Starwood Property Trust, Inc. (NYSE:STWD) Q4 2024 Earnings Conference Call February 27, 2025 10:00 AM ET Company Participants Zachary Tanenbaum - Head of Investor Relations Barry Sternlicht - Chairman & CEO Jeffrey DiModica - President Rina Paniry - Chief Financial Officer Conference Call Participants Steven Laws - Raymond James Richard Shane - JPMorgan Jade Rahmani - KBW Douglas Harter - UBS Donald Fandetti - Wells Fargo Securities Operator Greetings, and welcome to Starwood Property Trust, Inc.'s fourth q ...

Core Viewpoint - Starwood Property Trust (STWD) reported quarterly earnings of $0.48 per share, exceeding the Zacks Consensus Estimate of $0.46 per share, but down from $0.58 per share a year ago, indicating a 4.35% earnings surprise [1][2] Financial Performance - The company posted revenues of $454.39 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 3.73%, and down from $522.28 million year-over-year [2] - Over the last four quarters, Starwood Property Trust has surpassed consensus EPS estimates three times but has not beaten consensus revenue estimates [2] Stock Performance - Starwood Property Trust shares have increased approximately 5.4% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] - The stock's immediate price movement will depend on management's commentary during the earnings call [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.50 on revenues of $468 million, and for the current fiscal year, it is $1.97 on revenues of $1.88 billion [7] - The estimate revisions trend for Starwood Property Trust is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The REIT and Equity Trust industry is currently in the bottom 34% of over 250 Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8]

Financial Performance - Total revenues for the year ended December 31, 2024, were $1,946,843, a decrease of 5.0% from $2,049,908 in 2023[508]. - Net income attributable to Starwood Property Trust, Inc. for 2024 was $359,933, compared to $339,213 in 2023, reflecting an increase of 6.4%[508]. - Net income for the year ended December 31, 2024, was $380,577,000, a decrease of 9.0% from $418,157,000 in 2023[515]. - Comprehensive income attributable to Starwood Property Trust, Inc. was $358,175 in 2024, compared to $333,610 in 2023, an increase of 7.4%[510]. - Earnings per share (EPS) for 2024 was $1.10, consistent with the EPS of $1.07 in 2023[508]. - Total costs and expenses decreased to $1,982,072 in 2024 from $2,098,318 in 2023, a reduction of 5.6%[508]. Asset and Liability Management - As of December 31, 2024, total assets decreased to $62.56 billion from $69.50 billion in 2023, representing a decline of approximately 10.5%[506]. - Total liabilities decreased to $55.36 billion in 2024 from $62.48 billion in 2023, a decrease of around 11.3%[506]. - The Company reported a decrease in retained earnings to $235.32 million in 2024 from $505.88 million in 2023, a decline of approximately 53.7%[506]. - The Company’s total stockholders' equity increased to $6.44 billion in 2024 from $6.25 billion in 2023, an increase of about 3.0%[506]. - Cash and cash equivalents increased significantly to $377.83 million in 2024, up from $194.66 million in 2023, marking an increase of approximately 94.2%[506]. Loan and Investment Performance - Loans held-for-investment net of credit loss allowances decreased to $15.44 billion in 2024 from $17.57 billion in 2023, a reduction of about 12.1%[506]. - The total net loans as of December 31, 2024, were $17,953,021, down from $20,219,886 in 2023[608]. - The total gross loans decreased to $18,401,316 in 2024 from $20,528,925 in 2023[608]. - The company reported a credit loss provision of $165,489 thousand for the year ended December 31, 2024, compared to $232,712 thousand in 2023, indicating a reduction of approximately 29%[634]. - The credit loss allowance for funded loans increased to $436.8 million by December 31, 2024, up from $298.8 million in 2023[631]. Risk Management - The company is exposed to interest rate risk, with a series of derivative transactions entered into during 2024 to manage this risk[469]. - The company’s loans and investments are subject to credit risk, with regular monitoring of borrower performance to mitigate this risk[466]. - The estimated fair value of fixed-rate investments is expected to decrease in a rising interest rate environment, impacting overall asset valuation[476]. - Credit deterioration is evaluated quarterly, with significant declines in credit quality leading to different risk assessments and potential adjustments to credit loss allowances[560]. Foreign Currency and Hedging - Foreign currency assets in GBP, EUR, AUD, and CHF totaled £1.504 billion, €748.130 million, A$1.645 billion, and Fr. 65.995 million as of December 31, 2024[480]. - The company has hedged substantially all net asset exposure to GBP, EUR, AUD, and CHF with foreign currency forward contracts as of December 31, 2024[481]. - The foreign currency translation loss was $189,925 thousand for the year ended December 31, 2024, compared to a gain of $153,472 thousand in 2023[634]. Investment and Property Management - The company is focused on originating, acquiring, financing, and managing mortgage loans and other real estate investments across the U.S., Europe, and Australia[520]. - The company established the Woodstar Fund, managing 59 properties with 15,057 units in Florida, raising an initial aggregate subscription price of $216.0 million, adjusted to $214.2 million post-closing[565]. - The company reported total acquisitions/originations/additional funding of $4,781,916 thousand in 2024, compared to $3,474,242 thousand in 2023, reflecting an increase of about 37.5%[634]. Cash Flow and Dividends - Net cash provided by operating activities increased to $646,586,000 in 2024, up 22.4% from $528,597,000 in 2023[515]. - The company distributed $619,996,000 in dividends in 2024, slightly up from $601,192,000 in 2023[517]. - The company declared dividends of $1.92 per share for 2024, consistent with the previous year[512]. Property Sales and Acquisitions - On February 29, 2024, the company sold 16 retail properties for a gross sale price of $387.1 million, resulting in a net proceeds of $188.0 million after selling costs and a recognized gain of $92.0 million[604]. - The company sold an operating property within the REIS Equity Portfolio for $18.2 million, recognizing a gain of $8.3 million[605]. - The company acquired an operating property from a CMBS trust for a purchase price of $7.7 million during the year ended December 31, 2024[603]. Financial Reporting and Compliance - The Company maintained effective internal control over financial reporting as of December 31, 2024, according to the independent auditor's opinion[498]. - The company is required to distribute at least 90% of its taxable income annually to maintain REIT qualification, which constrains cash flow accumulation[468]. - The company has elected to be taxed as a REIT, allowing a deduction for dividends paid to stockholders, thus subjecting distributed net income to taxation at the stockholder level only[591].

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Starwood Property Trust due to lower revenues, with a focus on how actual results will compare to estimates [1][3]. Earnings Expectations - The upcoming earnings report is expected to show quarterly earnings of $0.46 per share, reflecting a -20.7% change year-over-year, and revenues of $472 million, down 9.6% from the previous year [3]. - A positive stock movement is likely if the actual earnings exceed expectations, while a miss could lead to a decline [2]. Estimate Revisions - The consensus EPS estimate has been revised down by 3.09% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10]. - The Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -5.84% [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive reading is a strong predictor of an earnings beat, especially when combined with a strong Zacks Rank [8]. - Starwood Property Trust currently holds a Zacks Rank of 4, making it challenging to predict an earnings beat [11]. Historical Performance - In the last reported quarter, Starwood Property Trust had an earnings surprise of +4.35%, beating the consensus estimate of $0.46 per share by reporting $0.48 [12]. - Over the last four quarters, the company has beaten consensus EPS estimates three times [13]. Conclusion - While the company may not appear to be a compelling earnings-beat candidate, investors should consider other factors before making investment decisions [16].

Core Insights - Albert Anthony is a markets analyst and contributor on Seeking Alpha, covering over 200 companies and providing market commentary since 2023 [1] - He has a growing fan base of over 1,000 followers and operates a home-based fund called The Future Investor Fund [1] - In 2025, he plans to publish a book titled "The Future Investor: Growing a Diversified Portfolio" aimed at educating over 1 million people globally [1] Company Profile - Albert Anthony & Company is an independent sole proprietorship registered in Travis County, Texas [1] - The company does not provide personalized financial advice but offers general market commentary based on publicly available research [1] Educational Background - Albert Anthony has completed degrees and certificates from various institutions, including Drew University and UVA Darden School of Business [1] - He is a member of the Croatian Association of Economists (HDE) as of 2024 [1] Professional Experience - His experience includes working as a management and information systems analyst at large companies, including a top 10 financial firm in the US [1] - He frequently attends business and innovation conferences across the US and Europe [1]

Core Points - Starwood Property Trust, Inc. announced the tax treatment for its common stock distributions for the calendar year ended December 31, 2024, detailing cash distributions and their tax implications [1] - The total cash distribution for the year was $1.92 per share, with a breakdown of ordinary taxable dividends and capital gains [1] - The company has successfully deployed over $100 billion of capital since its inception and manages a portfolio exceeding $26 billion [2] Distribution Details - The cash distribution per share for the record dates of March 29, June 28, September 30, and December 31, 2024, was consistently $0.48, totaling $1.92 for the year [1] - The December 31, 2024 distribution included a portion that will be allocable to 2025 for federal income tax purposes [1] - The ordinary taxable dividend for the year amounted to $1.2525 per share, with total capital gains distribution of $0.3267 per share [1] Company Overview - Starwood Property Trust is a leading diversified finance company focused on real estate and infrastructure sectors [2] - The company's investment objective is to generate attractive and stable returns for shareholders primarily through dividends [2] - The company is affiliated with Starwood Capital Group, a global private investment firm [2]

-          Repriced $1.4 Billion of Corporate Term Loans   – -          Raised $783 Million of New Corporate Debt at Record Low Spreads  – -          Extended Weighted Average Corporate Debt Maturity from 2.2 Years to 3.5 Years   – GREENWICH, Conn., Dec. 19, 2024 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) announced today that it has completed several capital markets transactions in December 2024: On December 17th, we priced a new issue of $500 million 6.500% senior unsecured sustainability ...

Financial analyst by day and a seasoned investor by passion, I've been involved in the world of investing for over 10 years and honed my skills in analyzing lucrative opportunities within the market.I specialize in uncovering strategies to utilize various investment vehicles - seeking out high quality dividend stocks, and other assets that offer potential for long term-growth that pack a serious punch for bill-paying potential. I use myself as an example that with a solid base of classic dividend growth sto ...

GREENWICH, Conn., Dec. 17, 2024 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) (the "Company") today announced that it has priced its private offering of $500 million aggregate principal amount of its 6.500% unsecured senior notes due 2030 (the "Notes"), which was upsized from the previously announced $400 million aggregate principal amount. The Notes priced at 100.0% of the principal amount and the settlement of the offering is expected to occur on December 27, 2024, subject to customary closin ...

GREENWICH, Conn., Dec. 17, 2024 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) (the "Company") today announced that, subject to market and other conditions, it is offering $400 million aggregate principal amount of its unsecured senior notes due 2030 (the "Notes") in a private offering.The Company intends to allocate an amount equal to the net proceeds from the offering to finance or refinance, in whole or in part, recently completed or future eligible green and/or social projects. Net proceeds ...