Q SUPPLEMENTAL REPORTING INFORMATION

Transcription

1 Q SUPPLEMENTAL REPORTING INFORMATION

2 Table of Contents Press Release Page 2 Highlights Page 10 Commercial and Residential Lending Segment Page 13 Infrastructure Lending Segment Page 19 Property Segment Page 22 Investing and Servicing Segment Page 27 Capitalization Page 30 Appendix Page 36 Cover photo: Beech Ridge Energy II Greenbrier County, West Virginia 1

3 PRESS RELEASE

4 For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended September 30, 2018 Quarterly GAAP Earnings of $0.31 and Core Earnings of $0.53 per Diluted Common Share Year-to-Date Capital Deployed of $8.9 Billion, Up 77% Versus 2017 Deploys $2.5 Billion for the Acquisition of Infrastructure Finance Platform and Portfolio and $1.3 Billion in the Commercial and Residential Lending Segment Moody s Revises Rating Outlook to Positive from Stable Declares Dividend of $0.48 per share for the Fourth Quarter of 2018 GREENWICH, Conn., November 9, 2018 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended September 30, The Company s third quarter 2018 GAAP net income was $84.5 million, or $0.31 per diluted share, and Core Earnings (a non-gaap financial measure) was $148.4 million, or $0.53 per diluted share. This includes $6.9 million, or $0.03 per diluted share, and $3.0 million, or $0.01 per diluted share, of acquisition costs associated with the infrastructure finance platform and portfolio for GAAP and Core Earnings, respectively. We are excited to have completed another successful quarter which was highlighted by record levels of capital deployment including the acquisition of our new infrastructure finance platform, commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust. We continue to see the benefits of a multi-cylinder approach as we execute on attractive investments across our existing businesses. During the quarter, our asset base and commercial loan portfolio both reached record levels, with assets of $16.0 billion and commercial loans of $7.5 billion. We intend to capitalize on attractive opportunities to expand our infrastructure finance platform as we continue to execute on the prudent allocation of capital across our cylinders allowing us to achieve the best risk-adjusted returns for our shareholders. Dividend On November 9, 2018, the Company s Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending December 31, The dividend is payable on January 15, 2019 to common stockholders of record as of December 31, Supplemental Schedules The Company has published supplemental earnings schedules on its website in order to provide additional disclosure and financial information for the benefit of the Company s stakeholders. Specifically, these materials can be found on the Company s website in the Investor Relations section under Quarterly Results at 3

5 Conference Call and Webcast Information The Company will host a webcast and conference call on Friday, November 9, 2018, at 10:00 a.m. Eastern Time to discuss the quarter s financial results and recent events. A webcast will be available on the Company s website at To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register and download and install any necessary audio software. To Participate in the Telephone Conference Call: Dial in at least five minutes prior to start time. Domestic: International: Conference Call Playback: Domestic: International: Passcode: The playback can be accessed through November 23, About Starwood Property Trust, Inc. Starwood Property Trust (NYSE: STWD), is a leading diversified finance company with a core focus on the real estate and infrastructure sectors. An affiliate of global private investment firm Starwood Capital Group, the Company has successfully deployed over $48 billion of capital since inception and manages a portfolio in excess of $15 billion across debt and equity investments. Starwood Property Trust s investment objective is to generate attractive and stable returns for shareholders, primarily through dividends, by leveraging a premiere global organization to identify and execute on the best risk adjusted returning investments across its target assets. Additional information can be found at Forward-Looking Statements Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Although Starwood Property Trust, Inc. believes the expectations reflected in any forwardlooking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company s expectations include completion of pending investments, continued ability to acquire additional investments, competition within the finance and real estate industries, economic conditions, availability of financing and other risks detailed from time to time in the Company's reports filed with the SEC. Additional information can be found on the Company s website at Contact: Zachary Tanenbaum Starwood Property Trust Phone: ztanenbaum@starwood.com 4

6 Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended September 30, 2018 (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 $ 147,913 $ 3,053 $ $ 3,535 $ $ 154,501 $ $ 154,501 Interest income from investment securities 10, ,477 44,904 (33,396) 11,508 Servicing fees 98 34,100 34,198 (6,374) 27,824 Rental income 76,067 15,065 91,132 91,132 Other revenues (42) 754 Total revenues 158,596 3,204 76,236 87, ,531 (39,812) 285,719 Costs and expenses: Management fees ,937 26, ,519 Interest expense 43,322 2,258 19,483 7,396 30, ,934 (276) 102,658 General and administrative 7, ,680 19,131 2,753 31, ,203 Acquisition and investment pursuit costs 341 6,725 (539) 6,527 6,527 Costs of rental operations 23,052 7,139 30,191 30,191 Depreciation and amortization 17 28,448 5,828 34,293 34,293 Loan loss allowance, net Other expense Total costs and expenses 52,154 9,520 72,663 38,973 59, ,475 (79) 232,396 Income (loss) before other income (loss), income taxes and non-controlling interests 106,442 (6,316) 3,573 48,433 (59,076) 93,056 (39,733) 53,323 Other income (loss): Change in net assets related to consolidated VIEs 33,289 33,289 Change in fair value of servicing rights (1,994) (1,994) 1,020 (974) Change in fair value of investment securities, net 238 (4,966) (4,728) 5, Change in fair value of mortgage loans held-for-sale, net 1,343 2,597 3,940 3,940 Earnings (loss) from unconsolidated entities 514 1,988 (134) 2, ,625 Gain on sale of investments and other assets, net 47 1,415 1,462 1,462 Gain (loss) on derivative financial instruments, net 7, ,895 3,076 (4,969) 11,735 11,735 Foreign currency loss, net (3,546) (531) (1) (4,078) (4,078) Loss on extinguishment of debt (730) (1,810) (2,540) (2,540) Other income (loss), net (1) 2 (1,422) (1,421) (1,421) Total other income (loss) 5,143 (76) 7,884 (1,428) (6,779) 4,744 39,595 44,339 Income (loss) before income taxes 111,585 (6,392) 11,457 47,005 (65,855) 97,800 (138) 97,662 Income tax provision (314) (125) (7,842) (8,281) (8,281) Net income (loss) 111,271 (6,392) 11,332 39,163 (65,855) 89,519 (138) 89,381 Net (income) loss attributable to non-controlling interests (365) (4,769) 151 (4,983) 138 (4,845) Net income (loss) attributable to Starwood Property Trust, Inc. $ 110,906 $ (6,392) $ 6,563 $ 39,314 $ (65,855) $ 84,536 $ $ 84,536 5

7 Definition of Core Earnings Core Earnings, a non-gaap financial measure, is used to compute the Company s incentive fees to its external manager and is an appropriate supplemental disclosure for a mortgage REIT. For the Company s purposes, Core Earnings is defined as GAAP net income (loss) excluding non-cash equity compensation expense, the incentive fee due to the Company s external manager, acquisition costs from successful acquisitions, depreciation and amortization of real estate and associated intangibles and any unrealized gains, losses or other non-cash items recorded in net income for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income and, to the extent deducted from net income (loss), distributions payable with respect to equity securities of subsidiaries issued in exchange for properties or interests therein. The amount is adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash adjustments as determined by the Company s external manager and approved by a majority of the Company s independent directors. Reconciliation of Net Income to Core Earnings For the three months ended September 30, 2018 (Amounts in thousands except per share data) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Segment Segment Segment Segment Corporate Total Net income (loss) attributable to Starwood Property Trust, Inc. $ 110,906 $ (6,392) $ 6,563 $ 39,314 $ (65,855) $ 84,536 Add / (Deduct): Non-controlling interests attributable to Woodstar II Class A Units 4,769 4,769 Non-cash equity compensation expense ,321 3,769 5,951 Management incentive fee 4,299 4,299 Acquisition and investment pursuit costs 45 3,770 (89) (129) 3,597 Depreciation and amortization 17 28,780 5,456 34,253 Loan loss allowance, net Interest income adjustment for securities (137) 6,573 6,436 Extinguishment of debt, net (922) (922) Other non-cash items (632) 1, ,976 Reversal of GAAP unrealized (gains) / losses on: Loans held-for-sale (1,343) (2,597) (3,940) Securities (338) 4,966 4,628 Derivatives (7,497) (455) (4,779) (3,424) 5,248 (10,907) Foreign currency 3, ,078 Earnings from unconsolidated entities (514) (1,988) 134 (2,368) Recognition of Core realized gains / (losses) on: Loans held-for-sale 3,558 4,415 7,973 Securities 100 1,673 1,773 Derivatives 6 (230) 1, Foreign currency 225 (8) 217 Earnings from unconsolidated entities ,194 Sales of properties (928) (928) Core Earnings (Loss) $ 110,834 $ (2,541) $ 32,493 $ 60,057 $ (52,475) $ 148,368 Core Earnings (Loss) per Weighted Average Diluted Share $ 0.40 $ (0.01) $ 0.12 $ 0.21 $ (0.19) $

8 Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the nine months ended September 30, 2018 (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 $ 431,153 $ 3,053 $ $ 9,619 $ $ 443,825 $ $ 443,825 Interest income from investment securities 33, , ,144 (95,577) 37,567 Servicing fees ,221 92,534 (21,328) 71,206 Rental income 217,178 43, , ,133 Other revenues ,278 (147) 2,131 Total revenues 465,838 3, , , ,914 (117,052) 815,862 Costs and expenses: Management fees 1, ,895 84, ,655 Interest expense 110,169 2,258 55,397 18,298 96, ,254 (821) 281,433 General and administrative 19, ,510 64,006 8,602 98, ,873 Acquisition and investment pursuit costs 2,253 6,725 (46) (467) 8,465 8,465 Costs of rental operations 72,531 20,250 92,781 92,781 Depreciation and amortization 50 86,655 16, , ,187 Loan loss allowance, net 27,726 27,726 27,726 Other expense Total costs and expenses 161,786 9, , , , ,052 (255) 697,797 Income (loss) before other income (loss), income taxes and non-controlling interests 304,052 (6,316) (2,518) 127,046 (187,402) 234,862 (116,797) 118,065 Other income (loss): Change in net assets related to consolidated VIEs 129, ,888 Change in fair value of servicing rights (14,417) (14,417) 5,426 (8,991) Change in fair value of investment securities, net 16 24,123 24,139 (16,285) 7,854 Change in fair value of mortgage loans held-for-sale, net (165) 26,738 26,573 26,573 Earnings from unconsolidated entities 3,761 1,406 2,916 8,083 (1,450) 6,633 Gain on sale of investments and other assets, net 461 6,883 18,215 25,559 25,559 Gain (loss) on derivative financial instruments, net 15, ,734 7,720 (24,338) 27,498 27,498 Foreign currency loss, net (3,260) (531) (2) (3,793) (3,793) Loss on extinguishment of debt (730) (186) (1,810) (2,726) (2,726) Other income (loss), net (1,365) (815) (815) Total other income (loss) 16,052 (76) 36,531 63,742 (26,148) 90, , ,680 Income (loss) before income taxes 320,104 (6,392) 34, ,788 (213,550) 324, ,745 Income tax provision (2,981) (1,997) (9,502) (14,480) (14,480) Net income (loss) 317,123 (6,392) 32, ,286 (213,550) 310, ,265 Net income attributable to non-controlling interests (1,087) (11,906) (3,792) (16,785) (782) (17,567) Net income (loss) attributable to Starwood Property Trust, Inc. $ 316,036 $ (6,392) $ 20,110 $ 177,494 $ (213,550) $ 293,698 $ $ 293,698 7

9 Reconciliation of Net Income to Core Earnings For the nine months ended September 30, 2018 (Amounts in thousands except per share data) Commercial and Residential Infrastructure Investing Lending Lending Property and Servicing Segment Segment Segment Segment Corporate Total Net income (loss) attributable to Starwood Property Trust, Inc. $ 316,036 $ (6,392) $ 20,110 $ 177,494 $ (213,550) $ 293,698 Add / (Deduct): Non-controlling interests attributable to Woodstar II Class A Units 11,906 11,906 Non-cash equity compensation expense 2, ,613 10,635 16,568 Management incentive fee 19,620 19,620 Acquisition and investment pursuit costs 1,430 3,770 (249) (215) 4,736 Depreciation and amortization 50 87,648 15, ,951 Loan loss allowance, net 27,726 27,726 Interest income adjustment for securities (531) 8,206 7,675 Extinguishment of debt, net 8,586 8,586 Other non-cash items (2,406) 2,194 2,762 2,550 Reversal of GAAP unrealized (gains) / losses on: Loans held-for-sale 165 (26,738) (26,573) Securities (259) (24,123) (24,382) Derivatives (16,665) (455) (25,228) (8,788) 26,797 (24,339) Foreign currency 3, ,793 Earnings from unconsolidated entities (3,761) (1,406) (2,916) (8,083) Recognition of Core realized gains / (losses) on: Loans held-for-sale 1,487 28,285 29,772 Securities 242 (4,419) (4,177) Derivatives (5,848) (938) 7, Foreign currency 8,136 (8) (42) 8,086 Earnings from unconsolidated entities 3,986 2,875 6,861 Sales of properties (365) (4,374) (4,739) Core Earnings (Loss) $ 337,533 $ (2,541) $ 89,300 $ 173,504 $ (145,150) $ 452,646 Core Earnings (Loss) per Weighted Average Diluted Share $ 1.24 $ (0.01) $ 0.33 $ 0.63 $ (0.53) $

10 Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of September 30, 2018 (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 $ 15,217 $ 8 $ 23,496 $ 44,771 $ 180,946 $ 264,438 $ 1,319 $ 265,757 Restricted cash 34,325 28,222 18,239 14,508 28, , ,264 Loans held-for-investment, net 7,004,938 1,492,276 3,460 8,500,674 8,500,674 Loans held-for-sale 719, , ,786 1,326,837 1,326,837 Loans transferred as secured borrowings 74,281 74,281 74,281 Investment securities 718,262 65,060 1,027,554 1,810,876 (1,047,426) 763,450 Properties, net 2,620, ,517 2,888,737 2,888,737 Properties held-for-sale 31,928 20,374 52,302 52,302 Intangible assets 96,348 80, ,768 (22,820) 153,948 Investment in unconsolidated entities 34, ,110 43, ,248 (21,460) 168,788 Goodwill 115, , , ,425 Derivative assets 15, ,461 2,633 59,807 59,807 Accrued interest receivable 42,080 6, ,090 3,243 53,038 (127) 52,911 Other assets 38,604 8,398 99,412 49,882 2, ,695 (7) 198,688 VIE assets, at fair value 48,034,610 48,034,610 Total Assets $ 8,697,054 $ 2,037,059 $ 3,043,483 $ 1,984,236 $ 215,558 $ 15,977,390 $ 46,944,089 $ 62,921,479 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 23,681 $ 10,889 $ 71,253 $ 80,353 $ 28,600 $ 214,776 $ 126 $ 214,902 Related-party payable 74 25,212 25,286 25,286 Dividends payable 132, , ,549 Derivative liabilities 3, , ,463 35,386 35,386 Secured financing agreements, net 4,117,051 1,507,073 1,929, , ,655 8,610,387 (23,700) 8,586,687 Unsecured senior notes, net 2,024,570 2,024,570 2,024,570 Secured borrowings on transferred loans, net 74,148 74,148 74,148 VIE liabilities, at fair value 46,945,674 46,945,674 Total Liabilities 4,217,895 1,518,343 2,003, ,690 2,538,049 11,117,102 46,922,100 58,039,202 Equity: Starwood Property Trust, Inc. Stockholders Equity: Common stock 2,793 2,793 2,793 Additional paid-in capital 1,481, , , ,045 1,876,231 4,963,061 4,963,061 Treasury stock (104,194) (104,194) (104,194) Accumulated other comprehensive income (loss) 60,811 7,171 (62) 67,920 67,920 Retained earnings (accumulated deficit) 2,926,015 (6,392) 5, ,580 (4,097,321) (308,343) (308,343) Total Starwood Property Trust, Inc. Stockholders Equity 4,468, , ,680 1,133,563 (2,322,491) 4,621,237 4,621,237 Non-controlling interests in consolidated subsidiaries 10, ,678 10, ,051 21, ,040 Total Equity 4,479, ,716 1,040,358 1,144,546 (2,322,491) 4,860,288 21,989 4,882,277 Total Liabilities and Equity $ 8,697,054 $ 2,037,059 $ 3,043,483 $ 1,984,236 $ 215,558 $ 15,977,390 $ 46,944,089 $ 62,921,479 9

11 HIGHLIGHTS

12 Business Highlights Third Quarter: Core earnings of $0.53 and GAAP earnings of $0.31 per diluted share Core earnings of $0.55 excluding bridge financing commitment fee ($0.01) and loss on Convertible Note extinguishment ($0.01) Deployed $2.5B related to our new Infrastructure Lending Segment, including $0.5B of unfunded commitments Deployed $1.3B in the Commercial and Residential Lending Segment Redeemed $236M of the 2019 convertible notes via the issuance of 11.2 million common shares and $21M cash Moody s revised ratings outlook from Stable to Positive Undepreciated book value per outstanding share of $17.84 Subsequent to Quarter End: Total investment capacity of $4.5B as of November 2, 2018 Declares dividend of $0.48 for the quarter ending December 31, 2018, representing an 8.8% annualized dividend yield (1) NOTE: Amounts are as of and for the period ended September 30, 2018, unless otherwise indicated. 11

13 Segment Highlights Commercial & Residential Lending Core and GAAP earnings of $111M Commercial lending: Originations and acquisitions of $1.1B, of which $1.0B was funded Repayments and sales of $715M Carrying amount of $7.5B, of which 87% are first mortgages; weighted average LTV of 62.5% Completed first Non-QM securitization, selling $384M of loans for a Core gain of $4M Infrastructure Lending Core and GAAP loss of $3M and $6M, respectively (Core and GAAP earnings of $0.4M and $0.5M, respectively, excluding acquisition costs) Acquired $1.9B of funded loans and $0.5B of unfunded commitments Entered into new financing for $2.1B; $1.5B of which was outstanding at quarter end Property Core and GAAP earnings of $32M and $7M, respectively Acquired the final Woodstar II affordable housing property for $33M Undepreciated carrying amount of investment portfolio of $3.1B Investing and Servicing Core and GAAP earnings of $60M and $39M, respectively Obtained 11 new special servicing assignments for CMBS trusts with a total unpaid principal balance of $5.5B NOTE: Amounts are as of September 30, 2018, unless otherwise indicated. 12

14 COMMERCIAL AND RESIDENTIAL LENDING SEGMENT

15 Commercial Loan Originations During the Quarter Property Type Originated $1.1B of new loans Funded $1.0B of new loans Multifamily 5% 100% floating rate Weighted average LTV of 64.5% Average loan size: $138M Hotel 49% Office 46% Fundings under previously originated commitments totaled $156M Geographic Location Northeast 23% International 37% Southeast 13% NOTE: Amounts are as of September 30, 2018, unless otherwise indicated. Mid-Atlantic 1% West 21% Southwest 5% 14

16 Significant Activity During the Quarter Commercial lending investment activity of $1.1B, including: $385M mezzanine loan on a 2,900-room resort in Nassau, Bahamas $239M of an $894M pari passu first mortgage and mezzanine loan for the acquisition of a nine-property office portfolio located in Manhattan s Lincoln Center neighborhood $157M first mortgage and mezzanine loan for the refinancing of an 18-property media campus located in Burbank, California $130M first mortgage loan for the acquisition of a 362-room resort located in St. Petersburg, Florida Residential lending investment activity: Securitized $384M of non-agency loans and retained $45M of RMBS, recognizing $4M and $2M Core and GAAP gains, respectively Purchased non-agency loans of $241M, bringing the total portfolio to $627M with an average FICO of 724 and LTV of 64.3% NOTE: Amounts are as of and for the period ended September 30, 2018, unless otherwise indicated. 15

17 Commercial Portfolio Metrics $ millions Asset Carrying Values Sept 30, 2018 June 30, 2018 March 31, 2018 Dec 31, 2017 Sept 30, 2017 First mortgage loans (2), (3) $ 6,540 $ 6,363 $ 5,429 $ 5,811 $ 5,518 Subordinated mortgages (3) Mezzanine loans (2) CMBS Preferred equity investments Commercial Portfolio Carrying Values $ 7,505 $ 7,039 $ 6,389 $ 6,966 $ 6,767 Unlevered Returns First mortgage loans (2) 6.9% 6.9% 6.9% 6.7% 6.7% Subordinated mortgages 11.8% 12.2% 11.9% 11.8% 11.4% Mezzanine loans (2) 11.7% 11.5% 11.4% 11.5% 11.2% CMBS 7.1% 7.0% 6.4% 5.4% 5.0% Preferred equity investments N/A 13.3% 13.3% 13.3% 13.3% 16

18 Commercial Portfolio Snapshot $ millions Geographic Diversification Collateral Diversification West 24% 27% International 14% Southwest 16% Northeast Midwest 28% 26% 5% 5% Mid-Atlantic 7% 7% Southeast 8% 8% PROPERTY TYPE Carrying Value as of: September 30, 2018 June 30, 2018 Office $ 2,607 35% $ 2,274 32% Hotel 1,742 23% 1,541 22% Mixed-Use % % Multifamily % % Residential 489 7% 529 8% Retail 176 2% 191 3% Parking 122 2% 147 2% I ndustrial 138 2% 160 2% Other (5) 411 5% 477 6% Total $ 7, % $ 7, % 12% 9% Other (4) 2% 2% As of September 30, 2018 As of June 30,

19 Weighted Average Ending LTV / LTC of Loan Portfolio Dollar (Carrying values in billions) Commercial Weighted Average LTV or LTC (6) $ billions 80.0% % 7.0 Preferred Equity % 5.0 Mezzanine loans held for investment 65.0% 60.0% 61.6% 62.9% 61.2% 61.9% 63.4% 63.8% 63.3% 62.9% 62.8% 62.1% 62.1% 62.4% 62.5% Subordinated mortgages held for investment First mortgages held for investment 55.0% % Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Quarter Ending 0.0 Weighted Average LTV of Loan Portfolio (6) First Mortgages Subordinated Mortgages Mezzanine Mortgages Preferred Equity Total (7) Beginning LTV 0.0% 19.1% 42.6% 67.9% 3.1% Ending LTV 63.1% 38.4% 62.7% 77.4% 62.5% 18

20 INFRASTRUCTURE LENDING 25

21 Transaction Details $ millions Balance Sheet Secured Financing Terms Assets: September 19, 2018 September 30, 2018 Restricted cash $ - $ 28 Loans held-for-inv estment 1,507 1,492 Loans held-for-sale I nv estment securtities Goodw ill I nterest receiv able 12 6 Other assets - 10 Totals assets $ 2,020 $ 2,037 Liabilities: Accrued expenses $ 8 $ 11 Secured financing - 1,507 Total liabilities $ 8 $ 1,518 Equity 2, Total liabilities and equity $ 2,020 $ 2,037 $2.1B, consisting of: $1.5B term loan; $0.3B delayed term loan and $0.3B revolver 4-year term (3 years + 1-year extension) 82.5% maximum advance rate assuming undrawn commitments (delayed draw term loan and revolver) are fully funded Effective advance rate of 77% Future fundings on undrawn commitments are advanced at 100% No recourse to STWD NOTE: Amounts are as of September 30, 2018, unless otherwise indicated. 20

22 Portfolio Metrics $2.4B portfolio, excluding goodwill $1.9B funded balance $0.5B unfunded commitment Other Thermal 6% Midstream / Downstream 8% Sector (8) Upstream 1% 97% floating rate 4.3 year WA life to management s expected maturity Renewables 29% Thermal - Natural Gas 56% Revenue Model Merchant 4% Geographic Location Other 7% Mexico 11% Partially Contracted 32% NOTE: Amounts are as of September 30, Contracted 64% U.S. 74% United Kingdom 5% Ireland 3% 21

23 PROPERTY SEGMENT 25

24 Investment Portfolio $ millions Acquired the final property in the Woodstar II Portfolio for $33M Issued 425k of OP units in connection with this purchase, plus 110k of contingently issuable OP units Investment Net Carrying Value (9) Asset Specific Financing Net Investment Q Net Operating Income Occupancy Rate Wholly-Owned: Medical Office Portfolio $ 760 $ 484 $ 276 $ % Ireland Portfolio % Woodstar I Portfolio % Woodstar II Portfolio % Master Lease Portfolio % Subtotal - Undepreciated Carrying Value $ 3,014 $ 1,930 $ 1,084 $ 52.7 (10) Accumulated Depreciation and Amortization (229) - (229) Net Carrying Value $ 2,785 $ 1,930 $ 855 Joint Venture: Regional Mall Portfolio Total $ 2,897 $ 1,930 $ 967 NOTE: Amounts are as of and for the period ended September 30, 2018, unless otherwise indicated. 23

25 Portfolio Snapshot $ millions Geographic Diversification (11) Collateral Diversification Northeast Property Type Undepreciated Carrying Value: West 7% Southwest 8% 8% Midwest Mid-Atlantic 11% 2% Southeast Wholly Owned: Office $ 1,268 42% Multifamily 1,241 41% Retail % Industrial 128 4% Subtotal $ 3, % International 3% 47% Joint Venture: Retail Total $ 3, % 17% NOTE: Amounts are as of and for the period ended September 30, 2018, unless otherwise indicated. 24

26 Portfolio Snapshot $ millions, square footage in thousands Medical Office Portfolio West 17% Texas 20% Midwest 15% Northeast 30% Southeast 18% Gross Investment Occupancy Sq. Ft. Midwest % 325 Northeast % 430 Southeast % 366 Texas % 457 West % 372 Total $ % 1,950 Master Lease Portfolio West 18% Southwest 17% Midwest 40% Mid-Atlantic 9% Southeast 16% Gross Investment Occupancy Sq. Ft. Midwest $ % 2,115 Southeast % 393 Southwest % 451 West % 878 Mid-Atlantic % 1,165 Total $ % 5,002 NOTE: Amounts are as of and for the period ended September 30, 2018, unless otherwise indicated. 25

27 Portfolio Snapshot $ millions, square footage in thousands Woodstar I and II Gross Florida Investment Occupancy Units North $ 75 94% 1,230 Central % 11,879 South % 1,948 Total $ 1,222 99% 15,057 Ireland Portfolio Gross Investment Occupancy Sq. Ft. Total $ % 601 North 6% Central Dublin 77% 100% South 17% NOTE: Amounts are as of and for the period ended September 30, 2018, unless otherwise indicated. 26

28 INVESTING AND SERVICING SEGMENT 21

29 Investment Portfolio $ millions Significant Activity During the Quarter: Obtained 11 new servicing assignments for CMBS trusts with a total unpaid principal balance of $5.5B Securitized $172M of conduit loans in one transaction Asset Carrying Values Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 CMBS, fair value option (12) $ 1,027 $ 1,076 $ 1,045 $ 1,024 $ 1,027 Properties and lease intangibles, net Conduit loans Investment in unconsolidated entities Special serv icing intangible Loans held for inv estment Total $ 1,726 $ 1,800 $ 1,525 $ 1,584 $ 1,711 28

30 CMBS and Special Servicing $ millions Owned CMBS by Vintage (13) LNR Special Servicer CMBS 1.0 9% CMBS 2.0/3.0 91% Portfolio Statistics $250 $200 $150 $100 $50 Named SS: # of CMBS Trusts 173 Unpaid Balance $ 78,600 Active SS: SS Loan Balance $ 2,900 REO Loan Balance 3,900 Total Active SS Balance $ 6,800 $0 '08 & Prior '11 '12 '13 '14 '15 '16 '17 '18 CMBS 1.0 CMBS 2.0 CMBS 3.0 Carrying Value NOTE: Amounts as of September 30, 2018; carrying value represents estimated fair value 29

31 CAPITALIZATION 27

32 Capitalization Overview Credit Metrics Net Debt-to-Equity Ratios (14) Total capitalization of $16.5B Interest coverage ratio of 2.4x Current corporate issuer rating of Ba2/BB Outlook revised to Positive by Moody s and Stable by S&P Total unencumbered assets of $2.8B 2.0x 2.4x Unencumbered assets to unsecured debt ratio of 1.4x Excluding Off-balance Sheet Leverage Including Off-balance Sheet Leverage Book Value per Share Metrics Sept 30, 2018 June 30, 2018 Mar 31, 2018 Dec 31, 2017 Sept 30, 2017 Book Value per Share $ $ $ $ $ Add: Accumulated depreciation & amortization Undepreciated book value per outstanding share $ $ $ $ $ Redeemed $236M of the 2019 convertible notes via the issuance of 11.2 million common shares and $21M cash NOTE: Amounts are as of September 30, 2018, unless otherwise indicated. 31

33 Financing Facilities $ millions Type Asset Specific Financing: NOTE: As of September 30, 2018 Debt Obligations Maximum Facility Size (15) Drawn (16) Available Capacity Large Loans $ 6,918 $ 3,509 $ 3,409 I nfrastructure Lending Segment 2,127 1, Property Segment 1,982 1, Conduit Loans, Residential Conduit Loans, Commercial MBS REO Portfolio Subtotal - Asset Specific Financing $ 12,991 $ 8,371 $ 4,620 Corporate Debt: Conv ertible Senior Notes $ 356 $ 356 $ - Senior Unsecured Notes 1,700 1,700 - Term Loan Revolving Secured Financing Subtotal - Corporate Debt $ 2,456 $ 2,356 $ 100 TOTAL DEBT: $ 15,447 $ 10,727 $ 4,720 32

34 Interest Rate Sensitivity The Company will continue to benefit from a rising interest rate environment 93% of the commercial loan portfolio is indexed to LIBOR 97% of the infrastructure loan portfolio is indexed to LIBOR Net Interest Income Per Share Sensitivity to LIBOR $0.25 $0.20 $0.21 $0.15 $0.13 $0.10 $0.05 $0.06 $ % Increase 2.0% Increase 3.0% Increase NOTE: Based on assets and liabilities as of September 30,

35 Financial Capacity ($ millions) Capacity to originate or acquire up to an additional $4.5B of new investments $5,000 $3,139 $4,493 $4,000 $3,000 $2,000 $1,014 ($247) ($225) $1,354 $1,000 $409 $92 $311 $0 Cash and equivalents Net equity invested in RMBS Approved but undrawn credit capacity 90-day expected maturities, prepayments, sales & participations 90-day expected loan fundings Cash withheld for working capital needs Total available capital Available onbalance sheet financing (17) Total potential liquidity NOTE: As of November 2,

36 Share Count (shares in thousands) Prior Year Q3 Q2 Q1 Full Year Q4 Q3 Q2 Q1 Full Year Number of Shares, GAAP: Basic Average shares outstanding 265, , , , , , , , ,620 Effect of dilutive securities Convertible Notes - 27,134 1,209 25,675 1,942 2,313 3,142 3,220 1,899 Effect of dilutive securities Other Diluted Average shares outstanding 265, , , , , , , , ,079 Shares Outstanding 274, , , , , , , , ,376 Number of Shares, Core: Basic Average shares outstanding 265, , , , , , , , ,620 Effect of Weighted Average Unvested Stock Awards 2,447 2,518 1,656 2,210 1,801 1,936 2,081 1,016 1,711 Effect of dilutive securities Woodstar II OP units 9,939 9,759 5,143 8,298 - N/A N/A N/A - Effect of dilutive securities Other Diluted Average shares outstanding 277, , , , , , , , ,839 35

37 APPENDIX 34

38 Company Information Starwood Property Trust, an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the United States. Additional information may be found on the Company s website, Contact Information: Headquarters: Investor Relations: New York Stock Exchange: 591 West Putnam Avenue Zachary Tanenbaum Symbol: STWD Greenwich, CT ztanenbaum@starwood.com Analyst Coverage: Bank of America Merrill Lynch Kenneth Bruce, Credit Suisse Douglas Harter, Deutsche Bank Research George Bahamondes, B. Riley FBR, Inc. Tim Hayes, JMP Securities Steven Delaney, JP Morgan Richard B. Shane, Jr., Keefe Bruyette & Woods North America Jade Rahmani, Raymond James Stephen Laws, Rating Agencies: Moody s Investors Service Rating Standard & Poor s Rating Services Rating Mark L. Wasden, Ba2 Matthew T. Carroll, BB Robert Young, Positive Outlook Brendan Browne, Stable Outlook 37

39 Footnotes 1. Based on a closing stock price of $21.73 as of November 8, First mortgages include first mortgage loans and any contiguous subordinated mortgage and/or 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 $1.0B, $983M, $689M, $851M and $1.1B being classified as first mortgages as of September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017 and September 30, 2017, respectively. 3. First mortgage loans and subordinated mortgage loans are net of $24M and $8M of allowances for loan losses, respectively, as of September 30, Includes traditional CMBS and certain other investments in unconsolidated entities as these investments are not associated with a particular region. 5. Includes other property types not specifically identified in the applicable table, including power plants, development site, land and car wash. 6. LTVs and LTCs are calculated using the methodology described in the Calculation Methodologies section of this Appendix on the following page. 7. Represents the Company s entire investment, which includes all components of the capital stack that it owns (i.e., first mortgages, subordinated mortgages, mezzanine loans and preferred equity). 8. Sectors are defined as follows: Thermal Natural Gas, power plants fueled with natural gas; Renewables, solar, wind and hydro power projects; Midstream / Downstream, pipelines and gas distribution / refineries; Other Thermal, power plants fueled with coal and pet coke; Upstream, oil and gas reserve based deals 9. Carrying value includes all components of the related asset, including properties, intangibles, capitalized acquisition costs and contingent consideration. 38

40 Footnotes, continued 10. Net operating income represents rental income less costs of rental operations and excludes interest, depreciation and amortization. 11. Excludes interest in joint venture. 12. Differences between face amount and carrying value are principally attributable to purchase discounts and changes in fair value. Face amounts of $2,984, $4,168M, $4,142M, $4,132M and $4,075M as of September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017 and September 30, 2017, respectively. 13. CMBS 1.0 deals were originated prior to CMBS 2.0 / 3.0 deals were originated from 2009 forward. Different credit underwriting and regulatory requirements are applied to CMBS 2.0 / Debt represents $10.7B of secured and unsecured financing agreements at September 30, Equity represents undepreciated equity, which equals $4.9B of GAAP equity including non-controlling interests and increased for $270.0M of accumulated depreciation and amortization at September 30, Debt reduced for cash of $264.4M at September 30, Off-balance sheet leverage is created from the sale of A-notes on the commercial loan business. Off balance sheet leverage is created from the sale and securitization of senior loan interests in our commercial and residential lending business. 15. Excludes borrowings on transferred loans. 16. Drawn amounts exclude discounts / premiums and unamortized deferred financing costs. 17. Does not include potential proceeds from future A-note sales or CLO securitizations. 39

41 Calculation Methodologies Commercial and Residential Lending Segment LTV & LTC For loans which utilize property value as the denominator, value is determined by reference to either appraisals, desk underwriting, discussions with brokers and other experts, or any combination thereof. To the extent that a loan has been newly originated, the Company uses the original appraisal. To the extent that conditions in either the overall real estate market or at the property or borrower level have changed in a meaningful way since origination, the Company either obtains updated appraisals, or conducts desk underwriting if the Company believes its knowledge of the asset and related market would provide a more accurate assessment of value. For loans which utilize cost as the denominator, cost is determined by reference to the borrower s development budget. Face value of the loan is used as the numerator regardless of whether the Company has purchased the loan at a discount or premium to par. For any loans collateralized by ground-up construction projects without significant leasing or units with executed sales contracts, the fully funded loan balance is included in the numerator and the fully budgeted construction cost including costs of acquisition of the property is included in the denominator. For ground up construction loans which have significant leasing or units under contract for sale, the fully funded loan balance is included in the numerator with an estimate of the stabilized value upon completion of construction included in the denominator. Core Earnings Calculation The Company calculates Core earnings as GAAP net income (loss) excluding non-cash equity compensation expense, the incentive fee due under the Company s Management Agreement, acquisition costs for successful acquisitions, depreciation and amortization of real estate and associated intangibles, and any unrealized gains, losses or other non-cash items recorded in net income for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income and, to the extent deducted from net income, distributions payable with respect to equity securities of subsidiaries issued in exchange for properties or interests therein. The amount is adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash adjustments as determined by the Company s Manager and approved by a majority of the Company s independent directors. 40

42 Special Note Regarding Forward-Looking Statements This presentation contains certain forward-looking statements, including without limitation, statements concerning the Company s 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 Forward-looking statements are developed by combining currently available information with the Company s 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 dates. These forward-looking statements are based largely on the Company s current beliefs, assumptions and expectations of the Company s future performance taking into account all information currently available to the Company. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company or within the Company s control, and which could materially affect actual results, performance or achievements. Factors that may cause actual results to vary from the Company s forward-looking statements include, but are not limited to: factors described in the Company s Annual Report on Form 10-K for the year ended December 31, 2017 and its quarterly reports on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018 and September 30, 2018, including those set forth under the captions Risk Factors and Business ; defaults by borrowers in paying debt service on outstanding indebtedness; impairment in the value of real estate property securing the Company s loans or in which the Company invests; availability of mortgage origination and acquisition opportunities acceptable to the Company; potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements; the Company s ability to integrate its recently completed acquisition of the project finance origination, underwriting and capital markets business of GE Capital Global Holdings, LLC into its business and to achieve the benefits that the Company anticipates 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. Additional risk factors are identified in the Company s filings with the U.S. Securities and Exchange Commission (the SEC ), which are available on the Company s website at and the SEC s website at If a change occurs, the Company s business, financial condition, liquidity and results of operations may vary materially from those expressed in the Company s forward-looking statements. As a result, the Company s business, financial condition, liquidity and results of operations may vary materially from those expressed in the Company s forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the events described by the Company s forward-looking statements might not occur. The Company qualifies any and all of the Company s forward-looking statements by these cautionary factors. Please keep this cautionary note in mind as you assess the information given in this presentation. 41

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