Q SUPPLEMENTAL REPORTING INFORMATION

Transcription

1 Q SUPPLEMENTAL REPORTING INFORMATION

2 Table of Contents Press Release Page 2 Highlights Page 8 Lending Segment Page 11 Property Segment Page 18 Investing and Servicing Segment Page 23 Capitalization Page 26 Appendix Page 33 Cover photo: 11 Hoyt Street, Brooklyn, NY - $170M mortgage loan. Rendering courtesy of Binyan Studios 1

3 PRESS RELEASE

4 For Immediate Release Starwood Property Trust Reports Results for the Quarter Ended March 31, 2018 Quarterly GAAP Earnings of $0.38 and Core Earnings of $0.58 per Diluted Common Share Deploys $2.0 Billion of Capital Closes $405 Million of Previously Announced $595 Million Affordable Housing Portfolio Purchase Issues $500 Million of 3.625% Unsecured Notes (Swapped to L+128 bps) Retires $370 Million of 4.55% Convertible Senior Notes Declares Dividend of $0.48 per share for the Second Quarter of 2018 GREENWICH, Conn., May 4, 2018 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) today announced operating results for the fiscal quarter ended March 31, The Company s first quarter 2018 GAAP net income was $99.9 million, or $0.38 per diluted share, and Core Earnings (a non-gaap financial measure) was $155.8 million, or $0.58 per diluted share is off to a great start as we have put more than $2.5 billion of capital to work year-to-date, including $1.8 billion in our Lending Segment, commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust. Our advantaged access to best-in-class low cost funding options, including our most recent $500 million unsecured debt offering, has enabled us to continue to source and close attractive risk adjusted lending investments in a very competitive market. With a robust investment pipeline generated by our multi-cylinder investment platform, and a very strong liquidity profile, we are well positioned to continue to deliver stable and compelling total returns for our shareholders for the long-term. Dividend On May 4, 2018, the Company s Board of Directors declared a dividend of $0.48 per share of common stock for the quarter ending June 30, The dividend is payable on July 13, 2018 to common stockholders of record as of June 29, 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, May 4, 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 May 18, About Starwood Property Trust, Inc. Starwood Property Trust (NYSE: STWD), an affiliate of global private investment firm Starwood Capital Group, is the largest commercial mortgage real estate investment trust in the United States. The Company s core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt and equity investments. With total capital deployed since inception of over $41 billion, Starwood Property Trust continues to solidify its position as one of the premier real estate finance companies in the country. 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. 4

6 Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Statement of Operations by Segment For the three months ended March 31, 2018 (Amounts in thousands) Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Revenues: Interest income from loans $ 134,972 $ $ 2,648 $ $ 137,620 $ $ 137,620 Interest income from investment securities 14,439 34,399 48,838 (33,569) 15,269 Servicing fees ,434 33,599 (7,532) 26,067 Rental income 66,710 14,400 81,110 81,110 Other revenues (54) 521 Total revenues 149,770 66,811 85, ,742 (41,155) 260,587 Costs and expenses: Management fees ,051 30, ,642 Interest expense 32,021 16,534 5,095 33,803 87,453 (270) 87,183 General and administrative 6,695 1,859 21,020 2,482 32, ,142 Acquisition and investment pursuit costs Costs of rental operations 23,488 6,205 29,693 29,693 Depreciation and amortization 17 26,469 5,258 31,744 31,744 Loan loss allowance, net 1,538 1,538 1,538 Other expense Total costs and expenses 41,048 68,356 37,774 66, ,514 (91) 213,423 Income (loss) before other income (loss), income taxes and noncontrolling interests 108,722 (1,545) 47,335 (66,284) 88,228 (41,064) 47,164 Other income (loss): Change in net assets related to consolidated VIEs 52,653 52,653 Change in fair value of servicing rights (9,168) (9,168) 3,354 (5,814) Change in fair value of investment securities, net (704) 13,979 13,275 (13,424) (149) Change in fair value of mortgage loans held-for-sale, net (1,692) 9,492 7,800 7,800 Earnings (loss) from unconsolidated entities 1,444 (3,515) 1,596 (475) (987) (1,462) Gain on sale of investments and other assets, net 279 3,942 6,439 10,660 10,660 (Loss) gain on derivative financial instruments, net (10,818) 1,919 5,042 (13,002) (16,859) (16,859) Foreign currency gain (loss), net 13,550 2 (3) 13,549 13,549 Other income, net Total other income (loss) 2,102 2,365 27,425 (13,002) 18,890 41,596 60,486 Income (loss) before income taxes 110, ,760 (79,286) 107, ,650 Income tax provision (947) (1,261) (648) (2,856) (2,856) Net income (loss) 109,877 (441) 74,112 (79,286) 104, ,794 Net income attributable to noncontrolling interests (361) (2,453) (1,516) (4,330) (532) (4,862) Net income (loss) attributable to Starwood Property Trust, Inc. $ 109,516 $ (2,894) $ 72,596 $ (79,286) $ 99,932 $ $ 99,932 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 March 31, 2018 (Amounts in thousands except per share data) Investing Lending Property and Servicing Segment Segment Segment Corporate Total Net income (loss) attributable to Starwood Property Trust, Inc. $ 109,516 $ (2,894) $ 72,596 $ (79,286) $ 99,932 Add / (Deduct): Non-controlling interests attributable to Woodstar II Class A Units 2,453 2,453 Non-cash equity compensation expense ,199 4,780 Management incentive fee 9,634 9,634 Acquisition and investment pursuit costs 119 (93) (29) (3) Depreciation and amortization 17 26,805 4,912 31,734 Loan loss allowance, net 1,538 1,538 Interest income adjustment for securities (197) (1,062) (1,259) Extinguishment of debt, net 9,755 9,755 Other non-cash items (562) Reversal of unrealized (gains) / losses on: Loans held-for-sale 1,692 (9,492) (7,800) Securities 704 (13,979) (13,275) Derivatives 10,529 (1,436) (5,422) 14,398 18,069 Foreign currency (13,550) (2) 3 (13,549) Earnings from unconsolidated entities (1,444) 3,515 (1,596) 475 Purchases and sales of properties Recognition of realized gains / (losses) on: Loans held-for-sale (875) 9,643 8,768 Securities (4,114) (4,114) Derivatives (5,725) (479) 5,531 (673) Foreign currency 8,051 2 (41) 8,012 Earnings from unconsolidated entities 1,847 1,044 2,891 Purchases and sales of properties (210) (1,765) (1,975) Core Earnings (Loss) $ 112,785 $ 27,142 $ 57,328 $ (41,419) $ 155,836 Core Earnings (Loss) per Weighted Average Diluted Share $ 0.42 $ 0.10 $ 0.21 $ (0.15) $

8 Starwood Property Trust, Inc. and Subsidiaries Condensed Consolidated Balance Sheet by Segment As of March 31, 2018 (Amounts in thousands) Investing Investing Lending Property and Servicing and Servicing Segment Segment Segment Corporate Subtotal VIEs Total Assets: Cash and cash equivalents $ 30,048 $ 14,738 $ 55,167 $ 179,987 $ 279,940 $ 6,215 $ 286,155 Restricted cash 52,855 15,343 8,478 16,590 93,266 93,266 Loans held-for-investment, net 6,179,100 3,686 6,182,786 6,182,786 Loans held-for-sale 662,971 60, , ,733 Loans transferred as secured borrowings 74,463 74,463 74,463 Investment securities 490,494 1,045,217 1,535,711 (1,021,248) 514,463 Properties, net 2,699, ,372 2,988,864 2,988,864 Intangible assets 118,522 85, ,521 (24,892) 179,629 Investment in unconsolidated entities 29, ,189 45, ,087 (21,975) 160,112 Goodwill 140, , ,437 Derivative assets 4,240 36, ,067 41,067 Accrued interest receivable 39, ,830 41,253 41,253 Other assets 328,622 88,708 50,830 2, ,243 (2,923) 467,320 VIE assets, at fair value 49,233,307 49,233,307 Total Assets $ 7,891,332 $ 3,080,211 $ 1,786,338 $ 200,490 $ 12,958,371 $ 48,168,484 $ 61,126,855 Liabilities and Equity Liabilities: Accounts payable, accrued expenses and other liabilities $ 18,332 $ 68,115 $ 48,925 $ 20,894 $ 156,266 $ 1,297 $ 157,563 Related-party payable ,733 31,781 31,781 Dividends payable 126, , ,244 Derivative liabilities 19,576 20, ,064 57,600 57,600 Secured financing agreements, net 2,936,419 1,936, , ,124 5,578,014 (23,700) 5,554,314 Unsecured senior notes, net 2,252,631 2,252,631 2,252,631 Secured borrowings on transferred loans, net 74,275 74,275 74,275 VIE liabilities, at fair value 48,167,760 48,167,760 Total Liabilities 3,048,622 2,025, ,387 2,745,690 8,276,811 48,145,357 56,422,168 Equity: Starwood Property Trust, Inc. Stockholders Equity: Common stock 2,671 2,671 2,671 Additional paid-in capital 2,054, , ,815 1,260,710 4,728,183 4,728,183 Treasury stock (104,194) (104,194) (104,194) Accumulated other comprehensive income (loss) 59,082 16,259 (31) 75,310 75,310 Retained earnings (accumulated deficit) 2,718,567 (17,229) 759,611 (3,704,387) (243,438) (243,438) Total Starwood Property Trust, Inc. Stockholders Equity 4,832, ,215 1,322,395 (2,545,200) 4,458,532 4,458,532 Non-controlling interests in consolidated subsidiaries 10, ,884 6, ,028 23, ,155 Total Equity 4,842,710 1,055,099 1,328,951 (2,545,200) 4,681,560 23,127 4,704,687 Total Liabilities and Equity $ 7,891,332 $ 3,080,211 $ 1,786,338 $ 200,490 $ 12,958,371 $ 48,168,484 $ 61,126,855 Additional information can be found on the Company s website at Contact: Zachary Tanenbaum Starwood Property Trust Phone: ztanenbaum@starwood.com 7

9 HIGHLIGHTS

10 Business Highlights First Quarter: Core Earnings of $0.58 and GAAP Earnings of $0.38 per diluted share Deployed $2B of capital, including $1.3B in Lending Segment Closed on 18, or $405M, of the 27-property affordable housing portfolio purchase we announced last quarter, bringing total properties acquired to 26 Undepreciated book value per share of $17.74, excluding the in-the-money portion of the convertible notes Debt-to-equity ratio of 1.6x; 1.5x net of cash (1) Issued $500M of senior unsecured notes due 2021 at L bps Repurchased 573K shares of stock for $12M Subsequent to Quarter End: Total investment capacity of $2.9B as of May 1, 2018 Declares dividend of $0.48 for the quarter ending June 30, 2018, representing a 9.2% annualized dividend yield (2) NOTE: Amounts are as of and for the period ended March 31, 2018, unless otherwise indicated. 9

11 Segment Highlights Lending Core and GAAP Earnings of $113M and $110M, respectively Commercial lending investment activity of $1.2B with an optimal asset-level return of 12.3% (3), of which $743M was funded $169M of fundings on previously originated loans Commercial lending repayments of $1.5B Carrying amount of target portfolio of $6.4B Weighted average LTV of target portfolio of 62.1% Property Core Earnings and GAAP Loss of $27M and $3M, respectively Closed on 18 of the 27-property affordable housing portfolio purchase we announced last quarter, bringing total properties acquired to 26 Purchase price of $405M Sold two properties from the Master Lease Portfolio for Core and GAAP gains of $4M Undepreciated carrying amount of investment portfolio of $3.1B Investing and Servicing Core and GAAP Earnings of $57M and $73M, respectively Securitized $257M of conduit loans in one transaction Named special servicer on three new issue CMBS trusts totaling $2.0B of collateral Fitch commercial special servicer rating of CSS1- reaffirmed subsequent to quarter end NOTE: Amounts are as of March 31, 2018, unless otherwise indicated. 10

12 LENDING SEGMENT

13 Commercial Loan Originations During the Quarter Property Type Originated or acquired $1.2B Funded $743M of new loans Other 10% Office 34% 89% senior loans Multifamily 17% 100% floating rate Weighted average LTV of 63% Average loan size: $103M Hotel 18% Residential 21% Fundings under previously originated commitments totaled $169M West 17% Geographic Location Midwest 3% International 5% Northeast 19% Southwest 23% Mid-Atlantic 33% 12

14 Significant Activity During the Quarter Commercial lending investment activity of $1.2B, including: $214M first mortgage and mezzanine loan for the acquisition of a 1.2M square foot Class A office tower located in Houston, Texas $170M first mortgage loan for the development of a 53-story residential tower located in Brooklyn, New York $140M first mortgage and mezzanine loan for the acquisition and conversion of a 16-story property located in Alexandria, Virginia. The Company subsequently sold the $106M first mortgage loan $130M first mortgage loan for the refinancing of a 381K square foot office building located in Arlington, Virginia $130M first mortgage for four U.S. power plants, that each have long term power purchase agreements with investment grade counterparties Residential lending investment activity: Non-agency loans of $92M, bringing the total portfolio to $663M with an average FICO of 723 and LTV of 63% NOTE: Amounts are as of and for the period ended March 31, 2018, unless otherwise indicated. 13

15 Investment Portfolio Carrying Value $ millions Asset Carrying Values March 31, 2018 Dec 31, 2017 Sept 30, 2017 June 30, 2017 March 31, 2017 First mortgage loans held for investment (4) $ 5,429 $ 5,811 $ 5,518 $ 5,303 $ 5,183 Subordinated mortgages held for inv estment Mezzanine loans held for investment (4) CMBS Preferred equity investments Total Asset Carrying Values $ 6,389 $ 6,966 $ 6,767 $ 6,671 $ 6,664 RMBS, av ailable for sale at fair v alue Residential mortgages held for sale Loans transferred as secured borrowings Other Total $ 7,436 $ 7,985 $ 7,587 $ 7,292 $ 7,181 14

16 Target Portfolio Returns Asset Returns As of March 31, 2018 As of December 31, 2017 As of March 31, 2017 Return on Asset Optimal Asset-Level Return (3) Return on Asset Optimal Asset-Level Return (3) Return on Asset Optimal Asset-Level Return (3) First mortgage loans held for investment (4) 6.9% 11.2% 6.7% 10.9% 6.6% 10.9% Subordinated mortgages held for inv estment 11.9% 11.9% 11.8% 11.8% 11.5% 11.6% Mezzanine loans held for investment (4) 11.4% 11.4% 11.5% 11.5% 10.8% 10.8% CMBS 6.4% 11.4% 5.4% 11.7% 5.1% 12.4% Preferred equity investments 13.3% 13.3% 13.3% 13.3% 13.3% 13.3% Target Portfolio of Lending Segment 7.4% 11.3% 7.2% 11.1% 7.2% 11.0% 15

17 Target Portfolio Snapshot $ millions Geographic Diversification Collateral Diversification West 21% Other (5) 3% 3% Southwest 16% Northeast Midwest 27% 6% Mid-Atlantic 9% Southeast 9% PROPERTY TYPE Carrying Value as of: March 31, 2018 March 31, 2017 Office $ 2,299 36% $ 2,279 34% Hotel 1,337 21% 1,281 19% Mixed-Use % 1,225 18% Multifamily % 301 5% Residential 551 9% 543 8% Retail 329 5% 545 8% Parking 162 3% 189 3% I ndustrial 161 2% 176 3% Other (6) 288 4% 125 2% Total $ 6, % $ 6, % International 9% NOTE: As of March 31,

18 Weighted Average Ending LTV / LTC of Loan Portfolio Dollar (Carrying values in billions) Migration of Weighted Average LTV or LTC (7) $ billions 80.0% % 6.0 First mortgages held for sale at fair value 70.0% 5.0 Preferred Equity 4.0 Mezzanine loans held for investment 65.0% 60.0% 62.4% 61.3% 61.6% 62.9% 61.2% 61.9% 63.4% 63.8% 63.3% 62.9% 62.8% 62.1% 62.1% Subordinated mortgages held for investment First mortgages held for investment 55.0% % Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1' Quarter Ending Weighted Average LTV of Loan Portfolio (7) First Mortgages Subordinated Mortgages Mezzanine Mortgages Preferred Equity Total (8) Beginning LTV 0.0% 10.3% 43.8% 63.4% 4.9% Ending LTV 62.8% 42.9% 62.8% 78.4% 62.1% 17

19 PROPERTY SEGMENT 25

20 Investment Portfolio $ millions Closed on 18, or $405M, of the 27-property affordable housing portfolio purchase we announced last quarter, bringing total properties acquired to 26 for $561M Issued 7.0M OP units in connection with this purchase, plus 1.3M contingently issuable OP units Sold two properties from the Master Lease Portfolio with an aggregate carrying value of $33M for Core and GAAP gains of $4M Wholly-Owned: Investment Net Carrying Value (9) Asset Specific Financing Net Investment Q Net Operating Income Occupancy Rate Medical Office Portfolio $ 760 $ 489 $ 271 $ % Ireland Portfolio % Woodstar I Portfolio % Woodstar II Portfolio % Master Lease Portfolio % Subtotal - Undepreciated Carrying Value $ 3,023 $ 1,937 $ 1,086 $ 43.8 (10) Accumulated Depreciation and Amortization (171) - (171) Net Carrying Value $ 2,852 $ 1,937 $ 915 Joint Venture: Regional Mall Portfolio Total $ 2,959 $ 1,937 $ 1,022 NOTE: Amounts are as of and for the period ended March 31, 2018, unless otherwise indicated. 19

21 Portfolio Snapshot $ millions Geographic Diversification (11) Collateral Diversification West 8% Southwest Midwest 10% Northeast 8% Mid-Atlantic 2% Wholly Owned: Property Type Undepreciated Carrying Value as of: March 31, 2018 March 31, 2017 Office $ 1,299 43% $ 1,233 66% Multifamily 1,204 40% % Retail % - - Industrial 128 4% - - Subtotal $ 3, % $ 1, % 8% Southeast Joint Venture: Retail Total $ 3, % $ 1, % Europe 3% 46% 18% NOTE: Amounts are as of and for the period ended March 31, 2018, unless otherwise indicated. 20

22 Portfolio Snapshot (11) $ 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 21% Southwest 16% Midwest 39% Mid-Atlantic 9% Southeast 15% Gross Investment Occupancy Sq. Ft. Midwest $ % 2,115 Southeast % 393 Southwest % 451 West % 950 Mid-Atlantic % 1,165 Total $ % 5,074 NOTE: Amounts are as of and for the period ended March 31, 2018, unless otherwise indicated. 21

23 Portfolio Snapshot (11) $ millions, square footage in thousands Woodstar Gross Florida Investment Occupancy Units North $ 75 95% 1,230 Central % 11,567 South % 1,948 Total $ 1,184 99% 14,745 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 March 31, 2018, unless otherwise indicated. 22

24 INVESTING AND SERVICING SEGMENT 21

25 Investment Portfolio $ millions Significant Activity During the Quarter: Securitized $257M of conduit loans in one transaction Awarded special servicing on three new issue CMBS trusts totaling $2B of collateral Acquired a $30M new issue B-piece Sold three properties with an aggregate Core carrying value of $21M and GAAP carrying value of $19M for Core and GAAP gains of $3M and $5M, respectively Asset Carrying Values Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 CMBS, fair value option (12) $ 1,045 $ 1,024 $ 1,027 $ 1,009 $ 1,015 Properties and lease intangibles, net Conduit loans Investment in unconsolidated entities Special serv icing intangible Loans held for inv estment Total $ 1,525 $ 1,584 $ 1,711 $ 1,771 $ 1,624 24

26 CMBS and Special Servicing $ millions Owned CMBS by Vintage (13) LNR Special Servicer $250 $200 $150 CMBS % CMBS 2.0/3.0 86% Named SS: # of CMBS Trusts 160 Unpaid Balance $ 72,906 Active SS: Portfolio Stats SS Loan Balance $ 4,688 REO Loan Balance $ 4,465 Total Active SS Balance $ 9,153 $100 $50 $0 '01 & Prior '02 '03 '04 '05 '06 '07 '08 '11 '12 '13 '14 '15 '16 '17 '18 Fitch commercial special servicer rating of CSS1- reaffirmed subsequent to quarter end CMBS 1.0 CMBS 2.0 CMBS 3.0 Carrying Value NOTE: Amounts as of March 31, 2018; carrying value represents estimated fair value 25

27 CAPITALIZATION 27

28 Capitalization Highlights During the Quarter Issued $500M of 3.625% senior unsecured notes due 2021 swapped to L bps Repurchased 573k shares of common stock for $12M Issued 7.0M OP units and 1.3M contingently issuable OP units which are redeemable for common stock in connection with the $405M acquisition of 18 Woodstar II Portfolio properties 2018 Convertible Notes were repaid at maturity on March 1, 2018 $370M of notes were repaid at par and had a coupon of 4.55% and an effective rate of 5.7% 27

29 Capitalization Overview Credit Metrics Net Debt-to-Equity Ratios (1) Total capitalization of $13.3B 2.0x Interest coverage ratio of 2.7x 1.5x Current corporate issuer rating of Ba2/BB; Outlook Stable Total unencumbered assets of $3.6B Unencumbered assets to unsecured debt ratio of 1.59x Excluding Off-balance Sheet Leverage Book Value per Share Metrics Including Off-balance Sheet Leverage Mar 31, 2018 Dec 31, 2017 Sept 30, 2017 Jun 30, 2017 Mar 31, 2017 Book value per diluted share $ $ $ $ $ Add: Accumulated depreciation & amortization Undepreciated book value per diluted share $ $ $ $ $ Add: Convertible notes conversion spread Adjusted book value per diluted share $ $ $ $ $ NOTE: Amounts are as of March 31, 2018, unless otherwise indicated. 28

30 Financing Facilities $ millions Type Asset Specific Financing: Debt Obligations Maximum Facility Size (14) Drawn (15) Available Capacity Large Loans $ 5,590 $ 2,338 $ 3,252 Properties 2,223 2, Residential Loans Conduit Loans MBS Subtotal - Asset Specific Financing $ 9,448 $ 5,297 $ 4,151 Corporate Debt: Conv ertible Senior Notes $ 591 $ 591 $ - Senior Unsecured Notes 1,700 1,700 - Term Loan Revolving Secured Financing Subtotal - Corporate Debt $ 2,691 $ 2,591 $ 100 TOTAL DEBT: $ 12,139 $ 7,888 $ 4,251 NOTE: As of March 31,

31 Interest Rate Sensitivity The Company will continue to benefit from a rising interest rate environment 92.9% of the Lending Segment s commercial loan portfolio is indexed to LIBOR Net Interest Income Per Share Sensitivity to LIBOR $0.21 $0.20 $0.14 $0.13 $0.07 $0.06 $ % Increase 2.0% Increase 3.0% Increase NOTE: Based on assets and liabilities as of March 31,

32 Financial Capacity ($ millions) Capacity to originate or acquire up to an additional $2.9B of new investments $3,500 $3,000 $1,930 $709 ($230) ($225) $2,851 $2,500 $2,000 $1,500 $1,000 $415 $500 $153 $99 $0 NOTE: As of May 1, 2018 Cash and equivalents Net equity invested in RMBS Approved but undrawn credit capacity Unallocated warehouse capacity 90-day expected maturities, prepayments, sales & participations 90-day expected loan fundings Cash withheld for working capital needs Capacity to originate or acquire 31

33 Share Count (shares in thousands) 2018 Prior Year Q1 Q1 Q2 Q3 Q4 Full Year Number of Shares, GAAP: Basic Av erage shares outstanding 260, , , , , ,620 Effect of dilutiv e securities Conv ertible Notes Conv ersion Spread 1,209 3,220 3,142 2,313 1,942 1,899 Effect of dilutiv e securities Other Diluted Av erage shares outstanding 262, , , , , ,079 Diluted Shares Outstanding at Period End 264, , , , , ,590 Number of Shares, Core: Basic Av erage shares outstanding 260, , , , , ,620 Effect of Weighted Av erage Unv ested Stock Awards 1,656 1,016 2,081 1,936 1,801 1,711 Effect of dilutiv e securities Woodstar I I OP Units 5,143 N/A N/A N/A - - Effect of dilutiv e securities Other Diluted Av erage shares outstanding 267, , , , , ,839 32

34 APPENDIX 34

35 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, Director Symbol: STWD Greenwich, CT ztanenbaum@starwood.com Analyst Coverage: Bank of America Merrill Lynch Kenneth Bruce, Compass Point Fred Small, Credit Suisse Douglas Harter, Deutsche Bank Research George Bahamondes, B. Riley FBR, Inc. Tim Hayes, JMP Securities Steven Delaney, 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, Stable Outlook Brendan Browne, Stable Outlook 34

36 Footnotes 1. Debt represents $7.9B of secured and unsecured financing agreements at March 31, Equity represents undepreciated equity, which equals $4.7B of GAAP equity including non-controlling interests and increased for $205.1M of accumulated depreciation and amortization at March 31, Debt reduced for cash of $279.9M at March 31, Off-balance sheet leverage is created from the sale of A-notes on the commercial loan business. 2. Based on a closing stock price of $20.96 as of May 3, The optimal asset-level return assumes (i) maximum available leverage in place or in negotiation for each asset, notwithstanding the amount actually borrowed, and (ii) full syndication of the first mortgage when syndication is deemed probable. 4. 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 $689M, $851M, $1.1B, $1.1B and $1.1B being classified as first mortgages as of March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively. 5. Includes traditional CMBS and certain other investments in unconsolidated entities as these investments are not associated with a particular region. 6. Includes other property types not specifically identified in the applicable table, including power plants, development site and car wash. 7. LTVs and LTCs are calculated using the methodology described in the Calculation Methodologies section of this Appendix on the following page. 8. 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). 9. Carrying value includes all components of the related asset, including properties, intangibles, capitalized acquisition costs and contingent consideration. 10. Net operating income represents rental income less costs of rental operations and excludes interest, depreciation and amortization. 11. Excludes interest in joint venture. 35

37 Footnotes, continued 12. Differences between face amount and carrying value are principally attributable to purchase discounts and changes in fair value. Face amounts of $4,142M, $4,132M, $4,075M, $4,131M and $4,256M as of March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 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 / Excludes borrowings on transferred loans. 15. Drawn amounts exclude discounts / premiums and unamortized deferred financing costs. 35

38 Calculation Methodologies 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. 36

39 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 Form 10-Q for the quarter ended March 31, 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; 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. 37

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