Starwood Property Trust(STWD) - 2025 Q2 - Quarterly Results

Form 8-K Current Report The company reports a material acquisition, preliminary Q2 2025 financial results, a dividend declaration, and related disclosures Entry into a Material Definitive Agreement The company entered an agreement to acquire Fundamental Income Properties for approximately $2.2 billion, including $1.3 billion in assumed debt Acquisition Details | Detail | Value/Description | | :--- | :--- | | Target Company | Fundamental Income Properties, LLC | | Purchase Price | Approx. $2.2 billion (inclusive of indebtedness) | | Assumed Debt | $1.3 billion | | Expected Closing Date | On or about July 23, 2025 | - The acquired portfolio consists of 467 properties, spanning 12 million square feet across 44 states, 56 industries, and 92 tenants[4] - The acquisition includes Fundamental Income Properties' 28-person team with capabilities across originations, credit underwriting, portfolio management, and capital markets[4] - The remainder of the purchase price will be funded by a combination of cash on hand, debt, and equity capital[5] Results of Operations and Financial Condition The company announced preliminary Q2 2025 results, including key earnings metrics, investment activity, and non-GAAP reconciliations Preliminary Unaudited Results for Q2 2025 Q2 2025 estimates show GAAP EPS of $0.36-$0.38, Distributable EPS of $0.42-$0.44, and $3.2 billion in new investments Q2 2025 Preliminary Financial Estimates | Metric | Q2 2025 Estimate | Q1 2025 (for comparison) | | :--- | :--- | :--- | | GAAP EPS | $0.36 - $0.38 | N/A | | Distributable Earnings per Share | $0.42 - $0.44 | N/A | | Book Value per Share | $18.78 - $18.80 | $18.87 | | Undepreciated Book Value per Share | $19.64 - $19.66 | $19.76 | - Results include a $44 million, or $0.13 per share, realized loss from the sale of a foreclosed office building in Houston, Texas[6] - During the quarter, the Company invested $3.2 billion, including $1.9 billion in commercial lending and $0.7 billion in infrastructure lending[8] - Loan portfolio activity included two foreclosures ($56M life science and $84M multifamily), two loan downgrades to a 4 risk rating, and one upgrade from a 5 to a 4 rating[8] - As of July 15, 2025, the Company had $1.4 billion of liquidity after paying its second-quarter dividend[9] Non-GAAP Financial Measures This section reconciles estimated GAAP EPS to the non-GAAP measure, Distributable Earnings, for Q2 2025 Reconciliation of Estimated GAAP EPS to Estimated Distributable EPS (Q2 2025) | | Low Estimate | High Estimate | | :--- | :--- | :--- | | Estimated GAAP Earnings per Diluted Share | $0.36 | $0.38 | | Non-cash items | $0.09 | $0.11 | | Unrealized (gains)/losses, net | ($0.03) | ($0.05) | | Estimated Distributable Earnings per Diluted Share | $0.42 | $0.44 | - Distributable Earnings is a non-GAAP measure calculated by excluding items like non-cash equity compensation, depreciation, and unrealized gains/losses from GAAP net income[12] - The company believes Distributable Earnings is a useful metric for stockholders as it has historically been a strong indicator of dividends and is used by management to evaluate performance[14] Regulation FD Disclosure The company issued a press release on July 16, 2025, announcing the acquisition and preliminary Q2 2025 financial results - A press release announcing the acquisition and preliminary Q2 2025 results was issued on July 16, 2025, and is attached as Exhibit 99.1[19] - The information in the press release (Exhibit 99.1) is considered "furnished" and not "filed" for the purposes of Section 18 of the Exchange Act[20] Other Events The company declared a quarterly dividend and detailed the strategic benefits and risks of the pending acquisition Declaration of Dividend The board declared a quarterly dividend of $0.48 per share for the quarter ending September 30, 2025 Q3 2025 Dividend Details | Detail | Value/Date | | :--- | :--- | | Dividend per Share | $0.48 | | For Quarter Ending | September 30, 2025 | | Record Date | September 30, 2025 | | Payment Date | October 15, 2025 | Strategic Benefits of Acquisition The acquisition offers attractive returns from a diversified portfolio and establishes a scalable net lease platform - The acquisition is expected to provide attractive risk-adjusted returns, a highly scalable opportunity in the net lease market, and enhanced origination capabilities[22][26] Acquired Portfolio Characteristics (as of March 31, 2025) | Characteristic | Detail | | :--- | :--- | | Occupancy | 100% | | Diversification | 92 tenants, 56 industries | | Credit History | 0% credit losses since inception | | Rent Growth | 2.2% average annual rent increases | | Lease Term | 17-year weighted average remaining term | Risks Related to Pending Acquisition Key risks include the potential failure to complete the acquisition and challenges in realizing anticipated integration benefits - There is a risk that the acquisition may not be completed, which could negatively impact the company's stock price and result in unrecoverable transaction costs[25] - The company may not realize all anticipated benefits of the acquisition, as the integration process may be complex, costly, and time-consuming, potentially disrupting business[28] Financial Statements and Exhibits This section lists the exhibits filed with the report, including a press release and interactive data file Exhibits | Exhibit Number | Description | | :--- | :--- | | 99.1 | Press Release of Starwood Property Trust, Inc. issued July 16, 2025 | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |