developments

Recent Accounting Developments

On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments, which mandates use of an “expected loss” credit model for estimating future credit losses of certain financial instruments instead of the “incurred loss” credit model that current GAAP requires. The “expected loss” model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event in accordance with the current “incurred loss” methodology. This ASU is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019. We expect this ASU to result in our recognition of higher levels of potential credit losses earlier in the credit cycle. Though we are still in the process of finalizing the effect of this ASU, we expect to record an initial increase in our allowance for credit losses of between $30 million and $40 million as of January 1, 2020 through a cumulative-effect adjustment to accumulated deficit.

On January 26, 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, which simplifies the method applied for measuring impairment in cases where goodwill is impaired.  This ASU specifies that goodwill impairment will be measured as the excess of the reporting unit’s carrying value (inclusive of goodwill) over its fair value, eliminating the requirement that all assets and liabilities of the reporting unit be remeasured individually in connection with measurement of goodwill impairment.  This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019 and is applied prospectively.  Early application is permitted.  We do not expect the application of this ASU to materially impact the Company.

On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework, which adds new disclosure requirements and modifies or eliminates existing disclosure requirements of ASC 820. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted. We do not expect the application of this ASU to materially impact the Company, as it only affects fair value disclosures.

On October 31, 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810) – Targeted Improvements to Related Party Guidance for Variable Interest Entities, which requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. This ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2019. Early application is permitted. We do not expect the application of this ASU to materially impact the Company.

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Assets:
Cash and cash equivalents	$ 478,388	$ 239,824
Restricted cash	95,643	248,041
Loans held-for-investment, net ($671,572 and $0 held at fair value)	10,586,074	8,532,356
Loans held-for-sale ($764,622 and $671,282 held at fair value)	884,150	1,187,552
Loans transferred as secured borrowings		74,346
Investment securities ($239,600 and $262,319 held at fair value)	810,238	906,468
Properties, net	2,266,440	2,784,890
Intangible assets ($16,917 and $20,557 held at fair value)	85,700	145,033
Investment in unconsolidated entities	84,329	171,765
Goodwill	259,846	259,846
Derivative assets	28,943	52,691
Accrued interest receivable	64,087	60,355
Other assets	211,323	152,922
Total Assets	78,042,336	68,262,453
Liabilities:
Accounts payable, accrued expenses and other liabilities	212,006	217,663
Related-party payable	40,925	44,043
Dividends payable	137,427	133,466
Derivative liabilities	8,740	15,415
Secured financing agreements, net	8,906,048	8,683,565
Collateralized loan obligations, net	928,060
Unsecured senior notes, net	1,928,622	1,998,831
Secured borrowings on transferred loans, net		74,239
Total Liabilities	72,905,322	63,362,264
Commitments and contingencies (Note 22)
Starwood Property Trust, Inc. Stockholders' Equity:
Preferred stock, $0.01 per share, 100,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.01 per share, 500,000,000 shares authorized, 287,380,891 issued and 282,200,751 outstanding as of December 31, 2019 and 280,839,692 issued and 275,659,552 outstanding as of December 31, 2018	2,874	2,808
Additional paid-in capital	5,132,532	4,995,156
Treasury stock (5,180,140 shares)	(104,194)	(104,194)
Accumulated other comprehensive income	50,932	58,660
Accumulated deficit	(381,719)	(348,998)
Total Starwood Property Trust, Inc. Stockholders' Equity	4,700,425	4,603,432
Non-controlling interests in consolidated subsidiaries	436,589	296,757
Total Equity	5,137,014	4,900,189
Total Liabilities and Equity	78,042,336	68,262,453
Primary beneficiary
Assets:
Total Assets	62,187,175	53,446,364
Liabilities:
Total Liabilities	$ 60,743,494	$ 52,195,042

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Data (Unaudited)

Quarterly Financial Data (Unaudited)

24. Quarterly Financial Data (Unaudited)

The following table summarizes our quarterly financial data which, in the opinion of management, reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our results of operations (amounts in thousands, except per share amounts):

	For the Three-Month Periods Ended
	March 31		June 30		September 30		December 31
2019:
Revenues	$	310,480	$	311,181	$	288,330	$	286,428
Net income		76,508		132,446		150,001		177,980
Net income attributable to Starwood Property Trust, Inc.		70,383		127,016		140,396		171,869
Earnings per share — Basic		0.25		0.45		0.50		0.61
Earnings per share — Diluted		0.25		0.45		0.49		0.60
2018:
Revenues	$	260,587	$	269,556	$	285,719	$	293,418
Net income		104,794		117,090		89,381		99,932
Net income attributable to Starwood Property Trust, Inc.		99,932		109,230		84,536		92,132
Earnings per share — Basic		0.38		0.41		0.31		0.33
Earnings per share — Diluted		0.38		0.40		0.31		0.33

Annual EPS may not equal the sum of each quarter’s EPS due to rounding and other computational factors.

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Unsecured Senior Notes

12 Months Ended

Dec. 31, 2019

Convertible Senior Notes

Unsecured Senior Notes

Unsecured Senior Notes

11. Unsecured Senior Notes

The following table is a summary of our unsecured senior notes outstanding as of December 31, 2019 and 2018 (dollars in thousands):

						Remaining
	Coupon		Effective		Maturity	Period of		Carrying Value at December 31,
	Rate		Rate (1)		Date	Amortization		2019		2018
2019 Convertible Notes	N/A		N/A		N/A	N/A		$	—	$	77,969
2021 Senior Notes (February)	3.63	%	3.89	%	2/1/2021	1.1	years		500,000		500,000
2021 Senior Notes (December)	5.00	%	5.32	%	12/15/2021	2.0	years		700,000		700,000
2023 Convertible Notes	4.38	%	4.86	%	4/1/2023	3.3	years		250,000		250,000
2025 Senior Notes	4.75	%	5.04	%	3/15/2025	5.2	years		500,000		500,000
Total principal amount									1,950,000		2,027,969
Unamortized discount—Convertible Notes									(3,610)		(4,644)
Unamortized discount—Senior Notes									(12,144)		(16,416)
Unamortized deferred financing costs									(5,624)		(8,078)
Carrying amount of debt components								$	1,928,622	$	1,998,831
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes								$	3,755	$	3,755

(1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on our Convertible Notes, the value of which reduced the initial liability and was recorded in additional paid-in-capital.

Senior Notes Due February 2021

On January 29, 2018, we issued $500.0 million of 3.625% Senior Notes due 2021 (the “2021 February Notes”). The 2021 February Notes mature on February 1, 2021. Prior to November 1, 2020, we may redeem some or all of the 2021 February Notes at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of the applicable date of redemption. On and after November 1, 2020, we may redeem some or all of the 2021 February Notes at a price equal to 100% of the principal amount thereof. In addition, prior to February 1, 2020, we may redeem up to 40% of the 2021 February Notes at the applicable redemption price using the proceeds of certain equity offerings. The 2021 February Notes were swapped to floating rate (see Note 13).

Senior Notes Due December 2021

On December 16, 2016, we issued $700.0 million of 5.00% Senior Notes due 2021 (the “2021 December Notes”). The 2021 December Notes mature on December 15, 2021. Prior to September 15, 2021, we may redeem some or all of the 2021 December Notes at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of the applicable date of redemption. On and after September 15, 2021, we may redeem some or all of the 2021 December Notes at a price equal to 100% of the principal amount thereof. In addition, prior to December 15, 2019, we may redeem up to 35% of the 2021 December Notes at the applicable redemption price using the proceeds of certain equity offerings.

Senior Notes Due 2025

On December 4, 2017, we issued $500.0 million of 4.75% Senior Notes due 2025 (the “2025 Notes”). The 2025 Notes mature on March 15, 2025. Prior to September 15, 2024, we may redeem some or all of the 2025 Notes at a price equal to 100% of the principal amount thereof, plus the applicable “make-whole” premium as of the applicable date of redemption. On and after September 15, 2024, we may redeem some or all of the 2025 Notes at a price equal to 100% of the principal amount thereof. In addition, prior to March 15, 2021, we may redeem up to 40% of the 2025 Notes at the

applicable redemption price using the proceeds of certain equity offerings. The 2025 Notes were swapped to floating rate (see Note 13).

Convertible Notes

On March 29, 2017, we issued $250.0 million of 4.375% Convertible Senior Notes due 2023 (the “2023 Notes”). On October 8, 2014, we issued $431.3 million of 3.75% Convertible Senior Notes due 2017 (the “2017 Notes”). On February 15, 2013, we issued $600.0 million of 4.55% Convertible Senior Notes due 2018 (the “2018 Notes”). On July 3, 2013, we issued $460.0 million of 4.00% Convertible Senior Notes due 2019 (the “2019 Notes”). In October 2017, we repaid the full outstanding principal amount of the 2017 Notes in cash upon their maturity. In March 2018, we repaid the full outstanding principal amount of the 2018 Notes in cash upon their maturity.

During the year ended December 31, 2019, we settled the remaining $78.0 million principal amount of the 2019 Notes through the issuance of 3.6 million shares of common stock and cash payments of $12.0 million. During the year ended December 31, 2018, we received and settled redemption notices related to the 2019 Notes with a par amount totaling $263.4 million. Total consideration of $296.8 million was paid via the issuance of 12.4 million shares and cash payments of $25.5 million. The $264.4 million of settlement consideration attributable to the liability component of the 2019 Notes exceeded the proportionate net carrying amount of the liability component by $2.1 million, which was recognized as a loss on extinguishment of debt in our consolidated statement of operations for the year ended December 31, 2018. The $32.4 million of settlement consideration attributable to the equity component of the 2019 Notes was recognized as a reduction of additional paid-in capital in our consolidated statement of equity for the year ended December 31, 2018, partially offsetting the $271.2 million fair value of the shares issued.

On March 29, 2017, the proceeds from the issuance of the 2023 Notes were used to repurchase $230.0 million of the 2018 Notes for $250.7 million. The repurchase price was allocated between the fair value of the liability component and the fair value of the equity component of the 2018 Notes at the repurchase date. The portion of the repurchase price attributable to the equity component totaled $18.1 million and was recognized as a reduction of additional paid-in capital during the year ended December 31, 2017. The portion of the repurchase price attributable to the liability component exceeded the net carrying amount of the liability component by $5.9 million, which was recognized as a loss on extinguishment of debt in our consolidated statement of operations for the year ended December 31, 2017.

We recognized interest expense of $12.3 million, $28.9 million and $72.2 million during the years ended December 31, 2019, 2018 and 2017, respectively, from our Convertible Notes.

The following table details the conversion attributes of our Convertible Notes outstanding as of December 31, 2019 (amounts in thousands, except rates):

	December 31, 2019			Conversion Spread Value - Shares (3)
	Conversion	Conversion		For the Year Ended December 31,
	Rate (1)	Price (2)		2019	2018	2017
2018 Notes	N/A		N/A	—	—	541
2019 Notes	N/A		N/A	—	91	1,358
2023 Notes	38.5959	$	25.91	—	—	—
				—	91	1,899

(1) The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of Convertible Notes converted, as adjusted in accordance with the indentures governing the Convertible Notes (including the applicable supplemental indentures).

(2) As of December 31, 2019, 2018 and 2017, the market price of the Company’s common stock was $24.86, $19.71 and $21.35 per share, respectively.

(3) The conversion spread value represents the portion of the Convertible Notes that are “in-the-money”, representing the value that would be delivered to investors in shares upon an assumed conversion.

The if-converted value of the 2023 Notes was less than their principal amount by $10.1 million at December 31, 2019 as the closing market price of the Company’s common stock of $24.86 was less than the implicit conversion price of $25.91 per share.

Effective June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. The if-converted value of the principal amount of the 2023 Notes was $239.9 million as of December 31, 2019.

Conditions for Conversion

Prior to October 1, 2022, the 2023 Notes will be convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of the Company’s common stock is at least 110% of the conversion price of the 2023 Notes for at least 20 out of 30 trading days prior to the end of the preceding fiscal quarter, (2) the trading price of the 2023 Notes is less than 98% of the product of (i) the conversion rate and (ii) the closing price of the Company’s common stock during any five consecutive trading day period, (3) the Company issues certain equity instruments at less than the 10-day average closing market price of its common stock or the per-share value of certain distributions exceeds the market price of the Company’s common stock by more than 10% or (4) certain other specified corporate events (significant consolidation, sale, merger, share exchange, fundamental change, etc.) occur.

On or after October 1, 2022, holders of the 2023 Notes may convert each of their notes at the applicable conversion rate at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date.

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Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2019

Acquisitions and Divestitures

Acquisitions and Divestitures

3. Acquisitions and Divestitures

Ireland Portfolio Sale

On December 23, 2019, we sold the U.S. entity which held the net assets related to our Ireland Portfolio. The properties within the entity were sold for a gross purchase price of €530.0 million. After certain adjustments, including a €20.7 million tax withholding which was treated as a reduction of purchase price, the net purchase price was €507.6 million, plus estimated net working capital. In connection with the transaction, the buyer assumed our existing third party debt totaling €316.3 million. Our basis in these assets was €394.7 million, net of €67.5 million of accumulated depreciation. The resulting gain, after selling costs, was €108.0 (or $119.7) million. This amount is included within gain on sale of investments and other assets in our consolidated statement of operations.

Upon receipt of the net proceeds from the sale, we unwound all of our foreign currency hedges related to this portfolio, which had a fair value of $16.6 million at the unwind date.

During the year ended December 31, 2017, we sold one office property within the Ireland Portfolio for $3.9 million, recognizing an immaterial gain on sale within gain on sale of investments and other assets in our consolidated statement of operations. There were no properties sold within the Ireland Portfolio during the year ended December 31, 2018.

Investing and Servicing Segment Property Portfolio

During the year ended December 31, 2019, our Investing and Servicing Segment acquired $8.6 million in net assets of a commercial real estate property from a CMBS trust for a gross purchase price of $8.8 million. This property, aggregated with the controlling interests in 15 remaining commercial real estate properties acquired from CMBS trusts prior to December 31, 2018 for an aggregate acquisition price of $227.3 million, comprise the Investing and Servicing Segment Property Portfolio (the “REIS Equity Portfolio”). When the properties are acquired from CMBS trusts that are consolidated as VIEs on our balance sheet, the acquisitions are reflected as repayment of debt of consolidated VIEs in our consolidated statements of cash flows.

During the year ended December 31, 2018, our Investing and Servicing Segment acquired $52.7 million in net assets of three commercial real estate properties from CMBS trusts for a gross purchase price of $53.1 million. During the year ended December 31, 2017, our Investing and Servicing Segment acquired the net equity of three commercial real estate properties from CMBS trusts for $48.7 million. We applied the business combination provisions of ASC 805 in accounting for the acquisitions in 2017 since they occurred prior to our adoption of ASU 2017-01 in December 2017, whereas we applied the asset acquisition provisions of ASC 805 for the acquisitions in 2018 and 2019.

During the year ended December 31, 2019, we sold four properties within the Investing and Servicing Segment for $145.9 million. In connection with these sales, we recognized a total gain of $59.7 million within gain on sale of investments and other assets in our consolidated statements of operations, of which $5.3 million was attributable to non-controlling interests. During the year ended December 31, 2018, we sold nine properties within the Investing and Servicing Segment for $77.9 million. In connection with these sales, we recognized a total gain of $26.6 million within gain on sale of investments and other assets in our consolidated statements of operations, of which $5.1 million was attributable to non-controlling interests. One of these properties was acquired by a third party which already held a $0.3 million non-controlling interest in the property. During the year ended December 31, 2017, we sold five properties within the Investing and Servicing Segment for $52.4 million. In connection with these sales, we recognized a total gain of $19.8 million within gain on sale of investments and other assets in our consolidated statements of operations, of which $3.3 million was attributable to non-controlling interests.

Infrastructure Lending Segment

On September 19, 2018, we acquired the project finance origination, underwriting and capital markets business of GE Capital Global Holdings, LLC (“GE Capital”) for approximately $2.0 billion (the “Infrastructure Lending Segment”) and on October 15, 2018, we acquired two additional senior secured project finance loans from GE Capital for $147.1 million. In total, the business included $2.1 billion of funded senior secured project finance loans and investment securities and $466.3 million of unfunded lending commitments (the “Infrastructure Lending Portfolio”) which are secured primarily by natural gas and renewable power facilities. We utilized $1.7 billion in new financing in order to fund the acquisition.

As of the acquisition dates, the Infrastructure Lending Portfolio was 97% floating rate with 74% of the collateral located in the U.S., 12% in Mexico, 5% in the United Kingdom and the remaining collateral dispersed through the Middle East, Ireland, Australia, Canada and Spain. The loans were predominantly denominated in U.S. Dollars (“USD”) and backed by long term power purchase agreements primarily with investment grade counterparties. The Company hired a team of professionals from GE Capital’s project finance division in connection with the acquisition to manage and expand the Infrastructure Lending Portfolio.

Goodwill of $119.4 million was recognized in connection with the Infrastructure Lending Segment acquisition as the consideration paid exceeded the fair value of the net assets acquired.

We applied the provisions of ASC 805, Business Combinations, in accounting for our acquisition of the Infrastructure Lending Segment. In doing so, we recorded all identifiable assets acquired and liabilities assumed at fair value as of the respective acquisition dates.

Woodstar II Portfolio

During the year ended December 31, 2018, we acquired the final 19 properties of the 27 affordable housing communities comprising our “Woodstar II Portfolio”. The Woodstar II Portfolio in its entirety is comprised of 6,109 units concentrated primarily in Central and South Florida and is 100% occupied.

The 19 affordable housing communities acquired during the year ended December 31, 2018 consist of 4,369 units and were acquired for $438.1 million, including contingent consideration of $29.2 million (the “2018 Closing”). The properties acquired in the 2018 Closing were recognized initially at the purchase price of $408.9 million plus capitalized acquisition costs of $4.1 million. Government sponsored mortgage debt of $27.0 million with weighted average fixed annual interest rates of 3.06% and remaining weighted average terms of 27.5 years was assumed at closing. We financed a portion of the 2018 Closing utilizing new 10-year mortgage debt totaling $300.9 million with weighted average fixed annual interest rates of 3.82%.

In December 2017, we acquired eight of the affordable housing communities (the “2017 Closing”), which include 1,740 units, for $156.2 million, including contingent consideration of $10.8 million. We financed the 2017 Closing utilizing 10-year mortgage debt totaling $116.7 million with a fixed 3.81% interest rate.

We effectuated the Woodstar II Portfolio acquisitions via a contribution of the properties by third parties (the “Contributors”) to SPT Dolphin Intermediate LLC (“SPT Dolphin”), a newly-formed, wholly-owned subsidiary of the Company. In exchange for the contribution, the Contributors received cash, Class A units of SPT Dolphin (the “Class A Units”) and rights to receive additional Class A Units if certain contingent events occur. The Class A unitholders have the right to redeem their Class A Units for consideration equal to the current share price of the Company’s common stock on a one-for-one basis, with the consideration paid in either cash or the Company’s common stock, at the determination of the Company.

The 2018 Closing resulted in the Contributors receiving cash of $225.8 million, 7,403,731 Class A Units and rights to receive an additional 1,411,642 Class A Units if certain contingent events occur. In aggregate, the 2018 Closing and 2017 Closing have resulted in the Contributors receiving cash of $310.7 million, 10,183,505 Class A Units and rights to receive an additional 1,910,563 Class A Units if certain contingent events occur. During the years ended December 31, 2019 and 2018, we issued 120,926 and 1,727,314, respectively, of the total 1,910,563 contingent Class A Units to the Contributors. During the year ended December 31, 2019, redemptions of 974,176 of the Class A Units were received and settled in common stock. No redemptions of Class A Units occurred during the year ended December 31, 2018. In consolidation, the issued Class A Units are reflected as non-controlling interests in consolidated subsidiaries on our consolidated balance sheets.

Since substantially all of the fair value of the properties acquired was concentrated in a group of similar identifiable assets, the Woodstar II Portfolio acquisitions were accounted for in accordance with the asset acquisition provisions of ASC 805.

Master Lease Portfolio

On September 25, 2017, we acquired 20 retail properties and three industrial properties (the “Master Lease Portfolio”) for a purchase price of $553.3 million, inclusive of $3.7 million of related transaction costs. Concurrently with the acquisition, we leased the properties back to the seller under corporate guaranteed master net lease agreements with initial terms of 24.6 years and periodic rent escalations. These properties, which collectively comprised 5.3 million square feet, are geographically dispersed throughout the U.S., with more than 50% of the portfolio, by carrying value, located in Florida, Texas and Minnesota. We utilized $265.9 million in new financing in order to fund the acquisition. This sale leaseback transaction was accounted for as an asset acquisition.

During the year ended December 31, 2018, we sold four retail properties and three industrial properties within the Master Lease Portfolio for $235.4 million, recognizing a gain on sale of $28.5 million within gain on sale of investments and other assets in our consolidated statement of operations. There were no properties sold within the Master Lease Portfolio during the years ended December 31, 2019 and 2017.

Purchase Price Allocations of Business Combinations

We applied the business combination provisions of ASC 805 in accounting for our acquisition of the Infrastructure Lending Segment and, prior to our adoption of ASU 2017-01 in December 2017, the REIS Equity Portfolio. In doing so, we recorded all identifiable assets acquired and liabilities assumed at fair value as of the respective acquisition dates.

The following table summarizes the identified assets acquired and liabilities assumed as of the respective acquisition dates (amounts in thousands):

	2018		2017
	Infrastructure		REIS Equity
Assets acquired:	Lending Segment		Portfolio
Loans held-for-investment	$	1,649,630	$	—
Loans held-for-sale		319,710		—
Investment securities		65,060		—
Properties		—		38,770
Intangible assets		—		11,955
Accrued interest receivable		13,843		—
Other assets		—		85
Total identifiable assets acquired		2,048,243		50,810
Liabilities assumed:
Accounts payable, accrued expenses and other liabilities		8,817		1,516
Derivative liabilities		282		—
Total liabilities assumed		9,099		1,516
Net assets acquired	$	2,039,144	$	49,294

Goodwill represents the excess of the purchase price over the fair value of the underlying assets acquired and liabilities assumed. This determination of goodwill resulting from the Infrastructure Lending Segment acquisition is as follows (amounts in thousands):

	2018
	Infrastructure
	Lending Segment
Purchase price	$	2,158,553
Fair value of net assets acquired		2,039,144
Goodwill	$	119,409

Pro Forma Operating Data (Unaudited)

The unaudited pro forma revenues and net income attributable to the Company for the years ended December 31, 2018 and 2017, assuming the Infrastructure Lending Segment was acquired on January 1, 2017, are as follows (amounts in thousands, except per share amounts):

	For the Year Ended
	December 31,
(Unaudited)	2018		2017
Revenues	$	1,182,892	$	966,636
Net income attributable to STWD		392,505		395,150
Net income per share - Basic		1.47		1.51
Net income per share - Diluted		1.44		1.50

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Properties

12 Months Ended

Dec. 31, 2019

Properties

Properties

7. Properties

Our properties are held within the following portfolios:

Woodstar I Portfolio

The Woodstar I Portfolio is comprised of 32 affordable housing communities with 8,948 units concentrated primarily in the Tampa, Orlando and West Palm Beach metropolitan areas. During the year ended December 31, 2015, we acquired 18 of the 32 affordable housing communities of the Woodstar I Portfolio with the final 14 communities acquired during the year ended December 31, 2016. The Woodstar I Portfolio includes total gross properties and lease intangibles of $629.5 million and federal, state and county sponsored financing and other debt of $478.2 million as of December 31, 2019.

Woodstar II Portfolio

The Woodstar II Portfolio is comprised of 27 affordable housing communities with 6,109 units concentrated primarily in Central and South Florida. The Woodstar II Portfolio includes total gross properties and lease intangibles of $605.5 million and debt of $436.9 million as of December 31, 2019. Refer to Note 3 for further discussion of the Woodstar II Portfolio.

Medical Office Portfolio

The Medical Office Portfolio is comprised of 34 medical office buildings acquired during the year ended December 31, 2016. These properties, which collectively comprise 1.9 million square feet, are geographically dispersed throughout the U.S. and primarily affiliated with major hospitals or located on or adjacent to major hospital campuses. The Medical Office Portfolio includes total gross properties and lease intangibles of $759.9 million and debt of $590.9 million as of December 31, 2019.

Master Lease Portfolio

The Master Lease Portfolio is comprised of 16 retail properties geographically dispersed throughout the U.S., with more than 50% of the portfolio, by carrying value, located in Florida, Texas and Minnesota. These properties, which were acquired in September 2017, collectively comprise 1.9 million square feet and were leased back to the seller under corporate guaranteed master net lease agreements with initial terms of 24.6 years and periodic rent escalations. The Master Lease Portfolio includes total gross properties of $343.8 million and debt of $192.4 million as of December 31, 2019. Refer to Note 3 for further discussion of the Master Lease Portfolio.

Investing and Servicing Segment Property Portfolio

The REIS Equity Portfolio is comprised of 16 commercial real estate properties and one equity interest in an unconsolidated commercial real estate property. The REIS Equity Portfolio includes total gross properties and lease intangibles of $277.8 million and debt of $187.9 million as of December 31, 2019. Refer to Note 3 for further discussion of the REIS Equity Portfolio.

The table below summarizes our properties held as of December 31, 2019 and December 31, 2018 (dollars in thousands):

	Depreciable Life	December 31, 2019		December 31, 2018
Property Segment
Land and land improvements	0 – 15 years	$	484,397	$	648,972
Buildings and building improvements	5 – 45 years		1,687,756		1,980,283
Furniture & fixtures	3 – 7 years		52,567		46,048
Investing and Servicing Segment
Land and land improvements	0 – 15 years		54,052		82,332
Buildings and building improvements	3 – 40 years		182,048		213,010
Furniture & fixtures	2 – 5 years		2,139		2,158
Commercial and Residential Lending Segment (1)
Land and land improvements	0 – 7 years		11,386		—
Buildings and building improvements	10 – 23 years		16,285		—
Properties, cost			2,490,630		2,972,803
Less: accumulated depreciation			(224,190)		(187,913)
Properties, net		$	2,266,440	$	2,784,890

(1) Represents properties acquired through loan foreclosure. Refer to Note 5 for further discussion.

During the year ended December 31, 2019, we sold $407.2 million of net property assets relating to the Ireland Portfolio. Refer to Note 3 for further discussion. Also during the year ended December 31, 2019, we sold four operating properties within the REIS Equity Portfolio for $145.9 million. In connection with these REIS Equity Portfolio sales, we recognized a total gain of $59.7 million within gain on sale of investments and other assets in our consolidated statement of operations, of which $5.3 million was attributable to non-controlling interests.

During the years ended December 31, 2018 and 2017, we sold 16 and six operating properties, respectively, for $313.3 million and $56.4 million, respectively. In connection with these sales, we recognized a total gain of $55.1 million and $19.9 million, respectively, within gain on sale of investments and other assets in our consolidated statements of operations, of which $5.1 million and $3.3 million, respectively, was attributable to non-controlling interests. One of these properties was acquired by a third party which already held a $0.3 million non-controlling interest in the property.

Future rental payments due to us from tenants under existing non-cancellable operating leases for each of the next five years and thereafter are as follows (in thousands):

2020	$	177,516
2021		95,524
2022		89,602
2023		79,177
2024		71,271
Thereafter		688,437
Total	$	1,201,527

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Goodwill and Intangibles - Activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2013
Summary of activity within intangible assets
Balance as of beginning of period	$ 145,033	$ 183,092
Amortization	(22,553)	(43,876)
Sales	(5,221)	(2,827)
Foreign exchange loss	1,027	1,614
Impairment	(1,244)	(361)
Changes in fair value due to changes in inputs and assumptions	(3,640)	(10,202)
Balance as of end of period	85,700	145,033
Unfavorable lease liability	2,300	2,900
Future rental payments due to us from tenants under existing non-cancellable operating leases
2020	11,699
2021	9,674
2022	7,892
2023	6,136
2024	4,742
Thereafter	28,640
Total	68,783
Medical Office Portfolio
Summary of activity within intangible assets
Unfavorable lease liability	$ 4,800
Amortization period of unfavorable lease liability	9 years 8 months 12 days
Woodstar II Portfolio
Summary of activity within intangible assets
Acquisition of properties		10,792
REIS Equity Portfolio
Summary of activity within intangible assets
Acquisition of properties	$ 277	10,029
Ireland Portfolio
Summary of activity within intangible assets
Sales	(25,925)
LNR
Summary of activity within intangible assets
Unfavorable lease liability	2,800	4,700	$ 15,300
Amortization period of unfavorable lease liability			1 year 6 months
Amortization of intangible unfavorable lease liability per year			$ 1,900
In-place lease
Summary of activity within intangible assets
Balance as of beginning of period	97,347	122,465
Amortization	(19,297)	(39,830)
Sales	(5,208)	(1,791)
Foreign exchange loss	806	1,270
Impairment	(1,132)	(361)
Balance as of end of period	50,910	97,347
In-place lease | Woodstar II Portfolio
Summary of activity within intangible assets
Acquisition of properties		10,792
In-place lease | REIS Equity Portfolio
Summary of activity within intangible assets
Acquisition of properties	277	7,342
In-place lease | Ireland Portfolio
Summary of activity within intangible assets
Sales	(20,271)
Favorable lease
Summary of activity within intangible assets
Balance as of beginning of period	27,129	29,868
Amortization	(3,256)	(4,046)
Sales	(13)	(1,036)
Foreign exchange loss	221	344
Impairment	(112)
Balance as of end of period	17,873	27,129
Favorable lease | REIS Equity Portfolio
Summary of activity within intangible assets
Acquisition of properties		2,687
Favorable lease | Ireland Portfolio
Summary of activity within intangible assets
Sales	(5,654)
Domestic Servicing Rights
Summary of activity within intangible assets
Balance as of beginning of period	20,557	30,759
Changes in fair value due to changes in inputs and assumptions	(3,640)	(10,202)
Balance as of end of period	$ 16,917	$ 20,557

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Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Assets
Net Amounts of Assets Presented in the Statement of Financial Position	$ 28,943	$ 52,691
Liabilities
Gross Amounts of Recognized Liabilities	4,618,197	4,305,165
Net Amounts of Liabilities Presented in the Statement of Financial Position	4,618,197	4,305,165
Gross Amounts Not Offset in the Statement of Financial Position
Financial Instruments	4,614,769	4,291,158
Cash Collateral Pledged	292	8,658
Net Amount	3,136	5,349
Derivatives
Assets
Gross Amounts of Recognized Assets	28,943	52,691
Net Amounts of Assets Presented in the Statement of Financial Position	28,943	52,691
Gross Amounts Not Offset in the Statement of Financial Position
Financial Instruments	5,312	1,408
Cash Collateral Received	14,208
Net Amount	9,423	51,283
Liabilities
Gross Amounts of Recognized Liabilities	8,740	15,415
Net Amounts of Liabilities Presented in the Statement of Financial Position	8,740	15,415
Gross Amounts Not Offset in the Statement of Financial Position
Financial Instruments	5,312	1,408
Cash Collateral Pledged	292	8,658
Net Amount	3,136	5,349
Repurchase Agreements
Liabilities
Gross Amounts of Recognized Liabilities	4,609,457	4,289,750
Net Amounts of Liabilities Presented in the Statement of Financial Position	4,609,457	4,289,750
Gross Amounts Not Offset in the Statement of Financial Position
Financial Instruments	$ 4,609,457	$ 4,289,750

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Loan Securitization/Sale Activities (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)
Loan Transfers Accounted for as Secured Borrowings
Net gains (losses) on the sale of loan qualifying for sales treatment	$ 6,900	$ 1,300
Interest Rate Swap Guarantees
Loan Transfers Accounted for as Secured Borrowings
Cash consideration	3,100
Investing and Servicing Segment
Loan Transfer Activities
Face Amount	1,781,981	1,517,599	$ 1,517,368
Proceeds	1,845,890	1,563,433	1,582,050
Repayment of purchase agreements	$ 1,289,129	$ 1,147,316	1,152,938
Commercial and Residential Lending Segment
Loan Transfers Accounted for as Secured Borrowings
Number of VIEs that were consolidated | item	3	2
Number of VIEs into which the commercial loans were sold | item		2
Face Amount			75,000
Proceeds			74,098
Net gains (losses) on the sale of loan qualifying for sales treatment	$ 4,600
Commercial and Residential Lending Segment | Loans held-for-sale, commercial
Loan Transfers Accounted for as Sales
Face Amount	751,210	$ 840,400	55,470
Proceeds	748,045	835,849	$ 52,609
Commercial and Residential Lending Segment | Loans held-for-sale, residential
Loan Transfers Accounted for as Sales
Face Amount	1,282,527	660,865
Proceeds	1,331,856	683,556
Infrastructure Lending Segment
Loan Transfer Activities
Face Amount	404,100	$ 0
Proceeds	393,300
Loan Transfers Accounted for as Secured Borrowings
Net gains (losses) on the sale of loan qualifying for sales treatment	3,100
Decrease in fair value within (loss) gain on derivative financial instruments	$ 2,700

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Investment Securities - SEREF (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2019	Dec. 31, 2012	Dec. 31, 2018
Residential Real Estate
Fair value of the investment		$ 26,746		$ 25,671
Ownership percentage		2.00%
SEREF
Residential Real Estate
Number of shares acquired	9,140,000		9,140,000
Fair value of the investment		$ 12,700		$ 11,900
Ownership percentage		2.00%

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Related-Party Transactions - Investments in Loans and Securities and Other Arrangements (Details) £ in Thousands, $ in Thousands, € in Millions		1 Months Ended																						2 Months Ended	12 Months Ended
	May 17, 2013 USD ($)	Nov. 30, 2019 EUR (€)	Sep. 30, 2019 EUR (€)	Jul. 31, 2019 USD ($)	Apr. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Feb. 28, 2019 USD ($) Plant	Dec. 31, 2018 USD ($) property	Oct. 31, 2018 GBP (£)	Jun. 30, 2018 USD ($) building	Mar. 31, 2018 USD ($)	Jan. 31, 2018 USD ($) Plant	Aug. 31, 2017 USD ($)	Jun. 30, 2017 GBP (£)	May 31, 2017 USD ($)	Jun. 30, 2016 GBP (£) property	Jan. 31, 2016 USD ($)	Oct. 31, 2015 USD ($) loan	Mar. 31, 2015 USD ($) property	Oct. 31, 2014 USD ($) item	Jul. 31, 2014 GBP (£) item	Apr. 30, 2013 USD ($) item	Dec. 31, 2012 USD ($) shares	Oct. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($) property	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2012 USD ($) shares	Dec. 31, 2019 EUR (€) item property	Dec. 31, 2019 USD ($) item property
Related-Party Transactions
Acquisitions and originations of mortgage financing																									$ 9,094,714	$ 6,723,144	$ 5,500,539
Spread on interest rate basis (as a percent)																															4.20%	4.20%
Purchase price of notes																									$ 5,473,399	4,428,891	3,234,987
Ownership percentage																									2.00%
Equity method, Carrying value								$ 146,094																		146,094						$ 57,583
Distribution of capital from unconsolidated entities																									$ 18,127	21,461	14,252
Total other-than-temporary impairment ("OTTI")																									267		180
Earnings (loss) from unconsolidated entities																									(101,354)	10,540	30,505
Interest in VIE								171,765																		171,765						$ 84,329
Contribution																									$ 183,520	13,407	106
CMBS
Related-Party Transactions
Payments to acquire security										$ 84,100							$ 9,700
Number of regional malls by which investment is secured | building										5
Purchase of first priority infrastructure term loan participation
Related-Party Transactions
Acquisitions and originations of mortgage financing				$ 16,000	$ 5,000		$ 60,000
First priority infrastructure term loan							$ 1,000,000
Upsize to term loan				$ 300,000,000
Number of domestic natural gas power plants | Plant							2
Origination of loan to refinance the debt of a commercial real estate partnership
Related-Party Transactions
Acquisitions and originations of mortgage financing						$ 22,500
Ownership percentage						50.00%
Co-origination of loan with SEREF and private funds, London
Related-Party Transactions
Acquisitions and originations of mortgage financing								62,500								£ 75,000
Number of properties | property																3
Loans funded by the reporting entity								21,300								£ 60,000
Co-origination of loan with affiliated private funds for London development
Related-Party Transactions
Acquisitions and originations of mortgage financing | £																					£ 101,750
Number of stories in the building | item																					46
Number of stories in the housing development | item																					18
Number of private residential and affordable housing units | item																					366
Loans funded by the reporting entity | £																					£ 86,750
Purchase of First Mortgage Loan Participation | First mortgage loan participation
Related-Party Transactions
Acquisitions and originations of mortgage financing												$ 130,000
Number of properties | Plant												4
Origination Of Loan For Acquisition Of Office Campus In Irvine, California
Related-Party Transactions
Acquisitions and originations of mortgage financing													$ 339,200
Purchase of first mortgage loan participation for acquisition of luxury resort, Spain from SEREF | First mortgage loan participation
Related-Party Transactions
Acquisitions and originations of mortgage financing											$ 55,000
Purchase of B-Notes secured by Class-A office buildings | CMBS
Related-Party Transactions
Aggregate proceeds from sale of interests in notes	$ 95,000
Purchase of B-Notes secured by Class-A office buildings | B Notes
Related-Party Transactions
Number of loans | item																						2
Purchase price of notes																						$ 146,700
Number of Class A office buildings with loans | item																						2
Number of loans sold | loan																		1
Aggregate proceeds from sale of interests in notes																		$ 29,200
Development of Grade A office building and convention center
Related-Party Transactions
Acquisitions and originations of mortgage financing | €			€ 58.9
SEREF
Related-Party Transactions
Acquisitions and originations of mortgage financing | €			14.7
First priority infrastructure term loan | €																															€ 15.0
Number of shares acquired | shares																							9,140,000							9,140,000
Value of shares acquired																							$ 14,700							$ 14,700
Ownership percentage acquired																							4.00%
Ownership percentage																									2.00%
SEREF | Co-origination of loan with SEREF and private funds, London
Related-Party Transactions
Loans funded by the related party								41,200								£ 15,000
SEREF | Development of Grade A office building and convention center
Related-Party Transactions
Acquisitions and originations of mortgage financing | €		€ 39.0	€ 73.6
Retail Fund
Related-Party Transactions
Equity method, Carrying value								114,362												$ 150,000						114,362
Distribution of capital from unconsolidated entities																											2,100
Investments in and Advances to Affiliates, at Fair Value, Gross Reductions																									$ 47,200
Total other-than-temporary impairment ("OTTI")																									71,900
Number of regional shopping malls | item																				4											4	4
Earnings (loss) from unconsolidated entities																									114,400	3,700	27,700
Percentage of acquired interest in joint venture																				33.00%
Interest in VIE													$ 15,500
Joint venture
Related-Party Transactions
Percentage of acquired interest in joint venture																						50.00%
Investing and Servicing Segment
Related-Party Transactions
Purchase price																										227,300	227,300	$ 227,300	$ 227,300
Investing and Servicing Segment | Co-origination of loan with SEREF and private funds, London | CMBS
Related-Party Transactions
Total commitments									£ 77,000	$ 4,500				£ 69,300
Amount committed for loans by the entity | £									£ 61,600					£ 55,400
REO Portfolio | Investing and Servicing Segment | CMBS
Related-Party Transactions
Net real estate assets								$ 27,700																		27,700	30,900					$ 8,600
Purchase price																									8,800	$ 28,000	31,300
REIS Equity Portfolio
Related-Party Transactions
Net real estate assets																											50,810
Fund IX | CMBS
Related-Party Transactions
Payments to acquire security																			$ 58,600
Number of properties | property																			85
Fund IX | Joint venture
Related-Party Transactions
Percentage of acquired interest in joint venture																						50.00%
SEREF | Development of Grade A office building and convention center
Related-Party Transactions
First priority infrastructure term loan | €		€ 192.0
Highmark Residential
Related-Party Transactions
Number of properties under management | property								10																		10					11	11
Payments to related party																									1,600	$ 100
Highmark Residential | SEREF
Related-Party Transactions
Number of properties under management | property																															21	21
Affiliated private funds | Co-origination of loan with affiliated private funds for London development
Related-Party Transactions
Loans funded by the related party | £																					£ 15,000
Affiliates of Manager
Related-Party Transactions
Purchase price															$ 50,000
Fund Participants | REO Portfolio
Related-Party Transactions
Aggregate commitment																									15,000
Capital commitments funded																									4,900
Amount of additional funding of capital commitments expected																									$ 0
Incremental percentage to earn on all operating cash flows attributable to capital account, net																									60.00%
Preferred return to general partner of the fund																									5.00%
Income recognized by non-controlling interests																									$ 1,300	2,000	$ 1,400
Fund Participants | REO Portfolio | Fund Participants
Related-Party Transactions
Equity interest in REO properties acquired after January 1, 2015 (as percent)																															10.00%	10.00%
Loans held-for-sale, residential | Residential mortgage originator
Related-Party Transactions
Acquisitions and originations of mortgage financing																								$ 2,000	$ 353,000	$ 135,600

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Secured Borrowings- Collateralized Loan Obligations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Aug. 31, 2019
Summary of CLO
Collateralized loan obligations, net	$ 928,060
Spread (as a percent)	1.50%
Amortization of deferred financing costs	$ 34,300	$ 27,000	$ 19,500
Deferred financing costs, net of amortization	$ 5,624	$ 8,078
Collateral assets
Summary of CLO
Count	20
Amount issued	$ 1,073,504
Collateralized loan obligations, net	$ 1,073,504
Financing
Summary of CLO
Count	1
Amount issued	$ 936,375
Collateralized loan obligations, net	928,060
Collateralized Loan Obligation
Summary of CLO
Amount issued				$ 1,100,000
Collateralized loan obligations, net				$ 936,400
Deferred financing costs, net of amortization	9,200
Unamortized issuance costs	$ 8,300
Collateralized Loan Obligation | Collateral assets
Summary of CLO
Loans financed by the CLO (as a percent)	9.00%
Fixed weighted average interest	6.84%
Collateralized Loan Obligation | LIBOR | Collateral assets
Summary of CLO
Spread (as a percent)	3.34%
Collateralized Loan Obligation | LIBOR | Financing
Summary of CLO
Spread (as a percent)	1.65%

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Fair Value (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value

Schedule of financial assets and liabilities carried at fair value on a recurring basis

The following tables present our financial assets and liabilities carried at fair value on a recurring basis in the consolidated balance sheets by their level in the fair value hierarchy as of December 31, 2019 and 2018 (amounts in thousands):

	December 31, 2019
	Total		Level I		Level II		Level III
Financial Assets:
Loans under fair value option	$	1,436,194	$	—	$	—	$	1,436,194
RMBS		189,576		—		—		189,576
CMBS		37,360		—		12,352		25,008
Equity security		12,664		12,664		—		—
Domestic servicing rights		16,917		—		—		16,917
Derivative assets		28,943		—		28,943		—
VIE assets		62,187,175		—				62,187,175
Total	$	63,908,829	$	12,664	$	41,295	$	63,854,870
Financial Liabilities:
Derivative liabilities	$	8,740	$	—	$	8,740	$	—
VIE liabilities		60,743,494		—		58,206,102		2,537,392
Total	$	60,752,234	$	—	$	58,214,842	$	2,537,392

	December 31, 2018
	Total		Level I		Level II		Level III
Financial Assets:
Loans under fair value option	$	671,282	$	—	$	—	$	671,282
RMBS		209,079		—		—		209,079
CMBS		41,347		—		16,119		25,228
Equity security		11,893		11,893		—		—
Domestic servicing rights		20,557		—		—		20,557
Derivative assets		52,691		—		52,691		—
VIE assets		53,446,364		—		—		53,446,364
Total	$	54,453,213	$	11,893	$	68,810	$	54,372,510
Financial Liabilities:
Derivative liabilities	$	15,415	$	—	$	15,415	$	—
VIE liabilities		52,195,042		—		50,753,596		1,441,446
Total	$	52,210,457	$	—	$	50,769,011	$	1,441,446

Schedule of changes in financial assets and liabilities classified as Level III

The changes in financial assets and liabilities classified as Level III are as follows for the years ended December 31, 2019 and 2018 (amounts in thousands):

							Domestic
	Loans at						Servicing				VIE
	Fair Value		RMBS		CMBS		Rights		VIE Assets		Liabilities		Total
January 1, 2018 balance	$	745,743		247,021		24,191		30,759		51,045,874		(2,188,937)	$	49,904,651
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale		40,217		3,527		2,568		(10,202)		(5,835,225)		1,022,887		(4,776,228)
Net accretion		—		10,932		—		—		—		—		10,932
Included in OCI		—		(4,374)		—		—		—		—		(4,374)
Purchases / Originations		2,276,788		—		3,621		—		—		—		2,280,409
Sales		(2,051,634)		(13,264)		(3,163)		—		—		—		(2,068,061)
Issuances		—		—		—		—		—		(102,474)		(102,474)
Cash repayments / receipts		(144,322)		(34,763)		(23,520)		—		—		(89,747)		(292,352)
Transfers into Level III		—		—		16,845		—		—		(1,043,920)		(1,027,075)
Transfers out of Level III		(195,510)		—		—		—		—		922,985		727,475
Consolidation of VIEs		—		—		—		—		9,885,200		(212,257)		9,672,943
Deconsolidation of VIEs		—		—		4,686		—		(1,649,485)		250,017		(1,394,782)
December 31, 2018 balance		671,282		209,079		25,228		20,557		53,446,364		(1,441,446)		52,931,064
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale		71,337		—		505		(3,640)		(1,250,935)		47,308		(1,135,425)
OTTI		—		—		—		—		—		—		—
Net accretion		—		9,945		—		—		—		—		9,945
Included in OCI		—		(2,519)		—		—		—		—		(2,519)
Purchases / Originations		4,015,167		—		5,165		—		—		—		4,020,332
Sales		(2,951,713)		—		(7,326)		—		—		—		(2,959,039)
Issuances		—		—		—		—		—		(116,273)		(116,273)
Cash repayments / receipts		(144,066)		(26,929)		(11,348)		—		—		(16,093)		(198,436)
Transfers into Level III		—		—		5,350		—		—		(1,728,562)		(1,723,212)
Transfers out of Level III		(225,813)		—		—		—		—		991,378		765,565
Consolidation of VIEs		—		—		—		—		10,368,817		(311,748)		10,057,069
Deconsolidation of VIEs		—		—		7,434		—		(377,071)		38,044		(331,593)
December 31, 2019 balance	$	1,436,194	$	189,576	$	25,008	$	16,917	$	62,187,175	$	(2,537,392)	$	61,317,478
Amount of total (losses) gains included in earnings attributable to assets still held at:
December 31, 2018	$	(3,753)		10,398		(352)		(10,202)		(5,835,225)		1,022,887	$	(4,816,247)
December 31, 2019		(4,459)		9,858		(666)		(3,640)		(1,250,935)		47,308		(1,202,534)

Schedule of fair value of financial instruments not carried at fair value

The following table presents the fair values, all of which are classified in Level III of the fair value hierarchy, of our financial instruments not carried at fair value on the consolidated balance sheets (amounts in thousands):

	December 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets not carried at fair value:
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings	$	10,034,030	$	10,086,372	$	9,122,972	$	9,178,709
HTM debt securities		570,638		568,727		644,149		643,948
Financial liabilities not carried at fair value:
Secured financing agreements, CLO and secured borrowings on transferred loans	$	9,834,108	$	9,826,511	$	8,757,804	$	8,662,548
Unsecured senior notes		1,928,622		2,022,283		1,998,831		1,945,160

Schedule of quantitative information for Level 3 Measurements for assets and liabilities measured at fair value on recurring basis

The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollars in thousands):

	Carrying Value at		Valuation	Unobservable	Range as of (1)
	December 31, 2019		Technique	Input	December 31, 2019	December 31, 2018
Loans under fair value option	$	1,436,194	Discounted cash flow	Yield (b)	3.4% - 5.9%	4.6% - 6.1%
				Duration (c)	1.3 - 11.3 years	2.5 - 14.4 years
RMBS		189,576	Discounted cash flow	Constant prepayment rate (a)	3.1% - 24.9%	3.2% - 25.2%
				Constant default rate (b)	0.5% - 5.0%	1.1% - 5.5%
				Loss severity (b)	0% - 93% (e)	0% - 73% (e)
				Delinquency rate (c)	5% - 29%	4% - 31%
				Servicer advances (a)	27% - 85%	21% - 83%
				Annual coupon deterioration (b)	0% - 1.6%	0% - 1.4%
				Putback amount per projected total collateral loss (d)	0% - 28%	0% - 7%
CMBS		25,008	Discounted cash flow	Yield (b)	0% - 122.9%	0% - 473.5%
				Duration (c)	0 - 9.7 years	0 - 9.7 years
Domestic servicing rights		16,917	Discounted cash flow	Debt yield (a)	7.5%	7.75%
				Discount rate (b)	15%	15%
				Control migration (b)	0% - 80%	0% - 80%
VIE assets		62,187,175	Discounted cash flow	Yield (b)	0% - 690.7%	0% - 290.9%
				Duration (c)	0 - 19.2 years	0 - 20.4 years
VIE liabilities		(2,537,392)	Discounted cash flow	Yield (b)	0% - 690.7%	0% - 290.9%
				Duration (c)	0 - 12.7 years	0 - 13.7 years

(1) The ranges of significant unobservable inputs are represented in percentages and years.

Sensitivity of the Fair Value to Changes in the Unobservable Inputs

(a) Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement.

(b) Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement.

(c) Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (higher or lower) fair value measurement depending on the structural features of the security in question.

(d) Any delay in the putback recovery date leads to a decrease in fair value for the majority of securities in our RMBS portfolio.

(e) 34% and 55% of the portfolio falls within a range of 45% - 80% as of December 31, 2019 and 2018, respectively.

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Data (Unaudited)

Summary of quarterly financial data

The following table summarizes our quarterly financial data which, in the opinion of management, reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our results of operations (amounts in thousands, except per share amounts):

	For the Three-Month Periods Ended
	March 31		June 30		September 30		December 31
2019:
Revenues	$	310,480	$	311,181	$	288,330	$	286,428
Net income		76,508		132,446		150,001		177,980
Net income attributable to Starwood Property Trust, Inc.		70,383		127,016		140,396		171,869
Earnings per share — Basic		0.25		0.45		0.50		0.61
Earnings per share — Diluted		0.25		0.45		0.49		0.60
2018:
Revenues	$	260,587	$	269,556	$	285,719	$	293,418
Net income		104,794		117,090		89,381		99,932
Net income attributable to Starwood Property Trust, Inc.		99,932		109,230		84,536		92,132
Earnings per share — Basic		0.38		0.41		0.31		0.33
Earnings per share — Diluted		0.38		0.40		0.31		0.33

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Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions														12 Months Ended
	Feb. 25, 2020	Nov. 08, 2019	Aug. 07, 2019	May 08, 2019	Feb. 28, 2019	Nov. 09, 2018	Aug. 08, 2018	May 04, 2018	Feb. 28, 2018	Nov. 08, 2017	Aug. 09, 2017	May 09, 2017	Feb. 23, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Feb. 29, 2020
Subsequent Events
Dividend declared (in dollars per share)		$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 0.48	$ 1.92	$ 1.92	$ 1.92
Subsequent event
Subsequent Events
Dividend declared (in dollars per share)	$ 0.48
Subsequent event | RMBS
Subsequent Events
Securitization of loans held for sale																	$ 381.3

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Schedule IV-Mortgage Loans on Real Estate - Activity of loan portfolio (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Mortgage Loans on Real Estate
Balance at the beginning of the period	$ 9,794,254	$ 7,382,641	$ 5,946,274
Acquisitions/origination/additional funding	9,094,714	6,723,144	5,500,539
Capitalized Interest	110,632	63,047	74,339
Basis of loans sold	(4,311,390)	(3,082,347)	(1,634,717)
Loan maturities/principal repayments	(3,304,838)	(3,272,666)	(2,658,522)
Discount accretion/premium amortization	35,387	38,099	39,084
Changes in fair value	71,601	40,522	66,987
Unrealized foreign currency translation (loss) gain	40,155	(32,341)	42,356
Loan loss provision, net	(7,126)	(34,821)	5,458
Transfer to/from other asset classifications	(25,862)	(364)	843
Balance at the end of the period	11,470,224	9,794,254	7,382,641
Commercial and Residential Lending Segment and Investing and Servicing Segment
Mortgage Loans on Real Estate
Balance at the beginning of the period	7,806,699	7,357,034	5,946,274
Acquisitions/origination/additional funding	8,174,321	6,543,873	5,494,837
Capitalized Interest	109,978	62,445	73,784
Basis of loans sold	(3,921,171)	(3,082,347)	(1,634,717)
Loan maturities/principal repayments	(2,387,843)	(3,086,107)	(2,657,696)
Discount accretion/premium amortization	29,775	37,408	38,560
Changes in fair value	71,601	40,522	66,987
Unrealized foreign currency translation (loss) gain	38,050	(26,645)	42,356
Loan loss provision, net	(2,616)	(34,821)	5,458
Loan foreclosures	(27,303)
Transfer to/from other asset classifications	(798)	(4,663)	(18,809)
Balance at the end of the period	$ 9,890,693	$ 7,806,699	$ 7,357,034

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Investment Securities - HTM (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
HTM Securities
Net Carrying Amount (Amortized Cost)	$ 570,638	$ 644,149
Gross Unrealized Holdings Gains	2,094	3,316
Gross Unrealized Holdings Losses	(4,005)	(3,517)
Fair Value	568,727	643,948
HTM preferred equity interests
Less than one year	289,622
One to three years	240,881
Three to five years	353
Thereafter	39,782
Total	570,638	644,149
CMBS
HTM Securities
Net Carrying Amount (Amortized Cost)	383,473	408,556
Gross Unrealized Holdings Gains	946	2,435
Gross Unrealized Holdings Losses	(3,001)	(3,349)
Fair Value	381,418	407,642
HTM preferred equity interests
Less than one year	284,251
One to three years	99,222
Total	383,473	408,556
Preferred interests
HTM Securities
Net Carrying Amount (Amortized Cost)	142,012	174,825
Gross Unrealized Holdings Gains	1,148	703
Gross Unrealized Holdings Losses	(353)
Fair Value	142,807	175,528
HTM preferred equity interests
One to three years	141,659
Three to five years	353
Total	142,012	174,825
Infrastructure bonds
HTM Securities
Net Carrying Amount (Amortized Cost)	45,153	60,768
Gross Unrealized Holdings Gains		178
Gross Unrealized Holdings Losses	(651)	(168)
Fair Value	44,502	60,778
Accretable yield	0
HTM preferred equity interests
Less than one year	5,371
Thereafter	39,782
Total	$ 45,153	$ 60,768

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Fair Value - Financial Instruments Not Carried at Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Financial assets not carried at fair value:
HTM securities	$ 570,638	$ 644,149
Financial liabilities not carried at fair value:
Unsecured senior notes	1,928,622	1,998,831
Carrying Value
Financial assets not carried at fair value:
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings	10,034,030	9,122,972
HTM securities	570,638	644,149
Financial liabilities not carried at fair value:
Secured financing agreements and secured borrowings on transferred loans	9,834,108	8,757,804
Unsecured senior notes	1,928,622	1,998,831
Fair Value
Financial assets not carried at fair value:
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings	10,086,372	9,178,709
HTM securities	568,727	643,948
Financial liabilities not carried at fair value:
Secured financing agreements and secured borrowings on transferred loans	9,826,511	8,662,548
Unsecured senior notes	$ 2,022,283	$ 1,945,160

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Acquisitions and Divestitures - Determination of Goodwill (Details) - USD ($) $ in Thousands			12 Months Ended
	Oct. 15, 2018	Sep. 19, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Acquisitions and Divestitures
Goodwill			$ 259,846	$ 259,846
Repayment of debt of consolidated VIEs			$ 373,155	410,453	$ 137,208
Infrastructure Lending Segment of GE Capital
Acquisitions and Divestitures
Purchase price	$ 147,100	$ 2,000,000		2,158,553
Fair value of net assets acquired				2,039,144
Goodwill		$ 119,400		$ 119,409

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Stockholders' Equity and Non-Controlling Interests - Share-based Compensation Expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based compensation expenses
Total share-based compensation expense	$ 46,237	$ 43,458	$ 39,223
Income tax effect	1,700	1,300
Management fees
Share-based compensation expenses
Total share-based compensation expense	30,337	33,273	31,495
Management fees | Starwood Property Trust, Inc. Manager Equity Plan
Share-based compensation expenses
Total share-based compensation expense	20,255	12,573	10,423
Management fees | Management agreement
Share-based compensation expenses
Total share-based compensation expense	10,082	20,700	21,072
General and administrative:
Share-based compensation expenses
Total share-based compensation expense	15,900	10,185	7,728
General and administrative: | Starwood Property Trust, Inc. Equity Plan
Share-based compensation expenses
Total share-based compensation expense	$ 15,900	$ 10,185	$ 7,728

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Accumulated Other Comprehensive Income - Changes in AOCI (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Changes in AOCI by component
Beginning balance	$ 58,660	$ 69,924	$ 36,138
OCI before reclassifications	(6,125)	(8,247)	33,884
Amounts reclassified from AOCI	(1,603)	(3,017)	(98)
Net period OCI	(7,728)	(11,264)	33,786
Ending balance	50,932	58,660	69,924
Effective Portion of Cumulative Loss on Cash Flow Hedges
Changes in AOCI by component
Beginning balance		25	(26)
OCI before reclassifications		8	54
Amounts reclassified from AOCI		(33)	(3)
Net period OCI		(25)	51
Ending balance			25
Cumulative Unrealized Gain (Loss) on Available-for-Sale Securities
Changes in AOCI by component
Beginning balance	53,515	57,889	44,929
OCI before reclassifications	(2,460)	(1,390)	13,055
Amounts reclassified from AOCI	(59)	(2,984)	(95)
Net period OCI	(2,519)	(4,374)	12,960
Ending balance	50,996	53,515	57,889
Foreign Currency Translation
Changes in AOCI by component
Beginning balance	5,145	12,010	(8,765)
OCI before reclassifications	(3,665)	(6,865)	20,775
Amounts reclassified from AOCI	(1,544)
Net period OCI	(5,209)	(6,865)	20,775
Ending balance	$ (64)	$ 5,145	$ 12,010

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Loans - Ratings (Details) $ in Thousands	1 Months Ended	12 Months Ended
	Apr. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Mar. 31, 2019 USD ($)
Investments in loans
Total gross loans		$ 11,503,835	$ 9,833,405
Total gross loans (as a percent)		100.00%	100.00%
Allowance for impaired loans		$ 29,900		$ 8,300
Impairment charges recorded			$ 38,200
Unpaid principal balance				20,900
Unamortized discount				3,600
Provision for impaired loans		3,314	38,205
Average recorded investment		172,800
Carrying amount of loans 90 days or more past due		7,400
Unfunded commitment		3,100
TDRs for which interest income was recognized		0
New York City
Investments in loans
Allowance for impaired loans		21,600
Greater Chicago
Investments in loans
Allowance for impaired loans		8,300
Recorded investment		12,200
Unpaid principal balance		12,000
Provision for impaired loans		$ 8,300
Number of Subordinated Mortgages | item		2
Montgomery, Alabama
Investments in loans
Allowance for impaired loans		$ 8,300
Recorded investment				$ 9,000
Orlando, Florida
Investments in loans
Recorded investment	$ 18,500
Unpaid principal balance	21,900
Unamortized discount	3,400
Provision for impaired loans	$ 0
Rating 1
Investments in loans
Total gross loans		$ 24,053	$ 30,305
Total gross loans (as a percent)		0.20%	0.30%
Rating 1 | Maximum
Investments in loans
LTV (as a percent)		65.00%
Rating 2
Investments in loans
Total gross loans		$ 4,376,306	$ 3,549,546
Total gross loans (as a percent)		38.00%	36.10%
Rating 2 | Maximum
Investments in loans
LTV (as a percent)		70.00%
Rating 3
Investments in loans
Total gross loans		$ 3,899,160	$ 3,334,111
Total gross loans (as a percent)		33.90%	33.90%
Rating 3 | Maximum
Investments in loans
LTV (as a percent)		80.00%
Rating 4
Investments in loans
Total gross loans		$ 40,436	$ 63,094
Total gross loans (as a percent)		0.40%	0.60%
Allowance for loan losses as a percent of carrying amount		1.50%
Rating 4 | Minimum
Investments in loans
LTV (as a percent)		80.00%
Rating 4 | Maximum
Investments in loans
LTV (as a percent)		90.00%
Rating 5
Investments in loans
Total gross loans		$ 59,116
Total gross loans (as a percent)		0.50%
Allowance for loan losses as a percent of carrying amount		5.00%
Rating 5 | Minimum
Investments in loans
LTV (as a percent)		90.00%
N/A
Investments in loans
Total gross loans		$ 1,548,846	$ 1,668,797
Total gross loans (as a percent)		13.50%	17.00%
Total
Investments in loans
Total gross loans		$ 9,947,917	$ 8,645,853
First Mortgages, excluding Cost Recovery Loans | New York City
Investments in loans
Recorded investment		131,600
Unpaid principal balance		104,200
Provision for impaired loans		21,600
Interest income accrued on loans		38,400
Unsecured promissory note | New York City
Investments in loans
Allowance for impaired loans		0
Recorded investment		7,800
Unpaid principal balance		8,900
First Mortgage Loan and Mezzanine Loan
Investments in loans
Recorded investment		93,600
Other
Investments in loans
Total gross loans		62,555	61,001
Infrastructure Loans
Investments in loans
Allowance for impaired loans		3,300
Recorded investment		29,200
Impairment charges recorded		3,300
Unpaid principal balance		36,200
Non-accretable difference		7,000
Carrying amount of loans in default		25,900
Total loans held-for-investment
Investments in loans
Total gross loans		10,619,489	8,571,507
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 1
Investments in loans
Total gross loans		503	6,538
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 2
Investments in loans
Total gross loans		4,186,776	3,356,342
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 3
Investments in loans
Total gross loans		3,509,601	2,987,296
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 4
Investments in loans
Total gross loans		40,436	63,094
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Rating 5
Investments in loans
Total gross loans		59,116
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | N/A
Investments in loans
Total gross loans		131,594	193,847
Total loans held-for-investment | First Mortgages, excluding Cost Recovery Loans | Total
Investments in loans
Total gross loans		7,928,026	6,607,117
Total loans held-for-investment | First Priority Infrastructure Loans | N/A
Investments in loans
Total gross loans		1,397,448	1,456,779
Total loans held-for-investment | First Priority Infrastructure Loans | Total
Investments in loans
Total gross loans		1,397,448	1,456,779
Total loans held-for-investment | Subordinated mortgages
Investments in loans
Total gross loans		75,724	52,778
Total loans held-for-investment | Subordinated mortgages | Rating 2
Investments in loans
Total gross loans		37,980	7,392
Total loans held-for-investment | Subordinated mortgages | Rating 3
Investments in loans
Total gross loans		25,767	33,410
Total loans held-for-investment | Subordinated mortgages | N/A
Investments in loans
Total gross loans		11,977	11,976
Total loans held-for-investment | Subordinated mortgages | Total
Investments in loans
Total gross loans		75,724	52,778
Total loans held-for-investment | Mezzanine Loans
Investments in loans
Total gross loans		484,164	393,832
Total loans held-for-investment | Mezzanine Loans | Rating 2
Investments in loans
Total gross loans		120,372	111,466
Total loans held-for-investment | Mezzanine Loans | Rating 3
Investments in loans
Total gross loans		363,792	282,366
Total loans held-for-investment | Mezzanine Loans | Total
Investments in loans
Total gross loans		484,164	393,832
Total loans held-for-investment | Residential loans, fair value option
Investments in loans
Total gross loans		$ 671,572
Total gross loans (as a percent)		5.80%
Total loans held-for-investment | Other | Rating 1
Investments in loans
Total gross loans		$ 23,550	23,767
Total loans held-for-investment | Other | Rating 2
Investments in loans
Total gross loans		31,178
Total loans held-for-investment | Other | Rating 3
Investments in loans
Total gross loans			31,039
Total loans held-for-investment | Other | N/A
Investments in loans
Total gross loans		7,827	6,195
Total loans held-for-investment | Other | Total
Investments in loans
Total gross loans		62,555	61,001
Loans held-for-sale
Investments in loans
Total gross loans		$ 884,346	$ 1,187,552
Total gross loans (as a percent)		7.70%	12.10%
Loans held-for-sale, residential
Investments in loans
Total gross loans		$ 605,384	$ 623,660
Loans held-for-sale, commercial
Investments in loans
Total gross loans		159,238	94,117
Loans Held For Sale Infrastructure
Investments in loans
Total gross loans		$ 119,724	469,775
Loans transferred as secured borrowings
Investments in loans
Total gross loans			74,346
Loans transferred as secured borrowings | Rating 2
Investments in loans
Total gross loans			74,346
Loans transferred as secured borrowings | Total
Investments in loans
Total gross loans			$ 74,346

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Commitments and Contingencies - Future maturity of lease (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jan. 01, 2019
Future maturity of operating lease liabilities:
2020	$ 6,163
2021	3,480
2022	1,272
2023	1,281
2024	6,206
Thereafter	1,002
Total	19,404
Less interest component	$ (2,316)
Operating lease liability		$ 12,000
Operating Lease, Liability, Statement of Financial Position [Extensible List]	us-gaap:AccountsPayableAndAccruedLiabilitiesMember	us-gaap:AccountsPayableAndAccruedLiabilitiesMember

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Commitments and Contingencies (Details) $ in Millions	Dec. 31, 2019 USD ($) item contract
Operating leases
Number of contracts | item	328
Infrastructure Lending Segment | Interest rate swaps | Derivatives designated as hedging instruments
Operating leases
Number of contracts | contract	7
Commitments | Commercial and Residential Lending Segment
Operating leases
Value of loans with future funding commitments	$ 3,200.0
Value of loans with future funding commitments expected to fund	2,900.0
Commitments | Infrastructure Lending Segment
Operating leases
Value of loans with future funding commitments	360.6
Revolvers and letters of credit | Infrastructure Lending Segment
Operating leases
Value of loans with future funding commitments	145.1
Outstanding	19.7
Delayed draw term loans | Infrastructure Lending Segment
Operating leases
Value of loans with future funding commitments	$ 215.5

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Loan Securitization/Sale Activities (Tables)

12 Months Ended

Dec. 31, 2019

Investing and Servicing Segment

Summary of fair value and par value of loans sold and amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with the loans

					Repayment of
					repurchase
	Face Amount		Proceeds		agreements
For the Year Ended December 31,
2019	$	1,781,981	$	1,845,890	$	1,289,129
2018		1,517,599		1,563,433		1,147,316
2017		1,517,368		1,582,050		1,152,938

Commercial and Residential Lending Segment

Summary of loans sold and loans transferred as secured borrowings by the Lending segment net of expenses

									Loan Transfers
	Loan Transfers Accounted for as Sales								Accounted for as Secured
	Commercial				Residential				Borrowings
For the Year Ended December 31,	Face Amount		Proceeds		Face Amount		Proceeds		Face Amount		Proceeds
2019	$	751,210	$	748,045	$	1,282,527	$	1,331,856	$	—	$	—
2018		840,400		835,849		660,865		683,556		—		—
2017		55,470		52,609		—		—		75,000		74,098

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Investment in Unconsolidated Entities (Tables)

12 Months Ended

Dec. 31, 2019

Investment in Unconsolidated Entities

Summary of investments in unconsolidated entities

The table below summarizes our investments in unconsolidated entities as of December 31, 2018 and 2017 (dollars in thousands):

	Participation /	Carrying value as of December 31,
	Ownership % (1)	2019		2018
Equity method:
Retail Fund (see Note 16)	33%	$	—	$	114,362
Equity interest in a natural gas power plant (2)	10%		25,862		—
Investor entity which owns equity in an online real estate company	50%		9,473		9,372
Equity interests in commercial real estate	50%		1,907		6,294
Equity interest in and advances to a residential mortgage originator (3)	N/A		12,002		9,082
Various	25% - 50%		8,339		6,984
			57,583		146,094
Other:
Equity interest in a servicing and advisory business (4)	4%		—		6,207
Investment funds which own equity in a loan servicer and other real estate assets	4% - 6%		9,225		9,225
Various	0% - 2%		17,521		10,239
			26,746		25,671
		$	84,329	$	171,765

(1)None of these investments are publicly traded and therefore quoted market prices are not available.

(2)This 10% equity interest was obtained in November 2019 pursuant to a bankruptcy court ordered sale in satisfaction of a past due $36.2 million infrastructure loan which had a carrying value of $25.9 million and was secured by a gas-fired power generation facility. We report our interest in this investment on a three-month lag basis.

(3)As of December 31, 2019 and 2018, includes a $4.5 million and $2.0 million subordinated loan, respectively.

(4)During the year ended December 31, 2019, we received a capital distribution of $8.4 million and our equity interest was reduced to 4%.

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Variable Interest Entities

12 Months Ended

Dec. 31, 2019

Variable Interest Entities

Variable Interest Entities

15. Variable Interest Entities

Investment Securities

As discussed in Note 2, we evaluate all of our investments and other interests in entities for consolidation, including our investments in CMBS, RMBS and our retained interests in securitization transactions we initiated, all of which are generally considered to be variable interests in VIEs.

Securitization VIEs consolidated in accordance with ASC 810 are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. The assets and other instruments held by these securitization entities are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the securitization entities do not have any recourse to the general credit of any other consolidated entities, nor to us as the primary beneficiary. The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, an allocable portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.

VIEs in which we are the Primary Beneficiary

The inclusion of the assets and liabilities of securitization VIEs in which we are deemed the primary beneficiary has no economic effect on us. Our exposure to the obligations of securitization VIEs is generally limited to our investment in these entities. We are not obligated to provide, nor have we provided, any financial support for any of these consolidated structures.

During the year ended December 31, 2019, we refinanced a pool of our commercial loans held-for-investment through a CLO, which is considered to be a VIE. We are the primary beneficiary of, and therefore consolidate, the CLO in our financial statements as we have both (i) the power to direct the activities in our role as collateral manager that most significantly impact the CLO’s economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the CLO that could be potentially significant through the subordinate interests we own.

The following table details the assets and liabilities of our consolidated CLO (amounts in thousands):

	As of
	December 31, 2019
Assets:
Loans held-for-investment	$	1,073,504
Accrued interest receivable		3,129
Other assets		26,496
Total Assets	$	1,103,129
Liabilities
Accounts payable, accrued expenses and other liabilities	$	1,362
Collateralized loan obligations, net		928,060
Total Liabilities	$	929,422

Assets held by this CLO are restricted and can be used only to settle obligations of the CLO, including the subordinate interests owned by us. The liabilities of this CLO are non-recourse to us and can only be satisfied from the assets of the CLO.

We also hold controlling interests in other non-securitization entities that are considered VIEs. SPT Dolphin, the entity which holds the Woodstar II Portfolio, is a VIE because the third party interest holders do not carry kick-out rights or substantive participating rights. We were deemed to be the primary beneficiary of the VIE because we possess both the power to direct the activities of the VIE that most significantly impact its economic performance and a

significant economic interest in the entity. This VIE had total assets of $684.1 million and liabilities of $444.4 million as of December 31, 2019.

In December 2019, we entered into a newly-formed joint venture (the “CMBS JV”) within our Investing and Servicing Segment, which is considered a VIE because the third party interest holder does not carry kick-out rights or substantive participating rights. We hold a 51% ownership interest and are deemed the primary beneficiary of the CMBS JV. This VIE had total assets of $347.2 million and liabilities of $0.4 million as of December 31, 2019. Refer to Note 17 for further discussion.

In total, our other consolidated non-securitization VIEs had total assets of $1.1 billion and liabilities of $491.8 million as of December 31, 2019.

VIEs in which we are not the Primary Beneficiary

In certain instances, we hold a variable interest in a VIE in the form of CMBS, but either (i) we are not appointed, or do not serve as, special servicer or servicing administrator or (ii) an unrelated third party has the rights to unilaterally remove us as special servicer without cause. In these instances, we do not have the power to direct activities that most significantly impact the VIE’s economic performance. In other cases, the variable interest we hold does not obligate us to absorb losses or provide us with the right to receive benefits from the VIE which could potentially be significant. For these structures, we are not deemed to be the primary beneficiary of the VIE, and we do not consolidate these VIEs.

As of December 31, 2019, four of our collateralized debt obligation (“CDO”) structures within our Investing and Servicing Segment were in default or imminent default, which, pursuant to the underlying indentures, changes the rights of the variable interest holders. Upon default of a CDO, the trustee or senior note holders are allowed to exercise certain rights, including liquidation of the collateral, which at that time, is the activity which would most significantly impact the CDO’s economic performance. Further, when the CDO is in default, the collateral administrator no longer has the option to purchase securities from the CDO. In cases where the CDO is in default and we do not have the ability to exercise rights which would most significantly impact the CDO’s economic performance, we do not consolidate the VIE. As of December 31, 2019, none of these CDO structures were consolidated.

As noted above, we are not obligated to provide, nor have we provided, any financial support for any of our securitization VIEs, whether or not we are deemed to be the primary beneficiary. As such, the risk associated with our involvement in these VIEs is limited to the carrying value of our investment in the entity. As of December 31, 2019, our maximum risk of loss related to securitization VIEs in which we were not the primary beneficiary was $37.4 million on a fair value basis.

As of December 31, 2019, the securitization VIEs which we do not consolidate had debt obligations to beneficial interest holders with unpaid principal balances, excluding the notional value of interest-only securities, of $6.1 billion. The corresponding assets are comprised primarily of commercial mortgage loans with unpaid principal balances corresponding to the amounts of the outstanding debt obligations.

We also hold passive non-controlling interests in certain unconsolidated entities that are considered VIEs. We are not the primary beneficiaries of these VIEs as we do not possess the power to direct the activities of the VIEs that most significantly impact their economic performance and therefore report our interests, which totaled $21.2 million as of December 31, 2019, within investment in unconsolidated entities on our consolidated balance sheet. Our maximum risk of loss is limited to our carrying value of the investments.

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2019

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

19. Accumulated Other Comprehensive Income

The changes in AOCI by component are as follows (amounts in thousands):

			Cumulative
			Unrealized Gain
	Effective Portion of		(Loss) on		Foreign
	Cumulative Loss on		Available-for-		Currency
	Cash Flow Hedges		Sale Securities		Translation		Total
Balance at January 1, 2017	$	(26)	$	44,929	$	(8,765)	$	36,138
OCI before reclassifications		54		13,055		20,775		33,884
Amounts reclassified from AOCI		(3)		(95)		—		(98)
Net period OCI		51		12,960		20,775		33,786
Balance at December 31, 2017		25		57,889		12,010		69,924
OCI before reclassifications		8		(1,390)		(6,865)		(8,247)
Amounts reclassified from AOCI		(33)		(2,984)		—		(3,017)
Net period OCI		(25)		(4,374)		(6,865)		(11,264)
Balance at December 31, 2018		—		53,515		5,145		58,660
OCI before reclassifications		—		(2,460)		(3,665)		(6,125)
Amounts reclassified from AOCI		—		(59)		(1,544)		(1,603)
Net period OCI		—		(2,519)		(5,209)		(7,728)
Balance at December 31, 2019	$	—	$	50,996	$	(64)	$	50,932

The reclassifications out of AOCI impacted the consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 as follows (amounts in thousands):

	Amounts Reclassified from
	AOCI during the Year						Affected Line Item
	Ended December 31,						in the Statements
Details about AOCI Components	2019		2018		2017		of Operations
Gain (loss) on cash flow hedges:
Interest rate contracts	$	—	$	33	$	3	Interest expense
Unrealized gains on available-for-sale securities:
Interest realized upon collection		59		46		95	Interest income from investment securities
Net realized gain on sale of investment		—		2,938		—	Gain on sale of investments and other assets, net
Total		59		2,984		95
Foreign currency translation:
Foreign currency gain from sale of Ireland Portfolio		1,544		—		—	Gain on sale of investments and other assets, net
Total reclassifications for the period	$	1,603	$	3,017	$	98

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Loans

12 Months Ended

Dec. 31, 2019

Loans

Loans

5. Loans

Our loans held-for-investment are accounted for at amortized cost and our loans held-for-sale are accounted for at the lower of cost or fair value, unless we have elected the fair value option for either. The following tables summarize our investments in mortgages and loans by subordination class as of December 31, 2019 and 2018 (dollars in thousands):

							Weighted
					Weighted		Average Life
	Carrying		Face		Average		(“WAL”)
December 31, 2019	Value		Amount		Coupon (1)		(years)(2)
First mortgages (3)	$	7,928,026	$	7,962,788	5.8	%	2.0
First priority infrastructure loans		1,397,448		1,416,164	5.6	%	4.9
Subordinated mortgages (4)		75,724		77,055	8.8	%	3.4
Mezzanine loans (3)		484,164		484,408	11.0	%	1.9
Residential loans, fair value option (5)		671,572		654,925	6.1	%	3.8
Other		62,555		66,525	8.2	%	1.6
Total loans held-for-investment		10,619,489		10,661,865
Loans held-for-sale, fair value option, residential (5)		605,384		587,144	6.2	%	3.9
Loans held-for-sale, fair value option, commercial		159,238		160,635	3.9	%	10.0
Loans held-for-sale, infrastructure		119,724		121,271	3.3	%	2.1
Total gross loans		11,503,835		11,530,915
Loan loss allowance		(33,611)		—
Total net loans	$	11,470,224	$	11,530,915
December 31, 2018
First mortgages (3)	$	6,607,117	$	6,631,236	6.9	%	2.0
First priority infrastructure loans		1,456,779		1,465,828	5.7	%	4.5
Subordinated mortgages (4)		52,778		53,996	8.9	%	3.7
Mezzanine loans (3)		393,832		394,739	10.6	%	2.0
Other		61,001		64,658	8.2	%	2.5
Total loans held-for-investment		8,571,507		8,610,457
Loans held-for-sale, fair value option, residential		623,660		609,571	6.3	%	6.6
Loans held-for-sale, commercial ($47,622 under fair value option)		94,117		94,916	5.4	%	6.2
Loans held-for-sale, infrastructure		469,775		486,909	3.5	%	0.3
Loans transferred as secured borrowings		74,346		74,692	7.1	%	1.3
Total gross loans		9,833,405		9,876,545
Loan loss allowance		(39,151)		—
Total net loans	$	9,794,254	$	9,876,545

(1) Calculated using LIBOR or other applicable index rates as of December 31, 2019 and 2018 for variable rate loans.

(2) Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination or acquisition.

(3) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan.  The application of this methodology resulted in mezzanine loans with carrying values of $967.0 million and $1.0 billion being classified as first mortgages as of December 31, 2019 and 2018, respectively.

(4) Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.

(5) During the year ended December 31, 2019, $340.9 million of residential loans held-for-sale were reclassified into residential loans held-for-investment.

During the year ended December 31, 2018, the Company received distributions totaling $15.1 million from a profit participation in a mortgage loan that was repaid in 2016. The loan was secured by a retail and hospitality property located in the Times Square area of New York City. The profit participation is accounted for as a loan in accordance with the acquisition, development and construction accounting guidance within ASC 310-10, which resulted in distributions in excess of basis being recognized within interest income in our consolidated statements of operations. There were no distributions from profit participations received during the years ended December 31, 2019 and 2017.

As of December 31, 2019, our variable rate loans held-for-investment were as follows (dollars in thousands):

	Carrying		Weighted-average
December 31, 2019	Value		Spread Above Index
Commercial loans	$	8,030,499	4.2	%
First priority infrastructure loans		1,397,448	3.8	%
Total variable rate loans held-for-investment	$	9,427,947	4.2	%

We regularly evaluate the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral, as well as the financial and operating capability of the borrower. Specifically, the collateral’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan and/or (iii) the collateral’s liquidation value. We also evaluate the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the collateral. In addition, we consider the overall economic environment, real estate or industry sector, and geographic sub-market in which the borrower operates. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including (i) periodic financial data such as property operating statements, occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections and (iii) current credit spreads and discussions with market participants.

Our evaluation process, as described above, produces an internal risk rating between 1 and 5, which is a weighted average of the numerical ratings in the following categories: (i) sponsor capability and financial condition, (ii) loan and collateral performance relative to underwriting, (iii) quality and stability of collateral cash flows and (iv) loan structure. We utilize the overall risk ratings as a concise means to monitor any credit migration on a loan as well as on the whole portfolio. While the overall risk rating is generally not the sole factor we use in determining whether a loan is impaired, a loan with a higher overall risk rating would tend to have more adverse indicators of impairment and therefore would be more likely to experience a credit loss.

The rating categories for commercial real estate loans generally include the characteristics described below, but these are utilized as guidelines and therefore not every loan will have all of the characteristics described in each category:

Rating	Characteristics
1	●	Sponsor capability and financial condition—Sponsor is highly rated or investment grade or, if private, the equivalent thereof with significant management experience.
	●	Loan collateral and performance relative to underwriting—The collateral has surpassed underwritten expectations.
	●	Quality and stability of collateral cash flows—Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high quality tenant mix.
	●	Loan structure—Loan to collateral value ratio (“LTV”) does not exceed 65%. The loan has structural features that enhance the credit profile.
2	●	Sponsor capability and financial condition—Strong sponsorship with experienced management team and a responsibly leveraged portfolio.
	●	Loan collateral and performance relative to underwriting—Collateral performance equals or exceeds underwritten expectations and covenants and performance criteria are being met or exceeded.
	●	Quality and stability of collateral cash flows—Occupancy is stabilized with a diverse tenant mix.
	●	Loan structure—LTV does not exceed 70% and unique property risks are mitigated by structural features.
3	●	Sponsor capability and financial condition—Sponsor has historically met its credit obligations, routinely pays off loans at maturity, and has a capable management team.
	●	Loan collateral and performance relative to underwriting—Property performance is consistent with underwritten expectations.
	●	Quality and stability of collateral cash flows—Occupancy is stabilized, near stabilized, or is on track with underwriting.
	●	Loan structure—LTV does not exceed 80%.
4	●	Sponsor capability and financial condition—Sponsor credit history includes missed payments, past due payment, and maturity extensions. Management team is capable but thin.
	●	Loan collateral and performance relative to underwriting—Property performance lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers. A sale of the property may be necessary in order for the borrower to pay off the loan at maturity.
	●	Quality and stability of collateral cash flows—Occupancy is not stabilized and the property has a large amount of rollover.
	●	Loan structure—LTV is 80% to 90%.
5	●	Sponsor capability and financial condition—Credit history includes defaults, deeds-in-lieu, foreclosures, and/or bankruptcies.
	●	Loan collateral and performance relative to underwriting—Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Sale proceeds would not be sufficient to pay off the loan at maturity.
	●	Quality and stability of collateral cash flows—The property has material vacancy and significant rollover of remaining tenants.
	●	Loan structure—LTV exceeds 90%.

The risk ratings for loans subject to our rating system, which excludes loans held-for-sale, by class of loan were as follows as of December 31, 2019 and 2018 (dollars in thousands):

	Balance Sheet Classification
	Loans Held-For-Investment														Loans
				First Priority											Transferred				% of
Risk Rating	First			Infrastructure			Subordinated			Mezzanine					As Secured				Total
Category	Mortgages			Loans			Mortgages			Loans		Other			Borrowings		Total		Loans
December 31, 2019
1	$	503		$	—		$	—		$	—	$	23,550		$	—	$	24,053	0.2	%
2		4,186,776			—			37,980			120,372		31,178			—		4,376,306	38.0	%
3		3,509,601			—			25,767			363,792		—			—		3,899,160	33.9	%
4		40,436			—			—			—		—			—		40,436	0.4	%
5		59,116			—			—			—		—			—		59,116	0.5	%
N/A		131,594	(1)		1,397,448	(2)		11,977	(1)		—		7,827	(1)		—		1,548,846	13.5	%
	$	7,928,026		$	1,397,448		$	75,724		$	484,164	$	62,555		$	—		9,947,917
Residential loans held-for-investment, fair value option																		671,572	5.8	%
Loans held-for-sale																		884,346	7.7	%
Total gross loans																	$	11,503,835	100.0	%
December 31, 2018
1	$	6,538		$	—		$	—		$	—	$	23,767		$	—	$	30,305	0.3	%
2		3,356,342			—			7,392			111,466		—			74,346		3,549,546	36.1	%
3		2,987,296			—			33,410			282,366		31,039			—		3,334,111	33.9	%
4		63,094			—			—			—		—			—		63,094	0.6	%
5		—			—			—			—		—			—		—	—	%
N/A		193,847	(1)		1,456,779	(2)		11,976	(1)		—		6,195	(1)		—		1,668,797	17.0	%
	$	6,607,117		$	1,456,779		$	52,778		$	393,832	$	61,001		$	74,346		8,645,853
Loans held-for-sale																		1,187,552	12.1	%
Total gross loans																	$	9,833,405	100.0	%

(1) Principally represents loans individually evaluated for impairment in accordance with ASC 310-10.

(2) First priority infrastructure loans were not risk rated as the Company is in the process of developing a risk rating policy for these loans.

In accordance with our loan impairment policy, during the year ended December 31, 2018, we recorded impairment charges of $38.2 million. During the year ended December 31, 2019, we recorded an impairment charge of $3.3 million to reflect the estimated fair value of the underlying collateral for a past due infrastructure loan that was converted into an equity interest in November 2019, pursuant to a bankruptcy court ordered sale. Our recorded investment in the loan was $29.2 million ($36.2 million principal balance, net of a $7.0 million non-accretable difference). The $25.9 million carrying value, net of the $3.3 million allowance for impaired loan which we charged-off, was reclassified to investment in unconsolidated entities upon conversion into an equity interest (see Note 8).

During the year ended December 31, 2019, we also charged-off an allowance for impaired loans of $8.3 million relating to a first mortgage loan on a grocery distribution facility located in Montgomery, Alabama that we foreclosed on in March 2019 and obtained physical possession of the underlying collateral property. As of the foreclosure date, our carrying value of the loan totaled $9.0 million ($20.9 million unpaid principal balance net of an $8.3 million allowance for impaired loan and $3.6 million of unamortized discount). In April 2019, we foreclosed on a first mortgage loan on a grocery distribution facility located in Orlando, Florida and obtained physical possession of the underlying collateral property. As of the foreclosure date, the appraised value of the property exceeded the $18.5 million carrying value of the

loan ($21.9 million unpaid principal and interest balance net of a $3.4 million unamortized discount, and no reserve for impaired loan).

As of December 31, 2019, we had allowances for impaired loans of $29.9 million. Of this amount, $21.6 million relates to a residential conversion project located in New York City, for which our recorded investment was as follows as of December 31, 2019: (i) $131.6 million first mortgage loan and contiguous mezzanine loans ($104.2 million unpaid principal balance, which does not reflect $38.4 million of accrued interest and $21.6 million allowance for impaired loan) and (ii) $7.8 million unsecured promissory note ($8.9 million unpaid principal balance and no reserve for impaired loan).

Also included in the allowance for impaired loans is $8.3 million related to two subordinated mortgages on department stores located in the Greater Chicago area. Our recorded investment in these loans totaled $12.2 million ($12.0 million unpaid principal balance and $8.3 million allowance for impaired loans) as of December 31, 2019.

We apply the cost recovery method of interest income recognition for these impaired loans. The average recorded investment in the impaired loans for the year ended December 31, 2019 was $172.8 million.

As of December 31, 2019, we held TDRs with unfunded commitments of $3.1 million. There were no TDRs for which interest income was recognized during the year ended December 31, 2019.

As of December 31, 2019, certain of the residential conversion project first mortgage and mezzanine loans with a recorded investment of $93.6 million and the department store loans discussed above were 90 days or greater past due, as were $7.4 million of residential loans. In accordance with our interest income recognition policy, these loans were placed on non-accrual status.

In accordance with our policies, we record an allowance for loan losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4,” plus (ii) 5% of the aggregate carrying amount of loans rated as a “5,” plus (iii) allowance for infrastructure loans held-for-sale where amortized cost is in excess of fair value, plus (iv) impaired loan reserves, if any. The following table presents the activity in our allowance for loan losses (amounts in thousands):

	For the year ended December 31,
	2019		2018		2017
Allowance for loan losses at January 1	$	39,151	$	4,330	$	9,788
Provision for (reversal of) loan losses		3,812		(3,384)		(5,458)
Provision for impaired loans		3,314		38,205		—
Charge-offs		(12,666)		—		—
Recoveries		—		—		—
Allowance for loan losses at December 31	$	33,611	$	39,151	$	4,330
Recorded investment in loans related to the allowance for loan loss	$	291,768	$	275,112	$	170,941

The activity in our loan portfolio was as follows (amounts in thousands):

	For the year ended December 31,
	2019		2018		2017
Balance at January 1	$	9,794,254	$	7,382,641	$	5,946,274
Acquisitions/originations/additional funding		9,094,714		6,723,144		5,500,539
Acquisition of Infrastructure Lending Portfolio		—		1,969,340		—
Capitalized interest (1)		110,632		63,047		74,339
Basis of loans sold (2)		(4,311,390)		(3,082,347)		(1,634,717)
Loan maturities/principal repayments		(3,304,838)		(3,272,666)		(2,658,522)
Discount accretion/premium amortization		35,387		38,099		39,084
Changes in fair value		71,601		40,522		66,987
Unrealized foreign currency translation gain (loss)		40,155		(32,341)		42,356
Loan loss provision, net		(7,126)		(34,821)		5,458
Loan foreclosures		(27,303)		—		—
Transfer to/from other asset classifications		(25,862)		(364)		843
Balance at December 31	$	11,470,224	$	9,794,254	$	7,382,641

(1) Represents accrued interest income on loans whose terms do not require current payment of interest.

(2) See Note 12 for additional disclosure on these transactions.

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Goodwill and Intangibles

12 Months Ended

Dec. 31, 2019

Goodwill and Intangibles

Goodwill and Intangibles

9. Goodwill and Intangibles

Goodwill

Infrastructure Lending Segment

The Infrastructure Lending Segment’s goodwill of $119.4 million at both December 31, 2019 and 2018 represents the excess of consideration transferred over the fair value of net assets acquired on September 19, 2018 and October 15, 2018. The goodwill recognized is attributable to value embedded in the acquired Infrastructure Lending Segment’s lending platform and is fully tax deductible over 15 years.

As discussed in Note 2, goodwill is tested for impairment at least annually. Based on our quantitative assessment during the fourth quarter of 2019, we determined that the fair value of the Infrastructure Lending Segment reporting unit to which goodwill is attributed exceeded its carrying value including goodwill. Therefore, we concluded that the goodwill attributed to the Infrastructure Lending Segment was not impaired.

LNR Property LLC (“LNR”)

The Investing and Servicing Segment’s goodwill of $140.4 million at both December 31, 2019 and 2018 represents the excess of consideration transferred over the fair value of net assets of LNR acquired on April 19, 2013. The goodwill recognized is attributable to value embedded in LNR’s existing platform, which includes a network of commercial real estate asset managers, work-out specialists, underwriters and administrative support professionals as well as proprietary historical performance data on commercial real estate assets. The tax deductible component of this goodwill as of April 19, 2013 was $149.9 million and is deductible over 15 years.

Based on our qualitative assessment during the fourth quarter of 2019, we determined that it is not more likely than not that the fair value of the Investing and Servicing Segment reporting unit to which goodwill is attributed is less than its carrying value including goodwill.  Therefore, we concluded that the goodwill attributed to the Investing and Servicing Segment was not impaired. 

Intangible Assets

Servicing Rights Intangibles

In connection with the LNR acquisition, we identified domestic servicing rights that existed at the purchase date, based upon the expected future cash flows of the associated servicing contracts. As of December 31, 2019 and

2018, the balance of the domestic servicing intangible was net of $26.2 million and $24.1 million, respectively, which was eliminated in consolidation pursuant to ASC 810 against VIE assets in connection with our consolidation of securitization VIEs. Before VIE consolidation, as of December 31, 2019 and 2018, the domestic servicing intangible had a balance of $43.2 million and $44.6 million, respectively, which represents our economic interest in this asset.

Lease Intangibles

In connection with our acquisitions of commercial real estate, we recognized in-place lease intangible assets and favorable lease intangible assets associated with certain non-cancelable operating leases of the acquired properties.

The following table summarizes our intangible assets, which are comprised of servicing rights intangibles and lease intangibles, as of December 31, 2019 and 2018 (amounts in thousands):

	As of December 31, 2019						As of December 31, 2018
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Value		Amortization		Value		Value		Amortization		Value
Domestic servicing rights, at fair value	$	16,917	$	—	$	16,917	$	20,557	$	—	$	20,557
In-place lease intangible assets		135,293		(84,383)		50,910		198,220		(100,873)		97,347
Favorable lease intangible assets		24,218		(6,345)		17,873		36,895		(9,766)		27,129
Total net intangible assets	$	176,428	$	(90,728)	$	85,700	$	255,672	$	(110,639)	$	145,033

The following table summarizes the activity within intangible assets for the years ended December 31, 2019 and 2018 (amounts in thousands):

	Domestic		In-place Lease		Favorable Lease
	Servicing		Intangible		Intangible
	Rights		Assets		Assets		Total
Balance as of January 1, 2018	$	30,759	$	122,465	$	29,868	$	183,092
Acquisition of Woodstar II Portfolio properties		—		10,792		—		10,792
Acquisition of additional REIS Equity Portfolio properties		—		7,342		2,687		10,029
Amortization		—		(39,830)		(4,046)		(43,876)
Sales		—		(1,791)		(1,036)		(2,827)
Foreign exchange loss		—		(1,270)		(344)		(1,614)
Impairment (1)		—		(361)		—		(361)
Changes in fair value due to changes in inputs and assumptions		(10,202)		—		—		(10,202)
Balance as of December 31, 2018	$	20,557	$	97,347	$	27,129	$	145,033
Sale of Ireland Portfolio		—		(20,271)		(5,654)		(25,925)
Sale of certain REIS Equity Portfolio properties		—		(5,208)		(13)		(5,221)
Acquisition of additional REIS Equity Portfolio property		—		277		—		277
Amortization		—		(19,297)		(3,256)		(22,553)
Foreign exchange loss		—		(806)		(221)		(1,027)
Impairment (1)		—		(1,132)		(112)		(1,244)
Changes in fair value due to changes in inputs and assumptions		(3,640)		—		—		(3,640)
Balance as of December 31, 2019	$	16,917	$	50,910	$	17,873	$	85,700

(1) Impairment of intangible lease assets is recognized within other expense in our consolidated statements of operations.

The following table sets forth the estimated aggregate amortization of our in-place lease intangible assets and favorable lease intangible assets for the next five years and thereafter (amounts in thousands):

2020	$	11,699
2021		9,674
2022		7,892
2023		6,136
2024		4,742
Thereafter		28,640
Total	$	68,783

Lease Liabilities

In connection with our acquisition of certain properties within our Medical Office Portfolio, we recognized aggregate unfavorable lease liabilities of $4.8 million with a weighted average life of 9.7 years at acquisition. The liability balance was $2.3 million and $2.9 million as of December 31, 2019 and 2018, respectively.

In connection with our acquisition of LNR in 2013, we recognized an unfavorable lease liability of $15.3 million related to an assumed operating lease for our offices in Miami Beach, Florida, which expires in 2021. This liability is being amortized over the remaining 1.5 years of the underlying lease term at a rate of approximately $1.9 million per year. The liability balance was $2.8 million and $4.7 million as of December 31, 2019 and 2018, respectively.

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Consolidated Statements of Cash Flows $ in Thousands, € in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Cash Flows from Operating Activities:
Net income	$ 536,935	$ 411,197	$ 412,767
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Amortization of deferred financing costs, premiums and discounts on secured borrowings	36,088	27,832	19,298
Amortization of discounts and deferred financing costs on unsecured senior notes	7,760	11,785	21,531
Accretion of net discount on investment securities	(11,791)	(15,253)	(15,208)
Accretion of net deferred loan fees and discounts	(35,387)	(38,099)	(39,084)
Share-based compensation	36,155	22,758	18,151
Share-based component of incentive fees	11,915	20,792	19,599
Change in fair value of investment securities	(833)	(10,345)	3,811
Change in fair value of consolidated VIEs	(67,798)	(17,408)	(69,483)
Change in fair value of servicing rights	3,640	10,202	24,323
Change in fair value of loans held-for-sale	(71,601)	(40,522)	(66,987)
Change in fair value of derivatives	11,441	(30,828)	68,309
Foreign currency (loss) gain, net	(17,582)	9,158	(33,439)
Gain on sale of investments and other assets	(188,028)	(59,044)	(20,499)
Impairment charges on properties and related intangibles	1,494	1,869	1,146
Loan loss provision, net	7,126	34,821	(5,458)
Depreciation and amortization	113,394	130,838	90,896
Loss (earnings) from unconsolidated entities	101,354	(10,540)	(30,505)
Distributions of earnings from unconsolidated entities	11,631	5,917	67,542
Loss on extinguishment of debt	(19,270)	(5,808)	(5,915)
Origination and purchase of loans held-for-sale, net of principal collections	(3,543,503)	(2,105,232)	(2,199,390)
Proceeds from sale of loans held-for-sale	3,177,640	2,246,989	1,582,050
Changes in operating assets and liabilities:
Related-party payable, net	(3,118)	1,674	4,551
Accrued and capitalized interest receivable, less purchased interest	(114,156)	(62,261)	(94,077)
Other assets	(29,787)	8,207	(35,300)
Accounts payable, accrued expenses and other liabilities	(5,458)	25,155	22,702
Net cash (used in) provided by operating activities	(13,199)	585,470	(246,839)
Cash Flows from Investing Activities:
Origination and purchase of loans held-for-investment	(5,473,399)	(4,428,891)	(3,234,987)
Proceeds from principal collections on loans	3,132,368	3,057,430	2,562,515
Proceeds from loans sold	1,141,411	835,849	52,609
Purchase of investment securities	(98,258)	(492,400)	(98,394)
Proceeds from sales of investment securities	7,326	16,427	11,579
Proceeds from principal collections on investment securities	205,660	382,924	232,793
Infrastructure lending business combination		(2,158,553)
Real estate business combinations, net of cash and restricted cash acquired			(17,639)
Proceeds from sales of real estate and related businesses, net of cash sold	343,896	311,874	55,739
Purchases and additions to properties and other assets	(30,865)	(54,772)	(573,930)
Investment in unconsolidated entities	(18,055)	(3,100)	(32,186)
Distribution of capital from unconsolidated entities	18,127	21,461	14,252
Payments for purchase or termination of derivatives	(42,835)	(29,581)	(40,518)
Proceeds from termination of derivatives	38,756	20,523	31,456
Return of investment basis in purchased derivative asset			151
Net cash used in investing activities	(775,868)	(2,520,809)	(1,036,560)
Cash Flows from Financing Activities:
Proceeds from borrowings	10,167,339	9,412,715	6,273,600
Principal repayments on and repurchases of borrowings	(8,671,085)	(6,360,610)	(4,586,509)
Payment of deferred financing costs	(72,438)	(67,218)	(22,703)
Proceeds from common stock issuances	767	608	702
Payment of equity offering costs	(27)	(22)	(647)
Payment of dividends	(538,424)	(509,966)	(501,663)
Contributions from non-controlling interests	183,520	13,407	106
Distributions to non-controlling interests	(49,958)	(256,404)	(96,010)
Purchase of treasury stock		(12,090)
Issuance of debt of consolidated VIEs	184,540	102,474	25,605
Repayment of debt of consolidated VIEs	(373,155)	(410,453)	(137,208)
Distributions of cash from consolidated VIEs	45,642	92,283	92,411
Net cash provided by financing activities	876,721	2,004,724	1,047,684
Net increase (decrease) in cash, cash equivalents and restricted cash	87,654	69,385	(235,715)
Cash, cash equivalents and restricted cash, beginning of year	487,865	418,273	650,755
Effect of exchange rate changes on cash	(1,488)	207	3,233
Cash, cash equivalents and restricted cash, end of year	574,031	487,865	418,273
Supplemental disclosure of cash flow information:
Cash paid for interest	481,483	337,605	250,690
Income taxes paid	11,284	10,900	20,767
Supplemental disclosure of non-cash investing and financing activities:
Dividends declared, but not yet paid	136,715	133,237	125,844
Consolidation of VIEs (VIE asset/liability additions)	10,368,817	9,885,200	3,925,370
Deconsolidation of VIEs (VIE asset/liability reductions)	377,071	1,649,485	2,480,125
Assets of Ireland real estate subsidiary sold, net of cash	440,966
Liabilities of Ireland real estate subsidiary sold	360,049
Reclassification of residential loans held-for-sale to held-for-investment	340,948
Settlement of 2019 Convertible Notes in shares	75,525	271,243
Settlement of loans transferred as secured borrowings	74,692		35,000
Net assets acquired through foreclosure	53,278
Redemption of Class A Units for common stock	21,070
Lease liabilities arising from obtaining right-of-use assets	9,626
Net assets acquired from consolidated VIEs	8,613	27,737	31,547
Fair value of assets acquired, net of cash and restricted cash		2,167,652	18,507
Fair value of liabilities assumed		9,099	760
Contribution of Woodstar II Portfolio net assets from non-controlling interests	2,877	$ 416,626	$ 145,177
Loan principal collections temporarily held at master servicer	$ 44,426

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Restricted Cash (Tables)

12 Months Ended

Dec. 31, 2019

Restricted Cash.

Summary of restricted cash

A summary of our restricted cash as of December 31, 2019 and 2018 is as follows (amounts in thousands):

	As of December 31,
	2019		2018
Cash restricted by lender	$	40,818	$	175,659
Cash collateral for derivative financial instruments		37,912		37,245
Funds held on behalf of borrowers and tenants		11,903		12,838
Other restricted cash		5,010		22,299
	$	95,643	$	248,041

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Schedule III-Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2019

Schedule III-Real Estate and Accumulated Depreciation

Schedule III-Real Estate and Accumulated Depreciation

Starwood Property Trust, Inc. and Subsidiaries

Schedule III—Real Estate and Accumulated Depreciation

December 31, 2019

(Dollars in thousands)

			Initial Cost				Costs		Gross Amounts Carried at
			to Company				Capitalized		December 31, 2019
Property Type /					Depreciable		Subsequent to				Depreciable					Accumulated		Acquisition
Geographic Location	Encumbrances		Land		Property		Acquisition(1)		Land		Property		Total			Depreciation(3)		Date
Aggregated Properties
Hotel—U.S., Midwest (1 property)	$	—	$	—	$	5,565	$	929	$	—	$	6,494	$	6,494		$	(1,807)	Feb-18
Medical office—U.S., Midwest (7 properties)		78,048		2,764		97,802		503		2,764		98,305		101,069			(9,705)	Dec-16
Medical office—U.S., North East (7 properties)		191,661		11,283		176,999		—		11,283		176,999		188,282			(16,437)	Dec-16
Medical office—U.S., South East (6 properties)		107,252		7,930		117,740		159		7,930		117,899		125,829			(11,555)	Dec-16
Medical office—U.S., South West (8 properties)		125,345		15,921		126,842		667		15,921		127,509		143,430			(13,493)	Dec-16
Medical office—U.S., West (6 properties)		97,694		13,415		107,844		488		13,415		108,332		121,747			(12,243)	Dec-16
Mixed Use—U.S., West (1 property)		8,667		1,002		14,323		246		1,002		14,569		15,571			(1,659)	Feb-16
Multifamily—U.S., South East (60 properties)		930,351		251,084		926,809		31,202		251,113		957,982		1,209,095			(113,293)	Oct-15 to Aug-19
Office—U.S., North East (1 property)		17,474		7,250		10,614		2,538		7,250		13,152		20,402			(1,505)	May-18
Office—U.S., South East (2 properties)		23,809		7,081		31,528		3,503		7,081		35,031		42,112			(7,585)	May-16 to Oct-16
Office—U.S., South West (2 properties)		28,334		8,188		28,019		2,252		8,188		30,271		38,459			(2,735)	Sep-17 to Feb-18
Office—U.S., West (1 property)		15,448		—		4,261		5,592		—		9,853		9,853			(1,301)	Oct-17
Retail—U.S., Mid Atlantic (1 property)		11,438		6,432		6,315		11,940		6,432		18,255		24,687			(1,985)	Mar-16
Retail—U.S., Midwest (7 properties)		79,300		24,384		109,445		1,354		24,384		110,799		135,183			(9,573)	Nov-15 to Sep-17
Retail—U.S., North East (1 property)		11,580		472		12,260		568		472		12,828		13,300			(1,877)	Nov-15
Retail—U.S., South East (5 properties)		42,200		21,353		60,618		49		21,353		60,667		82,020			(4,352)	Sep-16 to Sep-17
Retail—U.S., South West (6 properties)		76,894		37,458		78,579		90		37,458		78,669		116,127			(8,012)	Oct-14 to Sep-17
Retail—U.S., West (2 properties)		33,000		18,633		36,794		—		18,633		36,794		55,427			(2,875)	Sep-17
Self-storage—U.S., North East (1 property)		14,500		2,202		11,498		172		2,202		11,670		13,872			(1,361)	Dec-15
Industrial—U.S., South East (2 properties)		—		10,121		17,295		255		10,121		17,550		27,671			(837)	Mar-19 to Apr-19
	$	1,892,995	$	446,973	$	1,981,150	$	62,507	$	447,002	$	2,043,628	$	2,490,630	(2)	$	(224,190)

Notes to Schedule III:

(1) No material costs subsequent to acquisition were capitalized to land.

(2) The aggregate cost for federal income tax purposes is $2.6 billion.

(3) Depreciation is computed based upon estimated useful lives as described in Note 7 to the Consolidated Financial Statements.

The following schedule presents our real estate activity during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019		2018		2017
Beginning balance, January 1	$	2,972,803	$	2,755,050	$	1,986,285
Additions during the year:
Acquisitions (1)		8,472		445,170		725,955
Acquisitions through foreclosure		27,416		—		—
Improvements		30,865		25,764		18,575
Contingent consideration issued		2,877		38,211		—
Measurement period adjustments		—		—		660
Foreign currency translation		—		—		59,508
Total additions		69,630		509,145		804,698
Deductions during the year:
Costs of real estate sold		(535,417)		(269,989)		(35,774)
Foreign currency translation		(15,702)		(21,260)		—
Other		(684)		(143)		(159)
Total deductions		(551,803)		(291,392)		(35,933)
Ending balance, December 31	$	2,490,630	$	2,972,803	$	2,755,050

(1) Refer to Note 16 to the Consolidated Financial Statements for a discussion of property acquisitions from related parties.

The following schedule presents activity within accumulated depreciation during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019		2018		2017
Beginning balance, January 1	$	187,913	$	107,569	$	41,565
Depreciation expense		92,024		91,188		65,253
Disposition/write-offs		(54,260)		(9,389)		(1,785)
Foreign currency translation		(1,487)		(1,455)		2,536
Ending balance, December 31	$	224,190	$	187,913	$	107,569

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Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2017
Revenues:
Interest income from loans	$ 724,013	$ 513,814
Interest income from investment securities	76,629	52,813
Servicing fees	54,296	61,446
Rental income	337,966	249,000
Other revenues	3,515	2,815
Total revenues	1,196,419	879,888
Costs and expenses:
Management fees	119,132	122,699
Interest expense	508,729	295,666
General and administrative	155,112	129,587
Acquisition and investment pursuit costs	1,056	3,472
Costs of rental operations	122,982	94,258
Depreciation and amortization	113,322	93,603
Loan loss provision, net	7,126	(5,458)
Other expense	2,365	1,422
Total costs and expenses	1,029,824	735,249
Other income (loss):
Change in net assets related to consolidated VIEs	236,309	252,434
Change in fair value of servicing rights	(3,640)	(24,323)
Change in fair value of investment securities, net	833	(3,811)
Change in fair value of mortgage loans held-for-sale, net	71,601	66,987
(Loss) earnings from unconsolidated entities	(101,354)	30,505
Gain on sale of investments and other assets, net	188,028	20,499
(Loss) gain on derivative financial instruments, net	(6,310)	(72,532)
Foreign currency gain (loss), net	17,582	33,671
Total other-than-temporary impairment ("OTTI")	(267)	(180)
Noncredit portion of OTTI recognized in other comprehensive income	267	71
Net impairment losses recognized in earnings		(109)
Loss on extinguishment of debt	(19,270)	(5,915)
Other (loss) income, net	(207)	2,244
Total other income	383,572	299,650
Income before income taxes	550,167	444,289
Income tax provision	(13,232)	(31,522)
Net income	536,935	412,767
Net income attributable to non-controlling interests	(27,271)	(11,997)
Net income attributable to Starwood Property Trust, Inc.	$ 509,664	$ 400,770
Earnings per share data attributable to Starwood Property Trust, Inc.:
Basic (in dollars per share)	$ 1.81	$ 1.53
Diluted (in dollars per share)	$ 1.79	$ 1.52

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies.

Commitments and Contingencies

22. Commitments and Contingencies

As of December 31, 2019, our Commercial and Residential Lending Segment had future commercial loan funding commitments totaling $3.2 billion, of which we expect to fund $2.9 billion. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions.

As of December 31, 2019, our Infrastructure Lending Segment had future infrastructure loan funding commitments totaling $360.6 million, including $145.1 million under revolvers and letters of credit (“LCs”), and $215.5 million under delayed draw term loans. As of December 31, 2019, $19.7 million of revolvers and LCs were outstanding.

In connection with the Infrastructure Lending Segment acquisition, we assumed guarantees of certain borrowers’ performance under existing interest rate swaps.  As of December 31, 2019, we had seven outstanding guarantees on interest rate swaps maturing between March 2022 and June 2025. Refer to Note 13 for further discussion.

Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum debt service coverage ratios or executions of new leases before advances are made to the borrower.

Management is not aware of any other contractual obligations, legal proceedings, or any other contingent obligations incurred in the normal course of business that would have a material adverse effect on our consolidated financial statements.

Lease Commitment Disclosures

Our lease commitments consist of corporate office leases and ground leases for investment properties, all of which are classified as operating leases. We sublease some of the space within our corporate offices to third parties. Our lease costs and sublease income were as follows (in thousands):

	For the Year Ended December 31,
	2019		2018		2017
Operating lease costs	$	5,634	$	4,962	$	4,699
Short-term lease costs		115		210		96
Sublease income		(1,613)		(1,643)		(1,500)
Total lease cost	$	4,136	$	3,529	$	3,295

Information concerning our operating lease liabilities, which are classified within accounts payable, accrued expenses and other liabilities in our consolidated balance sheet as of December 31, 2019, is as follows (dollars in thousands):

	For the Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities—operating	$	5,215

	December 31, 2019
Weighted-average remaining lease term	6.0	years
Weighted-average discount rate	4.4	%

Future maturity of operating lease liabilities:
2020	$	6,163
2021		3,480
2022		1,272
2023		1,281
2024		6,206
Thereafter		1,002
Total		19,404
Less interest component		(2,316)
Operating lease liability	$	17,088

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Earnings per Share (Tables)

12 Months Ended

Dec. 31, 2019

Earnings per Share

Reconciliation of net income from continuing operations and the number of shares of common stock used in the computation of basic EPS and diluted EPS

	For the Year Ended December 31,
	2019		2018		2017
Basic Earnings
Income attributable to STWD common stockholders	$	509,664	$	385,830	$	400,770
Less: Income attributable to participating shares not already deducted as non-controlling interests		(3,873)		(3,592)		(3,183)
Basic earnings	$	505,791	$	382,238	$	397,587
Diluted Earnings
Income attributable to STWD common stockholders	$	509,664	$	385,830	$	400,770
Less: Income attributable to participating shares not already deducted as non-controlling interests		(3,873)		(3,592)		(3,183)
Add: Interest expense on Convertible Notes (1)		12,354		25,148		—
Add: Loss on extinguishment of Convertible Notes (1)		—		2,099		—
Diluted earnings	$	518,145	$	409,485	$	397,587
Number of Shares:
Basic — Average shares outstanding		279,337		265,279		259,620
Effect of dilutive securities — Convertible Notes (1)		9,805		22,659		1,899
Effect of dilutive securities — Contingently issuable shares		360		546		508
Effect of dilutive securities — Unvested non-participating shares		210		—		52
Diluted — Average shares outstanding		289,712		288,484		262,079
Earnings Per Share Attributable to STWD Common Stockholders:
Basic	$	1.81	$	1.44	$	1.53
Diluted	$	1.79	$	1.42	$	1.52

(1) Prior to June 30, 2018, the Company had asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. Accordingly, under GAAP, the dilutive effect to EPS was previously determined using the treasury stock method by dividing only the “conversion spread value” of the “in-the-money” Convertible Notes by the Company’s average share price and including the resulting share amount in the diluted EPS denominator. The conversion value of the principal amount of the Convertible Notes was not included. Effective June 30, 2018, the Company no longer asserts its intent to fully settle the principal amount of the Convertible Notes in cash upon conversion. Accordingly, under GAAP, the dilutive effect to EPS for the years ended December 31, 2019 and 2018 is determined using the “if-converted” method whereby interest expense or any loss on extinguishment of our Convertible Notes is added back to the diluted EPS numerator and the full number of potential shares contingently issuable upon their conversion is included in the diluted EPS denominator, if dilutive. Refer to Note 11 for further discussion.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies.

Schedule of lease costs and sublease income

	For the Year Ended December 31,
	2019		2018		2017
Operating lease costs	$	5,634	$	4,962	$	4,699
Short-term lease costs		115		210		96
Sublease income		(1,613)		(1,643)		(1,500)
Total lease cost	$	4,136	$	3,529	$	3,295

Information concerning our operating lease liabilities, which are classified within accounts payable, accrued expenses and other liabilities in our consolidated balance sheet as of December 31, 2019, is as follows (dollars in thousands):

	For the Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities—operating	$	5,215

	December 31, 2019
Weighted-average remaining lease term	6.0	years
Weighted-average discount rate	4.4	%

Schedule of future minimum rental payments and sublease income related to existing corporate leases and subleases

Future maturity of operating lease liabilities:
2020	$	6,163
2021		3,480
2022		1,272
2023		1,281
2024		6,206
Thereafter		1,002
Total		19,404
Less interest component		(2,316)
Operating lease liability	$	17,088

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Segment and Geographic Data - Foreign revenue (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues
Revenues	$ 286,428	$ 288,330	$ 311,181	$ 310,480	$ 293,418	$ 285,719	$ 269,556	$ 260,587	$ 1,196,419	$ 1,109,280	$ 879,888
Foreign
Revenues
Revenues									$ 115,600	$ 90,500	$ 82,000

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Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Jan. 01, 2020	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Properties held-for-sale		$ 0		$ 0
Leases
Right-of-use asset			$ 12,000
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]			Usgaap:OtherAssetsMember
Operating Lease, Liability			$ 12,000
Operating Lease, Liability, Statement of Financial Position [Extensible List]		us-gaap:AccountsPayableAndAccruedLiabilitiesMember	us-gaap:AccountsPayableAndAccruedLiabilitiesMember
Variable Interest Entities
REO assets as a percent of consolidated VIE assets		1.00%
Loans as a percent of consolidated VIE assets		99.00%
Fair Value Measurements
Permitted reinvestment under static investment in VIEs		$ 0
Minimum | Forecast | ASU 2016-13
Fair Value Measurements
Initial increase in allowance for credit losses	$ 30,000
Maximum | Forecast | ASU 2016-13
Fair Value Measurements
Initial increase in allowance for credit losses	$ 40,000

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Schedule III-Real Estate and Accumulated Depreciation - Activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Real Estate activity
Beginning balance	$ 2,972,803	$ 2,755,050	$ 1,986,285
Additions during the year:
Acquisitions (1)	8,472	445,170	725,955
Acquisitions through foreclosure	27,416
Improvements	30,865	25,764	18,575
Contingent consideration issued	2,877	38,211
Measurement period adjustments			660
Foreign currency translation			59,508
Total additions	69,630	509,145	804,698
Deductions during the year:
Costs of real estate sold	(535,417)	(269,989)	(35,774)
Foreign currency translation	(15,702)	(21,260)
Other	(684)	(143)	(159)
Total deductions	(551,803)	(291,392)	(35,933)
Ending balance	2,490,630	2,972,803	2,755,050
Accumulated depreciation activity
Beginning balance	187,913	107,569	41,565
Depreciation expense	92,024	91,188	65,253
Disposition/write-offs	(54,260)	(9,389)	(1,785)
Foreign currency translation	(1,487)	(1,455)	2,536
Ending balance	$ 224,190	$ 187,913	$ 107,569

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Secured Borrowings - Principal Repayments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Repayment of secured financings
Amortization of deferred financing costs	$ 34,300	$ 27,000	$ 19,500
CLO
Repayment of secured financings
Thereafter	936,375
Total	936,375
Secured financing agreements
Repayment of secured financings
2020	1,045,135
2021	1,483,385
2022	1,563,145
2023	1,762,095
2024	1,349,547
Thereafter	2,733,193
Total	9,936,500
Repurchase Agreements
Repayment of secured financings
2020	480,249
2021	625,956
2022	1,010,970
2023	1,056,812
2024	1,065,312
Thereafter	370,158
Total	4,609,457
Other Secured Financing
Repayment of secured financings
2020	564,886
2021	857,429
2022	552,175
2023	705,283
2024	284,235
Thereafter	1,426,660
Total	$ 4,390,668

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Variable Interest Entities (Details) $ in Thousands	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)
Variable interest entities
Total Assets	$ 78,042,336	$ 68,262,453
Total Liabilities	72,905,322	63,362,264
Debt obligations to beneficial interest holders, unpaid principal balances	1,950,000	2,027,969
Interest in VIE	$ 84,329	171,765
Not primary beneficiary
Variable interest entities
Number of CDO structures currently in default | item	4
Maximum risk of loss related to VIEs, on fair value basis	$ 37,400
Not primary beneficiary | ASU 2015-02
Variable interest entities
Interest in VIE	21,200
Not primary beneficiary | Securitization SPEs
Variable interest entities
Debt obligations to beneficial interest holders, unpaid principal balances	6,100,000
Primary beneficiary
Variable interest entities
Total Assets	62,187,175	53,446,364
Total Liabilities	$ 60,743,494	$ 52,195,042
Equity Method Investment, Ownership Percentage	51.00%
Primary beneficiary | ASU 2015-02
Variable interest entities
Total Assets	$ 1,100,000
Total Liabilities	491,800
Primary beneficiary | CMBS Venture Holdings
Variable interest entities
Total Assets	347,200
Total Liabilities	400
Primary beneficiary | SPT Dolphin | ASU 2015-02
Variable interest entities
Total Assets	684,100
Total Liabilities	$ 444,400

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Derivatives and Hedging Activity - Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair value of derivative instruments
Fair Value of Derivatives in an Asset Position	$ 28,943	$ 52,691
Fair Value of Derivatives in a Liability Position	8,740	15,415
Interest rate swaps | Derivatives not designated as hedging instruments
Fair value of derivative instruments
Fair Value of Derivatives in an Asset Position	14,385	30,791
Fair Value of Derivatives in a Liability Position		14,457
Interest Rate Swap Guarantees | Derivatives not designated as hedging instruments
Fair value of derivative instruments
Fair Value of Derivatives in a Liability Position	614	396
Foreign exchange contracts | Derivatives not designated as hedging instruments
Fair value of derivative instruments
Fair Value of Derivatives in an Asset Position	14,558	21,346
Fair Value of Derivatives in a Liability Position	7,834	562
Credit spread instrument | Derivatives not designated as hedging instruments
Fair value of derivative instruments
Fair Value of Derivatives in an Asset Position		$ 554
Fair Value of Derivatives in a Liability Position	$ 292

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Investment in Unconsolidated Entities (Details) $ in Thousands	1 Months Ended	3 Months Ended	12 Months Ended
	Nov. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Aug. 31, 2017 USD ($)	Oct. 31, 2014 USD ($)
Investment in Unconsolidated Entities
Equity method, Carrying value			$ 57,583	$ 146,094
Fair value of the investment			26,746	25,671
Investment in unconsolidated entities			84,329	171,765
Capital distribution			$ 18,127	$ 21,461	$ 14,252
Retail Fund
Investment in Unconsolidated Entities
Equity method, Participation / Ownership %			33.00%	33.00%
Equity method, Carrying value				$ 114,362			$ 150,000
Investment in unconsolidated entities						$ 15,500
Carrying amount			$ 0
Number of regional shopping malls | item			4
Decrease in investment		$ 44,900
Capital distribution					$ 2,100
Impairment charge			$ 71,900
Investor entity which owns equity in two real estate services providers
Investment in Unconsolidated Entities
Equity method, Participation / Ownership %			50.00%	50.00%
Equity method, Carrying value			$ 9,473	$ 9,372
Percentage of equity sold					88.00%
Equity interest in a natural gas power plant
Investment in Unconsolidated Entities
Equity method, Participation / Ownership %	10.00%		10.00%	10.00%
Equity method, Carrying value			$ 25,862
Equity interest in a natural gas power plant | Infrastructure Loans
Investment in Unconsolidated Entities
Past due loan amount	$ 36,200
Carrying amount	$ 25,900
Time lag for reporting financial information	3 months
Equity interests in commercial real estate
Investment in Unconsolidated Entities
Equity method, Participation / Ownership %			50.00%	50.00%
Equity method, Carrying value			$ 1,907	$ 6,294
Cash proceeds					$ 66,000
Income on sale of investments					$ 53,900
Equity interest in a residential mortgage originator
Investment in Unconsolidated Entities
Equity method, Carrying value			12,002	9,082
Carrying value over (under) equity in net assets			1,600
Equity interest in a residential mortgage originator | Subordinated Loans
Investment in Unconsolidated Entities
Equity method, Carrying value			4,500	2,000
Various - Equity method
Investment in Unconsolidated Entities
Equity method, Carrying value			$ 8,339	$ 6,984
Various - Equity method | Minimum
Investment in Unconsolidated Entities
Equity method, Participation / Ownership %			25.00%	25.00%
Various - Equity method | Maximum
Investment in Unconsolidated Entities
Equity method, Participation / Ownership %			50.00%	50.00%
Equity interest in a servicing and advisory business
Investment in Unconsolidated Entities
Equity method, Participation / Ownership %			4.00%	4.00%
Equity method, Carrying value				$ 6,207
Capital distribution			$ 8,400
Investment funds which own equity in a loan servicer and other real estate assets
Investment in Unconsolidated Entities
Fair value of the investment			$ 9,225	$ 9,225
Investment funds which own equity in a loan servicer and other real estate assets | Minimum
Investment in Unconsolidated Entities
Cost method, Ownership %			4.00%	4.00%
Investment funds which own equity in a loan servicer and other real estate assets | Maximum
Investment in Unconsolidated Entities
Cost method, Ownership %			6.00%	6.00%
Various
Investment in Unconsolidated Entities
Fair value of the investment			$ 17,521	$ 10,239
Various | Minimum
Investment in Unconsolidated Entities
Cost method, Ownership %			0.00%	0.00%
Various | Maximum
Investment in Unconsolidated Entities
Cost method, Ownership %			2.00%	2.00%

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Commitments and Contingencies - Cash paid (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Commitments and Contingencies.
Cash paid for amounts included in the measurement of lease liabilities-operating	$ 5,215

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Offsetting Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Offsetting Assets and Liabilities

Schedule of offsetting assets and liabilities

The following tables present the potential effects of netting arrangements on our financial position for financial assets and liabilities within the scope of ASC 210-20, Balance Sheet—Offsetting, which for us are derivative assets and liabilities as well as repurchase agreement liabilities (amounts in thousands):

							(iv)
							Gross Amounts Not
							Offset in the Statement
			(ii)		(iii) = (i) - (ii)		of Financial Position
			Gross Amounts		Net Amounts				Cash
	(i)		Offset in the		Presented in				Collateral
	Gross Amounts		Statement of		the Statement of		Financial		Received /		(v) = (iii) - (iv)
	Recognized		Financial Position		Financial Position		Instruments		Pledged		Net Amount
As of December 31, 2019
Derivative assets	$	28,943	$	—	$	28,943	$	5,312	$	14,208	$	9,423
Derivative liabilities	$	8,740	$	—	$	8,740	$	5,312	$	292	$	3,136
Repurchase agreements		4,609,457		—		4,609,457		4,609,457		—		—
	$	4,618,197	$	—	$	4,618,197	$	4,614,769	$	292	$	3,136
As of December 31, 2018
Derivative assets	$	52,691	$	—	$	52,691	$	1,408	$	—	$	51,283
Derivative liabilities	$	15,415	$	—	$	15,415	$	1,408	$	8,658	$	5,349
Repurchase agreements		4,289,750		—		4,289,750		4,289,750		—		—
	$	4,305,165	$	—	$	4,305,165	$	4,291,158	$	8,658	$	5,349

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Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Taxes
Assets	$ 78,042,336	$ 68,262,453
Cash	478,388	239,824
Current
Federal	4,917	10,508	$ 17,495
Foreign	977	293	8
State	3,182	3,010	3,115
Total current	9,076	13,811	20,618
Deferred
Federal	3,869	1,189	10,815
State	287	330	89
Total deferred	4,156	1,519	10,904
Total income tax provision	13,232	15,330	31,522
Tax Cuts and Jobs Act
Deferred income tax provision - Tax Cuts and Jobs Act			$ 10,400
Deferred tax assets and liabilities
Lease assets	(1,950)
Lease liabilities	2,752
Net deferred tax assets (liabilities)	14,020	18,177
U.S.
Deferred tax assets and liabilities
Reserves and accruals	4,017	5,161
Domestic intangible assets	8,185	14,022
Investment in unconsolidated entities	(116)	(1,842)
Deferred income	19	134
Net operating and capital loss carryforwards	885
Other temporary differences (asset)	228	702
Investing and Servicing Segment | TRS entities
Income Taxes
Assets	$ 1,600	$ 553,500

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Secured Borrowings (Tables)

12 Months Ended

Dec. 31, 2019

Secured Borrowings

Summary of secured financing agreements

The following table is a summary of our secured financing agreements in place as of December 31, 2019 and 2018 (dollars in thousands):

												Outstanding Balance at
	Current		Extended		Weighted Average	Pledged Asset			Maximum			December 31,		December 31,
	Maturity		Maturity (a)		Pricing	Carrying Value			Facility Size			2019		2018
Repurchase Agreements:
Commercial Loans	Aug 2020 to Jan 2024	(b)	Aug 2021 to Apr 2028	(b)	(c)	$	5,327,761		$	9,066,480	(d)	$	3,640,620	$	3,598,311
Residential Loans	Feb 2021		N/A		LIBOR + 2.10%		14,704			400,000			11,835		—
Infrastructure Loans	Feb 2020		Feb 2021		LIBOR + 1.75%		227,463			500,000			188,198		—
Conduit Loans	Feb 2020 to Jun 2022		Feb 2021 to Jun 2023		LIBOR + 2.10%		109,864			350,000			86,575		35,034
CMBS/RMBS	Sep 2020 to Dec 2029	(e)	Dec 2020 to June 2030	(e)	(f)		1,005,348			837,566			682,229		656,405
Total Repurchase Agreements							6,685,140			11,154,046			4,609,457		4,289,750
Other Secured Financing:
Borrowing Base Facility	Apr 2022		Apr 2024		LIBOR + 2.25%		542,281			650,000	(g)		198,955		—
Infrastructure Acquisition Facility	Sep 2021		Sep 2022		(h)		754,443			771,534			603,642		1,551,148
Infrastructure Financing Facilities	Jul 2022 to Oct 2022		Oct 2024 to Jul 2027		LIBOR + 2.12%		524,197			1,000,000			428,206		—
Property Mortgages - Fixed rate	Nov 2024 to Aug 2052	(i)	N/A		3.94%		1,499,356			1,196,698			1,196,492		1,475,382
Property Mortgages - Variable rate	May 2020 to Jun 2026		N/A		LIBOR + 2.49%		783,460			714,810			696,503		645,344
Term Loan and Revolver	(j)		N/A		(j)		N/A	(j)		519,000			399,000		300,000
FHLB	Feb 2021		N/A		(k)		1,262,250			2,000,000			867,870		500,000
Total Other Secured Financing							5,365,987			6,852,042			4,390,668		4,471,874
						$	12,051,127		$	18,006,088			9,000,125		8,761,624
Unamortized net discount													(8,347)		(963)
Unamortized deferred financing costs													(85,730)		(77,096)
												$	8,906,048	$	8,683,565

(a) Subject to certain conditions as defined in the respective facility agreement.

(b) For certain facilities, borrowings collateralized by loans existing at maturity may remain outstanding until such loan collateral matures, subject to certain specified conditions.

(c) Certain facilities with an outstanding balance of $874.9 million as of December 31, 2019 are indexed to GBP LIBOR and EURIBOR. The remainder have a weighted average rate of LIBOR + 1.90%.

(d) The aggregate initial maximum facility size of $8.9 billion may be increased at our option, subject to certain conditions. This amount includes such upsizes.

(e) Certain facilities with an outstanding balance of $295.0 million as of December 31, 2019 carry a rolling 11-month or 12-month term which may reset monthly with the lender's consent. These facilities carry no maximum facility size.

(f) A facility with an outstanding balance of $184.7 million as of December 31, 2019 has a fixed annual interest rate of 3.49%. All other facilities are variable rate with a weighted average rate of LIBOR + 1.58%.

(g) The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions.

(h) Consists of an annual interest rate of the applicable currency benchmark index + 1.50%. The spread increases 25 bps in each of the second and third years of the facility, which was entered into in September 2018.

(i) The weighted average maturity is 9.8 years as of December 31, 2019.

(j) Consists of: (i) a $399.0 million term loan facility that matures in July 2026 with an annual interest rate of LIBOR + 2.50%; and (ii) a $120.0 million revolving credit facility that matures in July 2024 with an annual interest rate of LIBOR + 3.00%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $3.1 billion as of December 31, 2019.

(k) FHLB financing with an outstanding balance of $438.5 million as of December 31, 2019 has a weighted average fixed annual interest rate of 2.01%. The remainder is variable rate with a weighted average rate of LIBOR + 0.28%.

Schedule of collateralized loan obligations

The following table is a summary of our CLO as of December 31, 2019 (amounts in thousands):

		Face		Carrying		Weighted
	Count	Amount		Value		Average Spread		Maturity
Collateral assets	20	$	1,073,504	$	1,073,504	LIBOR + 3.34%	(a)	Nov 2023	(b)
Financing	1		936,375		928,060	LIBOR + 1.65%	(c)	July 2038	(d)

(a) Represents the weighted-average coupon earned on variable rate loans during the year ended December 31, 2019. Of the loans financed by the CLO, 9% earned fixed weighted average interest of 6.84%.

(b) Represents the weighted-average maturity, assuming the extended contractual maturity of the collateral assets.

(c) Represents the weighted-average cost of financing incurred during the year ended December 31, 2019, inclusive of deferred issuance costs.

(d) Repayments of the CLO are tied to timing of the related collateral asset repayments. The term of the CLO financing obligation represents the legal final maturity date.

Schedule of five-year principal repayments for secured financings

Our credit facilities generally require principal to be paid down prior to the facilities’ respective maturities if and when we receive principal payments on, or sell, the investment collateral that we have pledged. The following table sets forth our principal repayments schedule for secured financings based on the earlier of (i) the extended contractual maturity of each credit facility or (ii) the extended contractual maturity of each of the investments that have been pledged as collateral under the respective credit facility (amounts in thousands):

	Repurchase		Other Secured
	Agreements		Financing		CLO			Total
2020	$	480,249	$	564,886	$	—		$	1,045,135
2021		625,956		857,429		—			1,483,385
2022		1,010,970		552,175		—			1,563,145
2023		1,056,812		705,283		—			1,762,095
2024		1,065,312		284,235		—			1,349,547
Thereafter		370,158		1,426,660		936,375	(a)		2,733,193
Total	$	4,609,457	$	4,390,668	$	936,375		$	9,936,500

(a) Assumes utilization of the reinvestment feature.

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Segment Data and Geographic Data - Balance sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Assets:
Cash and cash equivalents	$ 478,388	$ 239,824
Restricted cash	95,643	248,041
Loans held-for-investment, net ($671,572 and $0 held at fair value)	10,586,074	8,532,356
Loans held-for-sale	884,150	1,187,552
Loans transferred as secured borrowings		74,346
Investment securities	810,238	906,468
Properties, net	2,266,440	2,784,890
Intangible assets	85,700	145,033	$ 183,092
Investment in unconsolidated entities	84,329	171,765
Goodwill	259,846	259,846
Derivative assets	28,943	52,691
Accrued interest receivable	64,087	60,355
Other assets	211,323	152,922
Total Assets	78,042,336	68,262,453
Liabilities:
Accounts payable, accrued expenses and other liabilities	212,006	217,663
Related-party payable	40,925	44,043
Dividends payable	137,427	133,466
Derivative liabilities	8,740	15,415
Secured financing agreements, net	8,906,048	8,683,565
Collateralized loan obligations, net	928,060
Unsecured senior notes, net	1,928,622	1,998,831
Secured borrowings on transferred loans, net		74,239
Total Liabilities	72,905,322	63,362,264
Starwood Property Trust, Inc. Stockholders' Equity:
Common stock	2,874	2,808
Additional paid-in capital	5,132,532	4,995,156
Treasury stock	(104,194)	(104,194)
Accumulated other comprehensive income (loss)	50,932	58,660	69,924	$ 36,138
Retained earnings (accumulated deficit)	(381,719)	(348,998)
Total Starwood Property Trust, Inc. Stockholders' Equity	4,700,425	4,603,432
Non-controlling interests in consolidated subsidiaries	436,589	296,757
Total Equity	5,137,014	4,900,189	$ 4,579,201	$ 4,560,073
Total Liabilities and Equity	78,042,336	68,262,453
Infrastructure Lending Segment
Assets:
Goodwill	119,400	119,400
Investing and Servicing Segment
Assets:
Goodwill	140,400	140,400
Operating Segments and Corporate
Assets:
Cash and cash equivalents	477,167	237,270
Restricted cash	95,643	248,041
Loans held-for-investment, net ($671,572 and $0 held at fair value)	10,586,074	8,532,356
Loans held-for-sale	884,150	1,187,552
Loans transferred as secured borrowings		74,346
Investment securities	2,215,275	2,110,508
Properties, net	2,266,440	2,784,890
Intangible assets	111,947	169,108
Investment in unconsolidated entities	104,966	193,765
Goodwill	259,846	259,846
Derivative assets	28,943	52,691
Accrued interest receivable	64,893	60,996
Other assets	211,330	152,948
Total Assets	17,306,674	16,064,317
Liabilities:
Accounts payable, accrued expenses and other liabilities	211,922	217,521
Related-party payable	40,925	44,043
Dividends payable	137,427	133,466
Derivative liabilities	8,740	15,415
Secured financing agreements, net	8,919,998	8,697,515
Collateralized loan obligations, net	928,060
Unsecured senior notes, net	1,928,622	1,998,831
Secured borrowings on transferred loans, net		74,239
Total Liabilities	12,175,694	11,181,030
Starwood Property Trust, Inc. Stockholders' Equity:
Common stock	2,874	2,808
Additional paid-in capital	5,132,532	4,995,156
Treasury stock	(104,194)	(104,194)
Accumulated other comprehensive income (loss)	50,932	58,660
Retained earnings (accumulated deficit)	(381,719)	(348,998)
Total Starwood Property Trust, Inc. Stockholders' Equity	4,700,425	4,603,432
Non-controlling interests in consolidated subsidiaries	430,555	279,855
Total Equity	5,130,980	4,883,287
Total Liabilities and Equity	17,306,674	16,064,317
Operating segment | Commercial and Residential Lending Segment
Assets:
Cash and cash equivalents	26,278	14,385
Restricted cash	36,135	28,324
Loans held-for-investment, net ($671,572 and $0 held at fair value)	9,187,332	7,072,220
Loans held-for-sale	605,384	670,155
Loans transferred as secured borrowings		74,346
Investment securities	992,974	1,050,920
Properties, net	26,834
Investment in unconsolidated entities	46,921	35,274
Derivative assets	14,718	18,174
Accrued interest receivable	45,996	39,862
Other assets	59,170	13,958
Total Assets	11,041,742	9,017,618
Liabilities:
Accounts payable, accrued expenses and other liabilities	30,594	26,508
Derivative liabilities	7,698	1,290
Secured financing agreements, net	5,038,876	4,405,599
Collateralized loan obligations, net	928,060
Secured borrowings on transferred loans, net		74,239
Total Liabilities	6,005,228	4,507,636
Starwood Property Trust, Inc. Stockholders' Equity:
Additional paid-in capital	1,522,360	1,430,503
Accumulated other comprehensive income (loss)	50,996	53,516
Retained earnings (accumulated deficit)	3,463,158	3,015,676
Total Starwood Property Trust, Inc. Stockholders' Equity	5,036,514	4,499,695
Non-controlling interests in consolidated subsidiaries		10,287
Total Equity	5,036,514	4,509,982
Total Liabilities and Equity	11,041,742	9,017,618
Operating segment | Infrastructure Lending Segment
Assets:
Cash and cash equivalents	2,209	13
Restricted cash	41,967	175,659
Loans held-for-investment, net ($671,572 and $0 held at fair value)	1,397,448	1,456,779
Loans held-for-sale	119,528	469,775
Investment securities	45,153	60,768
Investment in unconsolidated entities	25,862
Goodwill	119,409	119,409
Derivative assets	7	1,066
Accrued interest receivable	3,134	6,982
Other assets	6,101	20,472
Total Assets	1,760,818	2,310,923
Liabilities:
Accounts payable, accrued expenses and other liabilities	6,443	26,476
Derivative liabilities	750	477
Secured financing agreements, net	1,217,066	1,524,551
Total Liabilities	1,224,259	1,551,504
Starwood Property Trust, Inc. Stockholders' Equity:
Additional paid-in capital	529,668	761,992
Retained earnings (accumulated deficit)	6,891	(2,573)
Total Starwood Property Trust, Inc. Stockholders' Equity	536,559	759,419
Total Equity	536,559	759,419
Total Liabilities and Equity	1,760,818	2,310,923
Operating segment | Property Segment
Assets:
Cash and cash equivalents	30,123	27,408
Restricted cash	7,171	25,144
Properties, net	2,029,024	2,512,847
Intangible assets	47,303	90,889
Investment in unconsolidated entities		114,362
Derivative assets	3	32,733
Accrued interest receivable	133	359
Other assets	82,910	67,098
Total Assets	2,196,667	2,870,840
Liabilities:
Accounts payable, accrued expenses and other liabilities	48,370	67,415
Derivative liabilities		37
Secured financing agreements, net	1,698,334	1,884,187
Total Liabilities	1,746,704	1,951,639
Starwood Property Trust, Inc. Stockholders' Equity:
Additional paid-in capital	208,650	645,561
Accumulated other comprehensive income (loss)		5,208
Retained earnings (accumulated deficit)	5,431	13,570
Total Starwood Property Trust, Inc. Stockholders' Equity	214,081	664,339
Non-controlling interests in consolidated subsidiaries	235,882	254,862
Total Equity	449,963	919,201
Total Liabilities and Equity	2,196,667	2,870,840
Operating segment | Investing and Servicing Segment
Assets:
Cash and cash equivalents	61,693	31,449
Restricted cash	10,370	11,679
Loans held-for-investment, net ($671,572 and $0 held at fair value)	1,294	3,357
Loans held-for-sale	159,238	47,622
Investment securities	1,177,148	998,820
Properties, net	210,582	272,043
Intangible assets	64,644	78,219
Investment in unconsolidated entities	32,183	44,129
Goodwill	140,437	140,437
Derivative assets	7	718
Accrued interest receivable	2,388	616
Other assets	54,238	49,363
Total Assets	1,914,222	1,678,452
Liabilities:
Accounts payable, accrued expenses and other liabilities	73,021	75,655
Related-party payable	5	53
Derivative liabilities	292	1,423
Secured financing agreements, net	574,507	585,258
Total Liabilities	647,825	662,389
Starwood Property Trust, Inc. Stockholders' Equity:
Additional paid-in capital	(123,210)	87,779
Accumulated other comprehensive income (loss)	(64)	(64)
Retained earnings (accumulated deficit)	1,194,998	913,642
Total Starwood Property Trust, Inc. Stockholders' Equity	1,071,724	1,001,357
Non-controlling interests in consolidated subsidiaries	194,673	14,706
Total Equity	1,266,397	1,016,063
Total Liabilities and Equity	1,914,222	1,678,452
Corporate
Assets:
Cash and cash equivalents	356,864	164,015
Restricted cash		7,235
Derivative assets	14,208
Accrued interest receivable	13,242	13,177
Other assets	8,911	2,057
Total Assets	393,225	186,484
Liabilities:
Accounts payable, accrued expenses and other liabilities	53,494	21,467
Related-party payable	40,920	43,990
Dividends payable	137,427	133,466
Derivative liabilities		12,188
Secured financing agreements, net	391,215	297,920
Unsecured senior notes, net	1,928,622	1,998,831
Total Liabilities	2,551,678	2,507,862
Starwood Property Trust, Inc. Stockholders' Equity:
Common stock	2,874	2,808
Additional paid-in capital	2,995,064	2,069,321
Treasury stock	(104,194)	(104,194)
Retained earnings (accumulated deficit)	(5,052,197)	(4,289,313)
Total Starwood Property Trust, Inc. Stockholders' Equity	(2,158,453)	(2,321,378)
Total Equity	(2,158,453)	(2,321,378)
Total Liabilities and Equity	393,225	186,484
LNR VIEs
Assets:
Cash and cash equivalents	1,221	2,554
Investment securities	(1,405,037)	(1,204,040)
Intangible assets	(26,247)	(24,075)
Investment in unconsolidated entities	(20,637)	(22,000)
Accrued interest receivable	(806)	(641)
Other assets	(7)	(26)
Total Assets	60,735,662	52,198,136
Liabilities:
Accounts payable, accrued expenses and other liabilities	84	142
Secured financing agreements, net	(13,950)	(13,950)
Total Liabilities	60,729,628	52,181,234
Starwood Property Trust, Inc. Stockholders' Equity:
Non-controlling interests in consolidated subsidiaries	6,034	16,902
Total Equity	6,034	16,902
Total Liabilities and Equity	60,735,662	52,198,136
Primary beneficiary
Assets:
Total Assets	62,187,175	53,446,364
Liabilities:
Total Liabilities	60,743,494	52,195,042
Primary beneficiary | LNR VIEs
Assets:
Total Assets	62,187,175	53,446,364
Liabilities:
Total Liabilities	$ 60,743,494	$ 52,195,042

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Investment Securities (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of investment securities

Investment securities were comprised of the following as of December 31, 2019 and 2018 (amounts in thousands):

	Carrying Value as of
	December 31, 2019		December 31, 2018
RMBS, available-for-sale	$	189,576	$	209,079
RMBS, fair value option (1)		147,034		87,879
CMBS, fair value option (1), (2)		1,295,363		1,157,508
Held-to-maturity (“HTM”) debt securities, amortized cost		570,638		644,149
Equity security, fair value		12,664		11,893
Subtotal—Investment securities		2,215,275		2,110,508
VIE eliminations (1)		(1,405,037)		(1,204,040)
Total investment securities	$	810,238	$	906,468

(1) Certain fair value option CMBS and RMBS are eliminated in consolidation against VIE liabilities pursuant to ASC 810.

(2) Includes $186.6 million and $8.4 million of non-controlling interests in the consolidated entities which hold certain of these CMBS as of December 31, 2019 and 2018, respectively.

Schedule of purchases, sales and principal collections for all investment securities

Purchases, sales and principal collections for all investment securities were as follows (amounts in thousands):

	RMBS,		RMBS, fair		CMBS, fair		HTM		Equity		Securitization
	available-for-sale		value option		value option		Securities		Security		VIEs (1)		Total
Year Ended December 31, 2019
Purchases	$	—	$	120,103	$	238,213	$	91,162	$	—	$	(351,220)	$	98,258
Sales		—		41,501		150,365		—		—		(184,540)		7,326
Principal collections		26,929		16,500		40,490		167,383		—		(45,642)		205,660
Year Ended December 31, 2018
Purchases	$	—	$	90,982	$	323,071	$	463,810	$	—	$	(385,463)	$	492,400
Acquisition of Infrastructure Lending Portfolio		—		—		—		65,060		—		—		65,060
Sales		13,264		—		105,637		—		—		(102,474)		16,427
Principal collections		34,763		1,439		114,545		327,207		—		(95,030)		382,924
Year Ended December 31, 2017
Purchases	$	7,433	$	—	$	125,776	$	79,163	$	—	$	(113,978)	$	98,394
Sales		—		—		37,184		—		—		(25,605)		11,579
Principal collections		40,635		—		109,354		182,919		—		(100,115)		232,793

(1) Represents RMBS and CMBS, fair value option amounts eliminated due to our consolidation of securitization VIEs. These amounts are reflected as repayment of debt of consolidated VIEs in our consolidated statements of cash flows.

Summary of investments in available-for-sale RMBS

The tables below summarize various attributes of our investments in available-for-sale RMBS as of December 31, 2019 and 2018 (amounts in thousands):

							Unrealized Gains or (Losses)
							Recognized in AOCI
	Purchase				Recorded				Gross		Gross		Net
	Amortized		Credit		Amortized		Non-Credit		Unrealized		Unrealized		Fair Value
	Cost		OTTI		Cost		OTTI		Gains		Losses		Adjustment		Fair Value
December 31, 2019
RMBS	$	148,385	$	(9,805)	$	138,580	$	(314)	$	51,310	$	—	$	50,996	$	189,576
December 31, 2018
RMBS	$	165,461	$	(9,897)	$	155,564	$	(31)	$	53,546	$	—	$	53,515	$	209,079

	Weighted Average Coupon (1)		Weighted Average Rating	WAL  (Years) (2)
December 31, 2019
RMBS	3.1	%	BB-	5.6
December 31, 2018
RMBS	3.7	%	CCC-	6.0

(1) Calculated using the December 31, 2019 and 2018 one-month LIBOR rate of 1.763% and 2.503%, respectively, for floating rate securities.

(2) Represents the remaining WAL of each respective group of securities as of the respective balance sheet date. The WAL of each individual security is calculated using projected amounts and projected timing of future principal payments.

Reconciliation of aggregate principal balance to amortized cost for RMBS and single-borrower CMBS, excluding CMBS where the fair value option is elected

The following table contains a reconciliation of aggregate principal balance to amortized cost for our RMBS as of December 31, 2019 and 2018 (amounts in thousands):

	December 31, 2019		December 31, 2018
Principal balance	$	278,853	$	309,497
Accretable yield		(56,108)		(54,779)
Non-accretable difference		(84,165)		(99,154)
Total discount		(140,273)		(153,933)
Amortized cost	$	138,580	$	155,564

Schedule of changes to accretable yield and non-accretable difference for RMBS and single-borrower CMBS, excluding CMBS where the fair value option is elected

The following table discloses the changes to accretable yield and non-accretable difference for our RMBS during the years ended December 31, 2019 and 2018 (amounts in thousands):

			Non-Accretable
	Accretable Yield		Difference
Balance as of January 1, 2018	$	55,712	$	121,867
Accretion of discount		(10,932)		—
Principal write-downs, net		—		(3,682)
Sales		(9,032)		—
Transfer to/from non-accretable difference		19,031		(19,031)
Balance as of December 31, 2018		54,779		99,154
Accretion of discount		(9,945)		—
Principal write-downs, net		—		(3,715)
Transfer to/from non-accretable difference		11,274		(11,274)
Balance as of December 31, 2019	$	56,108	$	84,165

Schedule of gross unrealized losses and estimated fair value of securities in an unrealized loss position, excluding CMBS where the fair value option is elected

The following table presents the gross unrealized losses and estimated fair value of any available-for-sale securities that were in an unrealized loss position as of December 31, 2019 and 2018, and for which OTTIs (full or partial) have not been recognized in earnings (amounts in thousands):

	Estimated Fair Value				Unrealized Losses
	Securities with a		Securities with a		Securities with a		Securities with a
	loss less than		loss greater than		loss less than		loss greater than
	12 months		12 months		12 months		12 months
As of December 31, 2019
RMBS	$	—	$	1,380	$	—	$	(314)
As of December 31, 2018
RMBS	$	2,148	$	—	$	(31)	$	—

Held-to-maturity

Summary of investments in HTM securities

The table below summarizes unrealized gains and losses of our investments in HTM debt securities as of December 31, 2019 and 2018 (amounts in thousands):

	Net Carrying Amount		Gross Unrealized		Gross Unrealized
	(Amortized Cost)		Holding Gains		Holding Losses		Fair Value
December 31, 2019
CMBS	$	383,473	$	946	$	(3,001)	$	381,418
Preferred interests		142,012		1,148		(353)		142,807
Infrastructure bonds		45,153		—		(651)		44,502
Total	$	570,638	$	2,094	$	(4,005)	$	568,727
December 31, 2018
CMBS	$	408,556	$	2,435	$	(3,349)	$	407,642
Preferred interests		174,825		703		—		175,528
Infrastructure bonds		60,768		178		(168)		60,778
Total	$	644,149	$	3,316	$	(3,517)	$	643,948

Summary of maturities of preferred equity interests in limited liability companies that own commercial real estate

The table below summarizes the maturities of our HTM debt securities by type as of December 31, 2019 (amounts in thousands):

			Preferred		Infrastructure
	CMBS		Interests		Bonds		Total
Less than one year	$	284,251	$	—	$	5,371	$	289,622
One to three years		99,222		141,659		—		240,881
Three to five years		—		353		—		353
Thereafter		—		—		39,782		39,782
Total	$	383,473	$	142,012	$	45,153	$	570,638

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Loans - Held for Investment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Investments in loans
Total gross loans	$ 11,503,835	$ 9,833,405
Loan loss allowance (loans held-for-investment)	(33,611)	(39,151)	$ (4,330)	$ (9,788)
Carrying amount of commercial loans		47,622
Carrying Value	11,470,224	9,794,254	7,382,641	$ 5,946,274
Carrying Value	11,470,224	9,794,254
Total distributions received from residual profit participation	0
Proceeds from borrowings	10,167,339	9,412,715	6,273,600
Payment of debt	8,671,085	6,360,610	$ 4,586,509
Face Amount	11,530,915	9,876,545
Loans with variable rates of interest	$ 9,427,947
Weighted average spread of loans (as a percent)	4.20%
Total loans held-for-investment
Investments in loans
Total gross loans	$ 10,619,489	8,571,507
Face Amount	10,661,865	8,610,457
Loans held-for-sale
Investments in loans
Total gross loans	884,346	1,187,552
Loans held-for-sale, residential
Investments in loans
Total gross loans	605,384	623,660
Face Amount	$ 587,144	$ 609,571
Weighted Average Life	3 years 10 months 24 days	6 years 7 months 6 days
Loans held-for-sale, residential | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)	6.20%	6.30%
Loans held-for-sale, commercial
Investments in loans
Total gross loans	$ 159,238	$ 94,117
Face Amount	$ 160,635	$ 94,916
Weighted Average Life	10 years	6 years 2 months 12 days
Loans held-for-sale, commercial | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)	3.90%	5.40%
Loans Held For Sale Infrastructure
Investments in loans
Total gross loans	$ 119,724	$ 469,775
Face Amount	$ 121,271	$ 486,909
Weighted Average Life	2 years 1 month 6 days	3 months 18 days
Loans Held For Sale Infrastructure | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)	3.30%	3.50%
Loans transferred as secured borrowings
Investments in loans
Total gross loans		$ 74,346
Face Amount		$ 74,692
Weighted Average Life		1 year 3 months 18 days
Loans transferred as secured borrowings | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)		7.10%
First mortgage loan participation | Total loans held-for-investment
Investments in loans
Total gross loans	$ 7,928,026	$ 6,607,117
Face Amount	$ 7,962,788	$ 6,631,236
Weighted Average Life	2 years	2 years
First mortgage loan participation | Total loans held-for-investment | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)	5.80%	6.90%
First priority infrastructure receivables
Investments in loans
Loans with variable rates of interest	$ 1,397,448
Weighted average spread of loans (as a percent)	3.80%
First priority infrastructure receivables | Total loans held-for-investment
Investments in loans
Total gross loans	$ 1,397,448	$ 1,456,779
Face Amount	$ 1,416,164	$ 1,465,828
Weighted Average Life	4 years 10 months 24 days	4 years 6 months
First priority infrastructure receivables | Total loans held-for-investment | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)	5.60%	5.70%
Mortgage, Residual Profit Participation | Retail and Hospitality Property
Investments in loans
Total distributions received from residual profit participation		$ 15,100
Subordinated mortgages | Total loans held-for-investment
Investments in loans
Total gross loans	$ 75,724	52,778
Face Amount	$ 77,055	$ 53,996
Weighted Average Life	3 years 4 months 24 days	3 years 8 months 12 days
Subordinated mortgages | Total loans held-for-investment | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)	8.80%	8.90%
Mezzanine Loans
Investments in loans
Carrying Value	$ 967,000,000	$ 1,000
Mezzanine Loans | Total loans held-for-investment
Investments in loans
Total gross loans	484,164	393,832
Face Amount	$ 484,408	$ 394,739
Weighted Average Life	1 year 10 months 24 days	2 years
Mezzanine Loans | Total loans held-for-investment | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)	11.00%	10.60%
Residential loans, fair value option
Investments in loans
Reclassification to held for investment	$ 340,900
Residential loans, fair value option | Total loans held-for-investment
Investments in loans
Total gross loans	671,572
Face Amount	$ 654,925
Weighted Average Life	3 years 9 months 18 days
Residential loans, fair value option | Total loans held-for-investment | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)	6.10%
Other
Investments in loans
Total gross loans	$ 62,555	$ 61,001
Face Amount	$ 66,525	$ 64,658
Weighted Average Life	1 year 7 months 6 days	2 years 6 months
Other | Weighted-average
Investments in loans
Weighted Average Coupon (as a percent)	8.20%	8.20%

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Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	1 Months Ended	3 Months Ended								12 Months Ended
	Jul. 31, 2019	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Continuing Operations:
Basic - Income attributable to STWD common stockholders										$ 509,664	$ 385,830	$ 400,770
Less: Income attributable to participating shares not already deducted as non-controlling interests										(3,873)	(3,592)	(3,183)
Basic earnings										505,791	382,238	397,587
Continuing Operations:
Basic - Income attributable to STWD common stockholders										509,664	385,830	400,770
Less: Income attributable to participating shares not already deducted as non-controlling interests										(3,873)	(3,592)	(3,183)
Add: Loss on extinguishment of debt	$ (1,500)									19,270	5,808	5,915
Diluted earnings										$ 518,145	$ 409,485	$ 397,587
Number of Shares:
Basic - Average shares outstanding										279,337	265,279	259,620
Effect of dilutive securities - Contingently issuable shares (in shares)										360	546	508
Effect of dilutive securities - Unvested non-participating shares										210		52
Diluted - Average shares outstanding										289,712	288,484	262,079
Basic:
Basic (in dollars per share)		$ 0.61	$ 0.50	$ 0.45	$ 0.25	$ 0.33	$ 0.31	$ 0.41	$ 0.38	$ 1.81	$ 1.44	$ 1.53
Diluted:
Diluted (in dollars per share)		$ 0.60	$ 0.49	$ 0.45	$ 0.25	$ 0.33	$ 0.31	$ 0.40	$ 0.38	$ 1.79	$ 1.42	$ 1.52
Convertible Senior Notes
Continuing Operations:
Add: Loss on extinguishment of debt											$ 2,099
Number of Shares:
Effect of dilutive securities - Convertible Notes (in shares)										9,805	22,659	1,899

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Fair Value - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Assets and liabilities measured at fair value
Permitted reinvestment under static investment in VIEs	$ 0
Marketable securities	810,238	$ 906,468
Domestic servicing rights	16,917	20,557
Derivative assets	28,943	52,691
Total Assets	78,042,336	68,262,453
Total Liabilities	72,905,322	63,362,264
Derivative liabilities	8,740	15,415
Fair value measurements on recurring basis
Assets and liabilities measured at fair value
Derivative assets		52,691
Total Assets	63,908,829	54,453,213
Derivative liabilities	8,740	15,415
Total Liabilities	60,752,234	52,210,457
Fair value measurements on recurring basis | Loans held-for-sale
Assets and liabilities measured at fair value
Loans held-for-sale, fair value option	1,436,194	671,282
Fair value measurements on recurring basis | RMBS
Assets and liabilities measured at fair value
Available-for-sale securities	189,576	209,079
Fair value measurements on recurring basis | CMBS
Assets and liabilities measured at fair value
Available-for-sale securities	37,360	41,347
Fair value measurements on recurring basis | Equity security
Assets and liabilities measured at fair value
Marketable securities	12,664	11,893
Fair value measurements on recurring basis | Domestic Servicing Rights
Assets and liabilities measured at fair value
Domestic servicing rights	16,917	20,557
Fair value measurements on recurring basis | Level I
Assets and liabilities measured at fair value
Total Assets	12,664	11,893
Fair value measurements on recurring basis | Level I | Equity security
Assets and liabilities measured at fair value
Marketable securities	12,664	11,893
Fair value measurements on recurring basis | Level II
Assets and liabilities measured at fair value
Derivative assets		52,691
Total Assets	41,295	68,810
Derivative liabilities	8,740	15,415
Total Liabilities	58,214,842	50,769,011
Fair value measurements on recurring basis | Level II | CMBS
Assets and liabilities measured at fair value
Available-for-sale securities	12,352	16,119
Fair value measurements on recurring basis | Level III
Assets and liabilities measured at fair value
Total Assets	63,854,870	54,372,510
Total Liabilities	2,537,392	1,441,446
Fair value measurements on recurring basis | Level III | Loans held-for-sale
Assets and liabilities measured at fair value
Loans held-for-sale, fair value option	1,436,194	671,282
Fair value measurements on recurring basis | Level III | RMBS
Assets and liabilities measured at fair value
Available-for-sale securities	189,576	209,079
Fair value measurements on recurring basis | Level III | CMBS
Assets and liabilities measured at fair value
Available-for-sale securities	25,008	25,228
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights
Assets and liabilities measured at fair value
Domestic servicing rights	16,917	20,557
Primary beneficiary
Assets and liabilities measured at fair value
Total Assets	62,187,175	53,446,364
Total Liabilities	60,743,494	52,195,042
Primary beneficiary | Fair value measurements on recurring basis
Assets and liabilities measured at fair value
Derivative assets	28,943
Total Assets	62,187,175	53,446,364
Total Liabilities	60,743,494	52,195,042
Primary beneficiary | Fair value measurements on recurring basis | Level II
Assets and liabilities measured at fair value
Derivative assets	28,943
Total Liabilities	58,206,102	50,753,596
Primary beneficiary | Fair value measurements on recurring basis | Level III
Assets and liabilities measured at fair value
Total Assets	62,187,175	53,446,364
Total Liabilities	$ 2,537,392	$ 1,441,446

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Investment Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Investment Securities
Investment securities				$ 810,238	$ 906,468
Purchases	$ 98,258	$ 492,400	$ 98,394
Acquisition of Infrastructure Lending Portfolio		65,060
Sales	7,326	16,427	11,579
Principal collections	205,660	382,924	232,793
VIE eliminations
Investment Securities
Purchases	(351,220)	(385,463)	(113,978)
Sales	(184,540)	(102,474)	(25,605)
Principal collections	(45,642)	(95,030)	(100,115)
Before consolidation of securitization VIEs
Investment Securities
Investment securities				2,215,275	2,110,508
Fair value option | VIE eliminations
Investment Securities
Investment securities				(1,405,037)	(1,204,040)
Held-to-maturity
Investment Securities
Purchases	91,162	463,810	79,163
Acquisition of Infrastructure Lending Portfolio		65,060
Principal collections	167,383	327,207	182,919
Held-to-maturity | Before consolidation of securitization VIEs
Investment Securities
Investment securities				570,638	644,149
RMBS | Available-for-sale
Investment Securities
Purchases			7,433
Sales		13,264
Principal collections	26,929	34,763	40,635
Purchase Amortized Cost				148,385	165,461
Credit OTTI				(9,805)	(9,897)
Recorded Amortized Cost				138,580	155,564
Non-Credit OTTI				(314)	(31)
Gross Unrealized Gains				51,310	53,546
Net Fair Value Adjustment				50,996	53,515
Fair Value				189,576	209,079
Portion of securities with variable rate				$ 160,900	$ 177,400
Portion of securities with variable rate (as a percent)				84.90%	84.90%
Principal balance				$ 278,853	$ 309,497
Accretable yield	(54,779)	(55,712)	(55,712)	(56,108)	(54,779)
Non-accretable difference				(84,165)	(99,154)
Total discount				(140,273)	(153,933)
Amortized cost				138,580	155,564
Credit deteriorated RMBS				263,700	290,800
Accretable yield related to credit deteriorated RMBS				$ 50,300	$ 49,500
Changes to accretable yield
Balance at the beginning of the period	54,779	55,712
Accretion of discount	(9,945)	(10,932)
Sales		(9,032)
Transfer to/from non-accretable difference	11,274	19,031
Balance at the end of the period	56,108	54,779	55,712
Changes to non accretable difference
Balance at the beginning of the period	99,154	121,867
Principal write-downs, net	(3,715)	(3,682)
Transfer to/from non-accretable difference	(11,274)	(19,031)
Balance at the end of the period	84,165	99,154	121,867
Cost of third party management	1,500	1,800	1,900
Proceeds from sale of securities	$ 0	13,300	0
Realized gain on sale of securities		$ 3,500
RMBS | Available-for-sale | LIBOR
Investment Securities
Variable rate, weighted average spread (as a percent)	1.24%	1.22%
RMBS | Available-for-sale | One-month LIBOR
Investment Securities
Effective variable rate basis (as a percent)				1.763%	2.503%
RMBS | Available-for-sale | B
Investment Securities
Weighted Average Coupon (as a percent)					3.70%
WAL (Years)		6 years
RMBS | Available-for-sale | CCC-
Investment Securities
Weighted Average Coupon (as a percent)				3.10%
WAL (Years)	5 years 7 months 6 days
RMBS | Available-for-sale | Before consolidation of securitization VIEs
Investment Securities
Investment securities				$ 189,576	$ 209,079
RMBS | Fair value option
Investment Securities
Purchases	$ 120,103	$ 90,982
Sales	41,501
Principal collections	16,500	1,439
Portion of securities with variable rate				0
RMBS | Fair value option | Before consolidation of securitization VIEs
Investment Securities
Investment securities				147,034	87,879
CMBS
Investment Securities
Amount not rated				186,600	8,400
CMBS | Fair value option
Investment Securities
Purchases	238,213	323,071	125,776
Sales	150,365	105,637	37,184
Principal collections	$ 40,490	$ 114,545	$ 109,354
Portion of securities with variable rate				118,200
CMBS | Fair value option | Before consolidation of securitization VIEs
Investment Securities
Investment securities				1,295,363	1,157,508
Equity security | Fair value option | Before consolidation of securitization VIEs
Investment Securities
Investment securities				12,664	11,893
Infrastructure bonds
Investment Securities
Principal balance				32,800	34,200
Non-accretable difference				(13,000)
Amortized cost				$ 19,800	$ 21,200

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Derivatives and Hedging Activity

12 Months Ended

Dec. 31, 2019

Derivatives and Hedging Activity

Derivatives and Hedging Activity

13. Derivatives and Hedging Activity

Risk Management Objective of Using Derivatives

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, foreign exchange, liquidity and credit risk primarily by managing the amount, sources and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates, credit spreads, and foreign exchange rates. Our derivative financial instruments are used to manage differences in the amount, timing and duration of the known or expected cash receipts and known or expected cash payments principally related to our investments, anticipated level of loan sales, and borrowings.

Designated Hedges

The Company does not generally elect to apply the hedge accounting designation to its hedging instruments. As of December 31, 2019 and 2018, the Company did not have any designated hedges. Additionally, during the years ended December 31, 2019, 2018 and 2017 the impact of cash flow hedges on our net income was not material, and we did not recognize any hedge ineffectiveness in earnings associated with these cash flow hedges.

Non-designated Hedges and Derivatives

Derivatives not designated as hedges are derivatives that do not meet the criteria for hedge accounting under GAAP or which we have not elected to designate as hedges. We do not use these derivatives for speculative purposes but instead they are used to manage our exposure to various risks such as foreign exchange rates, interest rate changes and certain credit spreads. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in gain (loss) on derivative financial instruments in our consolidated statements of operations.

We have entered into the following types of non-designated hedges and derivatives:

● Foreign exchange (“Fx”) forwards whereby we agree to buy or sell a specified amount of foreign currency for a specified amount of USD at a future date, economically fixing the USD amounts of foreign denominated cash flows we expect to receive or pay related to certain foreign denominated loan investments and properties;

● Interest rate contracts which hedge a portion of our exposure to changes in interest rates;

● Credit index instruments which hedge a portion of our exposure to the credit risk of our commercial loans held-for-sale; and

● Interest rate swap guarantees whereby we guarantee the interest rate swap obligations of certain Infrastructure Lending borrowers. Our interest rate swap guarantees were assumed in connection with the acquisition of the Infrastructure Lending Segment.

The following table summarizes our non-designated derivatives as of December 31, 2019 (notional amounts in thousands):

Type of Derivative	Number of Contracts	Aggregate Notional Amount	Notional Currency	Maturity
Fx contracts – Sell Euros ("EUR")	168	199,183	EUR	January 2020 – June 2023
Fx contracts – Sell Pounds Sterling ("GBP")	93	444,236	GBP	January 2020 – December 2023
Fx contracts – Sell Australian dollar ("AUD")	4	25,850	AUD	March 2020 – November 2021
Interest rate swaps – Paying fixed rates	37	1,299,466	USD	July 2022 – January 2030
Interest rate swaps – Receiving fixed rates	2	970,000	USD	January 2021- March 2025
Interest rate caps	12	742,299	USD	January 2020 – August 2023
Credit index instruments	5	89,000	USD	November 2054 – August 2061
Interest rate swap guarantees	6	394,671	USD	March 2022 – June 2025
Interest rate swap guarantees	1	9,390	GBP	December 2024
Total	328

The table below presents the fair value of our derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2019 and 2018 (amounts in thousands):

	Fair Value of Derivatives				Fair Value of Derivatives
	in an Asset Position (1)				in a Liability Position (2)
	as of December 31,				as of December 31,
	2019		2018		2019		2018
Interest rate contracts		14,385		30,791		—		14,457
Interest rate swap guarantees		—		—		614		396
Foreign exchange contracts		14,558		21,346		7,834		562
Credit index instruments		—		554		292		—
Total derivatives	$	28,943	$	52,691	$	8,740	$	15,415

(1) Classified as derivative assets in our consolidated balance sheets.

(2) Classified as derivative liabilities in our consolidated balance sheets.

The tables below present the effect of our derivative financial instruments on the consolidated statements of operations and of comprehensive income for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):

a
		Amount of Gain (Loss)
		Recognized in Income for the
Derivatives Not Designated	Location of Gain (Loss)	Year Ended December 31,
as Hedging Instruments	Recognized in Income	2019		2018		2017
Interest rate contracts	(Loss) gain on derivative financial instruments	$	(10,516)	$	(1,593)	$	(5,165)
Interest rate swap guarantees	(Loss) gain on derivative financial instruments		(3,350)		(114)		—
Foreign exchange contracts	(Loss) gain on derivative financial instruments		8,801		36,040		(65,645)
Credit index instruments	(Loss) gain on derivative financial instruments		(1,245)		270		(1,722)
		$	(6,310)	$	34,603	$	(72,532)

			Gain
	Gain		Reclassified
	Recognized		from AOCI		Gain Recognized
Derivatives Designated as Hedging Instruments	in OCI		into Income		in Income		Location of Gain
For the Year Ended December 31,	(effective portion)		(effective portion)		(ineffective portion)		Recognized in Income
2019	$	—	$	—	$	—	Interest expense
2018	$	8	$	33	$	—	Interest expense
2017	$	54	$	3	$	—	Interest expense

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Stockholders' Equity and Non-Controlling Interests

12 Months Ended

Dec. 31, 2019

Stockholders' Equity and Non-Controlling Interests

Stockholders' Equity and Non-Controlling Interests

17. Stockholders’ Equity and Non-Controlling Interests

The Company’s authorized capital stock consists of 100,000,000 shares of preferred stock, $0.01 par value per share, and 500,000,000 shares of common stock, $0.01 par value per share.

In May 2014, we established the Starwood Property Trust, Inc. Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”), which provides stockholders with a means of purchasing additional shares of our common stock by reinvesting the cash dividends paid on our common stock and by making additional optional cash purchases. Shares of our common stock purchased under the DRIP Plan will either be issued directly by the Company or purchased in the open market by the plan administrator. The Company may issue up to 11.0 million shares of common stock under the DRIP Plan. During the years ended December 31, 2019, 2018 and 2017, shares issued under the DRIP Plan were not material.

In May 2014, we entered into an amended and restated At-The-Market Equity Offering Sales Agreement (the “ATM Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated to sell shares of the Company’s common stock of up to $500.0 million from time to time, through an “at the market” equity offering program. Sales of shares under the ATM Agreement are made by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale or at negotiated prices. During the years ended December 31, 2019, 2018 and 2017, there were no shares issued under the ATM Agreement.

In September 2014, our board of directors authorized and announced the repurchase of up to $250 million of our outstanding common stock over a period of one year. Subsequent amendments to the repurchase program approved by our board of directors in December 2014, June 2015, January 2016 and February 2017 resulted in the program being (i) amended to increase maximum repurchases to $500.0 million, (ii) expanded to allow for the repurchase of our outstanding Convertible Notes under the program and (iii) extended through January 2019. Purchases made pursuant to the program were made in either the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases were discretionary and subject to economic and market conditions, stock price, applicable legal requirements and other factors. There were no Convertible Note or common stock repurchases under the repurchase program during the years ended December 31, 2019 and 2017. During the year ended December 31, 2018, we repurchased 573,255 shares of common stock for $12.1 million and there were no Convertible Notes repurchases under our repurchase program. The repurchase program expired in January 2019.

During the years ended December 31, 2019 and 2018, we issued 3.6 million shares and 12.4 million shares, respectively, in connection with the settlement of $78.0 million and $263.4 million, respectively, of our 2019 Notes. Refer to Note 11 for further discussion.

Our board of directors declared the following dividends during the years ended December 31 2019, 2018 and 2017:

Declaration Date	Record Date	Ex-Dividend Date	Payment Date	Amount		Frequency
11/8/19	12/31/19	12/30/19	1/15/20	$	0.48	Quarterly
8/7/19	9/30/19	9/27/19	10/15/19		0.48	Quarterly
5/8/19	6/28/19	6/27/19	7/15/19		0.48	Quarterly
2/28/19	3/29/19	3/28/19	4/15/19		0.48	Quarterly
11/9/18	12/31/18	12/28/18	1/15/19		0.48	Quarterly
8/8/18	9/28/18	9/27/18	10/15/18		0.48	Quarterly
5/4/18	6/29/18	6/28/18	7/13/18		0.48	Quarterly
2/28/18	3/30/18	3/28/18	4/13/18		0.48	Quarterly
11/8/17	12/29/17	12/28/17	1/12/18		0.48	Quarterly
8/9/17	9/29/17	9/28/17	10/13/17		0.48	Quarterly
5/9/17	6/30/17	6/28/17	7/14/17		0.48	Quarterly
2/23/17	3/31/17	3/29/17	4/14/17		0.48	Quarterly

Equity Incentive Plans

In May 2017, the Company’s shareholders approved the 2017 Manager Equity Plan and the Starwood Property Trust, Inc. 2017 Equity Plan (the “2017 Equity Plan”), which allow for the issuance of up to 11,000,000 stock options, stock appreciation rights, RSAs, RSUs or other equity-based awards or any combination thereof to the Manager, directors, employees, consultants or any other party providing services to the Company. The 2017 Manager Equity Plan succeeds and replaces the Manager Equity Plan and the 2017 Equity Plan succeeds and replaces the Starwood Property Trust, Inc. Equity Plan (the “Equity Plan”) and the Starwood Property Trust, Inc. Non-Executive Director Stock Plan (the “Non-Executive Director Stock Plan”). As of December 31, 2019, 7,498,820 share awards were available to be issued under either the 2017 Manager Equity Plan or the 2017 Equity Plan, determined on a combined basis.

To date, we have only granted RSAs and RSUs under the equity incentive plans. The holders of awards of RSAs or RSUs are entitled to receive dividends or “distribution equivalents” beginning on either the award’s grant date or vest date, depending on the terms of the award.

The table below summarizes our share awards granted or vested under the Manager Equity Plan and the 2017 Manager Equity Plan during the years ended December 31, 2019, 2018 and 2017 (dollar amounts in thousands):

Grant Date	Type	Amount Granted	Grant Date Fair Value		Vesting Period
September 2019	RSU	1,200,000	$	29,484	(1)
April 2018	RSU	775,000		16,329	3 years
March 2017	RSU	1,000,000		22,240	3 years
May 2015	RSU	675,000		16,511	3 years
January 2014	RSU	489,281		14,776	3 years
January 2014	RSU	2,000,000		55,420	3 years

(1) Of the amount granted, 218,898 vested immediately on the grant date and the remaining amount vests over a three-year period.

During the years ended December 31, 2019, 2018 and 2017, we granted 520,236, 851,170 and 742,516 RSAs, respectively, under the Equity Plan and the 2017 Equity Plan to a select group of eligible participants which includes our employees, directors and employees of our Manager who perform services for us. The awards were granted based on the market price of the Company’s common stock on the respective grant date and generally vest over a three-year period. Expenses related to the vesting of these awards are reflected in general and administrative expenses in our consolidated statements of operations. No RSUs were granted under the Equity Plan and the 2017 Equity Plan during the years ended December 31, 2019, 2018 and 2017.

The following shares of common stock were issued, without restriction, to our Manager as part of the incentive compensation due under the Management Agreement during the years ended December 31, 2019, 2018 and 2017:

Timing of Issuance	Shares of Common Stock Issued	Price per share
November 2019	38,942	$	24.08
March 2019	495,363		22.16
November 2018	98,026		21.94
August 2018	131,179		21.67
May 2018	224,071		21.49
March 2018	545,641		20.13
November 2017	239,757		21.64
August 2017	98,061		22.10
May 2017	123,478		21.83
February 2017	418,016		22.84

The following table summarizes our share-based compensation expenses during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	For the year ended December 31,
	2019		2018		2017
Management fees:
Manager incentive fee	$	10,082	$	20,700	$	21,072
2017 Manager Equity Plan (1)		20,255		12,573		10,423
		30,337		33,273		31,495
General and administrative:
2017 Equity Plan (1)		15,900		10,185		7,728
		15,900		10,185		7,728
Total share-based compensation expense (2)	$	46,237	$	43,458	$	39,223

(1)Share-based compensation expense relating to the Manager Equity Plan is reflected within the 2017 Manager Equity Plan. Share-based compensation expense relating to the Non-Executive Director Stock Plan and the Equity Plan are reflected within the 2017 Equity Plan.

(2)The income tax benefit associated with the share-based compensation expense for the years ended December 31, 2019 and 2018 was $1.7 million and $1.3 million, respectively.

Schedule of Non-Vested Shares and Share Equivalents (1)

		2017		Weighted Average
	2017	Manager		Grant Date Fair
	Equity Plan	Equity Plan	Total	Value (per share)
Balance as of January 1, 2019	1,436,445	997,920	2,434,365	$	21.52
Granted	520,236	1,200,000	1,720,236		24.01
Vested	(518,298)	(892,323)	(1,410,621)		22.20
Forfeited	(25,213)	—	(25,213)		21.84
Balance as of December 31, 2019	1,413,170	1,305,597	2,718,767		22.74

(1) Equity-based award activity for awards granted under the Equity Plan and Non-Executive Director Stock Plan is reflected within the 2017 Equity Plan column, and for awards granted under the Manager Equity Plan, within the 2017 Manager Equity Plan column.

The weighted average grant date fair value per share of grants during the years ended December 31, 2019, 2018 and 2017 was $24.01, $21.20 and $22.20, respectively.

Vesting Schedule

	2017 Equity	2017 Manager
	Plan	Equity Plan	Total
2020	799,039	668,701	1,467,740
2021	440,173	391,619	831,792
2022	173,958	245,277	419,235
Total	1,413,170	1,305,597	2,718,767

As of December 31, 2019, there was approximately $49.3 million of total unrecognized compensation costs related to unvested share-based compensation arrangements which are expected to be recognized over a weighted average period of 2.0 years. The total fair value of shares vested during the years ended December 31, 2019, 2018 and 2017 were $33.2 million, $18.3 million and $18.3 million, respectively, as of the respective vesting dates.

Non-Controlling Interests in Consolidated Subsidiaries

As discussed in Note 3, in connection with our Woodstar II Portfolio acquisitions, we issued 10.2 million Class A Units in SPT Dolphin and rights to receive an additional 1.9 million Class A Units if certain contingent events occur. During the years ended December 31, 2019 and 2018, we issued 0.1 million and 1.7 million, respectively, of the total 1.9 million contingent Class A Units to the Contributors. The Class A Units are redeemable for consideration equal to the current share price of the Company’s common stock on a one-for-one basis, with the consideration paid in either cash or the Company’s common stock, at the determination of the Company. During the year ended December 31, 2019, redemptions of 1.0 million of the Class A Units were received and settled in common stock. No Class A Units were redeemed during the year ended December 31, 2018. In consolidation, the outstanding Class A Units are reflected as non-controlling interests in consolidated subsidiaries on our consolidated balance sheets, the balance of which was $235.9 million and $254.9 million as of December 31, 2019 and 2018, respectively.

To the extent SPT Dolphin has sufficient cash available, the Class A Units earn a preferred return indexed to the dividend rate of the Company’s common stock. Any distributions made pursuant to this waterfall are recognized within net income attributable to non-controlling interests in our consolidated statements of operations. During the years ended December 31, 2019 and 2018, we recognized net income attributable to non-controlling interests of $21.6 million and $17.6 million, respectively, associated with these Class A Units. Amounts attributable to the Class A Unitholders were not significant for the year ended December 31, 2017.

As discussed in Note 15, we entered into the CMBS JV within our Investing and Servicing Segment in December 2019. In connection with the formation of this venture, we sold assets totaling $333.0 million to the CMBS JV, including $318.3 million of CMBS, $13.3 million of interests in various existing CMBS joint ventures, and $1.4 million of related interest receivables. We obtained a 51% interest in the venture for cash consideration of $169.8 million, and our joint venture partner obtained a 49% interest for $163.2 million. The $13.3 million of joint venture interests that we contributed into the CMBS JV relate to joint ventures which we consolidate. The CMBS within these ventures carried a fair value of $24.5 million at the time of sale and related non-controlling interests of $11.2 million.

Because the CMBS JV was deemed a VIE for which we were the primary beneficiary (see Note 15), this transaction was not recognized as a sale for GAAP purposes. Instead, the 49% interest of our joint venture partner is reflected as a non-controlling interest in consolidated subsidiaries on our consolidated balance sheet, and any net income attributable to this 49% joint venture interest will be reflected within net income attributable to non-controlling interests in our consolidated statement of operations. The non-controlling interests in CMBS JV was $175.6 million as of December 31, 2019. During the year ended December 31, 2019, net income attributable to non-controlling interests was immaterial.

In March 2018, we acquired the non-controlling interest held by a third party in one of our consolidated REIS Equity Portfolio properties, which was carried at $0.3 million, for $3.3 million. The excess of the consideration paid to acquire the non-controlling interest over the carrying value of the non-controlling interest was recorded as a reduction of stockholders’ equity in March 2018.

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Income Taxes

12 Months Ended

Dec. 31, 2019

Income Taxes

Income Taxes

21. Income Taxes

Certain of our domestic subsidiaries have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs permit us to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, we will continue to maintain our qualification as a REIT.

Our TRSs engage in various real estate related operations, including special servicing of commercial real estate, originating and securitizing commercial mortgage loans, and investing in entities which engage in real estate-related operations. As of December 31, 2019 and 2018, approximately $1.6 billion and $553.5 million, respectively, of assets were owned by TRS entities. Our TRSs are not consolidated for U.S. federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by us with respect to our interest in TRSs.

Our income tax provision consisted of the following for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	For the year ended December 31,
	2019		2018		2017
Current
Federal	$	4,917	$	10,508	$	17,495
State		3,182		3,010		3,115
Foreign		977		293		8
Total current		9,076		13,811		20,618
Deferred
Federal		3,869		1,189		10,815
State		287		330		89
Total deferred		4,156		1,519		10,904
Total income tax provision	$	13,232	$	15,330	$	31,522

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted which, amongst other corporate and individual tax law changes, lowered the corporate tax rate effective January 1, 2018. The Act reduced our Federal statutory rate from 35% to 21% effective January 1, 2018. As a result of this tax rate change, we remeasured our deferred tax assets, which resulted in a $10.4 million write-off of a portion of these assets. This charge was recognized within income tax provision in our consolidated statement of operations for the year ended December 31, 2017.

Deferred income taxes in our U.S. tax jurisdiction reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the tax effects of temporary differences on net deferred tax assets which are classified in other assets in our consolidated balance sheets (in thousands):

	December 31,
	2019		2018
Deferred tax asset, net
Reserves and accruals	$	4,017	$	5,161
Domestic intangible assets		8,185		14,022
Lease assets		(1,950)		—
Lease liabilities		2,752		—
Investment in unconsolidated entities		(116)		(1,842)
Deferred income		19		134
Net operating and capital loss carryforwards		885		—
Other U.S. temporary differences		228		702
Net deferred tax assets	$	14,020	$	18,177

Unrecognized tax benefits were not material as of and during the years ended December 31, 2019 and 2018. The Company’s tax returns are no longer subject to audit for years ended prior to January 1, 2016. The Company had pre-tax income from foreign operations of $0.9 million and $1.4 million during the years ended December 31, 2019 and 2018, respectively. The Company had pre-tax loss from foreign operations of $26.6 million during the year ended December 31, 2017.

The following table is a reconciliation of our U.S. federal income tax determined using our statutory federal tax rate to our reported income tax provision for the years ended December 31, 2019, 2018 and 2017 (dollars in thousands):

	For the Year Ended December 31,
	2019				2018				2017
Federal statutory tax rate	$	115,535	21.0	%	$	89,571	21.0	%	$	155,501	35.0	%
REIT and other non-taxable income		(106,301)	(19.3)	%		(77,972)	(18.3)	%		(135,830)	(30.6)	%
State income taxes		3,034	0.5	%		3,038	0.7	%		3,091	0.7	%
Federal benefit of state tax deduction		(637)	(0.1)	%		(638)	(0.1)	%		(1,082)	(0.2)	%
Changes in tax law		—	—	%		—	—	%		10,365	2.3	%
Other		1,601	0.3	%		1,331	0.3	%		(523)	(0.1)	%
Effective tax rate	$	13,232	2.4	%	$	15,330	3.6	%	$	31,522	7.1	%

During the year ended December 31, 2017, we recognized $53.9 million in earnings from unconsolidated entities related to our interest in an investor entity which owns equity in an online real estate company (see Note 8). The income tax effect of these earnings, net of the related Manager incentive fee, was $18.3 million in our consolidated statement of operations for the year ended December 31, 2017.

There were no valuation allowances during the years ended December 31, 2019 and 2018. During the year ended December 31, 2017, $5.5 million of a valuation allowance associated with our deferred tax assets was released to the income tax provision.

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Unsecured Senior Notes (Tables)

12 Months Ended

Dec. 31, 2019

Unsecured Senior Notes

Schedule of unsecured convertible senior notes outstanding

The following table is a summary of our unsecured senior notes outstanding as of December 31, 2019 and 2018 (dollars in thousands):

						Remaining
	Coupon		Effective		Maturity	Period of		Carrying Value at December 31,
	Rate		Rate (1)		Date	Amortization		2019		2018
2019 Convertible Notes	N/A		N/A		N/A	N/A		$	—	$	77,969
2021 Senior Notes (February)	3.63	%	3.89	%	2/1/2021	1.1	years		500,000		500,000
2021 Senior Notes (December)	5.00	%	5.32	%	12/15/2021	2.0	years		700,000		700,000
2023 Convertible Notes	4.38	%	4.86	%	4/1/2023	3.3	years		250,000		250,000
2025 Senior Notes	4.75	%	5.04	%	3/15/2025	5.2	years		500,000		500,000
Total principal amount									1,950,000		2,027,969
Unamortized discount—Convertible Notes									(3,610)		(4,644)
Unamortized discount—Senior Notes									(12,144)		(16,416)
Unamortized deferred financing costs									(5,624)		(8,078)
Carrying amount of debt components								$	1,928,622	$	1,998,831
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes								$	3,755	$	3,755

(1) Effective rate includes the effects of underwriter purchase discount and the adjustment for the conversion option on our Convertible Notes, the value of which reduced the initial liability and was recorded in additional paid-in-capital.

Schedule of conversion attributes on Convertible Notes outstanding

The following table details the conversion attributes of our Convertible Notes outstanding as of December 31, 2019 (amounts in thousands, except rates):

	December 31, 2019			Conversion Spread Value - Shares (3)
	Conversion	Conversion		For the Year Ended December 31,
	Rate (1)	Price (2)		2019	2018	2017
2018 Notes	N/A		N/A	—	—	541
2019 Notes	N/A		N/A	—	91	1,358
2023 Notes	38.5959	$	25.91	—	—	—
				—	91	1,899

(1) The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of Convertible Notes converted, as adjusted in accordance with the indentures governing the Convertible Notes (including the applicable supplemental indentures).

(2) As of December 31, 2019, 2018 and 2017, the market price of the Company’s common stock was $24.86, $19.71 and $21.35 per share, respectively.

(3) The conversion spread value represents the portion of the Convertible Notes that are “in-the-money”, representing the value that would be delivered to investors in shares upon an assumed conversion.

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Segment Data and Geographic Data - Results of Operations (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended								12 Months Ended
	Jul. 31, 2019	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues:
Interest income from loans										$ 724,013	$ 620,543	$ 513,814
Interest income from investment securities										76,629	56,839	52,813
Servicing fees										54,296	78,766	61,446
Rental income										337,966	349,684	249,000
Other revenues										3,515	3,448	2,815
Total revenues		$ 286,428	$ 288,330	$ 311,181	$ 310,480	$ 293,418	$ 285,719	$ 269,556	$ 260,587	1,196,419	1,109,280	879,888
Costs and expenses:
Management fees										119,132	129,455	122,699
Interest expense										508,729	408,188	295,666
General and administrative										155,112	136,132	129,587
Acquisition and investment pursuit costs										1,056	8,587	3,472
Costs of rental operations										122,982	127,068	94,258
Depreciation and amortization										113,322	132,649	93,603
Loan loss provision, net										7,126	34,821	(5,458)
Other expense										2,365	732	1,422
Total costs and expenses										1,029,824	977,632	735,249
Other income (loss):
Change in net assets related to consolidated VIEs										236,309	165,892	252,434
Change in fair value of servicing rights										(3,640)	(10,202)	(24,323)
Change in fair value of investment securities, net										833	10,345	(3,811)
Change in fair value of mortgage loans held-for-sale, net										71,601	40,522	66,987
Earnings (loss) from unconsolidated entities										(101,354)	10,540	30,505
(Loss) gain on derivative financial instruments, net										188,028	59,044	20,499
(Loss) gain on derivative financial instruments, net										(6,310)	34,603	(72,532)
Foreign currency gain (loss), net										17,582	(9,245)	33,671
OTTI/Impairment												(109)
Loss on extinguishment of debt	$ 1,500									(19,270)	(5,808)	(5,915)
Other (loss) income, net										(207)	(812)	2,244
Total other income										383,572	294,879	299,650
Income before income taxes										550,167	426,527	444,289
Income tax provision										(13,232)	(15,330)	(31,522)
Net income		177,980	150,001	132,446	76,508	99,932	89,381	117,090	104,794	536,935	411,197	412,767
Net income attributable to Starwood Property Trust, Inc.										(27,271)	(25,367)	(11,997)
Net income attributable to Starwood Property Trust, Inc.		$ 171,869	$ 140,396	$ 127,016	$ 70,383	$ 92,132	$ 84,536	$ 109,230	$ 99,932	509,664	385,830	400,770
Operating Segments and Corporate
Revenues:
Interest income from loans										724,013	620,543	513,814
Interest income from investment securities										205,236	178,258	181,453
Servicing fees										70,385	104,287	111,869
Rental income										337,966	349,684	249,000
Other revenues										3,541	3,624	3,125
Total revenues										1,341,141	1,256,396	1,059,261
Costs and expenses:
Management fees										118,971	129,043	122,392
Interest expense										509,377	409,174	296,760
General and administrative										154,769	135,793	129,251
Acquisition and investment pursuit costs										1,056	8,587	3,472
Costs of rental operations										122,982	127,068	94,258
Depreciation and amortization										113,322	132,649	93,603
Loan loss provision, net										7,126	34,821	(5,458)
Other expense										2,365	732	1,422
Total costs and expenses										1,029,968	977,867	735,700
Other income (loss):
Change in fair value of servicing rights										(1,468)	(14,373)	(30,315)
Change in fair value of investment securities, net										88,122	30,464	54,508
Change in fair value of mortgage loans held-for-sale, net										71,601	40,522	66,987
Earnings (loss) from unconsolidated entities										(99,547)	12,530	43,872
(Loss) gain on derivative financial instruments, net										188,028	59,044	20,499
(Loss) gain on derivative financial instruments, net										(6,310)	34,603	(72,532)
Foreign currency gain (loss), net										17,582	(9,245)	33,671
OTTI/Impairment												(109)
Loss on extinguishment of debt										(19,270)	(5,808)	(5,915)
Other (loss) income, net										(207)	(812)	2,857
Total other income										238,531	146,925	113,523
Income before income taxes										549,704	425,454	437,084
Income tax provision										(13,232)	(15,330)	(31,522)
Net income										536,472	410,124	405,562
Net income attributable to Starwood Property Trust, Inc.										(26,808)	(24,294)	(4,792)
Net income attributable to Starwood Property Trust, Inc.										509,664	385,830	400,770
Operating segment | Commercial and Residential Lending Segment
Revenues:
Interest income from loans										610,316	576,564	499,806
Interest income from investment securities										81,255	50,063	46,710
Servicing fees										423	421	711
Other revenues										1,038	902	686
Total revenues										693,032	627,950	547,913
Costs and expenses:
Management fees										1,495	1,838	1,933
Interest expense										222,118	160,769	107,167
General and administrative										29,481	26,324	19,981
Acquisition and investment pursuit costs										1,351	2,490	3,240
Costs of rental operations										2,691
Depreciation and amortization										1,091	76	66
Loan loss provision, net										2,616	34,821	(5,458)
Other expense										307	307	149
Total costs and expenses										261,150	226,625	127,078
Other income (loss):
Change in fair value of investment securities, net										(1,084)	(2,765)	175
Change in fair value of mortgage loans held-for-sale, net										10,462	(6,851)	2,324
Earnings (loss) from unconsolidated entities										10,649	5,063	3,365
(Loss) gain on derivative financial instruments, net										4,619	4,019	(59)
(Loss) gain on derivative financial instruments, net										(20,325)	17,654	(35,262)
Foreign currency gain (loss), net										17,342	(7,816)	33,651
OTTI/Impairment												(109)
Loss on extinguishment of debt										(857)	(730)
Other (loss) income, net											43
Total other income										20,806	8,617	4,085
Income before income taxes										452,688	409,942	424,920
Income tax provision										(4,818)	(2,801)	(143)
Net income										447,870	407,141	424,777
Net income attributable to Starwood Property Trust, Inc.										(392)	(1,451)	(1,419)
Net income attributable to Starwood Property Trust, Inc.										447,478	405,690	423,358
Operating segment | Infrastructure Lending Segment
Revenues:
Interest income from loans										99,580	28,995
Interest income from investment securities										6,318	1,095
Other revenues										751	619
Total revenues										106,649	30,709
Costs and expenses:
Interest expense										62,836	20,949
General and administrative										18,260	5,631
Acquisition and investment pursuit costs										75	6,806
Depreciation and amortization										83
Loan loss provision, net										4,510
Total costs and expenses										85,764	33,386
Other income (loss):
(Loss) gain on derivative financial instruments, net										3,041
(Loss) gain on derivative financial instruments, net										(3,349)	1,821
Foreign currency gain (loss), net										205	(1,425)
Loss on extinguishment of debt										(11,357)
Other (loss) income, net										(50)
Total other income										(11,510)	396
Income before income taxes										9,375	(2,281)
Income tax provision										89	(292)
Net income										9,464	(2,573)
Net income attributable to Starwood Property Trust, Inc.										9,464	(2,573)
Operating segment | Investing and Servicing Segment
Revenues:
Interest income from loans										14,117	14,984	14,008
Interest income from investment securities										117,663	127,100	134,743
Servicing fees										69,962	103,866	111,158
Rental income										50,872	57,231	50,534
Other revenues										1,317	1,299	1,794
Total revenues										253,931	304,480	312,237
Costs and expenses:
Management fees										72	72	72
Interest expense										33,621	27,459	19,840
General and administrative										87,115	84,978	94,625
Acquisition and investment pursuit costs										(587)	(663)	(143)
Costs of rental operations										24,921	27,436	22,050
Depreciation and amortization										19,587	21,889	19,999
Other expense										365	452	1,163
Total costs and expenses										165,094	161,623	157,606
Other income (loss):
Change in fair value of servicing rights										(1,468)	(14,373)	(30,315)
Change in fair value of investment securities, net										89,206	33,229	54,333
Change in fair value of mortgage loans held-for-sale, net										61,139	47,373	64,663
Earnings (loss) from unconsolidated entities										4,166	3,809	68,192
(Loss) gain on derivative financial instruments, net										60,622	26,557	20,481
(Loss) gain on derivative financial instruments, net										(7,414)	(298)	(2,497)
Foreign currency gain (loss), net										(2)	(2)	6
Loss on extinguishment of debt										(845)	(318)
Other (loss) income, net										16	(1,363)	1,105
Total other income										205,420	94,614	175,968
Income before income taxes										294,257	237,471	330,599
Income tax provision										(8,110)	(4,688)	(31,130)
Net income										286,147	232,783	299,469
Net income attributable to Starwood Property Trust, Inc.										(4,786)	(5,220)	(3,373)
Net income attributable to Starwood Property Trust, Inc.										281,361	227,563	296,096
Operating segment | Property Segment
Revenues:
Rental income										287,094	292,453	198,466
Other revenues										409	444	645
Total revenues										287,503	292,897	199,111
Costs and expenses:
Interest expense										76,838	75,192	46,552
General and administrative										6,232	7,113	4,734
Acquisition and investment pursuit costs										217	(46)	375
Costs of rental operations										95,370	99,632	72,208
Depreciation and amortization										92,561	110,684	73,538
Other expense										1,693	(27)	110
Total costs and expenses										272,911	292,548	197,517
Other income (loss):
Earnings (loss) from unconsolidated entities										(114,362)	3,658	(27,685)
(Loss) gain on derivative financial instruments, net										119,746	28,468	77
(Loss) gain on derivative financial instruments, net										(1,284)	22,756	(32,333)
Foreign currency gain (loss), net										37	(2)	14
Loss on extinguishment of debt										(4,745)	(2,661)
Other (loss) income, net										(100)	508	7
Total other income										(708)	52,727	(59,920)
Income before income taxes										13,884	53,076	(58,326)
Income tax provision										(393)	(7,549)	(249)
Net income										13,491	45,527	(58,575)
Net income attributable to Starwood Property Trust, Inc.										(21,630)	(17,623)
Net income attributable to Starwood Property Trust, Inc.										(8,139)	27,904	(58,575)
Corporate
Revenues:
Other revenues										26	360
Total revenues										26	360
Costs and expenses:
Management fees										117,404	127,133	120,387
Interest expense										113,964	124,805	123,201
General and administrative										13,681	11,747	9,911
Total costs and expenses										245,049	263,685	253,499
Other income (loss):
(Loss) gain on derivative financial instruments, net										26,062	(7,330)	(2,440)
Loss on extinguishment of debt										(1,466)	(2,099)	(5,915)
Other (loss) income, net										(73)		1,745
Total other income										24,523	(9,429)	(6,610)
Income before income taxes										(220,500)	(272,754)	(260,109)
Net income										(220,500)	(272,754)	(260,109)
Net income attributable to Starwood Property Trust, Inc.										(220,500)	(272,754)	(260,109)
LNR VIEs
Revenues:
Interest income from investment securities										(128,607)	(121,419)	(128,640)
Servicing fees										(16,089)	(25,521)	(50,423)
Other revenues										(26)	(176)	(310)
Total revenues										(144,722)	(147,116)	(179,373)
Costs and expenses:
Management fees										161	412	307
Interest expense										(648)	(986)	(1,094)
General and administrative										343	339	336
Total costs and expenses										(144)	(235)	(451)
Other income (loss):
Change in net assets related to consolidated VIEs										236,309	165,892	252,434
Change in fair value of servicing rights										(2,172)	4,171	5,992
Change in fair value of investment securities, net										(87,289)	(20,119)	(58,319)
Earnings (loss) from unconsolidated entities										(1,807)	(1,990)	(13,367)
Other (loss) income, net												(613)
Total other income										145,041	147,954	186,127
Income before income taxes										463	1,073	7,205
Net income										463	1,073	7,205
Net income attributable to Starwood Property Trust, Inc.										$ (463)	$ (1,073)	$ (7,205)

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Properties (Tables)

12 Months Ended

Dec. 31, 2019

Properties

Summary of properties

The table below summarizes our properties held as of December 31, 2019 and December 31, 2018 (dollars in thousands):

	Depreciable Life	December 31, 2019		December 31, 2018
Property Segment
Land and land improvements	0 – 15 years	$	484,397	$	648,972
Buildings and building improvements	5 – 45 years		1,687,756		1,980,283
Furniture & fixtures	3 – 7 years		52,567		46,048
Investing and Servicing Segment
Land and land improvements	0 – 15 years		54,052		82,332
Buildings and building improvements	3 – 40 years		182,048		213,010
Furniture & fixtures	2 – 5 years		2,139		2,158
Commercial and Residential Lending Segment (1)
Land and land improvements	0 – 7 years		11,386		—
Buildings and building improvements	10 – 23 years		16,285		—
Properties, cost			2,490,630		2,972,803
Less: accumulated depreciation			(224,190)		(187,913)
Properties, net		$	2,266,440	$	2,784,890

(1) Represents properties acquired through loan foreclosure. Refer to Note 5 for further discussion.

Summary of future rental payments due from tenants under existing non-cancellable operating leases

Future rental payments due to us from tenants under existing non-cancellable operating leases for each of the next five years and thereafter are as follows (in thousands):

2020	$	177,516
2021		95,524
2022		89,602
2023		79,177
2024		71,271
Thereafter		688,437
Total	$	1,201,527

XML

Commitments and Contingencies - Lease cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Commitments and Contingencies.
Operating lease costs	$ 5,634	$ 4,962	$ 4,699
Short-term lease costs	115	210	96
Sublease income	(1,613)	(1,643)	(1,500)
Total lease cost	$ 4,136	$ 3,529	$ 3,295

XML

Variable Interest Entities (Tables)

12 Months Ended

Dec. 31, 2019

Variable Interest Entities

Summary of assets and liabilities of our consolidated CLO

The following table details the assets and liabilities of our consolidated CLO (amounts in thousands):

	As of
	December 31, 2019
Assets:
Loans held-for-investment	$	1,073,504
Accrued interest receivable		3,129
Other assets		26,496
Total Assets	$	1,103,129
Liabilities
Accounts payable, accrued expenses and other liabilities	$	1,362
Collateralized loan obligations, net		928,060
Total Liabilities	$	929,422

XML

Fair Value - Significant unobservable inputs (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Domestic servicing rights	$ 16,917	$ 20,557
Total Assets	78,042,336	68,262,453
Total Liabilities	72,905,322	63,362,264
Fair value measurements on recurring basis | Loans held-for-sale
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Loans held-for-sale, fair value option	1,436,194	671,282
Fair value measurements on recurring basis | RMBS
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities	189,576	209,079
Fair value measurements on recurring basis | CMBS
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities	37,360	41,347
Fair value measurements on recurring basis | Domestic Servicing Rights
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Domestic servicing rights	16,917	20,557
Fair value measurements on recurring basis | Level III | Loans held-for-sale
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Loans held-for-sale, fair value option	$ 1,436,194	$ 671,282
Loans Held-for-sale, Valuation Technique [Extensible List]	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Minimum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Loans held-for-sale, duration	1 year 3 months 18 days	2 years 6 months
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Minimum | Debt yield
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Loans held-for-sale, measurement input	0.034	0.046
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Maximum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Loans held-for-sale, duration	11 years 3 months 18 days	14 years 4 months 24 days
Fair value measurements on recurring basis | Level III | Loans held-for-sale | Maximum | Debt yield
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Loans held-for-sale, measurement input	0.059	0.061
Fair value measurements on recurring basis | Level III | RMBS
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities	$ 189,576	$ 209,079
Debt Securities, Available-for-sale, Valuation Technique [Extensible List]	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Portfolio percentage	34.00%	55.00%
Fair value measurements on recurring basis | Level III | RMBS | Minimum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Loss severity for specified percentage of portfolio (as a percent)	45.00%	45.00%
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Constant prepayment rate
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.031	0.032
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Constant default rate
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.005	0.011
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Loss severity
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0	0
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Delinquency rate
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.05	0.04
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Servicer advances
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.27	0.21
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Annual coupon deterioration
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0	0
Fair value measurements on recurring basis | Level III | RMBS | Minimum | Putback amount per projected total collateral loss
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0	0
Fair value measurements on recurring basis | Level III | RMBS | Maximum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Loss severity for specified percentage of portfolio (as a percent)	80.00%	80.00%
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Constant prepayment rate
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.249	0.252
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Constant default rate
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.050	0.055
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Loss severity
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.93	0.73
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Delinquency rate
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.29	0.31
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Servicer advances
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.85	0.83
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Annual coupon deterioration
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.016	0.014
Fair value measurements on recurring basis | Level III | RMBS | Maximum | Putback amount per projected total collateral loss
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0.28	0.07
Fair value measurements on recurring basis | Level III | CMBS
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities	$ 25,008	$ 25,228
Debt Securities, Available-for-sale, Valuation Technique [Extensible List]	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Fair value measurements on recurring basis | Level III | CMBS | Minimum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	0	0
Available-for-sale debt securities, term	0 years	0 years
Fair value measurements on recurring basis | Level III | CMBS | Maximum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Available-for-sale securities, measurement input	1.229	4.735
Available-for-sale debt securities, term	9 years 8 months 12 days	9 years 8 months 12 days
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Domestic servicing rights	$ 16,917	$ 20,557
Servicing Asset, Valuation Technique [Extensible List]	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Debt yield
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Servicing asset, measurement input	0.075	0.0775
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Discount rate
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Servicing asset, measurement input	0.15	0.15
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Minimum | Control migration
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Servicing asset, measurement input	0	0
Fair value measurements on recurring basis | Level III | Domestic Servicing Rights | Maximum | Control migration
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Servicing asset, measurement input	0.80	0.80
Fair value measurements on recurring basis | Level III | VIE Assets
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Derivative Asset, Valuation Technique [Extensible List]	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Fair value measurements on recurring basis | Level III | VIE Assets | Minimum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
VIE assets, measurement input	0	0
VIE duration (in years)	0 years	0 years
Fair value measurements on recurring basis | Level III | VIE Assets | Maximum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
VIE assets, measurement input	6.907	2.909
VIE duration (in years)	19 years 2 months 12 days	20 years 4 months 24 days
Fair value measurements on recurring basis | Level III | VIE liabilities
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Derivative Liability, Valuation Technique [Extensible List]	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Fair value measurements on recurring basis | Level III | VIE liabilities | Minimum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
VIE duration (in years)	0 years	0 years
VIE liabilities, measurement input	0	0
Fair value measurements on recurring basis | Level III | VIE liabilities | Maximum
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
VIE duration (in years)	12 years 8 months 12 days	13 years 8 months 12 days
VIE liabilities, measurement input	6.907	2.909
Primary beneficiary
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Total Assets	$ 62,187,175	$ 53,446,364
Total Liabilities	60,743,494	52,195,042
Primary beneficiary | Fair value measurements on recurring basis
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Total Assets	62,187,175	53,446,364
Total Liabilities	60,743,494	52,195,042
Primary beneficiary | Fair value measurements on recurring basis | Level III
Quantitative information for Level 3 Fair Value Measurements for assets and liabilities measured at fair value on recurring basis
Total Assets	62,187,175	53,446,364
Total Liabilities	$ 2,537,392	$ 1,441,446

XML

Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Restricted cash
Cash restricted by lender	$ 40,818	$ 175,659
Cash collateral for derivative financial instruments	37,912	37,245
Funds held on behalf of borrowers and tenants	11,903	12,838
Other restricted cash	5,010	22,299
Restricted cash	$ 95,643	$ 248,041

XML

Stockholders' Equity and Non-Controlling Interests - Non-Vested Shares (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2019
Non-Vested Shares and Share Equivalents activity
Balance at the beginning of the period (in shares)	2,434,365
Granted (in shares)	1,720,236
Vested (in shares)	(1,410,621)
Forfeited (in shares)	(25,213)
Balance at the end of the period (in shares)	2,718,767	2,434,365
Weighted Average Grant Date Fair Value (per share)
Balance at the beginning of period (in dollars per share)	$ 21.52
Granted (in dollars per share)	24.01	$ 21.20	$ 22.20
Vested (in dollars per share)	22.20
Forfeited (in dollars per share)	21.84
Balance at the end of period (in dollars per share)	$ 22.74	$ 21.52
Vesting Schedule
2020 (in shares)				1,467,740
2021 (in shares)				831,792
2022 (in shares)				419,235
Total (in shares)	2,718,767	2,434,365		2,718,767
Total unrecognized compensation costs related to unvested share-based compensation				$ 49.3
Total fair value of shares vested	$ 33.2	$ 18.3	$ 18.3
Period over which unrecognized compensation cost is expected to be recognized	2 years
Starwood Property Trust, Inc. Equity Plan
Non-Vested Shares and Share Equivalents activity
Balance at the beginning of the period (in shares)	1,436,445
Granted (in shares)	520,236
Vested (in shares)	(518,298)
Forfeited (in shares)	(25,213)
Balance at the end of the period (in shares)	1,413,170	1,436,445
Vesting Schedule
2020 (in shares)				799,039
2021 (in shares)				440,173
2022 (in shares)				173,958
Total (in shares)	1,413,170	1,436,445		1,413,170
Starwood Property Trust, Inc. Manager Equity Plan
Non-Vested Shares and Share Equivalents activity
Balance at the beginning of the period (in shares)	997,920
Granted (in shares)	1,200,000
Vested (in shares)	(892,323)
Balance at the end of the period (in shares)	1,305,597	997,920
Vesting Schedule
2020 (in shares)				668,701
2021 (in shares)				391,619
2022 (in shares)				245,277
Total (in shares)	1,305,597	997,920		1,305,597

XML

Accumulated Other Comprehensive Income - Impact of Reclassifications out of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income
Interest expense									$ (508,729)	$ (408,188)	$ (295,666)
Interest income from investment securities									76,629	56,839	52,813
Foreign currency gain (loss), net									17,582	(9,245)	33,671
Net income	$ 177,980	$ 150,001	$ 132,446	$ 76,508	$ 99,932	$ 89,381	$ 117,090	$ 104,794	536,935	411,197	412,767
Amounts Reclassified from AOCI
Accumulated Other Comprehensive Income
Net income									1,603	3,017	98
Effective Portion of Cumulative Loss on Cash Flow Hedges | Interest rate contracts | Amounts Reclassified from AOCI
Accumulated Other Comprehensive Income
Interest expense										33	3
Cumulative Unrealized Gain (Loss) on Available-for-Sale Securities | Amounts Reclassified from AOCI
Accumulated Other Comprehensive Income
Interest income from investment securities									59	46	95
Gain on sale of investments and other assets, net										2,938
Total									59	$ 2,984	$ 95
Foreign Currency Translation | Amounts Reclassified from AOCI
Accumulated Other Comprehensive Income
Foreign currency gain (loss), net									$ 1,544

XML

Loans - Activity in Portfolio (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Activity in allowance for loan losses
Allowance for loan losses at the beginning of the period	$ 39,151	$ 4,330	$ 9,788
Provision for (reversal of) loan losses	(3,812)	3,384	5,458
Provision for impaired loans	3,314	38,205
Charge-offs	(12,666)
Allowance for loan losses at the end of the period	33,611	39,151	4,330
Recorded investment in loans related to the allowance for loan loss	291,768	275,112	170,941
Activity in loan portfolio
Balance at the beginning of the period	9,794,254	7,382,641	5,946,274
Acquisitions/origination/additional funding	9,094,714	6,723,144	5,500,539
Acquisition of Infrastructure Lending Portfolio		1,969,340
Capitalized Interest	110,632	63,047	74,339
Basis of loans sold	(4,311,390)	(3,082,347)	(1,634,717)
Loan maturities/principal repayments	(3,304,838)	(3,272,666)	(2,658,522)
Discount accretion/premium amortization	35,387	38,099	39,084
Changes in fair value	71,601	40,522	66,987
Unrealized foreign currency translation (loss) gain	40,155	(32,341)	42,356
Loan loss provision, net	(7,126)	(34,821)	5,458
Loan foreclosure	(27,303)
Transfer to/from other asset classifications	(25,862)	(364)	843
Balance at the end of the period	$ 11,470,224	$ 9,794,254	$ 7,382,641

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Fair Value

12 Months Ended

Dec. 31, 2019

Fair Value

Fair Value

20. Fair Value

GAAP establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring financial assets and liabilities at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:

Level I—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level II—Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level III—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Valuation Process

We have valuation control processes in place to validate the fair value of the Company’s financial assets and liabilities measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and the assumptions are reasonable.

Pricing Verification—We use recently executed transactions, other observable market data such as exchange data, broker/dealer quotes, third party pricing vendors and aggregation services for validating the fair values generated using valuation models. Pricing data provided by approved external sources is evaluated using a number of approaches; for example, by corroborating the external sources’ prices to executed trades, analyzing the methodology and assumptions used by the external source to generate a price and/or by evaluating how active the third party pricing source (or originating sources used by the third party pricing source) is in the market.

Unobservable Inputs—Where inputs are not observable, we review the appropriateness of the proposed valuation methodology to ensure it is consistent with how a market participant would arrive at the unobservable input. The valuation methodologies utilized in the absence of observable inputs may include extrapolation techniques and the use of comparable observable inputs.

Any changes to the valuation methodology will be reviewed by our management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while we anticipate that our valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value could result in a different estimate of fair value at the reporting date.

Fair Value on a Recurring Basis

We determine the fair value of our financial assets and liabilities measured at fair value on a recurring basis as follows:

Loans held-for-sale, commercial

We measure the fair value of our commercial mortgage loans held-for-sale using a discounted cash flow analysis unless observable market data (i.e., securitized pricing) is available. A discounted cash flow analysis requires management to make estimates regarding future interest rates and credit spreads. The most significant of these inputs

relates to credit spreads and is unobservable. Thus, we have determined that the fair values of mortgage loans valued using a discounted cash flow analysis should be classified in Level III of the fair value hierarchy, while mortgage loans valued using securitized pricing should be classified in Level II of the fair value hierarchy. Mortgage loans classified in Level III are transferred to Level II if securitized pricing becomes available.

Loans held-for-sale and loans held-for-investment, residential

We measure the fair value of our residential mortgage loans held-for-sale and held-for-investment based on the net present value of expected future cash flows using a combination of observable and unobservable inputs. Observable market participant assumptions include pricing related to trades of residential mortgage loans with similar characteristics. Unobservable inputs include the expectation of future cash flows, which involves judgments about the underlying collateral, the creditworthiness of the borrower, estimated prepayment speeds, estimated future credit losses, forward interest rates, investor yield requirements and certain other factors. At each measurement date, we consider both the observable and unobservable valuation inputs in the determination of fair value. However, given the significance of the unobservable inputs, these loans have been classified within Level III.

RMBS

RMBS are valued utilizing observable and unobservable market inputs. The observable market inputs include recent transactions, broker quotes and vendor prices (“market data”). However, given the implied price dispersion amongst the market data, the fair value determination for RMBS has also utilized significant unobservable inputs in discounted cash flow models including prepayments, default and severity estimates based on the recent performance of the collateral, the underlying collateral characteristics, industry trends, as well as expectations of macroeconomic events (e.g., housing price curves, interest rate curves, etc.). At each measurement date, we consider both the observable and unobservable valuation inputs in the determination of fair value. However, given the significance of the unobservable inputs these securities have been classified within Level III.

CMBS

CMBS are valued utilizing both observable and unobservable market inputs. These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, recent trades of similar securities and the spreads used in the prior valuation. We obtain current market spread information where available and use this information in evaluating and validating the market price of all CMBS. Depending upon the significance of the fair value inputs used in determining these fair values, these securities are classified in either Level II or Level III of the fair value hierarchy. CMBS may shift between Level II and Level III of the fair value hierarchy if the significant fair value inputs used to price the CMBS become or cease to be observable.

Equity security

The equity security is publicly registered and traded in the U.S. and its market price is listed on the London Stock Exchange. The security has been classified within Level I.

Domestic servicing rights

The fair value of this intangible is determined using discounted cash flow modeling techniques which require management to make estimates regarding future net servicing cash flows, including forecasted loan defeasance, control migration, delinquency and anticipated maturity defaults which are calculated assuming a debt yield at which default occurs. Since the most significant of these inputs are unobservable, we have determined that the fair values of this intangible in its entirety should be classified in Level III of the fair value hierarchy.

Derivatives

The valuation of derivative contracts are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market based inputs, including interest rate curves, spot and market forward points and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

The valuation of over the counter derivatives are determined using discounted cash flows based on Overnight Index Swap (“OIS”) rates. Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value. Uncollateralized or partially collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e., a LIBOR OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk. For credit index instruments, fair value is determined based on changes in the relevant indices from the date of initiation of the instrument to the reporting date, as these changes determine the amount of any future cash settlement between us and the counterparty. These indices are considered Level II inputs as they are directly observable.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level II of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level III inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. However, as of December 31, 2019 and 2018, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level II of the fair value hierarchy.

Liabilities of consolidated VIEs

Our consolidated VIE liabilities generally represent bonds that are not owned by us. The majority of these are either traded in the marketplace or can be analogized to similar securities that are traded in the marketplace. For these liabilities, pricing is considered to be Level II, where the valuation is based upon quoted prices for similar instruments traded in active markets. We generally utilize third party pricing service providers for valuing these liabilities. In order to determine whether to utilize the valuations provided by third parties, we conduct an ongoing evaluation of their valuation methodologies and processes, as well as a review of the individual valuations themselves. In evaluating third party pricing for reasonableness, we consider a variety of factors, including market transaction information for the particular bond, market transaction information for bonds within the same trust, market transaction information for similar bonds, the bond’s ratings and the bond’s subordination levels.

For the minority portion of our consolidated VIE liabilities which consist of unrated or non-investment grade bonds that are not owned by us, pricing may be either Level II or Level III. If independent third party pricing similar to that noted above is available, we consider the valuation to be Level II. If such third party pricing is not available, the valuation is generated from model-based techniques that use significant unobservable assumptions, and we consider the valuation to be Level III. For VIE liabilities classified as Level III, valuation is determined based on discounted expected future cash flows which take into consideration expected duration and yields based on market transaction information, ratings, subordination levels, vintage and current market spread. VIE liabilities may shift between Level II

and Level III of the fair value hierarchy if the significant fair value inputs used to price the VIE liabilities become or cease to be observable.

Assets of consolidated VIEs

The securitization VIEs in which we invest are “static”; that is, no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets of the VIE, we maximize the use of observable inputs over unobservable inputs. The individual assets of a VIE are inherently incapable of precise measurement given their illiquid nature and the limitations on available information related to these assets. Because our methodology for valuing these assets does not value the individual assets of a VIE, but rather uses the value of the VIE liabilities as an indicator of the fair value of VIE assets as a whole, we have determined that our valuations of VIE assets in their entirety should be classified in Level III of the fair value hierarchy.

Fair Value on a Nonrecurring Basis

We determine the fair value of our financial assets and liabilities measured at fair value on a nonrecurring basis as follows:

Loans held-for-sale, infrastructure

We measure the fair value of infrastructure loans held-for-sale, which are carried at the lower of amortized cost or fair value, utilizing bids periodically received from third parties to acquire these assets. As these bids represent observable market data, we have determined that the fair value of these assets would be classified in Level II of the fair value hierarchy.

Fair Value Only Disclosed

We determine the fair value of our financial instruments and assets where fair value is disclosed as follows:

Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings

We estimate the fair values of our loans not carried at fair value on a recurring basis by discounting their expected cash flows at a rate we estimate would be demanded by the market participants that are most likely to buy our loans. The expected cash flows used are generally the same as those used to calculate our level yield income in the financial statements. Since these inputs are unobservable, we have determined that the fair value of these loans in their entirety would be classified in Level III of the fair value hierarchy.

HTM debt securities

We estimate the fair value of our mandatorily redeemable preferred equity interests in commercial real estate companies and infrastructure bonds using the same methodology described for our loans held-for-investment. We estimate the fair value of our HTM CMBS using the same methodology described for our CMBS carried at fair value on a recurring basis.

Secured financing agreements, CLO, unsecured senior notes not convertible and secured borrowings on transferred loans

The fair value of the secured financing agreements, CLO, unsecured senior notes not convertible and secured borrowings on transferred loans are determined by discounting the contractual cash flows at the interest rate we estimate such arrangements would bear if executed in the current market. We have determined that our valuation of these instruments should be classified in Level III of the fair value hierarchy.

Convertible Notes

The fair value of the debt component of our Convertible Notes is estimated by discounting the contractual cash flows at the interest rate we estimate such notes would bear if sold in the current market without the embedded conversion option which, in accordance with ASC 470, is reflected as a component of equity. We have determined that our valuation of our Convertible Notes should be classified in Level III of the fair value hierarchy.

Fair Value Disclosures

The following tables present our financial assets and liabilities carried at fair value on a recurring basis in the consolidated balance sheets by their level in the fair value hierarchy as of December 31, 2019 and 2018 (amounts in thousands):

	December 31, 2019
	Total		Level I		Level II		Level III
Financial Assets:
Loans under fair value option	$	1,436,194	$	—	$	—	$	1,436,194
RMBS		189,576		—		—		189,576
CMBS		37,360		—		12,352		25,008
Equity security		12,664		12,664		—		—
Domestic servicing rights		16,917		—		—		16,917
Derivative assets		28,943		—		28,943		—
VIE assets		62,187,175		—				62,187,175
Total	$	63,908,829	$	12,664	$	41,295	$	63,854,870
Financial Liabilities:
Derivative liabilities	$	8,740	$	—	$	8,740	$	—
VIE liabilities		60,743,494		—		58,206,102		2,537,392
Total	$	60,752,234	$	—	$	58,214,842	$	2,537,392

	December 31, 2018
	Total		Level I		Level II		Level III
Financial Assets:
Loans under fair value option	$	671,282	$	—	$	—	$	671,282
RMBS		209,079		—		—		209,079
CMBS		41,347		—		16,119		25,228
Equity security		11,893		11,893		—		—
Domestic servicing rights		20,557		—		—		20,557
Derivative assets		52,691		—		52,691		—
VIE assets		53,446,364		—		—		53,446,364
Total	$	54,453,213	$	11,893	$	68,810	$	54,372,510
Financial Liabilities:
Derivative liabilities	$	15,415	$	—	$	15,415	$	—
VIE liabilities		52,195,042		—		50,753,596		1,441,446
Total	$	52,210,457	$	—	$	50,769,011	$	1,441,446

The changes in financial assets and liabilities classified as Level III are as follows for the years ended December 31, 2019 and 2018 (amounts in thousands):

							Domestic
	Loans at						Servicing				VIE
	Fair Value		RMBS		CMBS		Rights		VIE Assets		Liabilities		Total
January 1, 2018 balance	$	745,743		247,021		24,191		30,759		51,045,874		(2,188,937)	$	49,904,651
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale		40,217		3,527		2,568		(10,202)		(5,835,225)		1,022,887		(4,776,228)
Net accretion		—		10,932		—		—		—		—		10,932
Included in OCI		—		(4,374)		—		—		—		—		(4,374)
Purchases / Originations		2,276,788		—		3,621		—		—		—		2,280,409
Sales		(2,051,634)		(13,264)		(3,163)		—		—		—		(2,068,061)
Issuances		—		—		—		—		—		(102,474)		(102,474)
Cash repayments / receipts		(144,322)		(34,763)		(23,520)		—		—		(89,747)		(292,352)
Transfers into Level III		—		—		16,845		—		—		(1,043,920)		(1,027,075)
Transfers out of Level III		(195,510)		—		—		—		—		922,985		727,475
Consolidation of VIEs		—		—		—		—		9,885,200		(212,257)		9,672,943
Deconsolidation of VIEs		—		—		4,686		—		(1,649,485)		250,017		(1,394,782)
December 31, 2018 balance		671,282		209,079		25,228		20,557		53,446,364		(1,441,446)		52,931,064
Total realized and unrealized gains (losses):
Included in earnings:
Change in fair value / gain on sale		71,337		—		505		(3,640)		(1,250,935)		47,308		(1,135,425)
OTTI		—		—		—		—		—		—		—
Net accretion		—		9,945		—		—		—		—		9,945
Included in OCI		—		(2,519)		—		—		—		—		(2,519)
Purchases / Originations		4,015,167		—		5,165		—		—		—		4,020,332
Sales		(2,951,713)		—		(7,326)		—		—		—		(2,959,039)
Issuances		—		—		—		—		—		(116,273)		(116,273)
Cash repayments / receipts		(144,066)		(26,929)		(11,348)		—		—		(16,093)		(198,436)
Transfers into Level III		—		—		5,350		—		—		(1,728,562)		(1,723,212)
Transfers out of Level III		(225,813)		—		—		—		—		991,378		765,565
Consolidation of VIEs		—		—		—		—		10,368,817		(311,748)		10,057,069
Deconsolidation of VIEs		—		—		7,434		—		(377,071)		38,044		(331,593)
December 31, 2019 balance	$	1,436,194	$	189,576	$	25,008	$	16,917	$	62,187,175	$	(2,537,392)	$	61,317,478
Amount of total (losses) gains included in earnings attributable to assets still held at:
December 31, 2018	$	(3,753)		10,398		(352)		(10,202)		(5,835,225)		1,022,887	$	(4,816,247)
December 31, 2019		(4,459)		9,858		(666)		(3,640)		(1,250,935)		47,308		(1,202,534)

Amounts were transferred from Level II to Level III due to a decrease in the observable relevant market activity and amounts were transferred from Level III to Level II due to an increase in the observable relevant market activity.

The following table presents the fair values, all of which are classified in Level III of the fair value hierarchy, of our financial instruments not carried at fair value on the consolidated balance sheets (amounts in thousands):

	December 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets not carried at fair value:
Loans held-for-investment, loans held-for-sale and loans transferred as secured borrowings	$	10,034,030	$	10,086,372	$	9,122,972	$	9,178,709
HTM debt securities		570,638		568,727		644,149		643,948
Financial liabilities not carried at fair value:
Secured financing agreements, CLO and secured borrowings on transferred loans	$	9,834,108	$	9,826,511	$	8,757,804	$	8,662,548
Unsecured senior notes		1,928,622		2,022,283		1,998,831		1,945,160

The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollars in thousands):

	Carrying Value at		Valuation	Unobservable	Range as of (1)
	December 31, 2019		Technique	Input	December 31, 2019	December 31, 2018
Loans under fair value option	$	1,436,194	Discounted cash flow	Yield (b)	3.4% - 5.9%	4.6% - 6.1%
				Duration (c)	1.3 - 11.3 years	2.5 - 14.4 years
RMBS		189,576	Discounted cash flow	Constant prepayment rate (a)	3.1% - 24.9%	3.2% - 25.2%
				Constant default rate (b)	0.5% - 5.0%	1.1% - 5.5%
				Loss severity (b)	0% - 93% (e)	0% - 73% (e)
				Delinquency rate (c)	5% - 29%	4% - 31%
				Servicer advances (a)	27% - 85%	21% - 83%
				Annual coupon deterioration (b)	0% - 1.6%	0% - 1.4%
				Putback amount per projected total collateral loss (d)	0% - 28%	0% - 7%
CMBS		25,008	Discounted cash flow	Yield (b)	0% - 122.9%	0% - 473.5%
				Duration (c)	0 - 9.7 years	0 - 9.7 years
Domestic servicing rights		16,917	Discounted cash flow	Debt yield (a)	7.5%	7.75%
				Discount rate (b)	15%	15%
				Control migration (b)	0% - 80%	0% - 80%
VIE assets		62,187,175	Discounted cash flow	Yield (b)	0% - 690.7%	0% - 290.9%
				Duration (c)	0 - 19.2 years	0 - 20.4 years
VIE liabilities		(2,537,392)	Discounted cash flow	Yield (b)	0% - 690.7%	0% - 290.9%
				Duration (c)	0 - 12.7 years	0 - 13.7 years

(1) The ranges of significant unobservable inputs are represented in percentages and years.

Sensitivity of the Fair Value to Changes in the Unobservable Inputs

(a) Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement.

(b) Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement.

(c) Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (higher or lower) fair value measurement depending on the structural features of the security in question.

(d) Any delay in the putback recovery date leads to a decrease in fair value for the majority of securities in our RMBS portfolio.

(e) 34% and 55% of the portfolio falls within a range of 45% - 80% as of December 31, 2019 and 2018, respectively.

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Loan Securitization/Sale Activities

12 Months Ended

Dec. 31, 2019

Loan Securitization/Sale Activities

Loan Securitization/Sale Activities

12. Loan Securitization/Sale Activities

As described below, we regularly sell loans and notes under various strategies. We evaluate such sales as to whether they meet the criteria for treatment as a sale—legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint and transfer of control.

Conduit Loan Securitizations

Within the Investing and Servicing Segment, we originate commercial mortgage loans with the intent to sell these mortgage loans to VIEs for the purposes of securitization. These VIEs then issue CMBS that are collateralized in part by these assets, as well as other assets transferred to the VIE by third parties. In certain instances, we retain an interest in the VIE and/or serve as special servicer for the VIE. In these circumstances, we generally consolidate the VIE into which the loans were sold. The following summarizes the fair value and par value of loans sold from our conduit platform, as well as the amount of sale proceeds used in part to repay the outstanding balance of the repurchase agreements associated with these loans for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):

					Repayment of
					repurchase
	Face Amount		Proceeds		agreements
For the Year Ended December 31,
2019	$	1,781,981	$	1,845,890	$	1,289,129
2018		1,517,599		1,563,433		1,147,316
2017		1,517,368		1,582,050		1,152,938

Securitization Financing Arrangements and Sales

Within the Commercial and Residential Lending Segment, we originate or acquire residential and commercial mortgage loans, subsequently selling all or a portion thereof. Typically, our motivation for entering into these transactions is to effectively create leverage on the subordinated position that we will retain and hold for investment. These loans may be sold directly or through a securitization. In certain instances, we retain an interest in the VIE and continue to act as servicer, special servicer or servicing administrator for the loan following its sale. In these circumstances, similar to the case of our Investing and Servicing Segment described above, we generally consolidate the VIE into which the loans were sold. During the year ended December 31, 2019, we sold residential loans into three securitization VIEs which we consolidate. During the year ended December 31, 2018, we sold residential loans into two securitization VIEs which we consolidate, along with two securitization VIEs into which our commercial loans were sold. In each of these instances, we retained interests in the VIEs. The following table summarizes our loans sold and loans transferred as secured borrowings by the Commercial and Residential Lending Segment net of expenses (amounts in thousands):

									Loan Transfers
	Loan Transfers Accounted for as Sales								Accounted for as Secured
	Commercial				Residential				Borrowings
For the Year Ended December 31,	Face Amount		Proceeds		Face Amount		Proceeds		Face Amount		Proceeds
2019	$	751,210	$	748,045	$	1,282,527	$	1,331,856	$	—	$	—
2018		840,400		835,849		660,865		683,556		—		—
2017		55,470		52,609		—		—		75,000		74,098

During the years ended December 31, 2019 and 2018, we recognized a $6.9 million and $1.3 million, respectively, change in fair value of mortgage loans held-for-sale, net in our consolidated statements of operations in connection with residential mortgage loan securitizations. During the year ended December 31, 2019, gains recognized by the Commercial and Residential Lending Segment on sales of commercial loans were $4.6 million. During the years ended December 31, 2018 and 2017, gains (losses) recognized by the Commercial and Residential Lending Segment on sales of commercial loans were not material.

Our securitizations have each been structured as bankruptcy-remote entities whose assets are not intended to be available to the creditors of any other party.

Infrastructure Loan Sales

During the year ended December 31, 2019, the Infrastructure Lending Segment sold loans held-for-sale with an aggregate face amount of $404.1 million for proceeds of $393.3 million, recognizing a gain of $3.1 million. In connection with these sales, we sold an interest rate swap guarantee for cash payment of $3.1 million and recognized a decrease in fair value of $2.7 million within (loss) gain on derivative financial instruments, net in our consolidated statement of operations during the year ended December 31, 2019. Refer to Note 13 for further discussion of our interest rate swap guarantees. There were no sales of loans by the Infrastructure Lending Segment during the year ended December 31, 2018.

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Related-Party Transactions

12 Months Ended

Dec. 31, 2019

Related-Party Transactions

Related-Party Transactions

16. Related-Party Transactions

Management Agreement

We are party to a management agreement (the “Management Agreement”) with our Manager. Under the Management Agreement, our Manager, subject to the oversight of our board of directors, is required to manage our day to day activities, for which our Manager receives a base management fee and is eligible for an incentive fee and stock awards. Our Manager’s personnel perform certain due diligence, legal, management and other services that outside professionals or consultants would otherwise perform. As such, in accordance with the terms of our Management Agreement, our Manager is paid or reimbursed for the documented costs of performing such tasks, provided that such costs and reimbursements are in amounts no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis.

In February 2018, our board of directors authorized an amendment to our Management Agreement to adjust the calculation of the base management fee and incentive fee to treat equity securities of subsidiaries issued in exchange for properties as issued common stock, effective December 28, 2017 (the “Amendment”). The terms of the Amendment are reflected in the below descriptions of the base management fee and incentive fee calculations.

Base Management Fee. The base management fee is 1.5% of our stockholders’ equity per annum and calculated and payable quarterly in arrears in cash. For purposes of calculating the management fee, our stockholders’ equity means: (a) the sum of (1) the net proceeds from all issuances of our equity securities since inception and equity securities of subsidiaries issued in exchange for properties (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (2) our retained earnings and income to non-controlling interests with respect to equity securities of subsidiaries issued in exchange for properties at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less (b) any amount that we pay to repurchase our common stock since inception. It also excludes (1) any unrealized gains and losses and other non-cash items that have impacted stockholders’ equity as reported in our financial statements prepared in accordance with GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between our Manager and our independent directors and approval by a majority of our independent directors. As a result, our stockholders’ equity, for purposes of calculating the management fee, could be greater or less than the amount of stockholders’ equity shown in our consolidated financial statements.

For the years ended December 31, 2019, 2018 and 2017, approximately $77.0 million, $73.2 million and $67.8 million, respectively, was incurred for base management fees. As of December 31, 2019 and 2018, there were $19.3 million and $19.2 million, respectively, of unpaid base management fees included in related-party payable in our consolidated balance sheets.

Incentive Fee. Our Manager is entitled to be paid the incentive fee described below with respect to each calendar quarter if (1) our Core Earnings (as defined below) for the previous 12-month period exceeds an 8% threshold, and (2) our Core Earnings for the 12 most recently completed calendar quarters is greater than zero.

The incentive fee is calculated as follows: an amount, not less than zero, equal to the difference between (1) the product of (x) 20% and (y) the difference between (i) our Core Earnings for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price per share of our common stock of all of our public offerings and including issue price per equity security of subsidiaries issued in exchange for properties multiplied by the weighted average number of all shares of common stock outstanding (including any RSUs, any RSAs and other shares of common stock underlying awards granted under our equity incentive plans) and equity securities of subsidiaries issued in exchange for properties in such previous 12-month period, and (B) 8%, and (2) the sum of any incentive fee paid to our Manager with respect to the first three calendar quarters of such previous 12-month period. One half of each quarterly installment of the incentive fee is payable in shares of our common stock so long as the ownership of such additional number of shares by our Manager would not violate the 9.8% stock ownership limit set forth in our charter, after giving effect to any waiver from such limit that our board of directors may grant in the future. The remainder of the incentive fee is payable in cash. The number of shares to be issued to our Manager is equal to the dollar amount of the portion of the quarterly installment of the incentive fee payable in shares divided by the average of the closing prices of our common stock on the NYSE for the five trading days prior to the date on which such quarterly installment is paid.

Core Earnings is a non-GAAP financial measure. We calculate Core Earnings as GAAP net income (loss) excluding non-cash equity compensation expense, the incentive fee, depreciation and amortization of real estate and associated intangibles, acquisition costs associated with successful acquisitions, any unrealized gains, losses or other non-cash items recorded in net income for the period, regardless of whether such items are included in OCI, 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. The amount is adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash adjustments as determined by our Manager and approved by a majority of our independent directors.

For the years ended December 31, 2019, 2018 and 2017, approximately $20.2 million, $41.4 million and $42.1 million, respectively, was incurred for incentive fees. As of December 31, 2019 and 2018, there were $18.1 million and $21.8 million, respectively, of unpaid incentive fees included in related-party payable in our consolidated balance sheets.

Expense Reimbursement. We are required to reimburse our Manager for operating expenses incurred by our Manager on our behalf. In addition, pursuant to the terms of the Management Agreement, we are required to reimburse our Manager for the cost of legal, tax, consulting, accounting and other similar services rendered for us by our Manager’s personnel provided that such costs are no greater than those that would be payable if the services were provided by an independent third party. The expense reimbursement is not subject to any dollar limitations but is subject to review by our independent directors. For the years ended December 31, 2019, 2018 and 2017, approximately $7.7 million, $7.7 million and $6.4 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our consolidated statements of operations. As of December 31, 2019 and 2018, there were $3.5 million and $3.0 million, respectively, of unpaid reimbursable executive compensation and other expenses included in related-party payable in our consolidated balance sheets.

Equity Awards. In certain instances, we issue RSAs to certain employees of affiliates of our Manager who perform services for us. During the years ended December 31, 2019, 2018 and 2017, we granted 182,861, 252,375 and 138,264 RSAs, respectively, at grant date fair values of $4.1 million, $5.3 million and $3.1 million, respectively. Expenses related to the vesting of awards to employees of affiliates of our Manager were $4.1 million, $2.9 million and $2.7 million for the years ended December 31, 2019, 2018 and 2017, respectively, and are reflected in general and administrative expenses in our consolidated statements of operations. These shares generally vest over a three-year period.

Payments to Manager Employees.  During the year ended December 31, 2018, we made a cash payment of $1.3 million directly to an employee of our Manager in connection with the Company’s Infrastructure Lending Segment acquisition which was recognized within general and administrative expenses in our consolidated statement of operations for that year.  No cash payments were made directly to employees of our Manager during the years ended December 31, 2019 and 2017.

Termination Fee. We can terminate the Management Agreement without cause, as defined in the Management Agreement, with an affirmative two-thirds vote by our independent directors and 180 days written notice to our Manager. Upon termination without cause, our Manager is due a termination fee equal to three times the sum of the average annual base management fee and incentive fee earned by our Manager over the preceding eight calendar quarters. No termination fee is payable if our Manager is terminated for cause, as defined in the Management Agreement, which can be done at any time with 30 days written notice from our board of directors.

Manager Equity Plan

In May 2017, the Company’s shareholders approved the Starwood Property Trust, Inc. 2017 Manager Equity Plan (the “2017 Manager Equity Plan”), which replaced the Starwood Property Trust, Inc. Manager Equity Plan (“Manager Equity Plan”). In September 2019, we granted 1,200,000 RSUs to our Manager under the 2017 Manager Equity Plan. In April 2018, we granted 775,000 RSUs to our Manager under the 2017 Manager Equity Plan. In March 2017, we granted 1,000,000 RSUs to our Manager under the Manager Equity Plan. In May 2015, we granted 675,000 RSUs to our Manager under the Manager Equity Plan. In connection with these grants and prior similar grants, we

recognized share-based compensation expense of $20.2 million, $12.6 million and $10.4 million within management fees in our consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017, respectively. Refer to Note 17 for further discussion of these grants.

Investments in Loans and Securities

In November 2019, the Company and SEREF, an affiliate of our Manager, each originated €39.0 million of a €192.0 million first mortgage and subordinated loan. The loan was to a third party borrower for the acquisition of an office portfolio located in Spain. The loan matures in November 2023. In December 2019, we sold the first mortgage of €15.0 million.

In September 2019, the Company co-originated a €73.6 million first mortgage loan with SEREF, an affiliate of our Manager. The loan was to a third party borrower for the development of a Grade A office building and convention center in Dublin, Ireland. The Company originated €58.9 million of the loan and SEREF originated €14.7 million. The loan matures in May 2022.

In February 2019, the Company acquired a $60.0 million participation in a $1.0 billion first priority infrastructure term loan. In April 2019 and July 2019, the Company acquired participations of $5.0 million and $16.0 million, respectively, in a $300.0 million upsize to the term loan. The loan is secured by two domestic natural gas power plants. An affiliate of our Manager, Starwood Energy Group, is the borrower under the term loan.

In March 2019, the Company originated a $22.5 million loan to refinance the debt of a commercial real estate partnership in which we hold a 50% equity interest.

During the years ended December 31, 2019 and 2018, the Company acquired $353.0 million and $135.6 million, respectively, of loans from a residential mortgage originator in which it holds an equity interest. Also in September 2019 and October 2019, the Company amended a $2.0 million subordinated loan to this residential mortgage originator, which was entered into in June 2018, to extend the maturity from September 2019 to September 2020 and increase the total commitment to $4.5 million. Refer to Note 8 for further discussion.

In December 2018, the Company co-originated a £62.5 million mezzanine loan for the development of a residential and hotel property located in Central London with SEREF, an affiliate of our Manager. We originated £21.3 million of the loan and SEREF originated £41.2 million. The loan matures in December 2021.

In June 2018, a subordinate CMBS investment in a securitization issued by an affiliate of our Manager was paid off in full. We acquired the security, which was secured by five regional malls in Ohio, California and Washington, for $84.1 million in December 2013. In January 2016, we acquired an additional $9.7 million of this subordinate CMBS investment.

In March 2018, the Company acquired a €55.0 million newly-originated loan participation from SEREF, which is secured by a luxury resort in Estepona, Spain. The loan matures in March 2023.

In February 2018, a GBP denominated first mortgage loan that we had co-originated with SEREF in November 2013, which was secured by Centre Point, an iconic tower located in Central London, England, was repaid in full.

In January 2018, the Company acquired a $130.0 million first mortgage participation from an unaffiliated third party. The loan is secured by four U.S. power plants that each have long-term power purchase agreements with investment grade counterparties. The borrower is an affiliate of our Manager.

In August 2017, we originated a $339.2 million first mortgage and mezzanine loan for the acquisition of an office campus located in Irvine, California. An affiliate of our Manager has a non-controlling equity interest in the borrower.

In June 2016, we co-originated a £75.0 million first mortgage for the development of a three-property mixed use portfolio located in Greater London with SEREF, an affiliate of our Manager. We originated £60.0 million of the loan and SEREF originated £15.0 million. In June 2017, we amended the first mortgage to reduce the total commitment to £69.3 million, of which our share was £55.4 million. In October 2018, we amended the first mortgage to increase the total commitment to £77.0 million, of which our share is £61.6 million, and remove one of the properties from the collateral pool. The loan matures in February 2020.

In May 2017, our conduit business acquired certain commercial real estate loans from an unaffiliated third party for an aggregate purchase price of $50.0 million. The underlying borrowers are affiliates of our Manager. Subsequently during the year ended December 31, 2017, the loans were sold.

In March 2015, we purchased a subordinate single-borrower CMBS from a third party for $58.6 million which is secured by 85 U.S. hotel properties. The borrower is an affiliate of Starwood Distressed Opportunity Fund IX (“Fund IX”), an affiliate of our Manager. The subordinate single-borrower CMBS was fully repaid in March 2017.

In July 2014, we announced the co-origination of a £101.75 million first mortgage loan for the development of a 46-story residential tower and 18-story housing development containing a total of 366 private residential and affordable housing units located in London. We originated £86.75 million of the loan, and private funds managed by an affiliate of our Manager provided £15.0 million. The first mortgage loan was paid off in full in March 2017.

In April 2013, we purchased two B-Notes for $146.7 million from entities substantially all of whose equity was owned by an affiliate of our Manager. The B-Notes are secured by two Class A office buildings located in Austin, Texas. On May 17, 2013, we sold senior participation interests in the B-Notes to a third party, generating $95.0 million in aggregate proceeds. We retained the subordinated interests. In October 2015, we sold one of the subordinated interests in the B-Notes to a third party, generating $29.2 million in aggregate proceeds. The remaining subordinated interest was paid off in full in April 2017.

In December 2012, we acquired 9,140,000 ordinary shares in SEREF, a debt fund that is externally managed by an affiliate of our Manager and is listed on the London Stock Exchange, for approximately $14.7 million, which equated to approximately 4% ownership of SEREF. As of December 31, 2019, our shares represent an approximate 2% interest in SEREF. Refer to Note 6 for additional details.

Investment in Unconsolidated Entities

In October 2014, we committed $150 million for a 33% equity interest in four regional shopping malls (the “Retail Fund”). In August 2017, we funded the remaining $15.5 million capital commitment associated with this investment.  During the years ended December 31, 2019, 2018 and 2017, we recognized a loss of $114.4 million, earnings of $3.7 million and a loss of $27.7 million, respectively, and received distributions of $2.1 million during the year ended December 31, 2017. During the period included in our year ended December 31, 2019, the Retail Fund reported unrealized decreases in the fair value of its real estate properties, which resulted in a $47.2 million decrease to our investment. In addition, we provided an impairment charge of $71.9 million against the remainder of the investment based on our estimate of the fair value of the underlying retail assets as of December 31, 2019. Refer to Note 8 for further detail. The Retail Fund was established for the purpose of acquiring and operating four leading regional shopping malls located in Florida, Michigan, North Carolina and Virginia. All leasing services and asset management functions for the properties are conducted by an affiliate of our Manager which specializes in redeveloping, managing and repositioning retail real estate assets. In addition, another affiliate of our Manager serves as general partner of the Retail Fund.

In April 2013, in connection with our acquisition of LNR, we acquired 50% of a joint venture which owns equity in an online real estate company. An affiliate of ours, Fund IX, owns the remaining 50% of the venture.

Acquisitions from Consolidated CMBS Trusts

Our Investing and Servicing Segment acquires interests in properties for its REIS Equity Portfolio from CMBS trusts, some of which are consolidated as VIEs on our balance sheet. Acquisitions from consolidated VIEs are reflected as repayment of debt of consolidated VIEs in our consolidated statements of cash flows. During the years ended December 31, 2019, 2018 and 2017, we acquired $8.6 million, $27.7 million and $30.9 million, respectively, of net real estate assets from consolidated CMBS trusts for a total gross purchase price of $8.8 million, $28.0 million and $31.3 million, respectively. Refer to Note 3 for further discussion of these acquisitions.

Other Related-Party Arrangements

During the year ended December 31, 2016, we established a co-investment fund which provides key personnel with the opportunity to invest in certain properties included in our REIS Equity Portfolio. These personnel include certain of our employees as well as employees of affiliates of our Manager (collectively, “Fund Participants”). The fund carries an aggregate commitment of $15.0 million and owns a 10% equity interest in certain REIS Equity Portfolio properties acquired subsequent to January 1, 2015. As of December 31, 2019, Fund Participants have funded $4.9 million of the capital commitment, and it is our current expectation that there will be no additional funding of the commitment. The capital contributed by Fund Participants is reflected on our consolidated balance sheets as non-controlling interests in consolidated subsidiaries. In an effort to retain key personnel, the fund provides for disproportionate distributions which allows Fund Participants to earn an incremental 60% on all operating cash flows attributable to their capital account, net of a 5% preferred return to us as general partner of the fund. Amounts earned by Fund Participants pursuant to this waterfall are reflected within net income attributable to non-controlling interests in our consolidated statements of operations. During the years ended December 31, 2019, 2018 and 2017, the non-controlling interests related to this fund received cash distributions of $1.3 million, $2.0 million and $1.4 million, respectively.

During the years ended December 31, 2019 and 2018, we engaged Highmark Residential (“Highmark”) (formerly known as Milestone Management), an affiliate of our Manager, to provide property management services for 11 and ten properties within our Woodstar I Portfolio, respectively, bringing the total number of our properties managed by Highmark to 21. Fees paid to Highmark are calculated as a percentage of gross receipts and are at market terms. During the years ended December 31, 2019 and 2018, property management fees paid to Highmark were $1.6 million and $0.1 million, respectively.

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Restricted Cash

12 Months Ended

Dec. 31, 2019

Restricted Cash.

Restricted Cash

4. Restricted Cash

A summary of our restricted cash as of December 31, 2019 and 2018 is as follows (amounts in thousands):

	As of December 31,
	2019		2018
Cash restricted by lender	$	40,818	$	175,659
Cash collateral for derivative financial instruments		37,912		37,245
Funds held on behalf of borrowers and tenants		11,903		12,838
Other restricted cash		5,010		22,299
	$	95,643	$	248,041

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Investment in Unconsolidated Entities

12 Months Ended

Dec. 31, 2019

Investment in Unconsolidated Entities

Investment in Unconsolidated Entities

8. Investment in Unconsolidated Entities

The table below summarizes our investments in unconsolidated entities as of December 31, 2018 and 2017 (dollars in thousands):

	Participation /	Carrying value as of December 31,
	Ownership % (1)	2019		2018
Equity method:
Retail Fund (see Note 16)	33%	$	—	$	114,362
Equity interest in a natural gas power plant (2)	10%		25,862		—
Investor entity which owns equity in an online real estate company	50%		9,473		9,372
Equity interests in commercial real estate	50%		1,907		6,294
Equity interest in and advances to a residential mortgage originator (3)	N/A		12,002		9,082
Various	25% - 50%		8,339		6,984
			57,583		146,094
Other:
Equity interest in a servicing and advisory business (4)	4%		—		6,207
Investment funds which own equity in a loan servicer and other real estate assets	4% - 6%		9,225		9,225
Various	0% - 2%		17,521		10,239
			26,746		25,671
		$	84,329	$	171,765

(1)None of these investments are publicly traded and therefore quoted market prices are not available.

(2)This 10% equity interest was obtained in November 2019 pursuant to a bankruptcy court ordered sale in satisfaction of a past due $36.2 million infrastructure loan which had a carrying value of $25.9 million and was secured by a gas-fired power generation facility. We report our interest in this investment on a three-month lag basis.

(3)As of December 31, 2019 and 2018, includes a $4.5 million and $2.0 million subordinated loan, respectively.

(4)During the year ended December 31, 2019, we received a capital distribution of $8.4 million and our equity interest was reduced to 4%.

We own a 33% equity interest in a fund that owns four regional shopping malls (the “Retail Fund”). The fund is an investment company which measures its assets at fair value on a recurring basis. We report our interest in the Retail Fund on a three-month lag basis at its liquidation value. During the three months ended March 31, 2019, we recorded a $44.9 million decrease to our investment due to unrealized decreases in the fair value of real estate properties reported to us by the Retail Fund.

In November 2019, the Retail Fund’s secured financing matured and was not repaid. In light of these events, we commissioned independent appraisals of the underlying assets in order to estimate the fair value of our investment in the Retail Fund as of December 31, 2019. Based upon the results of these appraisals, we recorded an impairment charge of $71.9 million against the remainder of our investment as of December 31, 2019. These amounts were recognized within (loss) earnings from unconsolidated entities in our consolidated statement of operations during the year ended December 31, 2019. The impairment charge resulted in a $71.9 million difference between the zero carrying value of our investment and the underlying equity in the net assets of the Retail Fund.

As of December 31, 2019, the carrying value of our equity investment in a residential mortgage originator exceeded the underlying equity in net assets of such investee by $1.6 million. This difference is the result of the Company recording its investment in the investee at its acquisition date fair value, which included certain non-amortizing intangible assets not recognized by the investee. Should the Company determine these intangible assets held by the investee are impaired, the Company will recognize such impairment loss through earnings from unconsolidated

entities in our consolidated statement of operations, otherwise, such difference between the carrying value of our equity investment in the residential mortgage originator and the underlying equity in the net assets of the residential mortgage originator will continue to exist.

During the year ended December 31, 2017, the investor entity which owns equity in an online real estate company sold approximately 88% of its interest in the online real estate company and we received a pre-tax cash distribution of $66.0 million from the investor entity related to the sale. We recognized $53.9 million of income from our investment in this investor entity as a result of the sale within earnings from unconsolidated entities in our consolidated statement of operations during the year ended December 31, 2017.

Other than our equity interests in the Retail Fund and the residential mortgage originator, there were no differences between the carrying value of our equity method investments and the underlying equity in the net assets of the investees as of December 31, 2019.

During the year ended December 31, 2019, we did not become aware of any observable price changes in our other investments accounted for under the fair value practicability exception discussed in Note 2 or any indicators of impairment.

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Schedule IV-Mortgage Loans on Real Estate

12 Months Ended

Dec. 31, 2019

Schedule IV-Mortgage Loans on Real Estate

Schedule IV-Mortgage Loans on Real Estate

Starwood Property Trust, Inc. and Subsidiaries

Schedule IV—Mortgage Loans on Real Estate

December 31, 2019

(Dollars in thousands)

	Prior		Face		Carrying			Payment	Maturity	Principal Amount of
Description/ Location	Liens (1)		Amount		Amount		Interest Rate (2)	Terms (3)	Date (4)	Delinquent Loans
Individually Significant First Mortgages: (5)
Mixed Use, Birmingham, United Kingdom	$	—	$	331,342	$	327,235	3GBP+4.35%	I/O	1/11/2024	$	—
Multifamily, Various, United Kingdom		—		301,709		299,822	3GBP+4.50%	I/O	10/26/2021		—
Office, Irvine, CA		—		303,516		302,496	L+2.25% to 4.50%	I/O	9/9/2020		—
Aggregated First Mortgages: (5)
Hotel, International, Floating (3 mortgages)		N/A		N/A		33,265	3EU+4.90%	N/A	2022		—
Hotel, International, Floating (2 mortgages)		N/A		N/A		32,798	L+3.00% to 9.00%	N/A	2021		—
Hotel, Mid Atlantic, Floating (4 mortgages)		N/A		N/A		95,277	L+2.00% to 6.80%	N/A	2022		—
Hotel, Midwest, Floating (4 mortgages)		N/A		N/A		53,482	L+2.25% to 8.63%	N/A	2020		—
Hotel, North East, Floating (4 mortgages)		N/A		N/A		159,787	L+2.50% to 10.00%	N/A	2020-2023		—
Hotel, South East, Floating (4 mortgages)		N/A		N/A		59,462	L+2.40% to 7.40%	N/A	2022		—
Hotel, South West, Floating (8 mortgages)		N/A		N/A		158,577	L+2.00% to 7.67%	N/A	2023		—
Hotel, Various, Floating (9 mortgages)		N/A		N/A		364,603	L+2.00% to 10.50%	N/A	2021		—
Hotel, West, Floating (17 mortgages)		N/A		N/A		414,745	L+2.00% to 9.50%	N/A	2021-2024		—
Industrial, South East, Fixed (4 mortgages)		N/A		N/A		37,365	8.18%	N/A	2024		—
Mixed Use, International, Fixed (1 mortgage)		N/A		N/A		27,069	8.50%	N/A	2021		—
Mixed Use, International, Floating (2 mortgages)		N/A		N/A		98,646	3EU+4.85%	N/A	2023		—
Mixed Use, International, Floating (3 mortgages)		N/A		N/A		118,001	GBP+3.15% to 5.75%	N/A	2020-2022		—
Mixed Use, Mid Atlantic, Floating (1 mortgage)		N/A		N/A		3,796	L+3.15%	N/A	2024		—
Mixed Use, South East, Fixed (4 mortgages)		N/A		N/A		108,133	5.00% to 12.00%	N/A	2024		—
Mixed Use, South West, Floating (10 mortgages)		N/A		N/A		129,970	L+2.50% to 10.00%	N/A	2020-2022		—
Mixed Use, West, Floating (2 mortgages)		N/A		N/A		208,279	L+6.37%	N/A	2020		—
Multi-family, International, Fixed (1 mortgage)		N/A		N/A		10,655	8.00%	N/A	2021		—
Multi-family, Midwest, Fixed (1 mortgage)		N/A		N/A		1,294	6.28%	N/A	2024		—
Multi-family, Mid Atlantic, Floating (2 mortgages)		N/A		N/A		89,970	L+1.75% to 5.75%	N/A	2023		—
Multi-family, North East, Floating (7 mortgages)		N/A		N/A		280,322	L+1.85% to 6.45%	N/A	2021-2023		—
Multi-family, South West, Floating (10 mortgages)		N/A		N/A		183,159	L+2.50% to 3.00%	N/A	2021-2022		—
Multi-family, West, Floating (4 mortgages)		N/A		N/A		24,201	L+3.75% to 9.25%	N/A	2020		—
Office, International, Fixed (1 mortgage)		N/A		N/A		151,772	5.35%	N/A	2021		—
Office, International, Floating (2 mortgages)		N/A		N/A		259,567	3GBP+3.50% to 3.65%	N/A	2023		—
Office, International, Floating (2 mortgages)		N/A		N/A		26,780	EUR+6.00% to 7.80%	N/A	2021-2022		—
Office, Mid Atlantic, Floating (25 mortgages)		N/A		N/A		609,434	L+1.75% to 7.50%	N/A	2021-2023		—
Office, Midwest, Floating (6 mortgages)		N/A		N/A		129,593	L+1.75% to 9.75%	N/A	2021		—
Office, North East, Floating (22 mortgages)		N/A		N/A		826,429	L+2.80% to 12.00%	N/A	2020-2023		—
Office, South East, Floating (4 mortgages)		N/A		N/A		126,443	L+2.00% to 8.25%	N/A	2020		—
Office, South West, Floating (11 mortgages)		N/A		N/A		271,045	L+2.00% to 8.55%	N/A	2020-2023		—
Office, West, Floating (19 mortgages)		N/A		N/A		631,645	L+1.25% to 8.60%	N/A	2021-2024		—
Other, Midwest, Floating (4 mortgages)		N/A		N/A		59,729	L+4.50% to 11.17%	N/A	2021		—
Other, Various, Fixed (1 mortgage)		N/A		N/A		40,583	10.00%	N/A	2025		—
Other, Various, Floating (1 mortgage)		N/A		N/A		76,583	3M L+4.00%	N/A	2024		—
Other, West, Floating (4 mortgages)		N/A		N/A		24,356	L+7.00%	N/A	2021		—
Residential, North East, Fixed (1 mortgage)		N/A		N/A		31,855	8.00%	N/A	2020		16,167
Residential, North East, Floating (16 mortgages)		N/A		N/A		727,851	L+2.50% to 8.60%	N/A	2020-2022		49,149
Residential, West, Floating (3 mortgages)		N/A		N/A		34,118	L+2.75% to 8.75%	N/A	2021		—
Residential, Various, Fixed (1,197 mortgages)		N/A		N/A		671,572	3.25% to 9.00%	N/A	2013-2019		5,619
Retail, Midwest, Floating (4 mortgages)		N/A		N/A		40,436	L+2.75% to 10.75%	N/A	2020		—
Retail, North East, Floating (1 mortgage)		N/A		N/A		167,678	L+7.25%	N/A	2021		—
Retail, South West, Floating (8 mortgages)		N/A		N/A		71,350	L+2.25% to 15.25%	N/A	2020		—
Retail, West, Fixed (1 mortgage)		N/A		N/A		503	7.26%	N/A	2023		—
Loans Held-for-Sale, Various, Fixed		N/A		N/A		764,622	3.40% to 9.13%	N/A	2015-2029		2,528
Aggregated Subordinated and Mezzanine Loans: (5)
Hotel, North East, Floating (2 mortgages)		N/A		N/A		36,167	L+7.55% to 9.00%	N/A	2021		—
Hotel, South East, Floating (3 mortgages)		N/A		N/A		82,947	L+6.75% to 7.04%	N/A	2021-2022		—
Industrial, South East, Fixed (1 mortgage)		N/A		N/A		2,337	8.18%	N/A	2024		—
Industrial, South East, Floating (2 mortgages)		N/A		N/A		21,882	L+12.75%	N/A	2020		—
Mixed Use, International, Floating (1 mortgage)		N/A		N/A		56,515	3EU+7.25%	N/A	2022		—
Mixed Use, South East, Floating (2 mortgages)		N/A		N/A		25,628	L+5.50% to 10.25%	N/A	2021		—
Mixed Use, South West, Floating (1 mortgage)		N/A		N/A		83,353	L+11.85%	N/A	2021		—
Multi-family, Mid Atlantic, Floating (1 mortgage)		N/A		N/A		24,330	L+9.75%	N/A	2022		—
Multi-family, North East, Floating (3 mortgages)		N/A		N/A		62,780	L+7.10% to 9.25%	N/A	2021-2023		—
Office, International, Floating (2 mortgages)		N/A		N/A		23,491	3EU+8.95%	N/A	2024		—
Office, North East, Fixed (2 mortgages)		N/A		N/A		34,456	8.72%	N/A	2023		—
Office, South East, Fixed (1 mortgage)		N/A		N/A		7,245	8.25%	N/A	2020		—
Office, West, Floating (1 mortgage)		N/A		N/A		25,300	L+6.67%	N/A	2022		—
Other, West, Floating (2 mortgages)		N/A		N/A		61,577	L+11.00%	N/A	2021		—
Retail, Midwest, Fixed (2 mortgages)		N/A		N/A		11,977	7.16%	N/A	2024		11,977

	Prior		Face		Carrying				Payment	Maturity	Principal Amount of
Description/ Location	Liens (1)		Amount		Amount			Interest Rate (2)	Terms (3)	Date (4)	Delinquent Loans
Loan Loss Allowance		—		—		(33,415)						—
Prepaid Loan Costs, Net		—		—		(2,230)						—
					$	9,890,693	(6)				$	85,440

Notes to Schedule IV:

(1) Represents third party priority liens. Third party portions of pari-passu participations are not considered prior liens. Additionally, excludes the outstanding debt on third party joint ventures of underlying borrowers.

(2) L = one month LIBOR rate, 3M L = three month LIBOR rate, GBP = one month GBP LIBOR rate, 3GBP = three month GBP LIBOR rate, 3EU = three month EURO LIBOR rate.

(3) I/O = interest only until maturity.

(4) Based on management’s judgment of extension options being exercised.

(5) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan. 

(6) The aggregate cost for federal income tax purposes is $10.0 billion.

The following schedule presents activity within our Commercial and Residential Lending Segment and Investing and Servicing Segment loan portfolios during the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):

	For the year ended December 31,
	2019		2018		2017
Balance at January 1	$	7,806,699	$	7,357,034	$	5,946,274
Acquisitions/originations/additional funding		8,174,321		6,543,873		5,494,837
Capitalized interest		109,978		62,445		73,784
Basis of loans sold		(3,921,171)		(3,082,347)		(1,634,717)
Loan maturities/principal repayments		(2,387,843)		(3,086,107)		(2,657,696)
Discount accretion/premium amortization		29,775		37,408		38,560
Changes in fair value		71,601		40,522		66,987
Unrealized foreign currency translation gain (loss)		38,050		(26,645)		42,356
Loan loss provision, net		(2,616)		(34,821)		5,458
Loan foreclosures		(27,303)		—		—
Transfer to/from other asset classifications		(798)		(4,663)		(18,809)
Balance at December 31	$	9,890,693	$	7,806,699	$	7,357,034

Refer to Note 16 to the Consolidated Financial Statements for a discussion of loan activity with related parties.

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Consolidated Statements of Comprehensive Income
Net income	$ 536,935	$ 411,197	$ 412,767
Other comprehensive (loss) income (net change by component):
Cash flow hedges		(25)	51
Available-for-sale securities	(2,519)	(4,374)	12,960
Foreign currency translation	(5,209)	(6,865)	20,775
Other comprehensive (loss) income	(7,728)	(11,264)	33,786
Comprehensive income	529,207	399,933	446,553
Less: Comprehensive income attributable to non-controlling interests	(27,271)	(25,367)	(11,997)
Comprehensive income attributable to Starwood Property Trust, Inc.	$ 501,936	$ 374,566	$ 434,556

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Segment and Geographic Data

12 Months Ended

Dec. 31, 2019

Segment Data and Geographic Data

Segment and Geographic Data

23. Segment and Geographic Data

In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis prior to the impact of consolidating securitization VIEs under ASC 810. The segment information within this Note is reported on that basis.

The table below presents our results of operations for the year ended December 31, 2019 by business segment (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	$	610,316	$	99,580	$	—	$	14,117	$	—	$	724,013	$	—	$	724,013
Interest income from investment securities		81,255		6,318		—		117,663		—		205,236		(128,607)		76,629
Servicing fees		423		—		—		69,962		—		70,385		(16,089)		54,296
Rental income		—		—		287,094		50,872		—		337,966		—		337,966
Other revenues		1,038		751		409		1,317		26		3,541		(26)		3,515
Total revenues		693,032		106,649		287,503		253,931		26		1,341,141		(144,722)		1,196,419
Costs and expenses:
Management fees		1,495		—		—		72		117,404		118,971		161		119,132
Interest expense		222,118		62,836		76,838		33,621		113,964		509,377		(648)		508,729
General and administrative		29,481		18,260		6,232		87,115		13,681		154,769		343		155,112
Acquisition and investment pursuit costs		1,351		75		217		(587)		—		1,056		—		1,056
Costs of rental operations		2,691		—		95,370		24,921		—		122,982		—		122,982
Depreciation and amortization		1,091		83		92,561		19,587		—		113,322		—		113,322
Loan loss provision, net		2,616		4,510		—		—		—		7,126		—		7,126
Other expense		307		—		1,693		365		—		2,365		—		2,365
Total costs and expenses		261,150		85,764		272,911		165,094		245,049		1,029,968		(144)		1,029,824
Other income (loss):
Change in net assets related to consolidated VIEs		—		—		—		—		—		—		236,309		236,309
Change in fair value of servicing rights		—		—		—		(1,468)		—		(1,468)		(2,172)		(3,640)
Change in fair value of investment securities, net		(1,084)		—		—		89,206		—		88,122		(87,289)		833
Change in fair value of mortgage loans held-for-sale, net		10,462		—		—		61,139		—		71,601		—		71,601
Earnings (loss) from unconsolidated entities		10,649		—		(114,362)		4,166		—		(99,547)		(1,807)		(101,354)
Gain on sale of investments and other assets, net		4,619		3,041		119,746		60,622		—		188,028		—		188,028
(Loss) gain on derivative financial instruments, net		(20,325)		(3,349)		(1,284)		(7,414)		26,062		(6,310)		—		(6,310)
Foreign currency gain (loss), net		17,342		205		37		(2)		—		17,582		—		17,582
Loss on extinguishment of debt		(857)		(11,357)		(4,745)		(845)		(1,466)		(19,270)		—		(19,270)
Other (loss) income, net		—		(50)		(100)		16		(73)		(207)		—		(207)
Total other income (loss)		20,806		(11,510)		(708)		205,420		24,523		238,531		145,041		383,572
Income (loss) before income taxes		452,688		9,375		13,884		294,257		(220,500)		549,704		463		550,167
Income tax (provision) benefit		(4,818)		89		(393)		(8,110)		—		(13,232)		—		(13,232)
Net income (loss)		447,870		9,464		13,491		286,147		(220,500)		536,472		463		536,935
Net income attributable to non-controlling interests		(392)		—		(21,630)		(4,786)		—		(26,808)		(463)		(27,271)
Net income (loss) attributable to Starwood Property Trust, Inc.	$	447,478	$	9,464	$	(8,139)	$	281,361	$	(220,500)	$	509,664	$	—	$	509,664

The table below presents our results of operations for the year ended December 31, 2018 by business segment (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	$	576,564	$	28,995	$	—	$	14,984	$	—	$	620,543	$	—	$	620,543
Interest income from investment securities		50,063		1,095		—		127,100		—		178,258		(121,419)		56,839
Servicing fees		421		—		—		103,866		—		104,287		(25,521)		78,766
Rental income		—		—		292,453		57,231		—		349,684		—		349,684
Other revenues		902		619		444		1,299		360		3,624		(176)		3,448
Total revenues		627,950		30,709		292,897		304,480		360		1,256,396		(147,116)		1,109,280
Costs and expenses:
Management fees		1,838		—		—		72		127,133		129,043		412		129,455
Interest expense		160,769		20,949		75,192		27,459		124,805		409,174		(986)		408,188
General and administrative		26,324		5,631		7,113		84,978		11,747		135,793		339		136,132
Acquisition and investment pursuit costs		2,490		6,806		(46)		(663)		—		8,587		—		8,587
Costs of rental operations		—		—		99,632		27,436		—		127,068		—		127,068
Depreciation and amortization		76		—		110,684		21,889		—		132,649		—		132,649
Loan loss provision, net		34,821		—		—		—		—		34,821		—		34,821
Other expense		307		—		(27)		452		—		732		—		732
Total costs and expenses		226,625		33,386		292,548		161,623		263,685		977,867		(235)		977,632
Other income (loss):
Change in net assets related to consolidated VIEs		—		—		—		—		—		—		165,892		165,892
Change in fair value of servicing rights		—		—		—		(14,373)		—		(14,373)		4,171		(10,202)
Change in fair value of investment securities, net		(2,765)		—		—		33,229		—		30,464		(20,119)		10,345
Change in fair value of mortgage loans held-for-sale, net		(6,851)		—		—		47,373		—		40,522		—		40,522
Earnings from unconsolidated entities		5,063		—		3,658		3,809		—		12,530		(1,990)		10,540
Gain on sale of investments and other assets, net		4,019		—		28,468		26,557		—		59,044		—		59,044
Gain (loss) on derivative financial instruments, net		17,654		1,821		22,756		(298)		(7,330)		34,603		—		34,603
Foreign currency loss, net		(7,816)		(1,425)		(2)		(2)		—		(9,245)		—		(9,245)
Loss on extinguishment of debt		(730)		—		(2,661)		(318)		(2,099)		(5,808)		—		(5,808)
Other income (loss), net		43		—		508		(1,363)		—		(812)		—		(812)
Total other income (loss)		8,617		396		52,727		94,614		(9,429)		146,925		147,954		294,879
Income (loss) before income taxes		409,942		(2,281)		53,076		237,471		(272,754)		425,454		1,073		426,527
Income tax provision		(2,801)		(292)		(7,549)		(4,688)		—		(15,330)		—		(15,330)
Net income (loss)		407,141		(2,573)		45,527		232,783		(272,754)		410,124		1,073		411,197
Net income attributable to non-controlling interests		(1,451)		—		(17,623)		(5,220)		—		(24,294)		(1,073)		(25,367)
Net income (loss) attributable to Starwood Property Trust, Inc.	$	405,690	$	(2,573)	$	27,904	$	227,563	$	(272,754)	$	385,830	$	—	$	385,830

The table below presents our results of operations for the year ended December 31, 2017 by business segment (amounts in thousands):

	Commercial and
	Residential				Investing
	Lending		Property		and Servicing						Securitization
	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 provision, 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
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

The table below presents our consolidated balance sheet as of December 31, 2019 by business segment (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	$	26,278	$	2,209	$	30,123	$	61,693	$	356,864	$	477,167	$	1,221	$	478,388
Restricted cash		36,135		41,967		7,171		10,370		—		95,643		—		95,643
Loans held-for-investment, net		9,187,332		1,397,448		—		1,294		—		10,586,074		—		10,586,074
Loans held-for-sale		605,384		119,528		—		159,238		—		884,150		—		884,150
Investment securities		992,974		45,153		—		1,177,148		—		2,215,275		(1,405,037)		810,238
Properties, net		26,834		—		2,029,024		210,582		—		2,266,440		—		2,266,440
Intangible assets		—		—		47,303		64,644		—		111,947		(26,247)		85,700
Investment in unconsolidated entities		46,921		25,862		—		32,183		—		104,966		(20,637)		84,329
Goodwill		—		119,409		—		140,437		—		259,846		—		259,846
Derivative assets		14,718		7		3		7		14,208		28,943		—		28,943
Accrued interest receivable		45,996		3,134		133		2,388		13,242		64,893		(806)		64,087
Other assets		59,170		6,101		82,910		54,238		8,911		211,330		(7)		211,323
VIE assets, at fair value		—		—		—		—		—		—		62,187,175		62,187,175
Total Assets	$	11,041,742	$	1,760,818	$	2,196,667	$	1,914,222	$	393,225	$	17,306,674	$	60,735,662	$	78,042,336
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	30,594	$	6,443	$	48,370	$	73,021	$	53,494	$	211,922	$	84	$	212,006
Related-party payable		—		—		—		5		40,920		40,925		—		40,925
Dividends payable		—		—		—		—		137,427		137,427		—		137,427
Derivative liabilities		7,698		750		—		292		—		8,740		—		8,740
Secured financing agreements, net		5,038,876		1,217,066		1,698,334		574,507		391,215		8,919,998		(13,950)		8,906,048
Collateralized loan obligations, net		928,060		—		—		—		—		928,060		—		928,060
Unsecured senior notes, net		—		—		—		—		1,928,622		1,928,622		—		1,928,622
VIE liabilities, at fair value		—		—		—		—		—		—		60,743,494		60,743,494
Total Liabilities		6,005,228		1,224,259		1,746,704		647,825		2,551,678		12,175,694		60,729,628		72,905,322
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock		—		—		—		—		2,874		2,874		—		2,874
Additional paid-in capital		1,522,360		529,668		208,650		(123,210)		2,995,064		5,132,532		—		5,132,532
Treasury stock		—		—		—		—		(104,194)		(104,194)		—		(104,194)
Accumulated other comprehensive income (loss)		50,996		—		—		(64)		—		50,932		—		50,932
Retained earnings (accumulated deficit)		3,463,158		6,891		5,431		1,194,998		(5,052,197)		(381,719)		—		(381,719)
Total Starwood Property Trust, Inc. Stockholders’ Equity		5,036,514		536,559		214,081		1,071,724		(2,158,453)		4,700,425		—		4,700,425
Non-controlling interests in consolidated subsidiaries		—		—		235,882		194,673		—		430,555		6,034		436,589
Total Equity		5,036,514		536,559		449,963		1,266,397		(2,158,453)		5,130,980		6,034		5,137,014
Total Liabilities and Equity	$	11,041,742	$	1,760,818	$	2,196,667	$	1,914,222	$	393,225	$	17,306,674	$	60,735,662	$	78,042,336

The table below presents our consolidated balance sheet as of December 31, 2018 by business segment (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	$	14,385	$	13	$	27,408	$	31,449	$	164,015	$	237,270	$	2,554	$	239,824
Restricted cash		28,324		175,659		25,144		11,679		7,235		248,041		—		248,041
Loans held-for-investment, net		7,072,220		1,456,779		—		3,357		—		8,532,356		—		8,532,356
Loans held-for-sale		670,155		469,775		—		47,622		—		1,187,552		—		1,187,552
Loans transferred as secured borrowings		74,346		—		—		—		—		74,346		—		74,346
Investment securities		1,050,920		60,768		—		998,820		—		2,110,508		(1,204,040)		906,468
Properties, net		—		—		2,512,847		272,043		—		2,784,890		—		2,784,890
Intangible assets		—		—		90,889		78,219		—		169,108		(24,075)		145,033
Investment in unconsolidated entities		35,274		—		114,362		44,129		—		193,765		(22,000)		171,765
Goodwill		—		119,409		—		140,437		—		259,846		—		259,846
Derivative assets		18,174		1,066		32,733		718		—		52,691		—		52,691
Accrued interest receivable		39,862		6,982		359		616		13,177		60,996		(641)		60,355
Other assets		13,958		20,472		67,098		49,363		2,057		152,948		(26)		152,922
VIE assets, at fair value		—		—		—		—		—		—		53,446,364		53,446,364
Total Assets	$	9,017,618	$	2,310,923	$	2,870,840	$	1,678,452	$	186,484	$	16,064,317	$	52,198,136	$	68,262,453
Liabilities and Equity
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	26,508	$	26,476	$	67,415	$	75,655	$	21,467	$	217,521	$	142	$	217,663
Related-party payable		—		—		—		53		43,990		44,043		—		44,043
Dividends payable		—		—		—		—		133,466		133,466		—		133,466
Derivative liabilities		1,290		477		37		1,423		12,188		15,415		—		15,415
Secured financing agreements, net		4,405,599		1,524,551		1,884,187		585,258		297,920		8,697,515		(13,950)		8,683,565
Unsecured senior notes, net		—		—		—		—		1,998,831		1,998,831		—		1,998,831
Secured borrowings on transferred loans		74,239		—		—		—		—		74,239		—		74,239
VIE liabilities, at fair value		—		—		—		—		—		—		52,195,042		52,195,042
Total Liabilities		4,507,636		1,551,504		1,951,639		662,389		2,507,862		11,181,030		52,181,234		63,362,264
Equity:
Starwood Property Trust, Inc. Stockholders’ Equity:
Common stock		—		—		—		—		2,808		2,808		—		2,808
Additional paid-in capital		1,430,503		761,992		645,561		87,779		2,069,321		4,995,156		—		4,995,156
Treasury stock		—		—		—		—		(104,194)		(104,194)		—		(104,194)
Accumulated other comprehensive income (loss)		53,516		—		5,208		(64)		—		58,660		—		58,660
Retained earnings (accumulated deficit)		3,015,676		(2,573)		13,570		913,642		(4,289,313)		(348,998)		—		(348,998)
Total Starwood Property Trust, Inc. Stockholders’ Equity		4,499,695		759,419		664,339		1,001,357		(2,321,378)		4,603,432		—		4,603,432
Non-controlling interests in consolidated subsidiaries		10,287		—		254,862		14,706		—		279,855		16,902		296,757
Total Equity		4,509,982		759,419		919,201		1,016,063		(2,321,378)		4,883,287		16,902		4,900,189
Total Liabilities and Equity	$	9,017,618	$	2,310,923	$	2,870,840	$	1,678,452	$	186,484	$	16,064,317	$	52,198,136	$	68,262,453

Revenues generated from foreign sources were $115.6 million, $90.5 million and $82.0 million for the years ended December 31, 2019, 2018 and 2017, respectively. The majority of our revenues generated from foreign sources are derived from the United Kingdom and Ireland. Refer to Schedules III and IV for a detailed listing of the properties and loans held by the Company, including their respective geographic locations.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Feb. 20, 2020	Jun. 30, 2019
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2019
Entity File Number	001-34436
Entity Registrant Name	Starwood Property Trust, Inc.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	27-0247747
Entity Address, Address Line One	591 West Putnam Avenue
Entity Address, City or Town	Greenwich
Entity Address, State or Province	CT
Entity Address, Postal Zip Code	06830
City Area Code	203
Local Phone Number	422-7700
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	STWD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		282,613,156
Entity Central Index Key	0001465128
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Public Float			$ 6,183,846,104

XML

Business and Organization

12 Months Ended

Dec. 31, 2019

Business and Organization

Business and Organization

1. Business and Organization

Starwood Property Trust, Inc. (“STWD” and, together with its subsidiaries, “we” or the “Company”) is a Maryland corporation that commenced operations in August 2009, upon the completion of our initial public offering. We are focused primarily on originating, acquiring, financing and managing mortgage loans and other real estate investments in both the United States (“U.S.”) and Europe. As market conditions change over time, we may adjust our strategy to take advantage of changes in interest rates and credit spreads as well as economic and credit conditions.

We have four reportable business segments as of December 31, 2019 and we refer to the investments within these segments as our target assets:

● Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial and residential first mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in both the U.S. and Europe (including distressed or non-performing loans).

● Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments.

● Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that are held for investment.

● Real estate investing and servicing (the “Investing and Servicing Segment”)—includes (i) a servicing business in the U.S. that manages and works out problem assets, (ii) an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, including subordinated interests of securitization and resecuritization transactions, (iii) a mortgage loan business which originates conduit loans for the primary purpose of selling these loans into securitization transactions and (iv) an investment business that selectively acquires commercial real estate assets, including properties acquired from CMBS trusts.

Our segments exclude the consolidation of securitization variable interest entities (“VIEs”).

We are organized and conduct our operations to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). As such, we will generally not be subject to U.S. federal corporate income tax on that portion of our net income that is distributed to stockholders if we distribute at least 90% of our taxable income to our stockholders by prescribed dates and comply with various other requirements.

We are organized as a holding company and conduct our business primarily through our various wholly-owned subsidiaries. We are externally managed and advised by SPT Management, LLC (our “Manager”) pursuant to the terms of a management agreement. Our Manager is controlled by Barry Sternlicht, our Chairman and Chief Executive Officer. Our Manager is an affiliate of Starwood Capital Group, a privately-held private equity firm founded by Mr. Sternlicht.

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Loans (Tables)

12 Months Ended

Dec. 31, 2019

Loans

Summary of investments in mortgages and loans by subordination class

The following tables summarize our investments in mortgages and loans by subordination class as of December 31, 2019 and 2018 (dollars in thousands):

							Weighted
					Weighted		Average Life
	Carrying		Face		Average		(“WAL”)
December 31, 2019	Value		Amount		Coupon (1)		(years)(2)
First mortgages (3)	$	7,928,026	$	7,962,788	5.8	%	2.0
First priority infrastructure loans		1,397,448		1,416,164	5.6	%	4.9
Subordinated mortgages (4)		75,724		77,055	8.8	%	3.4
Mezzanine loans (3)		484,164		484,408	11.0	%	1.9
Residential loans, fair value option (5)		671,572		654,925	6.1	%	3.8
Other		62,555		66,525	8.2	%	1.6
Total loans held-for-investment		10,619,489		10,661,865
Loans held-for-sale, fair value option, residential (5)		605,384		587,144	6.2	%	3.9
Loans held-for-sale, fair value option, commercial		159,238		160,635	3.9	%	10.0
Loans held-for-sale, infrastructure		119,724		121,271	3.3	%	2.1
Total gross loans		11,503,835		11,530,915
Loan loss allowance		(33,611)		—
Total net loans	$	11,470,224	$	11,530,915
December 31, 2018
First mortgages (3)	$	6,607,117	$	6,631,236	6.9	%	2.0
First priority infrastructure loans		1,456,779		1,465,828	5.7	%	4.5
Subordinated mortgages (4)		52,778		53,996	8.9	%	3.7
Mezzanine loans (3)		393,832		394,739	10.6	%	2.0
Other		61,001		64,658	8.2	%	2.5
Total loans held-for-investment		8,571,507		8,610,457
Loans held-for-sale, fair value option, residential		623,660		609,571	6.3	%	6.6
Loans held-for-sale, commercial ($47,622 under fair value option)		94,117		94,916	5.4	%	6.2
Loans held-for-sale, infrastructure		469,775		486,909	3.5	%	0.3
Loans transferred as secured borrowings		74,346		74,692	7.1	%	1.3
Total gross loans		9,833,405		9,876,545
Loan loss allowance		(39,151)		—
Total net loans	$	9,794,254	$	9,876,545

(1) Calculated using LIBOR or other applicable index rates as of December 31, 2019 and 2018 for variable rate loans.

(2) Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination or acquisition.

(3) First mortgages include first mortgage loans and any contiguous mezzanine loan components because as a whole, the expected credit quality of these loans is more similar to that of a first mortgage loan.  The application of this methodology resulted in mezzanine loans with carrying values of $967.0 million and $1.0 billion being classified as first mortgages as of December 31, 2019 and 2018, respectively.

(4) Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.

(5) During the year ended December 31, 2019, $340.9 million of residential loans held-for-sale were reclassified into residential loans held-for-investment.

Summary of variable rate loans held-for-investment

As of December 31, 2019, our variable rate loans held-for-investment were as follows (dollars in thousands):

	Carrying		Weighted-average
December 31, 2019	Value		Spread Above Index
Commercial loans	$	8,030,499	4.2	%
First priority infrastructure loans		1,397,448	3.8	%
Total variable rate loans held-for-investment	$	9,427,947	4.2	%

Schedule of internal rating categories

The rating categories for commercial real estate loans generally include the characteristics described below, but these are utilized as guidelines and therefore not every loan will have all of the characteristics described in each category:

Rating	Characteristics
1	●	Sponsor capability and financial condition—Sponsor is highly rated or investment grade or, if private, the equivalent thereof with significant management experience.
	●	Loan collateral and performance relative to underwriting—The collateral has surpassed underwritten expectations.
	●	Quality and stability of collateral cash flows—Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high quality tenant mix.
	●	Loan structure—Loan to collateral value ratio (“LTV”) does not exceed 65%. The loan has structural features that enhance the credit profile.
2	●	Sponsor capability and financial condition—Strong sponsorship with experienced management team and a responsibly leveraged portfolio.
	●	Loan collateral and performance relative to underwriting—Collateral performance equals or exceeds underwritten expectations and covenants and performance criteria are being met or exceeded.
	●	Quality and stability of collateral cash flows—Occupancy is stabilized with a diverse tenant mix.
	●	Loan structure—LTV does not exceed 70% and unique property risks are mitigated by structural features.
3	●	Sponsor capability and financial condition—Sponsor has historically met its credit obligations, routinely pays off loans at maturity, and has a capable management team.
	●	Loan collateral and performance relative to underwriting—Property performance is consistent with underwritten expectations.
	●	Quality and stability of collateral cash flows—Occupancy is stabilized, near stabilized, or is on track with underwriting.
	●	Loan structure—LTV does not exceed 80%.
4	●	Sponsor capability and financial condition—Sponsor credit history includes missed payments, past due payment, and maturity extensions. Management team is capable but thin.
	●	Loan collateral and performance relative to underwriting—Property performance lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers. A sale of the property may be necessary in order for the borrower to pay off the loan at maturity.
	●	Quality and stability of collateral cash flows—Occupancy is not stabilized and the property has a large amount of rollover.
	●	Loan structure—LTV is 80% to 90%.
5	●	Sponsor capability and financial condition—Credit history includes defaults, deeds-in-lieu, foreclosures, and/or bankruptcies.
	●	Loan collateral and performance relative to underwriting—Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Sale proceeds would not be sufficient to pay off the loan at maturity.
	●	Quality and stability of collateral cash flows—The property has material vacancy and significant rollover of remaining tenants.
	●	Loan structure—LTV exceeds 90%.

Schedule of risk ratings by class of loan

The risk ratings for loans subject to our rating system, which excludes loans held-for-sale, by class of loan were as follows as of December 31, 2019 and 2018 (dollars in thousands):

	Balance Sheet Classification
	Loans Held-For-Investment														Loans
				First Priority											Transferred				% of
Risk Rating	First			Infrastructure			Subordinated			Mezzanine					As Secured				Total
Category	Mortgages			Loans			Mortgages			Loans		Other			Borrowings		Total		Loans
December 31, 2019
1	$	503		$	—		$	—		$	—	$	23,550		$	—	$	24,053	0.2	%
2		4,186,776			—			37,980			120,372		31,178			—		4,376,306	38.0	%
3		3,509,601			—			25,767			363,792		—			—		3,899,160	33.9	%
4		40,436			—			—			—		—			—		40,436	0.4	%
5		59,116			—			—			—		—			—		59,116	0.5	%
N/A		131,594	(1)		1,397,448	(2)		11,977	(1)		—		7,827	(1)		—		1,548,846	13.5	%
	$	7,928,026		$	1,397,448		$	75,724		$	484,164	$	62,555		$	—		9,947,917
Residential loans held-for-investment, fair value option																		671,572	5.8	%
Loans held-for-sale																		884,346	7.7	%
Total gross loans																	$	11,503,835	100.0	%
December 31, 2018
1	$	6,538		$	—		$	—		$	—	$	23,767		$	—	$	30,305	0.3	%
2		3,356,342			—			7,392			111,466		—			74,346		3,549,546	36.1	%
3		2,987,296			—			33,410			282,366		31,039			—		3,334,111	33.9	%
4		63,094			—			—			—		—			—		63,094	0.6	%
5		—			—			—			—		—			—		—	—	%
N/A		193,847	(1)		1,456,779	(2)		11,976	(1)		—		6,195	(1)		—		1,668,797	17.0	%
	$	6,607,117		$	1,456,779		$	52,778		$	393,832	$	61,001		$	74,346		8,645,853
Loans held-for-sale																		1,187,552	12.1	%
Total gross loans																	$	9,833,405	100.0	%

(1) Principally represents loans individually evaluated for impairment in accordance with ASC 310-10.

(2) First priority infrastructure loans were not risk rated as the Company is in the process of developing a risk rating policy for these loans.

Schedule of activity in allowance for loan losses

The following table presents the activity in our allowance for loan losses (amounts in thousands):

	For the year ended December 31,
	2019		2018		2017
Allowance for loan losses at January 1	$	39,151	$	4,330	$	9,788
Provision for (reversal of) loan losses		3,812		(3,384)		(5,458)
Provision for impaired loans		3,314		38,205		—
Charge-offs		(12,666)		—		—
Recoveries		—		—		—
Allowance for loan losses at December 31	$	33,611	$	39,151	$	4,330
Recorded investment in loans related to the allowance for loan loss	$	291,768	$	275,112	$	170,941

Schedule of activity in loan portfolio

The activity in our loan portfolio was as follows (amounts in thousands):

	For the year ended December 31,
	2019		2018		2017
Balance at January 1	$	9,794,254	$	7,382,641	$	5,946,274
Acquisitions/originations/additional funding		9,094,714		6,723,144		5,500,539
Acquisition of Infrastructure Lending Portfolio		—		1,969,340		—
Capitalized interest (1)		110,632		63,047		74,339
Basis of loans sold (2)		(4,311,390)		(3,082,347)		(1,634,717)
Loan maturities/principal repayments		(3,304,838)		(3,272,666)		(2,658,522)
Discount accretion/premium amortization		35,387		38,099		39,084
Changes in fair value		71,601		40,522		66,987
Unrealized foreign currency translation gain (loss)		40,155		(32,341)		42,356
Loan loss provision, net		(7,126)		(34,821)		5,458
Loan foreclosures		(27,303)		—		—
Transfer to/from other asset classifications		(25,862)		(364)		843
Balance at December 31	$	11,470,224	$	9,794,254	$	7,382,641

(1) Represents accrued interest income on loans whose terms do not require current payment of interest.

(2) See Note 12 for additional disclosure on these transactions.

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Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Quarterly Financial Data (Unaudited)
Revenues	$ 286,428	$ 288,330	$ 311,181	$ 310,480	$ 293,418	$ 285,719	$ 269,556	$ 260,587	$ 1,196,419	$ 1,109,280	$ 879,888
Net income	177,980	150,001	132,446	76,508	99,932	89,381	117,090	104,794	536,935	411,197	412,767
Net income attributable to Starwood Property Trust, Inc.	$ 171,869	$ 140,396	$ 127,016	$ 70,383	$ 92,132	$ 84,536	$ 109,230	$ 99,932	$ 509,664	$ 385,830	$ 400,770
Basic earnings per share:
Earnings per share - Basic (in dollars per share)	$ 0.61	$ 0.50	$ 0.45	$ 0.25	$ 0.33	$ 0.31	$ 0.41	$ 0.38	$ 1.81	$ 1.44	$ 1.53
Diluted earnings per share:
Earnings per share - Diluted (in dollars per share)	$ 0.60	$ 0.49	$ 0.45	$ 0.25	$ 0.33	$ 0.31	$ 0.40	$ 0.38	$ 1.79	$ 1.42	$ 1.52

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Business and Organization (Details)	12 Months Ended
	Dec. 31, 2019 segment
Business and Organization
Number of reportable business segments	4
Minimum annual REIT taxable income distributable to stockholders (as a percent)	90.00%

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Schedule IV-Mortgage Loans on Real Estate (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) loan	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Mortgage Loans on Real Estate
Face Amount	$ 11,530,915	$ 9,876,545
Carrying Amount	$ 11,470,224	9,794,254	$ 7,382,641	$ 5,946,274
Weighted average spread of loans (as a percent)	4.20%
Principal Amount of Delinquent Loans	$ 85,440
Aggregate cost for federal income tax purposes	10,000,000
Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Loan loss allowance	(33,415)
Prepaid Loan Costs, Net	(2,230)
Mixed Use, Birmingham, United Kingdom | Individually Significant First Mortgages
Mortgage Loans on Real Estate
Face Amount	331,342
Carrying Amount	$ 327,235
Mixed Use, Birmingham, United Kingdom | Individually Significant First Mortgages | 3 Month GBP LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	4.35%
Multifamily, Various, United Kingdom | Individually Significant First Mortgages
Mortgage Loans on Real Estate
Face Amount	$ 301,709
Carrying Amount	$ 299,822
Multifamily, Various, United Kingdom | Individually Significant First Mortgages | 3 Month GBP LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	4.50%
Office, Irvine, CA | Individually Significant First Mortgages
Mortgage Loans on Real Estate
Face Amount	$ 303,516
Carrying Amount	$ 302,496
Office, Irvine, CA | Individually Significant First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.25%
Office, Irvine, CA | Individually Significant First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	4.50%
Hotel, International, Floating (3 mortgages) | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 33,265
Number of loans | loan	3
Hotel, International, Floating (3 mortgages) | Aggregated First Mortgages | Three-month EURIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	4.90%
Hotel, International, Floating (2 mortgages) | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 32,798
Number of loans | loan	2
Hotel, International, Floating (2 mortgages) | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	3.00%
Hotel, International, Floating (2 mortgages) | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	9.00%
Hotel, Mid Atlantic, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 95,277
Number of loans | loan	4
Hotel, Mid Atlantic, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.00%
Hotel, Mid Atlantic, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	6.80%
Hotel, Midwest, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 53,482
Number of loans | loan	4
Hotel, Midwest, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.25%
Hotel, Midwest, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	8.63%
Hotel, North East, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 159,787
Number of loans | loan	4
Hotel, North East, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.50%
Hotel, North East, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	10.00%
Hotel, North East, Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 36,167
Number of loans | loan	2
Hotel, North East, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.55%
Hotel, North East, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	9.00%
Hotel, South East, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 59,462
Number of loans | loan	4
Hotel, South East, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.40%
Hotel, South East, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.40%
Hotel, South East, Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 82,947
Number of loans | loan	3
Hotel, South East, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	6.75%
Hotel, South East, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.04%
Hotel, South West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 158,577
Number of loans | loan	8
Hotel, South West, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.00%
Hotel, South West, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.67%
Hotel, Various, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 364,603
Number of loans | loan	9
Hotel, Various, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.00%
Hotel, Various, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	10.50%
Hotel, West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 414,745
Number of loans | loan	17
Hotel, West, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.00%
Hotel, West, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	9.50%
Industrial, South East, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 37,365
Weighted Average Coupon (as a percent)	8.18%
Number of loans | loan	4
Industrial, South East, Fixed | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 2,337
Weighted Average Coupon (as a percent)	8.18%
Number of loans | loan	1
Industrial, South East, Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 21,882
Number of loans | loan	2
Industrial, South East, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	12.75%
Mixed Use, International, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 27,069
Weighted Average Coupon (as a percent)	8.50%
Number of loans | loan	1
Mixed Use, International, Floating (2 mortgages) | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 98,646
Number of loans | loan	2
Mixed Use, International, Floating (2 mortgages) | Aggregated First Mortgages | Three-month EURIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	4.85%
Mixed Use, International, Floating (3 mortgages) | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 118,001
Number of loans | loan	3
Mixed Use, International, Floating (3 mortgages) | Aggregated First Mortgages | 1-month GBP LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	3.15%
Mixed Use, International, Floating (3 mortgages) | Aggregated First Mortgages | 1-month GBP LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	5.75%
Mixed Use, International, Floating (1 mortgage) | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 56,515
Number of loans | loan	1
Mixed Use, International, Floating (1 mortgage) | Aggregated Subordinated and Mezzanine Loans | Three-month EURIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.25%
Mixed Use, Mid Atlantic, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 3,796
Number of loans | loan	1
Mixed Use, Mid Atlantic, Floating | Aggregated First Mortgages | 1-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	3.15%
Mixed Use, South East, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 108,133
Number of loans | loan	4
Mixed Use, South East, Fixed | Aggregated First Mortgages | Minimum
Mortgage Loans on Real Estate
Weighted Average Coupon (as a percent)	5.00%
Mixed Use, South East, Fixed | Aggregated First Mortgages | Maximum
Mortgage Loans on Real Estate
Weighted Average Coupon (as a percent)	12.00%
Mixed Use South East Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 25,628
Number of loans | loan	2
Mixed Use South East Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	5.50%
Mixed Use South East Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	10.25%
Mixed Use, South West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 129,970
Number of loans | loan	10
Mixed Use, South West, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.50%
Mixed Use, South West, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	10.00%
Mixed Use, South West, Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 83,353
Number of loans | loan	1
Mixed Use, South West, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	11.85%
Mixed Use, West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 208,279
Number of loans | loan	2
Mixed Use, West, Floating | Aggregated First Mortgages | 1-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	6.37%
Multi-family, International, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 10,655
Weighted Average Coupon (as a percent)	8.00%
Number of loans | loan	1
Multi Family, Midwest, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 1,294
Weighted Average Coupon (as a percent)	6.28%
Number of loans | loan	1
Multi-Family, Mid Atlantic, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 89,970
Number of loans | loan	2
Multi-Family, Mid Atlantic, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	1.75%
Multi-Family, Mid Atlantic, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	5.75%
Multi-Family, Mid Atlantic, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	9.75%
Multi-Family, North East, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 280,322
Number of loans | loan	7
Multi-Family, North East, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	1.85%
Multi-Family, North East, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	6.45%
Multi-Family, North East, Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 62,780
Number of loans | loan	3
Multi-Family, North East, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.10%
Multi-Family, North East, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	9.25%
Multifamily, South West Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 183,159
Number of loans | loan	10
Multifamily, South West Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.50%
Multifamily, South West Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	3.00%
Multi-Family, West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 24,201
Number of loans | loan	4
Multi-Family, West, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	3.75%
Multi-Family, West, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	9.25%
Office , International , Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 151,772
Weighted Average Coupon (as a percent)	5.35%
Number of loans | loan	1
Office, Mid Atlantic, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 609,434
Number of loans | loan	25
Office, Mid Atlantic, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	1.75%
Office, Mid Atlantic, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.50%
Office, Midwest, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 129,593
Number of loans | loan	6
Office, Midwest, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	1.75%
Office, Midwest, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	9.75%
Office, North East, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 826,429
Number of loans | loan	22
Office, North East, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.80%
Office, North East, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	12.00%
Office , South East , Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 126,443
Number of loans | loan	4
Office , South East , Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.00%
Office , South East , Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	8.25%
Office, South West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 271,045
Number of loans | loan	11
Office, South West, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.00%
Office, South West, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	8.55%
Office, West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 631,645
Number of loans | loan	19
Office, West, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	1.25%
Office, West, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	8.60%
Office, West, Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 25,300
Number of loans | loan	1
Office, West, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	6.67%
Other, Midwest, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 59,729
Number of loans | loan	4
Other, Midwest, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	4.50%
Other, Midwest, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	11.17%
Other, Various, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 40,583
Weighted Average Coupon (as a percent)	10.00%
Number of loans | loan	1
Other, Various, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 76,583
Number of loans | loan	1
Other, Various, Floating | Aggregated First Mortgages | 3-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	4.00%
Other, West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 24,356
Number of loans | loan	4
Other, West, Floating | Aggregated First Mortgages | 1-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.00%
Other, West, Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 61,577
Number of loans | loan	2
Other, West, Floating | Aggregated Subordinated and Mezzanine Loans | 1-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	11.00%
Office , International , Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 259,567
Number of loans | loan	2
Office , International , Floating | Aggregated First Mortgages | 3 Month GBP LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	3.50%
Office , International , Floating | Aggregated First Mortgages | 3 Month GBP LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	3.65%
Office , International , Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 23,491
Number of loans | loan	2
Office , International , Floating | Aggregated Subordinated and Mezzanine Loans | Three-month EURIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	8.95%
Office , International , Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 26,780
Number of loans | loan	2
Office , International , Floating | Aggregated First Mortgages | One-month EURIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	6.00%
Office , International , Floating | Aggregated First Mortgages | One-month EURIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.80%
Office, North East, Fixed | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 34,456
Weighted Average Coupon (as a percent)	8.72%
Number of loans | loan	2
Office, North East, Fixed | Aggregated Subordinated and Mezzanine Loans | Minimum
Mortgage Loans on Real Estate
Weighted Average Coupon (as a percent)	8.72%
Residential, North East, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 31,855
Weighted Average Coupon (as a percent)	8.00%
Principal Amount of Delinquent Loans	$ 16,167
Number of loans | loan	1
Residential, North East, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 727,851
Principal Amount of Delinquent Loans	$ 49,149
Number of loans | loan	16
Residential, North East, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.50%
Residential, North East, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	8.60%
Residential, West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 34,118
Number of loans | loan	3
Residential, West, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.75%
Residential, West, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	8.75%
Retail , Midwest ,Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 40,436
Number of loans | loan	4
Retail , Midwest ,Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.75%
Retail , Midwest ,Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	10.75%
Retail, North East, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 167,678
Number of loans | loan	1
Retail, North East, Floating | Aggregated First Mortgages | 1-month LIBOR
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	7.25%
Retail, South West, Floating | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 71,350
Number of loans | loan	8
Retail, South West, Floating | Aggregated First Mortgages | 1-month LIBOR | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	2.25%
Retail, South West, Floating | Aggregated First Mortgages | 1-month LIBOR | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	15.25%
Retail, West, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 503
Weighted Average Coupon (as a percent)	7.26%
Number of loans | loan	1
Multi-family, Mid Atlantic, Floating | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 24,330
Number of loans | loan	1
Office, South East, Fixed | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 7,245
Weighted Average Coupon (as a percent)	8.25%
Number of loans | loan	1
Retail, Midwest, Fixed | Aggregated Subordinated and Mezzanine Loans
Mortgage Loans on Real Estate
Carrying Amount	$ 11,977
Weighted Average Coupon (as a percent)	7.16%
Principal Amount of Delinquent Loans	$ 11,977
Number of loans | loan	2
Loans Held-for-Sale, Various, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 764,622
Principal Amount of Delinquent Loans	$ 2,528
Loans Held-for-Sale, Various, Fixed | Aggregated First Mortgages | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	3.40%
Loans Held-for-Sale, Various, Fixed | Aggregated First Mortgages | Maximum
Mortgage Loans on Real Estate
Weighted Average Coupon (as a percent)	9.13%
Residential, Various, Fixed | Aggregated First Mortgages
Mortgage Loans on Real Estate
Carrying Amount	$ 671,572
Principal Amount of Delinquent Loans	$ 5,619
Number of loans | loan	1,197
Residential, Various, Fixed | Aggregated First Mortgages | Minimum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	3.25%
Residential, Various, Fixed | Aggregated First Mortgages | Maximum
Mortgage Loans on Real Estate
Weighted average spread of loans (as a percent)	9.00%
Commercial and Residential Lending Segment and Investing and Servicing Segment
Mortgage Loans on Real Estate
Carrying Amount	$ 9,890,693	$ 7,806,699	$ 7,357,034	$ 5,946,274

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Stockholders' Equity and Non-Controlling Interests (Tables)

12 Months Ended

Dec. 31, 2019

Stockholders' Equity and Non-Controlling Interests

Schedule of dividends declared by board of directors

Declaration Date	Record Date	Ex-Dividend Date	Payment Date	Amount		Frequency
11/8/19	12/31/19	12/30/19	1/15/20	$	0.48	Quarterly
8/7/19	9/30/19	9/27/19	10/15/19		0.48	Quarterly
5/8/19	6/28/19	6/27/19	7/15/19		0.48	Quarterly
2/28/19	3/29/19	3/28/19	4/15/19		0.48	Quarterly
11/9/18	12/31/18	12/28/18	1/15/19		0.48	Quarterly
8/8/18	9/28/18	9/27/18	10/15/18		0.48	Quarterly
5/4/18	6/29/18	6/28/18	7/13/18		0.48	Quarterly
2/28/18	3/30/18	3/28/18	4/13/18		0.48	Quarterly
11/8/17	12/29/17	12/28/17	1/12/18		0.48	Quarterly
8/9/17	9/29/17	9/28/17	10/13/17		0.48	Quarterly
5/9/17	6/30/17	6/28/17	7/14/17		0.48	Quarterly
2/23/17	3/31/17	3/29/17	4/14/17		0.48	Quarterly

Summary of share awards granted under the Manager Equity Plan

The table below summarizes our share awards granted or vested under the Manager Equity Plan and the 2017 Manager Equity Plan during the years ended December 31, 2019, 2018 and 2017 (dollar amounts in thousands):

Grant Date	Type	Amount Granted	Grant Date Fair Value		Vesting Period
September 2019	RSU	1,200,000	$	29,484	(1)
April 2018	RSU	775,000		16,329	3 years
March 2017	RSU	1,000,000		22,240	3 years
May 2015	RSU	675,000		16,511	3 years
January 2014	RSU	489,281		14,776	3 years
January 2014	RSU	2,000,000		55,420	3 years

(1) Of the amount granted, 218,898 vested immediately on the grant date and the remaining amount vests over a three-year period.

Schedule of common stock issued as incentive compensation under the Management Agreement

Timing of Issuance	Shares of Common Stock Issued	Price per share
November 2019	38,942	$	24.08
March 2019	495,363		22.16
November 2018	98,026		21.94
August 2018	131,179		21.67
May 2018	224,071		21.49
March 2018	545,641		20.13
November 2017	239,757		21.64
August 2017	98,061		22.10
May 2017	123,478		21.83
February 2017	418,016		22.84

Summary of share-based compensation expenses

The following table summarizes our share-based compensation expenses during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	For the year ended December 31,
	2019		2018		2017
Management fees:
Manager incentive fee	$	10,082	$	20,700	$	21,072
2017 Manager Equity Plan (1)		20,255		12,573		10,423
		30,337		33,273		31,495
General and administrative:
2017 Equity Plan (1)		15,900		10,185		7,728
		15,900		10,185		7,728
Total share-based compensation expense (2)	$	46,237	$	43,458	$	39,223

(1)Share-based compensation expense relating to the Manager Equity Plan is reflected within the 2017 Manager Equity Plan. Share-based compensation expense relating to the Non-Executive Director Stock Plan and the Equity Plan are reflected within the 2017 Equity Plan.

(2)The income tax benefit associated with the share-based compensation expense for the years ended December 31, 2019 and 2018 was $1.7 million and $1.3 million, respectively.

Schedule of Non-Vested Shares and Share Equivalents

		2017		Weighted Average
	2017	Manager		Grant Date Fair
	Equity Plan	Equity Plan	Total	Value (per share)
Balance as of January 1, 2019	1,436,445	997,920	2,434,365	$	21.52
Granted	520,236	1,200,000	1,720,236		24.01
Vested	(518,298)	(892,323)	(1,410,621)		22.20
Forfeited	(25,213)	—	(25,213)		21.84
Balance as of December 31, 2019	1,413,170	1,305,597	2,718,767		22.74

(1) Equity-based award activity for awards granted under the Equity Plan and Non-Executive Director Stock Plan is reflected within the 2017 Equity Plan column, and for awards granted under the Manager Equity Plan, within the 2017 Manager Equity Plan column.

Vesting Schedule

	2017 Equity	2017 Manager
	Plan	Equity Plan	Total
2020	799,039	668,701	1,467,740
2021	440,173	391,619	831,792
2022	173,958	245,277	419,235
Total	1,413,170	1,305,597	2,718,767

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Schedule of income tax provision

Our income tax provision consisted of the following for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	For the year ended December 31,
	2019		2018		2017
Current
Federal	$	4,917	$	10,508	$	17,495
State		3,182		3,010		3,115
Foreign		977		293		8
Total current		9,076		13,811		20,618
Deferred
Federal		3,869		1,189		10,815
State		287		330		89
Total deferred		4,156		1,519		10,904
Total income tax provision	$	13,232	$	15,330	$	31,522

Schedule of tax effects of temporary differences on net deferred tax assets

	December 31,
	2019		2018
Deferred tax asset, net
Reserves and accruals	$	4,017	$	5,161
Domestic intangible assets		8,185		14,022
Lease assets		(1,950)		—
Lease liabilities		2,752		—
Investment in unconsolidated entities		(116)		(1,842)
Deferred income		19		134
Net operating and capital loss carryforwards		885		—
Other U.S. temporary differences		228		702
Net deferred tax assets	$	14,020	$	18,177

Schedule of reconciliation of federal income tax determined using statutory federal tax rate to reported income tax provision

The following table is a reconciliation of our U.S. federal income tax determined using our statutory federal tax rate to our reported income tax provision for the years ended December 31, 2019, 2018 and 2017 (dollars in thousands):

	For the Year Ended December 31,
	2019				2018				2017
Federal statutory tax rate	$	115,535	21.0	%	$	89,571	21.0	%	$	155,501	35.0	%
REIT and other non-taxable income		(106,301)	(19.3)	%		(77,972)	(18.3)	%		(135,830)	(30.6)	%
State income taxes		3,034	0.5	%		3,038	0.7	%		3,091	0.7	%
Federal benefit of state tax deduction		(637)	(0.1)	%		(638)	(0.1)	%		(1,082)	(0.2)	%
Changes in tax law		—	—	%		—	—	%		10,365	2.3	%
Other		1,601	0.3	%		1,331	0.3	%		(523)	(0.1)	%
Effective tax rate	$	13,232	2.4	%	$	15,330	3.6	%	$	31,522	7.1	%

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Secured Borrowings - Repurchase Agreements (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Secured Financing Agreements
Principal Amount	$ 1,950,000	$ 2,027,969
Secured financing agreements
Secured Financing Agreements
Principal Amount	$ 9,000,125	$ 8,761,624
Repurchase Agreements
Secured Financing Agreements
Percentage of repurchase agreements for which margin calls are limited to collateral specific credit marks	78.00%
Percentage of repurchase agreements containing margin call provisions that pertain to loans held-for-sale	22.00%

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Related-Party Transactions (Details) $ in Thousands, £ in Millions	1 Months Ended							12 Months Ended
	Sep. 30, 2019 shares	Dec. 31, 2018 USD ($)	Apr. 30, 2018 shares	May 31, 2017 USD ($)	Mar. 31, 2017 shares	Jun. 30, 2016 GBP (£)	May 31, 2015 shares	Dec. 31, 2019 USD ($) item shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Termination Fee
Granted (in shares) | shares								1,720,236
Total fair value of shares vested								$ 33,200	$ 18,300	$ 18,300
Share-based compensation expense, before tax								$ 46,237	43,458	39,223
Ownership percentage								2.00%
General and administrative:
Termination Fee
Share-based compensation expense, before tax								$ 15,900	10,185	7,728
Starwood Property Trust, Inc. Manager Equity Plan
Termination Fee
Granted (in shares) | shares								1,200,000
Starwood Property Trust, Inc. Manager Equity Plan | Restricted stock units
Termination Fee
Granted (in shares) | shares	1,200,000		775,000		1,000,000		675,000
Award vesting period								3 years
Share-based compensation expense, before tax								$ 20,200	12,600	10,400
Co-origination of loan with SEREF and private funds, London
Termination Fee
Loans funded by the reporting entity		$ 21,300				£ 60.0
Manager
Related-Party Transactions
Base management fee as a percentage of stock holders' equity								1.50%
Base management fee incurred								$ 77,000	73,200	67,800
Base management fee payable		19,200						$ 19,300	19,200
Period for calculation of threshold Core Earnings percentage								12 months
Threshold percentage of Core Earnings for payment of incentive fee								8.00%
Number of prior calendar quarters for calculation of threshold Core Earnings amount								3 years
Threshold amount of Core Earnings for payment of incentive fee								$ 0
Threshold amount of incentive fee to be paid								$ 0
Incentive fee calculation, multiplication factor (as a percent)								20.00%
Incentive fee calculation, period								12 months
Incentive fee calculation, stock value factor (as a percent)								8.00%
Number of calendar quarters of incentive fee paid subtracted in incentive fee calculation								9 months
Portion of incentive fee quarterly installment payable in shares (as a percent)								50.00%
Stock ownership limit (as a percent)								9.80%
Number of trading days price used to calculate average stock price for payment of incentive fees in shares | item								5
Incentive fee incurred								$ 20,200	41,400	42,100
Incentive fees payable		21,800						18,100	21,800
Executive compensation and other reimbursable expenses								7,700	7,700	$ 6,400
Executive compensation and other reimbursable expense payable		$ 3,000						$ 3,500	$ 3,000
Termination Fee
Affirmative vote required by Company's independent directors for termination of management agreement without cause								two-thirds
Notice period for termination of management agreement without cause								180 days
Termination fee, factor applied to average base and incentive management fees | item								3
Termination period of calculation								2 years
Termination fee payable upon termination of manager for cause								$ 0
Notice period for termination of management agreement with cause								30 days
Manager | Restricted stock units
Termination Fee
Granted (in shares) | shares								182,861	252,375	138,264
Grant date fair value								$ 4,100	$ 5,300	$ 3,100
Share-based compensation expense, before tax								4,100	2,900	2,700
Affiliates of Manager
Termination Fee
Purchase price				$ 50,000
Investing and Servicing Segment
Termination Fee
Purchase price									227,300	227,300	$ 227,300	$ 227,300
Infrastructure Lending Segment | Manager | General and administrative:
Termination Fee
Cash payment								0	1,300	0
CMBS | Investing and Servicing Segment | REO Portfolio
Termination Fee
Purchase price								$ 8,800	$ 28,000	$ 31,300

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Derivatives and Hedging Activity - Effect on Financial Statements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Derivatives
(Loss) gain on derivative financial instruments, net	$ (6,310)	$ 34,603	$ (72,532)
Interest rate swaps
Derivatives
(Loss) gain on derivative financial instruments, net	(10,516)	(1,593)	(5,165)
Interest rate swap guarantees
Derivatives
(Loss) gain on derivative financial instruments, net	(3,350)	(114)
Foreign exchange contracts
Derivatives
(Loss) gain on derivative financial instruments, net	8,801	36,040	(65,645)
Credit spread instrument
Derivatives
(Loss) gain on derivative financial instruments, net	$ (1,245)	270	(1,722)
Cash flow hedges | Interest rate swaps | Derivatives designated as hedging instruments
Derivatives
Gain (Loss) Recognized in OCI (effective portion)		8	54
Gain (Loss) Reclassified from AOCI into Income (effective portion)		$ 33	$ 3

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Goodwill and Intangibles (Details) - USD ($) $ in Thousands		12 Months Ended
	Apr. 19, 2013	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Intangible Assets
Goodwill		$ 259,846	$ 259,846
Summary of Intangible Assets
Gross Carrying Value		176,428	255,672
Accumulated Amortization		(90,728)	(110,639)
Net Carrying Value		85,700	145,033	$ 183,092
In-place lease
Summary of Intangible Assets
Gross Carrying Value		135,293	198,220
Accumulated Amortization		(84,383)	(100,873)
Net Carrying Value		50,910	97,347	122,465
Favorable lease
Summary of Intangible Assets
Gross Carrying Value		24,218	36,895
Accumulated Amortization		(6,345)	(9,766)
Net Carrying Value		17,873	27,129	29,868
Domestic Servicing Rights
Summary of Intangible Assets
Gross Carrying Value		16,917	20,557
Net Carrying Value		16,917	20,557	$ 30,759
Domestic Servicing Rights | Before consolidation of securitization VIEs
Intangible Assets
Servicing rights intangibles		43,200	44,600
Domestic Servicing Rights | VIE eliminations
Intangible Assets
Servicing rights intangibles		26,200	24,100
Infrastructure Lending Segment
Intangible Assets
Goodwill		$ 119,400	119,400
Amortization period (in years)		15 years
Investing and Servicing Segment
Intangible Assets
Goodwill		$ 140,400	$ 140,400
Amortization period (in years)	15 years
Expected tax deductible expenses for goodwill	$ 149,900