GREENWICH, Conn., Sept. 3, 2024 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) (the "Company") today announced that, subject to market and other conditions, it is offering 17,500,000 shares of its common stock in an underwritten public offering. The underwriters will have a 30-day option from the date of the offering to purchase up to an additional 2,625,000 shares from the Company. All of the shares will be issued under the Company's currently effective shelf registration statement filed with t ...

Core Viewpoint - Starwood Property Trust Inc. continues to provide a strong value proposition for passive income investors despite weakened pay-out metrics in Q2 2024, maintaining its $0.48 per share quarterly dividend with distributable earnings [1][2][12] Company Overview - Starwood Property Trust is well-diversified with only 12% of total assets invested in the office segment, primarily focusing on Lending, which accounted for 77% of its investments in Q2 2024 [3][4] - The trust's total real estate investments amounted to $26 billion as of June 30, 2024 [3][4] Financial Performance - Distributable earnings dropped to $0.48 per share in Q2 2024, attributed to higher credit loss provisions totaling $43 million [4][8] - The dividend pay-out ratio rose to 100% in Q2 2024, which is about 10 percentage points higher than on a last twelve months (LTM) basis, yet the dividend is expected to remain sustainable [2][8][12] Market Context - The central bank is anticipated to lower interest rates, which may alleviate pressure on the U.S. office sector and improve conditions for the commercial real estate market [1][2] - Starwood Property Trust's stock is trading at a 3% premium to book value, indicating market confidence in the sustainability of its dividend [12] Competitive Positioning - Compared to peers like Blackstone Mortgage Trust and Apollo Commercial Real Estate Finance, Starwood Property Trust is perceived to have a stronger portfolio and less exposure to office properties [9][12] - The trust's intrinsic value estimate as of June 30, 2024, was $19.64 per share, reflecting its net book value minus accumulated depreciation [9]

Core Viewpoint - Starwood Property Trust (STWD) has received a Zacks Rank 1 (Strong Buy) upgrade due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Rising earnings estimates indicate an improvement in the underlying business of Starwood Property Trust, suggesting potential for stock price appreciation [5][10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions [9][10]. Earnings Estimate Revisions for Starwood Property Trust - Starwood Property Trust is projected to earn $2.02 per share for the fiscal year ending December 2024, reflecting a year-over-year change of -1.5% [8]. - Over the past three months, the Zacks Consensus Estimate for Starwood Property Trust has increased by 1.1% [8].

spawns/E+ via Getty Images Introduction I've been thinking a lot about retirement lately. Don't get me wrong. I'm not going anywhere. As I have written in prior articles, I don't yet have the capital to retire in most developed nations - at least not comfortably and without the need to take significant financial risks. And even if I did, I wouldn't stop covering macroeconomics, dividend strategies, and other topics we frequently discuss. What I have been doing is thinking about different ways to improve the ...

Core Viewpoint - Starwood Property (NYSE: STWD) reported a decent earnings performance for Q2, but the deterioration in its commercial and residential segments has raised concerns about its dividend sustainability, leading to a downgrade to hold status [1][3][16] Earnings Performance - Starwood Property's distributable earnings per share for Q2'24 were $0.48, fully supporting its dividend payout, but the distribution coverage ratio dropped to 100%, indicating a lack of safety margin [4][13] - The decline in distributable earnings was primarily due to a $43 million increase in credit loss provisions, with year-to-date provisions rising by $78 million [7][16] Dividend Coverage - The distribution coverage ratio fell by 23 percentage points quarter-over-quarter, highlighting increased risks to dividend continuity [4][16] - Starwood Property has maintained a consistent dividend of $0.48 per share since 2013, but the recent performance raises concerns about its reliability as a dividend payer [13][16] Portfolio Composition - Approximately 57% of Starwood Property's investments are in commercial loans, with only 10% in U.S. offices, reflecting a strategic shift away from the office sector [9][11] Valuation Metrics - Starwood Property is currently valued at a price-to-book ratio of 1.00x, which is comparable to Ladder Capital's 0.98x, indicating it is fairly valued despite the recent decline in distribution coverage [13][16] - The book value per share at the end of Q2 was $19.64 on a GAAP basis [13]

Financial Data and Key Metrics - Distributable earnings (DE) for the quarter were $158 million, or $0.48 per share, while GAAP net income was $78 million, or $0.24 per share [5] - The company committed to $925 million in new investments during the quarter, with 62% of investments made in businesses other than commercial lending [5] - The loan book ended the quarter at $14.7 billion, with a weighted average risk rating of 3.0, up from 2.9 last quarter [6] - The CECL reserve increased by $33 million to $380 million, with 70% related to office loans [8] - The company's adjusted debt to undepreciated equity ratio decreased to 2.29x, the lowest level in over two years [13] Business Line Performance - Commercial and residential lending contributed $189 million in DE, or $0.58 per share, with $353 million in new loan originations [6] - Residential lending saw a $2.5 billion on-balance sheet loan portfolio, with $62 million in par repayments and a $34 million net positive mark-to-market [9] - The Property segment contributed $14 million in DE, primarily from the Florida Affordable Housing Fund, with rent increases implemented in June [10] - Investing and servicing contributed $37 million in DE, with $363 million in securitizations completed or priced at above-historic profit margins [10] - Infrastructure lending contributed $24 million in DE, with $237 million in new loan commitments and $313 million in repayments and sales [12] Market Performance - The company's active servicing portfolio increased by over 30% to $9.4 billion, the highest level since COVID, driven by $2.5 billion in transfers into servicing [11] - The named servicing portfolio increased to $98 billion, driven by $5.1 billion in new assignments [11] - The energy infrastructure lending business continues to perform well, with mid-teens levered returns on loans made since 2018 [22] Strategic Direction and Industry Competition - The company is diversifying its business model, with 57% of assets now in commercial lending and significant investments in other sectors [5] - The company is focusing on converting underperforming office assets into multifamily properties, with one such conversion expected to recover more than the basis [7] - The company is leveraging its expertise in multifamily properties to stabilize and potentially sell underperforming assets [19] - The company is well-positioned to benefit from a potential decline in interest rates, with 40% of assets in non-CRE lending businesses [34] Management Commentary on Operating Environment and Future Outlook - Management highlighted the positive impact of a potential decline in interest rates on CRE credit, particularly for multifamily and hospitality sectors [16] - The company expects to see increased borrower support for assets as rates decline, particularly in the multifamily and hospitality sectors [16] - Management remains optimistic about the company's ability to navigate the current cycle, with significant embedded gains in its property portfolio [23] - The company is well-positioned to capitalize on lending opportunities as banks remain reluctant to lend, particularly in the CRE space [38] Other Important Information - The company repriced its 2027 $591 million term loan B facility, reducing the spread by 50 basis points to SOFR plus 2.75% [12] - The company's credit ratings were affirmed by all three major rating agencies, recognizing its diversity, leverage profile, and liquidity position [13] - The company was awarded the 2024 Nareit Gold Investor CARE Award for communications and reporting excellence [14] Q&A Session Summary Question: Rick Shane (JPMorgan) - Credit and Borrower Sentiment - Rick Shane asked about the shift in borrower sentiment given the recent changes in forward rate expectations [45] - Barry Sternlicht noted that it is too early to tell, but the recent rate movements could help borrowers stay afloat until 2025 [45] - Jeff DiModica added that the company's CECL reserve has increased to $380 million, reflecting cautious optimism about future rate changes [48] Question: Stephen Laws (Raymond James) - Originations and Investment Opportunities - Stephen Laws inquired about the pace of originations and where the company sees the best returns [55] - Jeff DiModica highlighted strong returns in the energy infrastructure business and a growing pipeline in CRE lending [55] - Barry Sternlicht mentioned that the company has over $1 billion in actionable CRE loans and is balancing its needs to fix assets with new investments [58] Question: Don Fandetti (Wells Fargo) - Capital Inflow Post-Fed Rate Cuts - Don Fandetti asked about the potential inflow of capital into CRE once the Fed cuts rates [68] - Barry Sternlicht discussed the complexity of the equity side of real estate and the potential for increased investment from international and high-net-worth individuals [68] Question: Jade Rahmani (KBW) - Starwood Solutions and CMBS Market Growth - Jade Rahmani asked for an update on Starwood Solutions and the potential growth of the CMBS market [75] - Jeff DiModica noted that Starwood Solutions is still in its early stages but has potential for growth, particularly with government clients [75] - Barry Sternlicht and Jeff DiModica discussed the growth potential in the CMBS market, particularly for 5-year loans, and the company's position in the market [76][79] Closing Remarks - Barry Sternlicht expressed optimism about the company's future and thanked shareholders, the Board, and the team for their support during challenging times [84]

Starwood Property Trust (STWD) came out with quarterly earnings of $0.48 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.49 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this commercial real estate investment trust would post earnings of $0.46 per share when it actually produced earnings of $0.59, delivering a surprise of 28.26%. Over the last four quarters, the company has surpassed consensus EPS estimates ...

– Quarterly GAAP Earnings of $0.24 and Distributable Earnings (DE) of $0.48 per Diluted Share – – Paid Dividend of $0.48 per Share and Declared $0.48 Dividend for each of the next Two Quarters – – Received Repayments of $0.9 Billion in the Quarter – – Repriced our $591.0 Million Term Loan B, Reducing Spread by 50 bps to S+275 – – Received 8th Nareit Gold Investor CARE (Communications & Reporting Excellence) Award – – LNR's Commercial Special Servicer Rating of CSS1 (Highest Rating Possible) Reaffirmed by Fi ...

"We created a differentiated multi-cylinder company and have maintained a low leverage balance sheet in order to enable us to outperform in times of volatility. We expect to maintain our dividend for the foreseeable future assuming macro and market conditions don't materially change. As a result, our Board has declared our third and fourth quarter dividends of $0.48 per quarter, in-line with our current dividend. Beyond our current earnings power, we have the ability to monetize the over $4.00 per share of ...

Webcast Conference Call Playback: Domestic: 1-844-512-2921 International: 1-412-317-6671 Passcode: 13742860 The playback can be accessed through August 20, 2024. About Starwood Property Trust, Inc. Zachary Tanenbaum Starwood Property Trust Phone: 203-422-7788 Email: [email protected] During the conference call, the Company's officers will review second quarter performance, discuss recent events and conduct a question-and-answer period. To Participate in the Telephone Conference Call: Dial in at least five m ...