UNITED STATES
For the quarterly period ended Commission file number001-34436☒☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 March 31,September 30, 2021☐☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Starwood Property Trust, Inc.
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Maryland |
| 27-0247747 | ||||||
(State or Other Jurisdiction of |
| (I.R.S. Employer | ||||||
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591 West Putnam Avenue |
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| 06830 | ||||||
(Address of Principal Executive Offices) |
| (Zip Code) |
(203) 422-7700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common stock, $0.01 par value per share | STWD | New York Stock Exchange |
☒No☐
☒No☐
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Large accelerated filer |
| Accelerated filer | |||||||||
Non-accelerated filer |
| Smaller reporting company | ☐ | ||||||||
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| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻☐
☒
288,596,238.
Special Note Regarding Forward-Looking Statements
2
•
availability of mortgage origination and acquisition opportunities acceptable to us;
3
TABLE OF CONTENTS
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4
| | | | | | |
| | As of | | As of | ||
| | March 31, 2021 | | December 31, 2020 | ||
Assets: | | | | | | |
Cash and cash equivalents | | $ | 351,190 | | $ | 563,217 |
Restricted cash | |
| 118,724 | |
| 158,945 |
Loans held-for-investment, net of credit loss allowances of $72,284 and $77,444 ($150,712 and $90,684 held at fair value) | |
| 12,321,493 | |
| 11,087,073 |
Loans held-for-sale ($613,061 and $932,295 held at fair value) | |
| 844,631 | |
| 1,052,835 |
Investment securities, net of credit loss allowances of $5,387 and $5,675 ($190,212 and $198,053 held at fair value) | |
| 678,287 | |
| 736,658 |
Properties, net | | | 2,244,748 | | | 2,271,153 |
Intangible assets ($12,406 and $13,202 held at fair value) | |
| 66,772 | |
| 70,117 |
Investment in unconsolidated entities | |
| 100,907 | |
| 108,054 |
Goodwill | |
| 259,846 | |
| 259,846 |
Derivative assets | |
| 38,029 | |
| 40,555 |
Accrued interest receivable | |
| 101,713 | |
| 95,980 |
Other assets | |
| 208,873 | |
| 190,748 |
Variable interest entity (“VIE”) assets, at fair value | |
| 62,367,110 | |
| 64,238,328 |
Total Assets | | $ | 79,702,323 | | $ | 80,873,509 |
Liabilities and Equity | | | | | | |
Liabilities: | | | | | | |
Accounts payable, accrued expenses and other liabilities | | $ | 178,215 | | $ | 206,845 |
Related-party payable | |
| 36,135 | |
| 39,170 |
Dividends payable | |
| 138,906 | |
| 137,959 |
Derivative liabilities | |
| 34,805 | |
| 41,324 |
Secured financing agreements, net | |
| 10,895,932 | |
| 10,146,190 |
Collateralized loan obligations, net | | | 931,178 | | | 930,554 |
Unsecured senior notes, net | |
| 1,735,658 | |
| 1,732,520 |
VIE liabilities, at fair value | |
| 60,896,709 | |
| 62,776,371 |
Total Liabilities | |
| 74,847,538 | |
| 76,010,933 |
Commitments and contingencies (Note 21) | | | | | | |
Equity: | | | | | | |
Starwood Property Trust, Inc. Stockholders’ Equity: | | | | | | |
Preferred stock, $0.01 per share, 100,000,000 shares authorized, 0 shares issued and outstanding | |
| — | |
| — |
Common stock, $0.01 per share, 500,000,000 shares authorized, 294,300,251 issued and 286,851,560 outstanding as of March 31, 2021 and 292,091,601 issued and 284,642,910 outstanding as of December 31, 2020 | |
| 2,943 | |
| 2,921 |
Additional paid-in capital | |
| 5,225,037 | |
| 5,209,739 |
Treasury stock (7,448,691 shares) | |
| (138,022) | |
| (138,022) |
Accumulated other comprehensive income | |
| 41,654 | |
| 43,993 |
Accumulated deficit | |
| (654,750) | |
| (629,733) |
Total Starwood Property Trust, Inc. Stockholders’ Equity | |
| 4,476,862 | |
| 4,488,898 |
Non-controlling interests in consolidated subsidiaries | |
| 377,923 | |
| 373,678 |
Total Equity | |
| 4,854,785 | |
| 4,862,576 |
Total Liabilities and Equity | | $ | 79,702,323 | | $ | 80,873,509 |
As of September 30, 2021 | As of December 31, 2020 | ||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 273,316 | $ | 563,217 | |||||||
Restricted cash | 110,472 | 158,945 | |||||||||
Loans held-for-investment, net of credit loss allowances of $57,573 and $77,444 ($91,499 and $90,684 held at fair value) | 13,292,998 | 11,087,073 | |||||||||
Loans held-for-sale ($2,099,266 and $932,295 held at fair value) | 2,183,519 | 1,052,835 | |||||||||
Investment securities, net of credit loss allowances of $6,389 and $5,675 ($184,153 and $198,053 held at fair value) | 670,887 | 736,658 | |||||||||
Properties, net | 2,228,862 | 2,271,153 | |||||||||
Intangible assets ($15,942 and $13,202 held at fair value) | 65,122 | 70,117 | |||||||||
Investment in unconsolidated entities | 94,000 | 108,054 | |||||||||
Goodwill | 259,846 | 259,846 | |||||||||
Derivative assets | 52,566 | 40,555 | |||||||||
Accrued interest receivable | 108,126 | 95,980 | |||||||||
Other assets | 294,670 | 190,748 | |||||||||
Variable interest entity (“VIE”) assets, at fair value | 62,346,480 | 64,238,328 | |||||||||
Total Assets | $ | 81,980,864 | $ | 80,873,509 | |||||||
Liabilities and Equity | |||||||||||
Liabilities: | |||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 210,080 | $ | 206,845 | |||||||
Related-party payable | 23,378 | 39,170 | |||||||||
Dividends payable | 139,738 | 137,959 | |||||||||
Derivative liabilities | 15,615 | 41,324 | |||||||||
Secured financing agreements, net | 11,502,052 | 10,146,190 | |||||||||
Collateralized loan obligations and single asset securitization, net | 2,614,230 | 930,554 | |||||||||
Unsecured senior notes, net | 1,733,684 | 1,732,520 | |||||||||
VIE liabilities, at fair value | 60,894,975 | 62,776,371 | |||||||||
Total Liabilities | 77,133,752 | 76,010,933 | |||||||||
Commitments and contingencies (Note 21) | 0 | 0 | |||||||||
Equity: | |||||||||||
Starwood Property Trust, Inc. Stockholders’ Equity: | |||||||||||
Preferred stock, $0.01 per share, 100,000,000 shares authorized, no shares issued and outstanding | — | — | |||||||||
Common stock, $0.01 per share, 500,000,000 shares authorized, 296,072,090 issued and 288,623,399 outstanding as of September 30, 2021 and 292,091,601 issued and 284,642,910 outstanding as of December 31, 2020 | 2,961 | 2,921 | |||||||||
Additional paid-in capital | 5,270,265 | 5,209,739 | |||||||||
Treasury stock (7,448,691 shares) | (138,022) | (138,022) | |||||||||
Accumulated other comprehensive income | 40,486 | 43,993 | |||||||||
Accumulated deficit | (687,980) | (629,733) | |||||||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 4,487,710 | 4,488,898 | |||||||||
Non-controlling interests in consolidated subsidiaries | 359,402 | 373,678 | |||||||||
Total Equity | 4,847,112 | 4,862,576 | |||||||||
Total Liabilities and Equity | $ | 81,980,864 | $ | 80,873,509 |
5
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2021 |
| 2020 | ||
Revenues: | | | | | | |
Interest income from loans | | $ | 190,575 | | $ | 217,427 |
Interest income from investment securities | |
| 11,610 | |
| 15,240 |
Servicing fees | |
| 8,402 | |
| 4,793 |
Rental income | | | 76,338 | | | 74,146 |
Other revenues | |
| 305 | |
| 954 |
Total revenues | |
| 287,230 | |
| 312,560 |
Costs and expenses: | | | | | | |
Management fees | |
| 38,736 | |
| 40,728 |
Interest expense | |
| 103,374 | |
| 120,025 |
General and administrative | |
| 38,636 | |
| 38,702 |
Acquisition and investment pursuit costs | |
| 185 | |
| 909 |
Costs of rental operations | | | 28,745 | | | 28,214 |
Depreciation and amortization | |
| 22,474 | |
| 23,980 |
Credit loss provision, net | |
| 44 | |
| 48,669 |
Other expense | |
| 685 | |
| 388 |
Total costs and expenses | |
| 232,879 | |
| 301,615 |
Other income (loss): | | | | | | |
Change in net assets related to consolidated VIEs | |
| 39,745 | |
| (45,493) |
Change in fair value of servicing rights | |
| (796) | |
| (393) |
Change in fair value of investment securities, net | |
| (306) | |
| 2,504 |
Change in fair value of mortgage loans, net | |
| (9,478) | |
| (16,134) |
Earnings from unconsolidated entities | |
| 1,734 | |
| 97 |
Gain on sale of investments and other assets, net | |
| 17,693 | |
| 296 |
Gain on derivative financial instruments, net | |
| 33,989 | |
| 9,710 |
Foreign currency loss, net | |
| (11,681) | |
| (34,486) |
Loss on extinguishment of debt | | | (516) | | | (170) |
Other income, net | |
| 21 | |
| 126 |
Total other income (loss) | |
| 70,405 | |
| (83,943) |
Income (loss) before income taxes | |
| 124,756 | |
| (72,998) |
Income tax (provision) benefit | |
| (2,230) | |
| 6,729 |
Net income (loss) | |
| 122,526 | |
| (66,269) |
Net income attributable to non-controlling interests | |
| (11,148) | |
| (500) |
Net income (loss) attributable to Starwood Property Trust, Inc. | | $ | 111,378 | | $ | (66,769) |
| | | | | | |
Earnings (loss) per share data attributable to Starwood Property Trust, Inc.: | | | | | | |
Basic | | $ | 0.39 | | $ | (0.24) |
Diluted | | $ | 0.38 | | $ | (0.24) |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Interest income from loans | $ | 203,252 | $ | 169,404 | $ | 583,099 | $ | 557,934 | |||||||||||||||
Interest income from investment securities | 10,697 | 12,186 | 32,955 | 42,070 | |||||||||||||||||||
Servicing fees | 10,473 | 9,548 | 29,739 | 20,999 | |||||||||||||||||||
Rental income | 77,512 | 75,978 | 230,969 | 222,834 | |||||||||||||||||||
Other revenues | 352 | 311 | 3,621 | 1,756 | |||||||||||||||||||
Total revenues | 302,286 | 267,427 | 880,383 | 845,593 | |||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Management fees | 23,727 | 23,127 | 91,713 | 86,970 | |||||||||||||||||||
Interest expense | 115,531 | 95,981 | 328,558 | 317,499 | |||||||||||||||||||
General and administrative | 38,864 | 39,478 | 122,765 | 110,857 | |||||||||||||||||||
Acquisition and investment pursuit costs | 214 | 884 | 806 | 3,383 | |||||||||||||||||||
Costs of rental operations | 31,516 | 29,522 | 90,992 | 87,368 | |||||||||||||||||||
Depreciation and amortization | 22,041 | 23,581 | 66,992 | 70,982 | |||||||||||||||||||
Credit loss (reversal) provision, net | (563) | (3,587) | (12,363) | 55,284 | |||||||||||||||||||
Other expense | 23 | 172 | 708 | 662 | |||||||||||||||||||
Total costs and expenses | 231,353 | 209,158 | 690,171 | 733,005 | |||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||
Change in net assets related to consolidated VIEs | 28,049 | 58,585 | 80,303 | 64,353 | |||||||||||||||||||
Change in fair value of servicing rights | 2,237 | 634 | 2,740 | (2,328) | |||||||||||||||||||
Change in fair value of investment securities, net | (299) | (199) | 903 | 3,132 | |||||||||||||||||||
Change in fair value of mortgage loans, net | 31,727 | 61,384 | 68,116 | 79,700 | |||||||||||||||||||
Earnings from unconsolidated entities | 2,042 | 3,192 | 6,002 | 32,065 | |||||||||||||||||||
(Loss) gain on sale of investments and other assets, net | (47) | — | 26,377 | 6,768 | |||||||||||||||||||
Gain (loss) on derivative financial instruments, net | 41,812 | (28,097) | 65,792 | (34,485) | |||||||||||||||||||
Foreign currency (loss) gain, net | (27,003) | 25,452 | (36,057) | (1,861) | |||||||||||||||||||
Loss on extinguishment of debt | (499) | — | (2,197) | (2,377) | |||||||||||||||||||
Other (loss) income, net | (964) | 357 | (6,416) | 687 | |||||||||||||||||||
Total other income | 77,055 | 121,308 | 205,563 | 145,654 | |||||||||||||||||||
Income before income taxes | 147,988 | 179,577 | 395,775 | 258,242 | |||||||||||||||||||
Income tax provision | (7,501) | (14,843) | (6,378) | (6,816) | |||||||||||||||||||
Net income | 140,487 | 164,734 | 389,397 | 251,426 | |||||||||||||||||||
Net income attributable to non-controlling interests | (11,885) | (12,900) | (33,107) | (26,705) | |||||||||||||||||||
Net income attributable to Starwood Property Trust, Inc. | $ | 128,602 | $ | 151,834 | $ | 356,290 | $ | 224,721 | |||||||||||||||
Earnings per share data attributable to Starwood Property Trust, Inc.: | |||||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.53 | $ | 1.23 | $ | 0.79 | |||||||||||||||
Diluted | $ | 0.44 | $ | 0.52 | $ | 1.22 | $ | 0.79 |
6
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2021 | | 2020 | ||
Net income (loss) | | $ | 122,526 | | $ | (66,269) |
Other comprehensive (loss) income (net change by component): | | | | | | |
Available-for-sale securities | |
| (2,403) | |
| (15,048) |
Foreign currency translation | |
| 64 | |
| — |
Other comprehensive loss | |
| (2,339) | |
| (15,048) |
Comprehensive income (loss) | |
| 120,187 | |
| (81,317) |
Less: Comprehensive income attributable to non-controlling interests | |
| (11,148) | |
| (500) |
Comprehensive income (loss) attributable to Starwood Property Trust, Inc. | | $ | 109,039 | | $ | (81,817) |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net income | $ | 140,487 | $ | 164,734 | $ | 389,397 | $ | 251,426 | |||||||||||||||
Other comprehensive (loss) income (net change by component): | |||||||||||||||||||||||
Available-for-sale securities | (824) | (581) | (3,571) | (8,647) | |||||||||||||||||||
Foreign currency translation | — | — | 64 | — | |||||||||||||||||||
Other comprehensive loss | (824) | (581) | (3,507) | (8,647) | |||||||||||||||||||
Comprehensive income | 139,663 | 164,153 | 385,890 | 242,779 | |||||||||||||||||||
Less: Comprehensive income attributable to non-controlling interests | (11,885) | (12,900) | (33,107) | (26,705) | |||||||||||||||||||
Comprehensive income attributable to Starwood Property Trust, Inc. | $ | 127,778 | $ | 151,253 | $ | 352,783 | $ | 216,074 |
7
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Total | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Starwood | | | | | | | ||
| | | | | | | | | | | | | | | | | Accumulated | | Property | | | | | | | |||
| | Common stock | | Additional | | | | | | | | | Other | | Trust, Inc. | | Non- | | | | ||||||||
| | | | Par | | Paid-in | | Treasury Stock | | Accumulated | | Comprehensive | | Stockholders’ | | Controlling | | Total | ||||||||||
|
| Shares |
| Value |
| Capital |
| Shares |
| Amount |
| Deficit |
| Income |
| Equity |
| Interests |
| Equity | ||||||||
Balance, December 31, 2020 |
| 292,091,601 | | $ | 2,921 | | $ | 5,209,739 |
| 7,448,691 | | $ | (138,022) | | $ | (629,733) | | $ | 43,993 | | $ | 4,488,898 | | $ | 373,678 | | $ | 4,862,576 |
Cumulative effect of convertible notes accounting standard update adopted January 1, 2021 | | — | | | — | | | (3,755) | | — | | | — | | | 2,219 | | | — | | | (1,536) | | | — | | | (1,536) |
Proceeds from DRIP Plan | | 12,234 | | | — | | | 262 | | — | | | — | | | — | | | — | | | 262 | | | — | | | 262 |
Redemption of Class A Units | | 50,000 | | | 1 | | | 1,038 | | — | | | — | | | — | | | — | | | 1,039 | | | (1,039) | | | — |
Equity offering costs | | — | | | — | | | (22) | | — | | | — | | | — | | | — | | | (22) | | | — | | | (22) |
Share-based compensation | | 1,814,414 | | | 18 | | | 10,292 | | — | | | — | | | — | | | — | | | 10,310 | | | — | | | 10,310 |
Manager fees paid in stock |
| 332,002 | | | 3 | | | 7,483 | | — | | | — | | | — | | | — | | | 7,486 | | | — | | | 7,486 |
Net income |
| — | | | — | | | — | | — | | | — | | | 111,378 | | | — | | | 111,378 | | | 11,148 | | | 122,526 |
Dividends declared, $0.48 per share |
| — | | | — | | | — | | — | | | — | | | (138,614) | | | — | | | (138,614) | | | — | | | (138,614) |
Other comprehensive loss, net |
| — | | | — | | | — | | — | | | — | | | — | | | (2,339) | | | (2,339) | | | — | | | (2,339) |
Contributions from non-controlling interests | | — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | 2,969 | | | 2,969 |
Distributions to non-controlling interests |
| — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | (8,833) | | | (8,833) |
Balance, March 31, 2021 |
| 294,300,251 | | $ | 2,943 | | $ | 5,225,037 |
| 7,448,691 | | $ | (138,022) | | $ | (654,750) | | $ | 41,654 | | $ | 4,476,862 | | $ | 377,923 | | $ | 4,854,785 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, December 31, 2019 |
| 287,380,891 | | $ | 2,874 | | $ | 5,132,532 | | 5,180,140 | | $ | (104,194) | | $ | (381,719) | | $ | 50,932 | | $ | 4,700,425 | | $ | 436,589 | | $ | 5,137,014 |
Cumulative effect of credit loss accounting standard effective January 1, 2020 | | — | | | — | | | — | | — | | | — | | | (32,286) | | | — | | | (32,286) | | | — | | | (32,286) |
Proceeds from DRIP Plan | | 7,718 | | | — | | | 153 | | — | | | — | | | — | | | — | | | 153 | | | — | | | 153 |
Redemption of Class A Units | | 409,712 | | | 4 | | | 8,534 | | — | | | — | | | — | | | — | | | 8,538 | | | (8,538) | | | — |
Equity offering costs | | — | | | — | | | (14) | | — | | | — | | | — | | | — | | | (14) | | | — | | | (14) |
Common stock repurchased |
| — | | | — | | | — | | 1,925,421 | | | (28,830) | | | — | | | — | | | (28,830) | | | — | | | (28,830) |
Share-based compensation |
| 1,195,208 | | | 12 | | | 8,788 | | — | | | — | | | — | | | — | | | 8,800 | | | — | |
| 8,800 |
Manager fees paid in stock |
| 355,910 | | | 4 | | | 9,076 | | — | | | — | | | — | | | — | | | 9,080 | | | — | |
| 9,080 |
Net loss |
| — | | | — | | | — | | — | | | — | | | (66,769) | | | — | | | (66,769) | | | 500 | |
| (66,269) |
Dividends declared, $0.48 per share |
| — | | | — | | | — | | — | | | — | | | (135,991) | | | — | | | (135,991) | | | — | |
| (135,991) |
Other comprehensive loss, net |
| — | | | — | | | — | | — | | | — | | | — | | | (15,048) | | | (15,048) | | | — | |
| (15,048) |
VIE non-controlling interests |
| — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | (2,188) | | | (2,188) |
Contributions from non-controlling interests |
| — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | 9,406 | | | 9,406 |
Distributions to non-controlling interests |
| — | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | (66,476) | |
| (66,476) |
Balance, March 31, 2020 |
| 289,349,439 | | $ | 2,894 | | $ | 5,159,069 |
| 7,105,561 | | $ | (133,024) | | $ | (616,765) | | $ | 35,884 | | $ | 4,448,058 | | $ | 369,293 | | $ | 4,817,351 |
Common stock | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Starwood Property Trust, Inc. Stockholders’ Equity | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 295,257,898 | $ | 2,952 | $ | 5,248,490 | 7,448,691 | $ | (138,022) | $ | (677,375) | $ | 41,310 | $ | 4,477,355 | $ | 374,345 | $ | 4,851,700 | |||||||||||||||||||||||||||||||||||||||||
Proceeds from DRIP Plan | 8,161 | — | 209 | — | — | — | — | 209 | — | 209 | |||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Class A Units | 465,679 | 5 | 9,617 | — | — | — | — | 9,622 | (9,622) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity offering costs | — | — | (5) | — | — | — | — | (5) | — | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 243,201 | 3 | 9,449 | — | — | — | — | 9,452 | — | 9,452 | |||||||||||||||||||||||||||||||||||||||||||||||||
Manager fees paid in stock | 97,151 | 1 | 2,505 | — | — | — | — | 2,506 | — | 2,506 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 128,602 | — | 128,602 | 11,885 | 140,487 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, $0.48 per share | — | — | — | — | — | (139,207) | — | (139,207) | — | (139,207) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | — | (824) | (824) | — | (824) | |||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests | — | — | — | — | — | — | — | — | 52 | 52 | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | (17,258) | (17,258) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 | 296,072,090 | $ | 2,961 | $ | 5,270,265 | 7,448,691 | $ | (138,022) | $ | (687,980) | $ | 40,486 | $ | 4,487,710 | $ | 359,402 | $ | 4,847,112 | |||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | 291,573,083 | $ | 2,916 | $ | 5,193,572 | 7,105,561 | $ | (133,024) | $ | (614,093) | $ | 42,866 | $ | 4,492,237 | $ | 372,559 | $ | 4,864,796 | |||||||||||||||||||||||||||||||||||||||||
Proceeds from DRIP Plan | 34,309 | 1 | 520 | — | — | — | — | 521 | — | 521 | |||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Class A Units | — | — | 418 | — | — | — | — | 418 | (1,703) | (1,285) | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity offering costs | — | — | (54) | — | — | — | — | (54) | — | (54) | |||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 179,935 | 1 | 6,260 | — | — | — | — | 6,261 | — | 6,261 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 151,834 | — | 151,834 | 12,900 | 164,734 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, $0.48 per share | — | — | — | — | — | (136,755) | — | (136,755) | — | (136,755) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | — | (581) | (581) | — | (581) | |||||||||||||||||||||||||||||||||||||||||||||||||
VIE non-controlling interests | — | — | — | — | — | — | — | — | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests | — | — | — | — | — | — | — | — | 251 | 251 | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | (12,207) | (12,207) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | 291,787,327 | $ | 2,918 | $ | 5,200,716 | 7,105,561 | $ | (133,024) | $ | (599,014) | $ | 42,285 | $ | 4,513,881 | $ | 371,812 | $ | 4,885,693 |
8
Equity
thousands, except share data)
Common stock | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Starwood Property Trust, Inc. Stockholders’ Equity | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 292,091,601 | $ | 2,921 | $ | 5,209,739 | 7,448,691 | $ | (138,022) | $ | (629,733) | $ | 43,993 | $ | 4,488,898 | $ | 373,678 | $ | 4,862,576 | |||||||||||||||||||||||||||||||||||||||||
Cumulative effect of convertible notes accounting standard update adopted January 1, 2021 | — | — | (3,755) | — | — | 2,219 | — | (1,536) | — | (1,536) | |||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from DRIP Plan | 29,331 | — | 697 | — | — | — | — | 697 | — | 697 | |||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Class A Units | 853,681 | 9 | 17,729 | — | — | — | — | 17,738 | (17,738) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity offering costs | — | — | (27) | — | — | — | — | (27) | — | (27) | |||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 2,400,946 | 24 | 29,335 | — | — | — | — | 29,359 | — | 29,359 | |||||||||||||||||||||||||||||||||||||||||||||||||
Manager fees paid in stock | 696,531 | 7 | 16,547 | — | — | — | — | 16,554 | — | 16,554 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 356,290 | — | 356,290 | 33,107 | 389,397 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, $1.44 per share | — | — | — | — | — | (416,756) | — | (416,756) | — | (416,756) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | — | (3,507) | (3,507) | — | (3,507) | |||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests | — | — | — | — | — | — | — | — | 5,590 | 5,590 | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | (35,235) | (35,235) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 | 296,072,090 | $ | 2,961 | $ | 5,270,265 | 7,448,691 | $ | (138,022) | $ | (687,980) | $ | 40,486 | $ | 4,487,710 | $ | 359,402 | $ | 4,847,112 | |||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | 287,380,891 | $ | 2,874 | $ | 5,132,532 | 5,180,140 | $ | (104,194) | $ | (381,719) | $ | 50,932 | $ | 4,700,425 | $ | 436,589 | $ | 5,137,014 | |||||||||||||||||||||||||||||||||||||||||
Cumulative effect of credit loss accounting standard effective January 1, 2020 | — | — | — | — | — | (32,286) | — | (32,286) | — | (32,286) | |||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from DRIP Plan | 59,340 | 1 | 889 | — | — | — | — | 890 | — | 890 | |||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Class A Units | 409,712 | 4 | 8,952 | — | — | — | — | 8,956 | (10,241) | (1,285) | |||||||||||||||||||||||||||||||||||||||||||||||||
Equity offering costs | — | — | (69) | — | — | — | — | (69) | — | (69) | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock repurchased | — | — | — | 1,925,421 | (28,830) | — | — | (28,830) | — | (28,830) | |||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 1,516,152 | 15 | 22,390 | — | — | — | — | 22,405 | — | 22,405 | |||||||||||||||||||||||||||||||||||||||||||||||||
Manager fees paid in stock | 2,421,232 | 24 | 36,022 | — | — | — | — | 36,046 | — | 36,046 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 224,721 | — | 224,721 | 26,705 | 251,426 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared, $1.44 per share | — | — | — | — | — | (409,730) | — | (409,730) | — | (409,730) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | — | (8,647) | (8,647) | — | (8,647) | |||||||||||||||||||||||||||||||||||||||||||||||||
VIE non-controlling interests | — | — | — | — | — | — | — | — | (2,177) | (2,177) | |||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from non-controlling interests | — | — | — | — | — | — | — | — | 9,657 | 9,657 | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | (88,721) | (88,721) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | 291,787,327 | $ | 2,918 | $ | 5,200,716 | 7,105,561 | $ | (133,024) | $ | (599,014) | $ | 42,285 | $ | 4,513,881 | $ | 371,812 | $ | 4,885,693 |
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2021 |
| 2020 | ||
Cash Flows from Operating Activities: | | | | | | |
Net income (loss) | | $ | 122,526 | | $ | (66,269) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | |
Amortization of deferred financing costs, premiums and discounts on secured borrowings | |
| 10,515 | |
| 9,634 |
Amortization of discounts and deferred financing costs on unsecured senior notes | |
| 1,726 | |
| 1,962 |
Accretion of net discount on investment securities | |
| (3,476) | |
| (2,783) |
Accretion of net deferred loan fees and discounts | |
| (16,745) | |
| (12,080) |
Share-based compensation | |
| 10,310 | |
| 8,800 |
Manager fees paid in stock | |
| 7,486 | |
| 9,080 |
Change in fair value of investment securities | |
| 306 | |
| (2,504) |
Change in fair value of consolidated VIEs | |
| (7,042) | |
| 80,683 |
Change in fair value of servicing rights | |
| 796 | |
| 393 |
Change in fair value of loans | |
| 9,478 | |
| 16,134 |
Change in fair value of derivatives | |
| (34,768) | |
| (7,617) |
Foreign currency loss, net | |
| 11,681 | |
| 34,486 |
Gain on sale of investments and other assets | |
| (17,693) | |
| (296) |
Credit loss provision, net | |
| 44 | |
| 48,669 |
Depreciation and amortization | |
| 22,528 | |
| 23,864 |
Earnings from unconsolidated entities | |
| (1,734) | |
| (97) |
Distributions of earnings from unconsolidated entities | |
| 17 | |
| 27 |
Loss on extinguishment of debt | | | 516 | | | 170 |
Origination and purchase of loans held-for-sale, net of principal collections | |
| (327,352) | |
| (621,832) |
Proceeds from sale of loans held-for-sale | |
| 571,927 | |
| 751,140 |
Changes in operating assets and liabilities: | | | | | | |
Related-party payable, net | |
| (3,035) | |
| (1,659) |
Accrued and capitalized interest receivable, less purchased interest | |
| (41,833) | |
| (31,465) |
Other assets | |
| (19,467) | |
| (40,944) |
Accounts payable, accrued expenses and other liabilities | |
| (25,945) | |
| (6,764) |
Net cash provided by operating activities | |
| 270,766 | |
| 190,732 |
Cash Flows from Investing Activities: | | | | | | |
Origination, purchase and funding of loans held-for-investment | |
| (2,296,124) | |
| (1,252,745) |
Proceeds from principal collections on loans | |
| 1,051,695 | |
| 812,187 |
Proceeds from loans sold | |
| — | |
| 39,019 |
Purchase and funding of investment securities | |
| — | |
| (5,729) |
Proceeds from sales of investment securities | |
| — | |
| 7,940 |
Proceeds from principal collections on investment securities | |
| 59,514 | |
| 13,559 |
Proceeds from sales of real estate | |
| 30,566 | |
| — |
Purchases and additions to properties and other assets | | | (3,512) | | | (7,056) |
Investment in unconsolidated entities | | | — | | | (3,100) |
Distribution of capital from unconsolidated entities | |
| 15,980 | |
| 153 |
Payments for purchase or termination of derivatives | |
| (851) | |
| (67,323) |
Proceeds from termination of derivatives | |
| 23,527 | |
| 8,912 |
Net cash used in investing activities | |
| (1,119,205) | |
| (454,183) |
9
Starwood Property Trust, Inc. and Subsidiaries
For the Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Cash Flows from Operating Activities: | |||||||||||
Net income | $ | 389,397 | $ | 251,426 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Amortization of deferred financing costs, premiums and discounts on secured borrowings | 32,141 | 29,996 | |||||||||
Amortization of discounts and deferred financing costs on unsecured senior notes | 5,387 | 5,933 | |||||||||
Accretion of net discount on investment securities | (10,090) | (9,362) | |||||||||
Accretion of net deferred loan fees and discounts | (44,523) | (30,468) | |||||||||
Share-based compensation | 29,359 | 22,405 | |||||||||
Manager fees paid in stock | 16,554 | 36,046 | |||||||||
Change in fair value of investment securities | (903) | (3,132) | |||||||||
Change in fair value of consolidated VIEs | 26,990 | 41,008 | |||||||||
Change in fair value of servicing rights | (2,740) | 2,328 | |||||||||
Change in fair value of loans | (68,116) | (79,700) | |||||||||
Change in fair value of derivatives | (70,661) | 41,146 | |||||||||
Foreign currency loss, net | 36,057 | 1,861 | |||||||||
Gain on sale of investments and other assets | (26,377) | (6,768) | |||||||||
Credit loss (reversal) provision, net | (12,363) | 55,284 | |||||||||
Depreciation and amortization | 67,653 | 70,626 | |||||||||
Earnings from unconsolidated entities | (6,002) | (32,065) | |||||||||
Distributions of earnings from unconsolidated entities | 1,623 | 2,334 | |||||||||
Loss on extinguishment of debt | 2,197 | 2,377 | |||||||||
Origination and purchase of loans held-for-sale, net of principal collections | (3,027,235) | (1,725,341) | |||||||||
Proceeds from sale of loans held-for-sale | 2,333,767 | 1,997,651 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Related-party payable, net | (15,792) | (18,829) | |||||||||
Accrued and capitalized interest receivable, less purchased interest | (105,039) | (121,923) | |||||||||
Other assets | (27,236) | 3,007 | |||||||||
Accounts payable, accrued expenses and other liabilities | 14,199 | (9,691) | |||||||||
Net cash (used in) provided by operating activities | (461,753) | 526,149 | |||||||||
Cash Flows from Investing Activities: | |||||||||||
Origination, purchase and funding of loans held-for-investment | (5,635,707) | (2,368,931) | |||||||||
Proceeds from principal collections on loans | 3,173,764 | 1,357,445 | |||||||||
Proceeds from loans sold | 267,349 | 435,097 | |||||||||
Purchase and funding of investment securities | — | (22,408) | |||||||||
Proceeds from sales of investment securities | — | 7,940 | |||||||||
Proceeds from principal collections on investment securities | 77,855 | 67,957 | |||||||||
Proceeds from sales of real estate | 60,969 | 23,805 | |||||||||
Purchases and additions to properties and other assets | (17,259) | (17,923) | |||||||||
Investment in unconsolidated entities | — | (3,133) | |||||||||
Proceeds from sale of interest in unconsolidated entities | — | 10,313 | |||||||||
Distribution of capital from unconsolidated entities | 25,555 | 2,485 | |||||||||
Payments for purchase or termination of derivatives | (14,699) | (76,270) | |||||||||
Proceeds from termination of derivatives | 44,742 | 13,667 | |||||||||
Net cash used in investing activities | (2,017,431) | $ | (569,956) | ||||||||
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2021 |
| 2020 | ||
Cash Flows from Financing Activities: | | | | | | |
Proceeds from borrowings | | $ | 2,748,317 | | $ | 2,756,915 |
Principal repayments on and repurchases of borrowings | |
| (2,001,336) | |
| (1,923,754) |
Payment of deferred financing costs | |
| (5,052) | |
| (3,577) |
Proceeds from common stock issuances | |
| 262 | |
| 153 |
Payment of equity offering costs | | | (22) | | | (14) |
Payment of dividends | |
| (137,667) | |
| (135,889) |
Contributions from non-controlling interests | | | 2,969 | | | 9,406 |
Distributions to non-controlling interests | |
| (8,833) | |
| (66,476) |
Purchase of treasury stock | |
| — | |
| (28,830) |
Issuance of debt of consolidated VIEs | |
| 11,604 | |
| 24,376 |
Repayment of debt of consolidated VIEs | |
| (27,490) | |
| (36,953) |
Distributions of cash from consolidated VIEs | |
| 14,481 | |
| 24,723 |
Net cash provided by financing activities | |
| 597,233 | |
| 620,080 |
Net (decrease) increase in cash, cash equivalents and restricted cash | |
| (251,206) | |
| 356,629 |
Cash, cash equivalents and restricted cash, beginning of period | |
| 722,162 | |
| 574,031 |
Effect of exchange rate changes on cash | |
| (1,042) | |
| 733 |
Cash, cash equivalents and restricted cash, end of period | | $ | 469,914 | | $ | 931,393 |
Supplemental disclosure of cash flow information: | | | | | | |
Cash paid for interest | | $ | 80,624 | | $ | 109,341 |
Income taxes paid | |
| 425 | |
| 569 |
Supplemental disclosure of non-cash investing and financing activities: | | | | | | |
Dividends declared, but not yet paid | | $ | 139,113 | | $ | 135,994 |
Consolidation of VIEs (VIE asset/liability additions) | |
| 393,373 | |
| 2,477,422 |
Reclassification of loans held-for-investment to loans held-for-sale | | | 166,901 | | | 422,691 |
Reclassification of loans held-for-sale to loans held-for-investment | | | 124,935 | | | — |
Loan principal collections temporarily held at master servicer | | | 31,965 | | | 9,779 |
Net assets acquired through conversion to equity interest | | | 7,320 | | | — |
Redemption of Class A Units for common stock | | | 1,039 | | | 8,538 |
For the Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Cash Flows from Financing Activities: | |||||||||||
Proceeds from borrowings | $ | 11,654,848 | $ | 4,935,556 | |||||||
Principal repayments on and repurchases of borrowings | (8,566,856) | (4,221,999) | |||||||||
Payment of deferred financing costs | (46,196) | (17,978) | |||||||||
Proceeds from common stock issuances | 697 | 511 | |||||||||
Payment of equity offering costs | (27) | (69) | |||||||||
Payment of dividends | (414,977) | (408,893) | |||||||||
Contributions from non-controlling interests | 5,590 | 9,657 | |||||||||
Distributions to non-controlling interests | (35,235) | (90,006) | |||||||||
Purchase of treasury stock | — | (28,830) | |||||||||
Issuance of debt of consolidated VIEs | 69,399 | 24,376 | |||||||||
Repayment of debt of consolidated VIEs | (608,435) | (279,419) | |||||||||
Distributions of cash from consolidated VIEs | 83,785 | 57,174 | |||||||||
Net cash provided by (used in) financing activities | 2,142,593 | (19,920) | |||||||||
Net decrease in cash, cash equivalents and restricted cash | (336,591) | (63,727) | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | 722,162 | 574,031 | |||||||||
Effect of exchange rate changes on cash | (1,783) | 902 | |||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 383,788 | $ | 511,206 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for interest | $ | 276,783 | $ | 284,855 | |||||||
Income taxes paid | 7,036 | 2,261 | |||||||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
Dividends declared, but not yet paid | $ | 140,465 | $ | 138,737 | |||||||
Consolidation of VIEs (VIE asset/liability additions) | 4,427,479 | 3,589,657 | |||||||||
Deconsolidation of VIEs (VIE asset/liability reductions) | 935,855 | 7,652 | |||||||||
Reclassification of loans held-for-investment to loans held-for-sale | 237,132 | 449,025 | |||||||||
Reclassification of loans held-for-sale to loans held-for-investment | 124,932 | 104,327 | |||||||||
Transfer of loans from VIE assets to residential loans upon redemption of consolidated RMBS trusts | 432,926 | — | |||||||||
Loan principal collections temporarily held at master servicer | 119,925 | 9,911 | |||||||||
Net assets acquired through conversion to equity interest and foreclosure | 36,308 | — | |||||||||
Redemption of Class A Units for common stock | 17,738 | 8,538 | |||||||||
Unsettled derivative transactions | 4,047 | — | |||||||||
Unsettled common stock issuances | — | 379 |
Organization
Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial first mortgages, non-agency residential mortgages (“residential loans”), subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in both the U.S. and Europe (including distressed or non-performing loans). Our residential loans are secured by a first mortgage lien on residential property and primarily consist of non-agency residential loans that are not guaranteed by any U.S. Government agency or federally chartered corporation.
Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments.
Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that are held for investment.
Refer to our Form 10-K for a description of our recurring accounting policies. We have included disclosure in this Note 2 regarding principles of consolidation and other accounting policies that (i) are required to be disclosed quarterly, (ii) we view as critical, (iii) became significant since December 31, 2020 due to a corporate action or increase in the significance of the underlying business activity or (iv) changed upon adoption of an Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”).
12
We evaluate all of our interests in VIEs for consolidation. When our interests are determined to be variable interests, we assess whether we are deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Accounting Standards Codification (“ASC”) 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. We
13
We separately present the assets and liabilities of our consolidated securitization VIEs as individual line items on our condensed consolidated balance sheets. The liabilities of our consolidated securitization VIEs consist solely of obligations to the bondholders of the related trusts, and are thus presented as a single line item entitled “VIE liabilities.” The assets of our consolidated securitization VIEs consist principally of loans, but at times, also include foreclosed loans which have been temporarily converted into real estate owned (“REO”). These assets in the aggregate are likewise presented as a single line item entitled “VIE assets.”
For these reasons, the assets of our securitization VIEs are presented in the aggregate.
14
Fair Value Measurements
As discussed above, we measure the assets and liabilities of consolidated securitization VIEs at fair value pursuant to our election of the fair value option. The securitization VIEs in which we invest are “static”; that is, 0no reinvestment is permitted, and there is no active management of the underlying assets. In determining the fair value of the assets and liabilities of the securitization VIEs, we maximize the use of observable inputs over unobservable inputs. Refer to Note 19 for further discussion regarding our fair value measurements.
Our only equity investment security is carried at fair value, with unrealized holding gains and losses recorded in earnings.
Loans and Debt Securities Measured at Amortized Cost
15
As we do not have a history of realized credit losses on our HFI loans and HTM securities, we have subscribed to third party database services to provide us with historical industry losses for both commercial real estateand infrastructure loans. Using these losses as a benchmark, we determine expected credit losses for our loans and securities on a collective basis within our commercial real estate and infrastructure portfolios. See Note 4 for further discussion of our methodologies.
Available-for-Sale Debt Securities
16
We cease accruing interest on non-performing loans at the earlier of (i) the loan becoming significantly past due or (ii) management concluding that a full recovery of all interest and principal is doubtful. Interest income on non-accrual loans in which management expects a full recovery of the loan’s outstanding principal balance is only recognized when received in cash. If a full recovery of principal is doubtful, the cost recovery method is applied whereby any cash received is applied to the outstanding principal balance of the loan. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and management believes all future principal and interest will be received according to the contractual loan terms.
17
Use of Estimates
The outbreak of COVID-19 beginning in the first quarter of 2020 has had, and is expected to continue to have, an adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of March 31,September 30, 2021. However, uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and our business in particular, makes any estimates and assumptions as of March 31,September 30, 2021 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may ultimately differ from those estimates.
| | | | | | | | | | | |
|
| | |
| | |
| |
| Weighted |
|
| | | | | | | | Weighted | | Average Life |
|
| | Carrying | | Face | | Average | | (“WAL”) |
| ||
March 31, 2021 | | Value | | Amount | | Coupon (1) | | (years)(2) | | ||
Loans held-for-investment: | | | | | | | | | | | |
Commercial loans: | | | | | | | | | | | |
First mortgages (3), (8) | | $ | 9,955,674 | | $ | 10,003,057 | | 5.1 | % | 1.7 | |
Subordinated mortgages (4) | |
| 70,457 | | | 71,428 | | 8.8 | % | 2.5 | |
Mezzanine loans (3) | |
| 603,119 | | | 601,080 | | 10.1 | % | 1.4 | |
Other | | | 18,200 | | | 20,267 | | 8.2 | % | 2.6 | |
Total commercial loans | | | 10,647,450 | | | 10,695,832 | | | | | |
Infrastructure first priority loans (5) | | | 1,595,615 | | | 1,616,716 | | 4.3 | % | 4.1 | |
Residential loans, fair value option (6) | | | 150,712 | | | 149,404 | | 6.2 | % | N/A | (7) |
Total loans held-for-investment | |
| 12,393,777 | | | 12,461,952 | | | | | |
Loans held-for-sale: | | | | | | | | | | | |
Residential, fair value option (6) | | | 444,835 | | | 435,025 | | 5.7 | % | N/A | (7) |
Commercial, $168,226 under fair value option (8) | | | 310,428 | | | 314,917 | | 4.3 | % | 5.7 | |
Infrastructure, lower of cost or fair value (5) | | | 89,368 | | | 89,601 | | 2.9 | % | 2.6 | |
Total loans held-for-sale | | | 844,631 | | | 839,543 | | | | | |
Total gross loans | |
| 13,238,408 | | $ | 13,301,495 | | | | | |
Credit loss allowances: | | | | | | | | | | | |
Commercial loans held-for-investment | | | (63,477) | | | | | | | | |
Infrastructure loans held-for-investment | | | (8,807) | | | | | | | | |
Total allowances | | | (72,284) | | | | | | | | |
Total net loans | | $ | 13,166,124 | | | | | | | | |
| | | | | | | | | | | |
December 31, 2020 | | | | | | | | | | | |
Loans held-for-investment: | | | | | | | | | | | |
Commercial loans: | | | | | | | | | | | |
First mortgages (3) | | $ | 8,931,772 | | $ | 8,978,373 | | 5.3 | % | 1.5 | |
Subordinated mortgages (4) | |
| 71,185 | |
| 72,257 | | 8.8 | % | 2.8 | |
Mezzanine loans (3) | |
| 620,319 | |
| 619,352 | | 10.1 | % | 1.6 | |
Other | | | 30,284 | | | 33,626 | | 8.9 | % | 1.8 | |
Total commercial loans | | | 9,653,560 | | | 9,703,608 | | | | | |
Infrastructure first priority loans | | | 1,420,273 | |
| 1,439,940 | | 4.4 | % | 4.3 | |
Residential loans, fair value option | | | 90,684 | | | 86,796 | | 6.0 | % | N/A | (7) |
Total loans held-for-investment | |
| 11,164,517 | | | 11,230,344 | | | | | |
Loans held-for-sale: | | | | | | | | | | | |
Residential, fair value option | | | 841,963 | | | 820,807 | | 6.0 | % | N/A | (7) |
Commercial, fair value option | | | 90,332 | | | 90,789 | | 3.9 | % | 10.0 | |
Infrastructure, lower of cost or fair value | | | 120,540 | | | 120,900 | | 3.1 | % | 3.2 | |
Total loans held-for-sale | | | 1,052,835 | | | 1,032,496 | | | | | |
Total gross loans | |
| 12,217,352 | | $ | 12,262,840 | | | | | |
Credit loss allowances: | | | | | | | | | | | |
Commercial loans held-for-investment | | | (69,611) | | | | | | | | |
Infrastructure loans held-for-investment | | | (7,833) | | | | | | | | |
Total allowances | | | (77,444) | | | | | | | | |
Total net loans | | $ | 12,139,908 | | | | | | | | |
September 30, 2021 | Carrying Value | Face Amount | Weighted Average Coupon (1) | Weighted Average Life (“WAL”) (years)(2) | ||||||||||||||||||||||
Loans held-for-investment: | ||||||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||
First mortgages (3) | $ | 10,984,936 | $ | 11,043,211 | 4.9 | % | 1.8 | |||||||||||||||||||
Subordinated mortgages (4) | 81,159 | 82,916 | 9.6 | % | 3.0 | |||||||||||||||||||||
Mezzanine loans (3) | 477,227 | 474,105 | 9.6 | % | 1.3 | |||||||||||||||||||||
Other | 17,689 | 19,450 | 8.2 | % | 2.3 | |||||||||||||||||||||
Total commercial loans | 11,561,011 | 11,619,682 | ||||||||||||||||||||||||
Infrastructure first priority loans (5) | 1,698,061 | 1,719,931 | 4.3 | % | 3.9 | |||||||||||||||||||||
Residential loans, fair value option (6) | 91,499 | 91,280 | 6.1 | % | N/A | (7) | ||||||||||||||||||||
Total loans held-for-investment | 13,350,571 | 13,430,893 | ||||||||||||||||||||||||
Loans held-for-sale: | ||||||||||||||||||||||||||
Residential, fair value option (6) | 1,813,458 | 1,758,342 | 4.3 | % | N/A | (7) | ||||||||||||||||||||
Commercial, fair value option | 285,808 | 278,736 | 3.6 | % | 9.7 | |||||||||||||||||||||
Infrastructure, lower of cost or fair value (5) | 84,253 | 84,457 | 2.8 | % | 1.5 | |||||||||||||||||||||
Total loans held-for-sale | 2,183,519 | 2,121,535 | ||||||||||||||||||||||||
Total gross loans | 15,534,090 | $ | 15,552,428 | |||||||||||||||||||||||
Credit loss allowances: | ||||||||||||||||||||||||||
Commercial loans held-for-investment | (48,359) | |||||||||||||||||||||||||
Infrastructure loans held-for-investment | (9,214) | |||||||||||||||||||||||||
Total allowances | (57,573) | |||||||||||||||||||||||||
Total net loans | $ | 15,476,517 | ||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||
Loans held-for-investment: | ||||||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||
First mortgages (3) | $ | 8,931,772 | $ | 8,978,373 | 5.3 | % | 1.5 | |||||||||||||||||||
Subordinated mortgages (4) | 71,185 | 72,257 | 8.8 | % | 2.8 | |||||||||||||||||||||
Mezzanine loans (3) | 620,319 | 619,352 | 10.1 | % | 1.6 | |||||||||||||||||||||
Other | 30,284 | 33,626 | 8.9 | % | 1.8 | |||||||||||||||||||||
Total commercial loans | 9,653,560 | 9,703,608 | ||||||||||||||||||||||||
Infrastructure first priority loans | 1,420,273 | 1,439,940 | 4.4 | % | 4.3 | |||||||||||||||||||||
Residential loans, fair value option | 90,684 | 86,796 | 6.0 | % | N/A | (7) | ||||||||||||||||||||
Total loans held-for-investment | 11,164,517 | 11,230,344 | ||||||||||||||||||||||||
Loans held-for-sale: | ||||||||||||||||||||||||||
Residential, fair value option | 841,963 | 820,807 | 6.0 | % | N/A | (7) | ||||||||||||||||||||
Commercial, fair value option | 90,332 | 90,789 | 3.9 | % | 10.0 | |||||||||||||||||||||
Infrastructure, lower of cost or fair value | 120,540 | 120,900 | 3.1 | % | 3.2 | |||||||||||||||||||||
Total loans held-for-sale | 1,052,835 | 1,032,496 | ||||||||||||||||||||||||
Total gross loans | 12,217,352 | $ | 12,262,840 | |||||||||||||||||||||||
Credit loss allowances: | ||||||||||||||||||||||||||
Commercial loans held-for-investment | (69,611) | |||||||||||||||||||||||||
Infrastructure loans held-for-investment | (7,833) | |||||||||||||||||||||||||
Total allowances | (77,444) | |||||||||||||||||||||||||
Total net loans | $ | 12,139,908 |
19
(2)
Represents the WAL of each respective group of loans as of the respective balance sheet date. The WAL of each individual loan is calculated using amounts and timing of future principal payments, as projected at origination or acquisition.
First mortgages include first mortgage loans and any contiguous 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 $1.2 billion and $877.3 million being classified as first mortgages as of September 30, 2021 and December 31, 2020, respectively.
Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.
During the nine months ended September 30, 2021, $30.7 million of infrastructure loans held-for-sale were reclassified into loans held-for-investment.
September 30, 2021 | Carrying Value | Weighted-average Spread Above Index | |||||||||
Commercial loans | $ | 11,114,900 | 4.2 | % | |||||||
Infrastructure loans | 1,698,061 | 3.9 | % | ||||||||
Total variable rate loans held-for-investment | $ | 12,812,961 | 4.2 | % |
| | | | | | |
| | Carrying | | Weighted-average | | |
March 31, 2021 | | Value | | Spread Above Index | | |
Commercial loans | | $ | 9,969,387 | | 4.3 | % |
Infrastructure loans | | | 1,595,615 | | 3.8 | % |
Total variable rate loans held-for-investment | | $ | 11,565,002 | | 4.2 | % |
Credit Loss Allowances
20
withstood extended government mandated closures,were initially impacted by lockdowns and more recentlypartial reopenings and reduced consumer travel. The office which is experiencing lower demandsector has also been adversely affected due to the increase in remote working arrangements. The broad macroeconomic forecasts do not account for such differentiation. Accordingly, we have selected a more adverse macroeconomic recovery forecast related to these property types in determining our credit loss allowance.
| | | | | | | | | | | | | | | | ��� | | | | | | | | | | | |
|
| Term Loans |
| Revolving Loans |
| Total |
| Credit | |||||||||||||||||||
| | Amortized Cost Basis by Origination Year | | Amortized Cost | | Amortized | | Loss | |||||||||||||||||||
As of March 31, 2021 | | 2021 |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| Prior | | Total | | Cost Basis | | Allowance | |||||||||
Commercial loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Credit quality indicator: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
LTV < 60% | | $ | 1,152,309 | | $ | 709,735 | | $ | 1,314,912 | | $ | 1,225,605 | | $ | 729,227 | | $ | 425,570 | | $ | — | | $ | 5,557,358 | | $ | 7,015 |
LTV 60% - 70% | | | 859,035 | | | 480,542 | | | 1,530,002 | | | 825,212 | | | 39,916 | | | 82,088 | | | — | | | 3,816,795 | | | 31,535 |
LTV > 70% | | | — | | | 240,217 | | | 599,518 | | | 312,972 | | | — | | | 61,426 | | | — | | | 1,214,133 | | | 16,661 |
Credit deteriorated | | | — | | | — | | | — | | | 28,986 | | | — | | | 11,977 | | | — | | | 40,963 | | | 8,266 |
Defeased and other | | | — | | | — | | | — | | | — | | | — | | | 18,201 | | | — | | | 18,201 | | | — |
Total commercial | | $ | 2,011,344 | | $ | 1,430,494 | | $ | 3,444,432 | | $ | 2,392,775 | | $ | 769,143 | | $ | 599,262 | | $ | — | | $ | 10,647,450 | | $ | 63,477 |
Infrastructure loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Credit quality indicator: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Power | | $ | — | | $ | 77,525 | | $ | 220,901 | | $ | 397,619 | | $ | 124,959 | | $ | 371,072 | | $ | 10,057 | | $ | 1,202,133 | | $ | 5,074 |
Oil and gas | | | — | | | 19,902 | | | 267,727 | | | 100,803 | | | — | | | — | | | 5,050 | | | 393,482 | | | 3,733 |
Total infrastructure | | $ | — | | $ | 97,427 | | $ | 488,628 | | $ | 498,422 | | $ | 124,959 | | $ | 371,072 | | $ | 15,107 | | $ | 1,595,615 | | $ | 8,807 |
Residential loans held-for-investment, fair value option | | | | | | | | | | | | | | | | | | | | | | | | 150,712 | | | — |
Loans held-for-sale | | | | | | | | | | | | | | | | | | | | | | | | 844,631 | | | — |
Total gross loans | | | | | | | | | | | | | | | | | | | | | | | $ | 13,238,408 | | $ | 72,284 |
21
Term Loans Amortized Cost Basis by Origination Year | Revolving Loans Amortized Cost Total | Total Amortized Cost Basis | Credit Loss Allowance | |||||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2021 | 2021 | 2020 | 2019 | 2018 | 2017 | Prior | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit quality indicator: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTV < 60% | $ | 2,055,283 | $ | 758,931 | $ | 1,185,385 | $ | 595,145 | $ | 657,732 | $ | 287,335 | $ | — | $ | 5,539,811 | $ | 8,226 | ||||||||||||||||||||||||||||||||||||||
LTV 60% - 70% | 2,136,337 | 416,218 | 1,188,220 | 679,369 | — | 82,258 | — | 4,502,402 | 19,763 | |||||||||||||||||||||||||||||||||||||||||||||||
LTV > 70% | 329,066 | 272,581 | 473,177 | 352,473 | — | 61,835 | — | 1,489,132 | 12,104 | |||||||||||||||||||||||||||||||||||||||||||||||
Credit deteriorated | — | — | — | — | — | 11,977 | — | 11,977 | 8,266 | |||||||||||||||||||||||||||||||||||||||||||||||
Defeased and other | — | — | — | — | — | 17,689 | — | 17,689 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Total commercial | $ | 4,520,686 | $ | 1,447,730 | $ | 2,846,782 | $ | 1,626,987 | $ | 657,732 | $ | 461,094 | $ | — | $ | 11,561,011 | $ | 48,359 | ||||||||||||||||||||||||||||||||||||||
Infrastructure loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit quality indicator: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Power | $ | 98,003 | $ | 52,343 | $ | 217,061 | $ | 410,610 | $ | 121,482 | $ | 305,241 | $ | 9,111 | $ | 1,213,851 | $ | 5,108 | ||||||||||||||||||||||||||||||||||||||
Oil and gas | 64,547 | 17,376 | 254,266 | 98,924 | 45,113 | — | 3,984 | 484,210 | 4,106 | |||||||||||||||||||||||||||||||||||||||||||||||
Total infrastructure | $ | 162,550 | $ | 69,719 | $ | 471,327 | $ | 509,534 | $ | 166,595 | $ | 305,241 | $ | 13,095 | $ | 1,698,061 | $ | 9,214 | ||||||||||||||||||||||||||||||||||||||
Residential loans held-for-investment, fair value option | 91,499 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans held-for-sale | 2,183,519 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total gross loans | $ | 15,534,090 | $ | 57,573 |
As of March 31,September 30, 2021, we had credit deteriorated commercial loans with an amortized cost basis of $41.0 million, of which $29.0 million had no credit loss allowance.$12.0 million. These loans were on nonaccrual status, with the cost recovery method of interest income recognition applied. In addition to these credit deteriorated loans, we had a $187.6$196.2 million commercial loan and $20.2$19.5 million of residential loans that were 90 days or greater past due at March 31,September 30, 2021. In March 2021, $7.3 million relating to the $187.6$196.2 million commercial loan that was 90 days or greater past due was converted to equity interests pursuant to a consensual transfer under pre-existing equity pledges of additional collateral (see Note 7). The $187.6$196.2 million commercial loan, along with a $14.8$13.1 million infrastructure loan in forbearance, were placed on nonaccrual status during the three months ended March 31,in January 2021, but are not considered credit deteriorated as we presently expect to recover all amounts due. Any loans which are modified to provide for the deferral of interest are not considered past due and are accounted for in accordance with our revenue recognition policy on interest income.
| | | | | | | | | |
| | Funded Commitments Credit Loss Allowance | |||||||
| | Loans Held-for-Investment | | Total | |||||
Three Months Ended March 31, 2021 | | Commercial | | Infrastructure | | Funded Loans | |||
Credit loss allowance at December 31, 2020 | | $ | 69,611 | | $ | 7,833 | | $ | 77,444 |
Credit loss provision (reversal), net | |
| 1,880 | |
| 717 | |
| 2,597 |
Charge-offs | | | (7,757) | (1) | | — | | | (7,757) |
Recoveries | |
| — | |
| — | |
| — |
Transfers | |
| (257) | |
| 257 | |
| — |
Credit loss allowance at March 31, 2021 | | $ | 63,477 | | $ | 8,807 | | $ | 72,284 |
| | | | | | | | | |
| | Unfunded Commitments Credit Loss Allowance (2) | |||||||
| | Loans Held-for-Investment | | | |||||
Three Months Ended March 31, 2021 |
| Commercial |
| Infrastructure |
| Total | |||
Credit loss allowance at December 31, 2020 | | $ | 5,258 | | $ | 812 | | $ | 6,070 |
Credit loss reversal, net | |
| (2,122) | |
| (143) | |
| (2,265) |
Credit loss allowance at March 31, 2021 | | $ | 3,136 | | $ | 669 | | $ | 3,805 |
Memo: Unfunded commitments as of March 31, 2021 (3) | | $ | 1,291,304 | | $ | 65,791 | | $ | 1,357,095 |
22
Funded Commitments Credit Loss Allowance | ||||||||||||||||||||
Loans Held-for-Investment | Total Funded Loans | |||||||||||||||||||
Nine Months Ended September 30, 2021 | Commercial | Infrastructure | ||||||||||||||||||
Credit loss allowance at December 31, 2020 | $ | 69,611 | $ | 7,833 | $ | 77,444 | ||||||||||||||
Credit loss (reversal) provision, net | (13,238) | 1,124 | (12,114) | |||||||||||||||||
Charge-offs | (7,757) | (1) | — | (7,757) | ||||||||||||||||
Recoveries | — | — | — | |||||||||||||||||
Transfers | (257) | 257 | — | |||||||||||||||||
Credit loss allowance at September 30, 2021 | $ | 48,359 | $ | 9,214 | $ | 57,573 |
Unfunded Commitments Credit Loss Allowance (2) | |||||||||||||||||
Loans Held-for-Investment | |||||||||||||||||
Nine Months Ended September 30, 2021 | Commercial | Infrastructure | Total | ||||||||||||||
Credit loss allowance at December 31, 2020 | $ | 5,258 | $ | 812 | $ | 6,070 | |||||||||||
Credit loss reversal, net | (440) | (523) | (963) | ||||||||||||||
Credit loss allowance at September 30, 2021 | $ | 4,818 | $ | 289 | $ | 5,107 | |||||||||||
Memo: Unfunded commitments as of September 30, 2021 (3) | $ | 1,352,772 | $ | 32,080 | $ | 1,384,852 |
Table of Contents(2)Included in accounts payable, accrued expenses and other liabilities in our condensed consolidated balance sheets.
| | | | | | | | | | | | | | | |
| | Held-for-Investment Loans | | | | | | | |||||||
Three Months Ended March 31, 2021 | | Commercial | | Infrastructure | | Residential | | Held-for-Sale Loans | | Total Loans | |||||
Balance at December 31, 2020 | | $ | 9,583,949 | | $ | 1,412,440 | | $ | 90,684 | | $ | 1,052,835 | | $ | 12,139,908 |
Acquisitions/originations/additional funding | |
| 2,196,813 | |
| 99,311 | |
| — | |
| 375,270 | |
| 2,671,394 |
Capitalized interest (1) | |
| 36,646 | |
| — | |
| — | |
| — | |
| 36,646 |
Basis of loans sold (2) | |
| — | |
| — | |
| — | |
| (571,927) | |
| (571,927) |
Loan maturities/principal repayments | |
| (1,021,393) | |
| (18,055) | |
| (9,210) | |
| (44,326) | |
| (1,092,984) |
Discount accretion/premium amortization | |
| 15,824 | |
| 921 | |
| — | |
| — | |
| 16,745 |
Changes in fair value | |
| — | |
| — | |
| (290) | |
| (9,188) | |
| (9,478) |
Unrealized foreign currency translation loss | |
| (14,082) | |
| (181) | |
| — | |
| — | |
| (14,263) |
Credit loss provision, net | |
| (1,880) | |
| (717) | |
| — | |
| — | |
| (2,597) |
Transfer to/from other asset classifications or between segments | | | (211,904) | | | 93,089 | | | 69,528 | | | 41,967 | | | (7,320) |
Balance at March 31, 2021 | | $ | 10,583,973 | | $ | 1,586,808 | | $ | 150,712 | | $ | 844,631 | | $ | 13,166,124 |
Held-for-Investment Loans | |||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2021 | Commercial | Infrastructure | Residential | Held-for-Sale Loans | Total Loans | ||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | 9,583,949 | $ | 1,412,440 | $ | 90,684 | $ | 1,052,835 | $ | 12,139,908 | |||||||||||||||||||||||||
Acquisitions/originations/additional funding | 5,242,378 | 393,329 | — | 3,151,361 | 8,787,068 | ||||||||||||||||||||||||||||||
Capitalized interest (1) | 89,830 | — | 2,068 | 2,062 | 93,960 | ||||||||||||||||||||||||||||||
Basis of loans sold (2) | (243,378) | — | — | (2,358,790) | (2,602,168) | ||||||||||||||||||||||||||||||
Loan maturities/principal repayments | (2,897,747) | (211,695) | (26,341) | (250,662) | (3,386,445) | ||||||||||||||||||||||||||||||
Discount accretion/premium amortization | 40,367 | 3,652 | — | 504 | 44,523 | ||||||||||||||||||||||||||||||
Changes in fair value | — | — | 1,837 | 66,279 | 68,116 | ||||||||||||||||||||||||||||||
Foreign currency translation loss, net | (75,094) | (840) | — | — | (75,934) | ||||||||||||||||||||||||||||||
Credit loss reversal (provision), net | 13,238 | (1,124) | — | — | 12,114 | ||||||||||||||||||||||||||||||
Loan foreclosure and conversion to equity interest | (36,308) | — | — | — | (36,308) | (3) | |||||||||||||||||||||||||||||
Transfer to/from other asset classifications or between segments | (204,583) | 93,085 | 23,251 | 519,930 | 431,683 | (4) | |||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | 11,512,652 | $ | 1,688,847 | $ | 91,499 | $ | 2,183,519 | $ | 15,476,517 |
| | | | | | | | | | | | | | | |
| | Held-for-Investment Loans | | | | | | | |||||||
Three Months Ended March 31, 2020 | | Commercial | | Infrastructure | | Residential | | Held-for-Sale Loans | | Total Loans | |||||
Balance at December 31, 2019 | | $ | 8,517,054 | | $ | 1,397,448 | | $ | 671,572 | | $ | 884,150 | | $ | 11,470,224 |
Cumulative effect of ASC 326 effective January 1, 2020 | | | (10,112) | | | (10,328) | | | — | | | — | | | (20,440) |
Acquisitions/originations/additional funding | |
| 1,089,096 | |
| 62,929 | |
| 100,720 | |
| 646,160 | |
| 1,898,905 |
Capitalized interest (1) | |
| 36,072 | |
| — | |
| — | |
| — | |
| 36,072 |
Basis of loans sold (2) | |
| — | |
| — | |
| (604) | |
| (789,259) | |
| (789,863) |
Loan maturities/principal repayments | |
| (689,972) | |
| (37,051) | |
| (48,620) | |
| (20,680) | |
| (796,323) |
Discount accretion/premium amortization | |
| 11,559 | |
| 411 | |
| — | |
| 110 | |
| 12,080 |
Changes in fair value | |
| — | |
| — | |
| (25,619) | |
| 9,485 | |
| (16,134) |
Unrealized foreign currency translation loss | |
| (83,263) | |
| — | |
| — | |
| (4,056) | |
| (87,319) |
Credit loss provision, net | |
| (37,527) | |
| (5,805) | |
| — | |
| — | |
| (43,332) |
Transfer to/from other asset classifications | | | — | | | (26,333) | | | (422,691) | | | 449,024 | | | — |
Balance at March 31, 2020 | | $ | 8,832,907 | | $ | 1,381,271 | | $ | 274,758 | | $ | 1,174,934 | | $ | 11,663,870 |
Held-for-Investment Loans | ||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2020 | Commercial | Infrastructure | Residential | Held-for-Sale Loans | Total Loans | |||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | 8,517,054 | $ | 1,397,448 | $ | 671,572 | $ | 884,150 | $ | 11,470,224 | ||||||||||||||||||||||
Cumulative effect of ASC 326 effective January 1, 2020 | (10,112) | (10,328) | — | — | (20,440) | |||||||||||||||||||||||||||
Acquisitions/originations/additional funding | 2,090,964 | 177,247 | 100,720 | 1,800,018 | 4,168,949 | |||||||||||||||||||||||||||
Capitalized interest (1) | 105,329 | 48 | — | — | 105,377 | |||||||||||||||||||||||||||
Basis of loans sold (2) | (397,038) | — | (604) | (2,035,770) | (2,433,412) | |||||||||||||||||||||||||||
Loan maturities/principal repayments | (1,148,317) | (96,150) | (76,025) | (75,632) | (1,396,124) | |||||||||||||||||||||||||||
Discount accretion/premium amortization | 28,686 | 1,672 | — | 110 | 30,468 | |||||||||||||||||||||||||||
Changes in fair value | — | — | (16,565) | 96,265 | 79,700 | |||||||||||||||||||||||||||
Foreign currency translation loss, net | (15,279) | (38) | — | (1,291) | (16,608) | |||||||||||||||||||||||||||
Credit loss (provision) reversal, net | (53,110) | (3,824) | — | 125 | (56,809) | |||||||||||||||||||||||||||
Transfer to/from other asset classifications | — | 77,993 | (422,691) | 344,698 | — | |||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | 9,118,177 | $ | 1,544,068 | $ | 256,407 | $ | 1,012,673 | $ | 11,931,325 |
(2) See Note 11 for additional disclosure on these transactions.
Includes (i) a $29.0 million credit deteriorated loan related to a residential conversion project which was foreclosed in April 2021 and (ii) $7.3 million of a commercial loan that was converted to equity interests in March 2021 (see Note 7) pursuant to a consensual transfer under pre-existing equity pledges of additional collateral, both as described above.
Carrying Value as of | |||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||
RMBS, available-for-sale | $ | 148,583 | $ | 167,349 | |||||||
RMBS, fair value option (1) | 215,152 | 235,997 | |||||||||
CMBS, fair value option (1), (2) | 1,227,119 | 1,209,030 | |||||||||
HTM debt securities, amortized cost net of credit loss allowance of $6,389 and $5,675 | 486,734 | 538,605 | |||||||||
Equity security, fair value | 12,067 | 11,247 | |||||||||
Subtotal—Investment securities | 2,089,655 | 2,162,228 | |||||||||
VIE eliminations (1) | (1,418,768) | (1,425,570) | |||||||||
Total investment securities | $ | 670,887 | $ | 736,658 |
| | | | | | |
| | Carrying Value as of | ||||
| | March 31, 2021 |
| December 31, 2020 | ||
RMBS, available-for-sale | | $ | 160,301 | | $ | 167,349 |
RMBS, fair value option (1) | | | 249,005 | | | 235,997 |
CMBS, fair value option (1), (2) | |
| 1,202,883 | |
| 1,209,030 |
HTM debt securities, amortized cost net of credit loss allowance of $5,387 and $5,675 | |
| 488,075 | |
| 538,605 |
Equity security, fair value | |
| 10,655 | |
| 11,247 |
Subtotal—Investment securities | |
| 2,110,919 | |
| 2,162,228 |
VIE eliminations (1) | |
| (1,432,632) | | | (1,425,570) |
Total investment securities | | $ | 678,287 | | $ | 736,658 |
Purchases, sales, and principal collections and redemptions for all investment securities were as follows (amounts in thousands):
RMBS, available-for-sale | RMBS, fair value option | CMBS, fair value option | HTM Securities | Securitization VIEs (1) | Total | ||||||||||||||||||||||||||||||
Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
Purchases | $ | — | $ | 33,009 | $ | 8,383 | $ | — | $ | (41,392) | $ | — | |||||||||||||||||||||||
Sales | — | — | 27,111 | — | (27,111) | — | |||||||||||||||||||||||||||||
Principal collections | 7,881 | 14,204 | 706 | 752 | (14,555) | 8,988 | |||||||||||||||||||||||||||||
Redemptions | — | 26,753 | — | — | (26,753) | — | |||||||||||||||||||||||||||||
Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
Purchases/fundings | $ | — | $ | 43,083 | $ | — | $ | 6,288 | $ | (43,083) | $ | 6,288 | |||||||||||||||||||||||
Principal collections | 6,063 | 12,132 | 8,265 | 11,203 | (20,185) | 17,478 |
RMBS, available-for-sale | RMBS, fair value option | CMBS, fair value option | HTM Securities | Securitization VIEs (1) | Total | ||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
Purchases | $ | — | $ | 112,693 | $ | 62,465 | $ | — | $ | (175,158) | $ | — | |||||||||||||||||||||||
Sales | — | 30,684 | 38,715 | — | (69,399) | — | |||||||||||||||||||||||||||||
Principal collections | 22,995 | 42,235 | 4,429 | 53,321 | (45,125) | 77,855 | |||||||||||||||||||||||||||||
Redemptions | — | 38,729 | — | — | (38,729) | — | |||||||||||||||||||||||||||||
Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
Purchases/fundings | $ | — | $ | 257,808 | $ | 7,661 | $ | 22,408 | $ | (265,469) | $ | 22,408 | |||||||||||||||||||||||
Sales | — | — | 32,316 | — | (24,376) | 7,940 | |||||||||||||||||||||||||||||
Principal collections | 18,626 | 32,236 | 25,715 | 48,554 | (57,174) | 67,957 |
| | | | | | | | | | | | | | | | | | |
| | RMBS, | | RMBS, fair | | CMBS, fair | | HTM | | Securitization | | | | |||||
|
| available-for-sale |
| value option |
| value option |
| Securities |
| VIEs (1) |
| Total | ||||||
Three Months Ended March 31, 2021 | | | | | | | | | | | | | | | | |||
Purchases | | $ | — | | $ | 27,333 | | $ | — | | $ | — | | $ | (27,333) | | $ | — |
Sales | |
| — | |
| — | |
| 11,604 | |
| — | |
| (11,604) | |
| — |
Principal collections | |
| 7,251 | |
| 13,344 | |
| 1,710 | |
| 51,690 | |
| (14,481) | |
| 59,514 |
Three Months Ended March 31, 2020 | | | | | | | | | | | | | | | | |||
Purchases/fundings | | $ | — | | $ | 29,292 | | $ | 7,661 | | $ | 5,729 | | $ | (36,953) | | $ | 5,729 |
Sales | |
| — | |
| — | |
| 32,316 | |
| — | |
| (24,376) | |
| 7,940 |
Principal collections | |
| 6,549 | |
| 8,572 | |
| 16,523 | |
| 6,638 | |
| (24,723) | |
| 13,559 |
24
The tables below summarize various attributes of our investments in available-for-sale RMBS as of March 31,September 30, 2021 and December 31, 2020 (amounts in thousands):
Unrealized Gains or (Losses) Recognized in AOCI | |||||||||||||||||||||||||||||||||||||||||
Amortized Cost | Credit Loss Allowance | Net Basis | Gross Unrealized Gains | Gross Unrealized Losses | Net Fair Value Adjustment | Fair Value | |||||||||||||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
RMBS | $ | 108,097 | $ | — | $ | 108,097 | $ | 40,486 | $ | — | $ | 40,486 | $ | 148,583 | |||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
RMBS | $ | 123,292 | $ | — | $ | 123,292 | $ | 44,123 | $ | (66) | $ | 44,057 | $ | 167,349 |
Weighted Average Coupon (1) | WAL (Years) (2) | ||||||||||
September 30, 2021 | |||||||||||
RMBS | 1.2 | % | 5.4 |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Unrealized Gains or (Losses) | | | | |||||||
| | | | | | | | | | | Recognized in AOCI | | | | |||||||
|
| |
| Credit |
| |
| Gross |
| Gross |
| Net |
| | | ||||||
| | Amortized | | Loss | | Net | | Unrealized | | Unrealized | | Fair Value | | | | ||||||
| | Cost | | Allowance | | Basis | | Gains | | Losses | | Adjustment | | Fair Value | |||||||
March 31, 2021 | | | | | | | | | | | | | | | | | | | | | |
RMBS | | $ | 118,647 | | $ | — | | $ | 118,647 | | $ | 41,688 | | $ | (34) | | $ | 41,654 | | $ | 160,301 |
December 31, 2020 | | | | | | | | | | | | | | | | | | | | | |
RMBS | | $ | 123,292 | | $ | — | | $ | 123,292 | | $ | 44,123 | | $ | (66) | | $ | 44,057 | | $ | 167,349 |
Calculated using the September 30, 2021 one-month LIBOR rate of 0.080% for floating rate securities.
| | | | |
|
| Weighted Average Coupon (1) |
| WAL |
March 31, 2021 | | | | |
RMBS |
| 1.2 | % | 5.9 |
As of March 31,September 30, 2021, approximately $139.4$129.4 million, or 87.0%87%, of RMBS were variable rate. We purchased all of the RMBS at a discount, a portion of which is accreted into income over the expected remaining life of the security. The majority of the income from this strategy is earned from the accretion of this accretable discount.
Estimated Fair Value | Unrealized Losses | ||||||||||||||||||||||
Securities with a loss less than 12 months | Securities with a loss greater than 12 months | Securities with a loss less than 12 months | Securities with a loss greater than 12 months | ||||||||||||||||||||
As of September 30, 2021 | |||||||||||||||||||||||
RMBS | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
As of December 31, 2020 | |||||||||||||||||||||||
RMBS | $ | 438 | $ | 1,195 | $ | (25) | $ | (41) |
| | | | | | | | | | | | | |
| | Estimated Fair Value | | Unrealized Losses |
| ||||||||
|
| Securities with a |
| Securities with a |
| Securities with a |
| Securities with a |
| ||||
| | loss less than | | loss greater than | | loss less than | | loss greater than |
| ||||
| | 12 months | | 12 months | | 12 months | | 12 months |
| ||||
As of March 31, 2021 | | | | | | | | | | | | | |
RMBS | | $ | — | | $ | 1,170 | | $ | — | | $ | (34) | |
As of December 31, 2020 | | | | | | | | | | | | | |
RMBS | | $ | 438 | | $ | 1,195 | | $ | (25) | | $ | (41) | |
As of March 31,September 30, 2021, $96.9$98.2 million of our CMBS were variable rate and NaNnone of our RMBS were variable rate.
Amortized Cost Basis | Credit Loss Allowance | Net Carrying Amount | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Fair Value | ||||||||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||||||||
CMBS | $ | 339,190 | $ | (1,593) | $ | 337,597 | $ | — | $ | (23,490) | $ | 314,107 | |||||||||||||||||||||||
Preferred interests | 117,692 | (1,877) | 115,815 | 3,415 | — | 119,230 | |||||||||||||||||||||||||||||
Infrastructure bonds | 36,241 | (2,919) | 33,322 | 498 | — | 33,820 | |||||||||||||||||||||||||||||
Total | $ | 493,123 | $ | (6,389) | $ | 486,734 | $ | 3,913 | $ | (23,490) | $ | 467,157 | |||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||
CMBS | $ | 339,059 | $ | — | $ | 339,059 | $ | — | $ | (23,286) | $ | 315,773 | |||||||||||||||||||||||
Preferred interests | 166,614 | (2,749) | 163,865 | 432 | (913) | 163,384 | |||||||||||||||||||||||||||||
Infrastructure bonds | 38,607 | (2,926) | 35,681 | 415 | — | 36,096 | |||||||||||||||||||||||||||||
Total | $ | 544,280 | $ | (5,675) | $ | 538,605 | $ | 847 | $ | (24,199) | $ | 515,253 |
| | | | | | | | | | | | | | | | | | | |
| | Amortized | | Credit Loss | | Net Carrying | | Gross Unrealized | | Gross Unrealized | | | |
| |||||
| | Cost Basis | | Allowance | | Amount | | Holding Gains | | Holding Losses | | Fair Value |
| ||||||
March 31, 2021 |
| | | | | | | | | | | |
| | |
| | |
|
CMBS | | $ | 339,120 | | $ | — | | $ | 339,120 | | $ | — | | $ | (25,169) | | $ | 313,951 | |
Preferred interests | | | 116,466 | | | (2,462) | | | 114,004 | | | 3,346 | | | — | | | 117,350 | |
Infrastructure bonds | | | 37,876 | | | (2,925) | | | 34,951 | | | 435 | | | — | | | 35,386 | |
Total | | $ | 493,462 | | $ | (5,387) | | $ | 488,075 | | $ | 3,781 | | $ | (25,169) | | $ | 466,687 | |
| | | | | | | | | | | | | | | | | | | |
December 31, 2020 | | | | | | | | | | | | | | | | | | | |
CMBS | | $ | 339,059 | | $ | — | | $ | 339,059 | | $ | — | | $ | (23,286) | | $ | 315,773 | |
Preferred interests | | | 166,614 | | | (2,749) | | | 163,865 | | | 432 | | | (913) | | | 163,384 | |
Infrastructure bonds | | | 38,607 | | | (2,926) | | | 35,681 | | | 415 | | | — | | | 36,096 | |
Total | | $ | 544,280 | | $ | (5,675) | | $ | 538,605 | | $ | 847 | | $ | (24,199) | | $ | 515,253 | |
| | | | | | | | | |
| | | | | | Total HTM | |||
| | Preferred | | Infrastructure | | Credit Loss | |||
| | Interests | | Bonds | | Allowance | |||
Three Months Ended March 31, 2021 | | | | | | | | | |
Credit loss allowance at December 31, 2020 | | $ | 2,749 | | $ | 2,926 | | $ | 5,675 |
Credit loss reversal, net | | | (287) | | | (1) | | | (288) |
Credit loss allowance at March 31, 2021 | | $ | 2,462 | | $ | 2,925 | | $ | 5,387 |
CMBS | Preferred Interests | Infrastructure Bonds | Total HTM Credit Loss Allowance | ||||||||||||||||||||
Nine Months Ended September 30, 2021 | |||||||||||||||||||||||
Credit loss allowance at December 31, 2020 | $ | — | $ | 2,749 | $ | 2,926 | $ | 5,675 | |||||||||||||||
Credit loss provision (reversal), net | 1,593 | (872) | (7) | 714 | |||||||||||||||||||
Credit loss allowance at September 30, 2021 | $ | 1,593 | $ | 1,877 | $ | 2,919 | $ | 6,389 |
CMBS | Preferred Interests | Infrastructure Bonds | Total | ||||||||||||||||||||
Less than one year | $ | 313,928 | $ | — | $ | — | $ | 313,928 | |||||||||||||||
One to three years | 23,669 | 115,815 | — | 139,484 | |||||||||||||||||||
Three to five years | — | — | 814 | 814 | |||||||||||||||||||
Thereafter | — | — | 32,508 | 32,508 | |||||||||||||||||||
Total | $ | 337,597 | $ | 115,815 | $ | 33,322 | $ | 486,734 |
| | | | | | | | | | | | |
| | | | Preferred | | Infrastructure | | | ||||
| | CMBS | | Interests | | Bonds | | Total | ||||
Less than one year |
| $ | 313,863 | | $ | — | | $ | — | | $ | 313,863 |
One to three years | | | 25,257 | | | 114,004 | | | — | | | 139,261 |
Three to five years | | | — | | | — | | | — | | | — |
Thereafter | |
| — | | | — | | | 34,951 | | | 34,951 |
Total | | $ | 339,120 | | $ | 114,004 | | $ | 34,951 | | $ | 488,075 |
Medical Office Portfolio
The Master Lease Portfolio is comprised of 16 retail properties geographically dispersed throughout the U.S., with more than 50% of the portfolio, by carrying value, located in Florida, Texas and Minnesota. These properties, which we acquired in September 2017, collectively comprise 1.9 million square feet and were leased back to the seller under corporate guaranteed master net lease agreements with initial terms of 24.6 years and periodic rent escalations. The Master Lease Portfolio includes total gross properties of $343.8 million and debt of $192.8$193.0 million as of March 31,September 30, 2021.
The Investing and Servicing Segment Property Portfolio (“REIS Equity Portfolio”)Portfolio is comprised of 1514 commercial real estate properties and 1 equity interest in an unconsolidated commercial real estate property which were acquired from CMBS trusts during the previous five years. The REIS Equity Portfolio includes total gross properties and lease intangibles of $270.4$250.3 million and debt of $192.6$176.7 million as of March 31,September 30, 2021.
The table below summarizes our properties held as of March 31,September 30, 2021 and December 31, 2020 (dollars in thousands):
Depreciable Life | September 30, 2021 | December 31, 2020 | |||||||||||||||
Property Segment | |||||||||||||||||
Land and land improvements | 0 - 15 years | $ | 485,177 | $ | 484,846 | ||||||||||||
Buildings and building improvements | 0 - 45 years | 1,693,834 | 1,690,701 | ||||||||||||||
Furniture & fixtures | 3 - 7 years | 65,575 | 59,632 | ||||||||||||||
Investing and Servicing Segment | |||||||||||||||||
Land and land improvements | 0 - 15 years | 45,243 | 50,585 | ||||||||||||||
Buildings and building improvements | 3 - 40 years | 167,271 | 179,014 | ||||||||||||||
Furniture & fixtures | 2 - 5 years | 3,077 | 2,606 | ||||||||||||||
Commercial and Residential Lending Segment (1) | |||||||||||||||||
Land and land improvements | 0 - 7 years | 9,691 | 11,416 | ||||||||||||||
Buildings and building improvements | 10 - 20 years | 12,409 | 19,251 | ||||||||||||||
Construction in progress | N/A | 104,088 | 75,245 | ||||||||||||||
Properties, cost | 2,586,365 | 2,573,296 | |||||||||||||||
Less: accumulated depreciation | (357,503) | (302,143) | |||||||||||||||
Properties, net | $ | 2,228,862 | $ | 2,271,153 |
| | | | | | | | |
|
| Depreciable Life |
| March 31, 2021 |
| December 31, 2020 | ||
Property Segment | | | | | | | | |
Land and land improvements | | 0 – 15 years | | $ | 485,026 | | $ | 484,846 |
Buildings and building improvements | | 5 – 45 years | | | 1,691,423 | | | 1,690,701 |
Furniture & fixtures | | 3 – 7 years | | | 60,926 | | | 59,632 |
Investing and Servicing Segment | | | | | | | | |
Land and land improvements | | 0 – 15 years | | | 50,617 | | | 50,585 |
Buildings and building improvements | | 3 – 40 years | | | 179,813 | | | 179,014 |
Furniture & fixtures | | 2 – 5 years | | | 2,804 | | | 2,606 |
Commercial and Residential Lending Segment (1) | | | | | | | | |
Land and land improvements | | 0 – 7 years | | | 9,691 | | | 11,416 |
Buildings and building improvements | | 10 – 20 years | | | 9,927 | | | 19,251 |
Construction in progress | | N/A | | | 75,245 | | | 75,245 |
Properties, cost | | | | | 2,565,472 | | | 2,573,296 |
Less: accumulated depreciation | | | | | (320,724) | | | (302,143) |
Properties, net | | | | $ | 2,244,748 | | $ | 2,271,153 |
During the threenine months ended March 31,September 30, 2021, we sold an operating property within the REIS Equity Portfolio for $30.9 million and recognized a gain of $9.7 million within gain on sale of investments and other assets in our condensed consolidated statements of operations. During the nine months ended September 30, 2020, we sold an operating property within the REIS Equity Portfolio for $24.1 million and recognized a gain of $7.4 million within gain on sale of investments and other assets in our condensed consolidated statements of operations.
Participation / Ownership % (1) | Carrying value as of | ||||||||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||||||||
Equity method investments: | |||||||||||||||||
Equity interest in a natural gas power plant | 10% | $ | 25,170 | $ | 25,095 | ||||||||||||
Investor entity which owns equity in an online real estate company (2) | 50% | 5,142 | 9,397 | ||||||||||||||
Equity interests in commercial real estate | 50% | 975 | 1,543 | ||||||||||||||
Equity interest in and advances to a residential mortgage originator (3) | N/A | 19,376 | 17,852 | ||||||||||||||
Various | 25% - 50% | 11,166 | 8,831 | ||||||||||||||
61,829 | 62,718 | ||||||||||||||||
Other equity investments: | |||||||||||||||||
Equity interest in a servicing and advisory business | 2% | 17,584 | 17,584 | ||||||||||||||
Investment funds which own equity in a loan servicer and other real estate assets | 4% - 6% | 7,267 | 7,267 | ||||||||||||||
Investor entities which own equity interests in two entertainment and retail centers (4) | 15% | 7,320 | — | ||||||||||||||
Federal Home Loan Bank stock | N/A | — | 20,485 | ||||||||||||||
32,171 | 45,336 | ||||||||||||||||
$ | 94,000 | $ | 108,054 |
| | | | | | | | |
| | Participation / | | Carrying value as of | ||||
|
| Ownership % (1) |
| March 31, 2021 |
| December 31, 2020 | ||
Equity method investments: | | | | | | | | |
Equity interest in a natural gas power plant | | 10% | | $ | 24,840 | | $ | 25,095 |
Investor entity which owns equity in an online real estate company | | 50% | | | 9,573 | | | 9,397 |
Equity interests in commercial real estate | | 50% | | | 1,368 | | | 1,543 |
Equity interest in and advances to a residential mortgage originator (2) |
| N/A | |
| 18,458 | |
| 17,852 |
Various (3) |
| 15% - 50% | |
| 16,896 | |
| 8,831 |
| | | |
| 71,135 | |
| 62,718 |
Other equity investments: | | | | | | | | |
Equity interest in a servicing and advisory business | | 2% | | | 17,584 | |
| 17,584 |
Investment funds which own equity in a loan servicer and other real estate assets |
| 4% - 6% | |
| 7,267 | |
| 7,267 |
Various, including Federal Home Loan Bank stock |
| 0% - 2% | |
| 4,921 | |
| 20,485 |
| | | |
| 29,772 | |
| 45,336 |
| | | | $ | 100,907 | | $ | 108,054 |
Infrastructure Lending Segment
| | | | | | | | | | | | | | | | | | |
| | As of March 31, 2021 | | As of December 31, 2020 | ||||||||||||||
|
| Gross Carrying | | Accumulated |
| Net Carrying |
| Gross Carrying |
| Accumulated |
| Net Carrying | ||||||
| | Value | | Amortization | | Value | | Value | | Amortization | | Value | ||||||
Domestic servicing rights, at fair value | | $ | 12,406 | | $ | — | | $ | 12,406 | | $ | 13,202 | | $ | — | | $ | 13,202 |
In-place lease intangible assets | |
| 133,203 | |
| (94,726) | |
| 38,477 | |
| 133,203 | |
| (92,540) | |
| 40,663 |
Favorable lease intangible assets | | | 24,181 | | | (8,292) | | | 15,889 | | | 24,181 | | | (7,929) | | | 16,252 |
Total net intangible assets | | $ | 169,790 | | $ | (103,018) | | $ | 66,772 | | $ | 170,586 | | $ | (100,469) | | $ | 70,117 |
As of September 30, 2021 | As of December 31, 2020 | ||||||||||||||||||||||||||||||||||
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||||||
Domestic servicing rights, at fair value | $ | 15,942 | $ | — | $ | 15,942 | $ | 13,202 | $ | — | $ | 13,202 | |||||||||||||||||||||||
In-place lease intangible assets | 131,418 | (97,365) | 34,053 | 133,203 | (92,540) | 40,663 | |||||||||||||||||||||||||||||
Favorable lease intangible assets | 23,862 | (8,735) | 15,127 | 24,181 | (7,929) | 16,252 | |||||||||||||||||||||||||||||
Total net intangible assets | $ | 171,222 | $ | (106,100) | $ | 65,122 | $ | 170,586 | $ | (100,469) | $ | 70,117 |
The following table summarizes the activity within intangible assets for the threenine months ended March 31,September 30, 2021 (amounts in thousands):
Domestic Servicing Rights | In-place Lease Intangible Assets | Favorable Lease Intangible Assets | Total | ||||||||||||||||||||
Balance as of January 1, 2021 | $ | 13,202 | $ | 40,663 | $ | 16,252 | $ | 70,117 | |||||||||||||||
Amortization | — | (6,250) | (1,056) | (7,306) | |||||||||||||||||||
Sales | — | (360) | (69) | (429) | |||||||||||||||||||
Changes in fair value due to changes in inputs and assumptions | 2,740 | — | — | 2,740 | |||||||||||||||||||
Balance as of September 30, 2021 | $ | 15,942 | $ | 34,053 | $ | 15,127 | $ | 65,122 |
| | | | | | | | | | | | |
| | Domestic | | In-place Lease | | Favorable Lease | | | ||||
| | Servicing | | Intangible | | Intangible | | | ||||
|
| Rights |
| Assets |
| Assets |
| Total | ||||
Balance as of January 1, 2021 | | $ | 13,202 | | $ | 40,663 | | $ | 16,252 | | $ | 70,117 |
Amortization | | | — | | | (2,186) | | | (363) | | | (2,549) |
Changes in fair value due to changes in inputs and assumptions | | | (796) | | | — | | | — | | | (796) |
Balance as of March 31, 2021 | | $ | 12,406 | | $ | 38,477 | | $ | 15,889 | | $ | 66,772 |
| | | |
2021 (remainder of) |
| $ | 7,094 |
2022 | |
| 7,862 |
2023 | |
| 6,115 |
2024 | |
| 4,722 |
2025 | |
| 3,846 |
Thereafter | |
| 24,727 |
Total | | $ | 54,366 |
2021 (remainder of) | $ | 2,231 | |||
2022 | 7,783 | ||||
2023 | 6,043 | ||||
2024 | 4,650 | ||||
2025 | 3,775 | ||||
Thereafter | 24,698 | ||||
Total | $ | 49,180 |
Outstanding Balance at | |||||||||||||||||||||||||||||||||||||||||
Current Maturity | Extended Maturity (a) | Weighted Average Pricing | Pledged Asset Carrying Value | Maximum Facility Size | September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||
Repurchase Agreements: | |||||||||||||||||||||||||||||||||||||||||
Commercial Loans | Mar 2022 to Jul 2026 | (b) | Jun 2025 to Mar 2029 | (b) | (c) | $ | 7,750,853 | $ | 9,980,380 | (d) | $ | 5,294,281 | $ | 4,878,939 | |||||||||||||||||||||||||||
Residential Loans | Jun 2022 to Oct 2023 | N/A | LIBOR + 2.01% | 1,755,161 | 2,550,000 | 1,440,018 | 22,590 | ||||||||||||||||||||||||||||||||||
Infrastructure Loans | Sep 2024 | Sep 2026 | LIBOR + 2.00% | 467,921 | 650,000 | 368,442 | 232,961 | ||||||||||||||||||||||||||||||||||
Conduit Loans | Feb 2022 to Jun 2024 | Feb 2023 to Jun 2025 | LIBOR + 1.99% | 259,155 | 350,000 | 192,829 | 53,554 | ||||||||||||||||||||||||||||||||||
CMBS/RMBS | Dec 2021 to May 2031 | (e) | Sep 2022 to Nov 2031 | (e) | (f) | 1,193,808 | 835,850 | 709,340 | (g) | 620,763 | |||||||||||||||||||||||||||||||
Total Repurchase Agreements | 11,426,898 | 14,366,230 | 8,004,910 | 5,808,807 | |||||||||||||||||||||||||||||||||||||
Other Secured Financing: | |||||||||||||||||||||||||||||||||||||||||
Borrowing Base Facility | Apr 2022 | Apr 2024 | LIBOR + 2.25% | 73,502 | 650,000 | (h) | 2,000 | 43,014 | |||||||||||||||||||||||||||||||||
Commercial Financing Facility | Mar 2022 | Mar 2029 | GBP LIBOR + 1.75% | 177,424 | 142,872 | 142,872 | 81,218 | ||||||||||||||||||||||||||||||||||
Residential Financing Facility | Sep 2022 | Sep 2025 | 3.50% | 149,604 | 250,000 | 2,018 | 215,024 | ||||||||||||||||||||||||||||||||||
Infrastructure Acquisition Facility | N/A | N/A | N/A | — | — | — | 467,450 | ||||||||||||||||||||||||||||||||||
Infrastructure Financing Facilities | Jul 2022 to Oct 2022 | Oct 2024 to Jul 2027 | LIBOR + 2.03% | 688,488 | 1,250,000 | 544,582 | 538,645 | ||||||||||||||||||||||||||||||||||
Property Mortgages - Fixed rate | Nov 2024 to Aug 2052 | (i) | N/A | 4.03% | 1,254,141 | 1,154,763 | 1,154,763 | 1,077,528 | |||||||||||||||||||||||||||||||||
Property Mortgages - Variable rate | Nov 2021 to Jul 2030 | N/A | (j) | 898,634 | 969,790 | 945,311 | 960,903 | ||||||||||||||||||||||||||||||||||
Term Loan and Revolver | (k) | N/A | (k) | N/A | (k) | 940,750 | 790,750 | 645,000 | |||||||||||||||||||||||||||||||||
Federal Home Loan Bank | N/A | N/A | N/A | — | — | — | 396,000 | ||||||||||||||||||||||||||||||||||
Total Other Secured Financing | 3,241,793 | 5,358,175 | 3,582,296 | 4,424,782 | |||||||||||||||||||||||||||||||||||||
$ | 14,668,691 | $ | 19,724,405 | 11,587,206 | 10,233,589 | ||||||||||||||||||||||||||||||||||||
Unamortized net discount | (14,603) | (13,569) | |||||||||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | (70,551) | (73,830) | |||||||||||||||||||||||||||||||||||||||
$ | 11,502,052 | $ | 10,146,190 |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Outstanding Balance at | ||||
| | Current | | Extended | | Weighted Average | | Pledged Asset | | Maximum | | March 31, | | December 31, | ||||
|
| Maturity |
| Maturity (a) |
| Pricing |
| Carrying Value |
| Facility Size |
| 2021 |
| 2020 | ||||
Repurchase Agreements: | | | | | | | | | | | | | | | | | | |
Commercial Loans | | May 2021 to Aug 2025 | (b) | May 2023 to Mar 2029 | (b) | (c) | | $ | 8,088,081 | | $ | 9,164,525 | (d) | $ | 5,592,652 | | $ | 4,878,939 |
Residential Loans | | Jan 2022 to Oct 2023 | | N/A | | LIBOR + 2.09% | | | 428,877 | | | 1,750,000 | | | 328,620 | | | 22,590 |
Infrastructure Loans | | Feb 2022 | | N/A | | LIBOR + 2.00% | | | 295,516 | | | 500,000 | | | 246,136 | | | 232,961 |
Conduit Loans | | Feb 2022 to Jun 2023 | | Feb 2023 to Jun 2024 | | LIBOR + 2.15% | | | 147,523 | | | 350,000 | | | 111,087 | | | 53,554 |
CMBS/RMBS | | Dec 2021 to Oct 2030 | (e) | Mar 2022 to Apr 2031 | (e) | (f) | | | 1,112,819 | | | 823,365 | | | 668,993 | (g) | | 620,763 |
Total Repurchase Agreements | | | | | | | | | 10,072,816 | | | 12,587,890 | | | 6,947,488 | | | 5,808,807 |
Other Secured Financing: | | | | | | | | | | | | | | | | | | |
Borrowing Base Facility | | Apr 2022 | | Apr 2024 | | LIBOR + 2.25% | | | 304,076 | | | 650,000 | (h) | | 223,302 | | | 43,014 |
Commercial Financing Facility | | Mar 2022 | | Mar 2029 | | GBP LIBOR + 1.75% | | | 101,559 | | | 81,847 | | | 81,847 | | | 81,218 |
Residential Financing Facility | | Sep 2022 | | Sep 2025 | | 3.50% | | | 163,545 | | | 250,000 | | | 1,515 | | | 215,024 |
Infrastructure Acquisition Facility | | Sep 2021 | | Sep 2022 | | (i) | | | 525,611 | | | 517,498 | | | 414,503 | | | 467,450 |
Infrastructure Financing Facilities | | Jul 2022 to Oct 2022 | | Oct 2024 to Jul 2027 | | LIBOR + 2.04% | | | 699,684 | | | 1,250,000 | | | 548,956 | | | 538,645 |
Property Mortgages - Fixed rate | | Nov 2024 to Aug 2052 | (j) | N/A | | 4.03% | | | 1,271,385 | | | 1,155,306 | | | 1,155,306 | | | 1,077,528 |
Property Mortgages - Variable rate | | Nov 2021 to Jul 2030 | | N/A | | (k) | | | 929,800 | | | 985,453 | | | 960,901 | | | 960,903 |
Term Loan and Revolver | | (l) | | N/A | | (l) | | | N/A | (l) | | 763,375 | | | 643,375 | | | 645,000 |
Federal Home Loan Bank | | N/A | | N/A | | N/A | | | — | | | — | | | — | | | 396,000 |
Total Other Secured Financing | | | | | | | | | 3,995,660 | | | 5,653,479 | | | 4,029,705 | | | 4,424,782 |
| | | | | | | | $ | 14,068,476 | | $ | 18,241,369 | | | 10,977,193 | | | 10,233,589 |
Unamortized net discount | | | | | | | | | | | | | | | (13,149) | | | (13,569) |
Unamortized deferred financing costs | | | | | | | | | | | | | | | (68,112) | | | (73,830) |
| | | | | | | | | | | | | | $ | 10,895,932 | | $ | 10,146,190 |
(e)Certain facilities with an outstanding balance of $292.8 million as of September 30, 2021 carry a rolling 11-month or 12-month term which may reset monthly or quarterly with the lender's consent. These facilities carry no maximum facility size. (f)A facility with an outstanding balance of $243.0 million as of September 30, 2021 has a weighted average fixed annual interest rate of 3.21%. All other facilities are variable rate with a weighted average rate of LIBOR + 1.76%. (g)Includes: (i) $243.0 million outstanding on a repurchase facility that is not subject to margin calls; and (ii) $35.8 million outstanding on one of our repurchase facilities that represents the 49% pro rata share owed by a non-controlling partner in a consolidated joint venture (see Note 14). (h)The initial maximum facility size of $300.0 million may be increased to $650.0 million, subject to certain conditions. (i)The weighted average maturity is 6.0 years as of September 30, 2021. (j)Includes a $600.0 million first mortgage and mezzanine loan secured by our Medical Office Portfolio. This debt has a weighted average interest rate of LIBOR + 2.07% that we swapped to a fixed rate of 3.34%. The remainder have a weighted average rate of LIBOR + 2.61%. (k)Consists of: (i) a $790.8 million term loan facility that matures in July 2026, of which $392.0 million (the "Initial Borrowings") has an annual interest rate of LIBOR + 2.50% and $398.8 million (the "Incremental Borrowings") has an annual interest rate of LIBOR + 3.25%, subject to a 0.75% LIBOR floor, and (ii) a $150.0 million revolving credit |
facility that matures in April 2026 with an annual interest rate of SOFR + 2.50%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $4.7 billion as of September 30, 2021.
For the three and nine months ended September 30, 2020, approximately
and Single Asset Securitization
33
The following table is a summary of our CLOCLOs and our SASB as of March 31,September 30, 2021 and December 31, 2020 (amounts in thousands):September 30, 2021 Count Face
AmountCarrying
ValueWeighted
Average SpreadMaturity STWD 2019-FL1 Collateral assets 25 $ 1,034,361 $ 1,103,259 LIBOR + 4.23% (a) September 2024 (b) Financing 1 936,375 932,425 SOFR + 1.63% (c) July 2038 (d) STWD 2021-FL2 Collateral assets 25 1,269,744 1,279,245 LIBOR + 4.23% (a) January 2025 (b) Financing 1 1,077,375 1,069,014 LIBOR + 1.78% (c) April 2038 (d) STWD 2021-SIF1 Collateral assets 31 494,065 510,592 LIBOR + 3.94% (a) March 2026 (b) Financing 1 410,000 404,960 LIBOR + 2.15% (c) April 2032 (d) STWD 2021-HTS Collateral assets 1 230,000 230,562 LIBOR + 4.34% (a) April 2026 (b) Financing 1 210,091 207,831 LIBOR + 2.47% (c) April 2034 (d) Total Collateral assets $ 3,028,170 $ 3,123,658 Financing $ 2,633,841 $ 2,614,230 December 31, 2020 STWD 2019-FL1 Collateral assets 23 $ 1,002,445 $ 1,099,439 LIBOR + 3.93% (a) April 2024 (b) Financing 1 936,375 930,554 LIBOR + 1.64% (c) July 2038 (d)
| | | | | | | | | | | | | |
| | | | Face | | Carrying | | Weighted | | | | ||
March 31, 2021 | | Count | | Amount | | Value | | Average Spread | | Maturity | | ||
Collateral assets | | 25 | | $ | 1,099,693 | | $ | 1,099,639 | | LIBOR + 4.21% | (a) | May 2024 | (b) |
Financing | | 1 | |
| 936,375 | | | 931,178 | | LIBOR + 1.63% | (c) | July 2038 | (d) |
| | | | | | | | | | | | | |
December 31, 2020 | | | | | | | | | | | | | |
Collateral assets | | 23 | | $ | 1,002,445 | | $ | 1,099,439 | | LIBOR + 3.93% | (a) | Apr 2024 | (b) |
Financing | | 1 | |
| 936,375 | | | 930,554 | | LIBOR + 1.64% | (c) | July 2038 | (d) |
The CLO isCLOs and SASB are considered a VIE,VIEs, for which we are deemed the primary beneficiary. We therefore consolidate the CLO.CLOs and SASB. Refer to Note 14 for further discussion.
Repurchase Agreements | Other Secured Financing | CLOs and SASB (a) | Total | ||||||||||||||||||||
2021 (remainder of) | $ | 273,583 | $ | 15,751 | $ | 4,103 | $ | 293,437 | |||||||||||||||
2022 | 1,998,566 | 35,189 | 125,338 | 2,159,093 | |||||||||||||||||||
2023 | 860,568 | 821,810 | 638,036 | 2,320,414 | |||||||||||||||||||
2024 | 824,181 | 214,086 | 485,408 | 1,523,675 | |||||||||||||||||||
2025 | 2,585,446 | 264,934 | 513,671 | 3,364,051 | |||||||||||||||||||
Thereafter | 1,462,566 | 2,230,526 | 867,285 | 4,560,377 | |||||||||||||||||||
Total | $ | 8,004,910 | $ | 3,582,296 | $ | 2,633,841 | $ | 14,221,047 |
For the CLOs, the above does not assume utilization of their reinvestment features. The SASB does not have a reinvestment feature.
| | | | | | | | | | | | |
|
| Repurchase |
| Other Secured |
| | | | ||||
| | Agreements | | Financing | | CLO | | Total | ||||
2021 (remainder of) |
| $ | 302,200 |
| $ | 58,768 |
| $ | — | | $ | 360,968 |
2022 | |
| 1,548,791 | |
| 419,128 | | | — | |
| 1,967,919 |
2023 | |
| 1,450,262 | |
| 803,315 | | | — | |
| 2,253,577 |
2024 | |
| 1,480,044 | |
| 475,383 | | | — | |
| 1,955,427 |
2025 | |
| 1,510,607 | |
| 248,376 | | | — | |
| 1,758,983 |
Thereafter | |
| 655,584 | |
| 2,024,735 | | | 936,375 | (a) |
| 3,616,694 |
Total | | $ | 6,947,488 | | $ | 4,029,705 | | $ | 936,375 | | $ | 11,913,568 |
34
Coupon Rate | Effective Rate (1) | Maturity Date | Remaining Period of Amortization | Carrying Value at | ||||||||||||||||||||||||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||
2021 Senior Notes (2) | 5.00 | % | 5.32 | % | 12/15/2021 | 0.2 years | $ | 300,000 | $ | 700,000 | ||||||||||||||||||||||||||||
2023 Senior Notes | 5.50 | % | 5.71 | % | 11/1/2023 | 2.1 years | 300,000 | 300,000 | ||||||||||||||||||||||||||||||
2023 Convertible Notes | 4.38 | % | 4.57 | % | 4/1/2023 | 1.5 years | 250,000 | 250,000 | ||||||||||||||||||||||||||||||
2025 Senior Notes | 4.75 | % | (3) | 5.04 | % | 3/15/2025 | 3.5 years | 500,000 | 500,000 | |||||||||||||||||||||||||||||
2026 Senior Notes | 3.63 | % | 3.77 | % | 7/15/2026 | 4.8 years | 400,000 | — | ||||||||||||||||||||||||||||||
Total principal amount | 1,750,000 | 1,750,000 | ||||||||||||||||||||||||||||||||||||
Unamortized discount—Convertible Notes | (690) | (2,559) | ||||||||||||||||||||||||||||||||||||
Unamortized discount—Senior Notes | (8,666) | (9,332) | ||||||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | (6,960) | (5,589) | ||||||||||||||||||||||||||||||||||||
Carrying amount of debt components | $ | 1,733,684 | $ | 1,732,520 | ||||||||||||||||||||||||||||||||||
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes | N/A | $ | 3,755 |
| | | | | | | | | | | | | | | | |
| | | | | | | | | Remaining | | | | | | | |
| | Coupon | | | Effective | | Maturity | | Period of | | Carrying Value at | |||||
| | Rate | | | Rate (1) | | Date | | Amortization | | March 31, 2021 | | December 31, 2020 | |||
2021 Senior Notes | | 5.00 | % | | 5.32 | % | 12/15/2021 | | 0.7 | years | | $ | 700,000 | | $ | 700,000 |
2023 Senior Notes | | 5.50 | % | | 5.71 | % | 11/1/2023 |
| 2.6 | years |
| | 300,000 |
| | 300,000 |
2023 Convertible Notes | | 4.38 | % | | 4.57 | % | 4/1/2023 | | 2.0 | years | | | 250,000 | | | 250,000 |
2025 Senior Notes | | 4.75 | % | (2) | 5.04 | % | 3/15/2025 | | 4.0 | years | | | 500,000 | | | 500,000 |
Total principal amount | | | | | | | | | | | | | 1,750,000 | | | 1,750,000 |
Unamortized discount—Convertible Notes | | | | | | | | | | | | | (910) | | | (2,559) |
Unamortized discount—Senior Notes | | | | | | | | | | | | | (8,356) | | | (9,332) |
Unamortized deferred financing costs | | | | | | | | | | | |
| (5,076) | |
| (5,589) |
Carrying amount of debt components | | | | | | | | | | | | $ | 1,735,658 | | $ | 1,732,520 |
Carrying amount of conversion option equity components recorded in additional paid-in capital for outstanding convertible notes | | | | | | | | | | | | | N/A | | $ | 3,755 |
September 30, 2021 | |||||||||||
Conversion | Conversion | ||||||||||
Rate (1) | Price (2) | ||||||||||
2023 Convertible Notes | 38.5959 | $ | 25.91 |
| | | | | |
| | March 31, 2021 | |||
| | Conversion | | Conversion | |
| | Rate (1) | | Price (2) | |
2023 Convertible Notes | | 38.5959 |
| $ | 25.91 |
The conversion rate represents the number of shares of common stock issuable per $1,000 principal amount of 2023 Convertible Notes converted, as adjusted in accordance with the indenture governing the 2023 Convertible Notes (including the applicable supplemental indenture).
35
Upon conversion of the 2023 Convertible Notes, settlement may be made in common stock, cash or a combination of both, at the option of the Company.
Prior to October 1, 2022, the 2023 Convertible Notes will be convertible only upon satisfaction of 1 or more of the following conditions: (1) the closing market price of the Company’s common stock is at least 110% of the conversion price of the 2023 Convertible Notes for at least 20 out of 30 trading days prior to the end of the preceding fiscal quarter, (2) the trading price of the 2023 Convertible Notes is less than 98% of the product of (i) the conversion rate and (ii) the closing price of the Company’s common stock during any five consecutive trading day period, (3) the Company issues certain equity instruments at less than the 10-day average closing market price of its common stock or the per-share value of certain distributions exceeds the market price of the Company’s common stock by more than 10% or (4) certain other specified corporate events (significant consolidation, sale, merger, share exchange, fundamental change, etc.) occur.
Loan Securitizations
| | | | | | | | | | | | |
| | Commercial Loans | | Residential Loans | ||||||||
|
| Face Amount |
| Proceeds |
| Face Amount |
| Proceeds | ||||
For the Three Months Ended March 31, | | | | | | | | | | | | |
2021 | | $ | 85,037 | | $ | 89,710 | | $ | 383,549 | | $ | 389,798 |
2020 | |
| 335,835 | | | 352,393 | |
| 381,279 | |
| 398,747 |
Commercial Loans | Residential Loans | ||||||||||||||||||||||
Face Amount | Proceeds | Face Amount | Proceeds | ||||||||||||||||||||
For the Three Months Ended September 30, | |||||||||||||||||||||||
2021 | $ | 349,225 | $ | 364,287 | $ | 469,663 | $ | 491,901 | |||||||||||||||
2020 | 151,295 | 157,497 | 478,911 | 499,321 | |||||||||||||||||||
For the Nine Months Ended September 30, | |||||||||||||||||||||||
2021 | $ | 738,866 | $ | 775,374 | $ | 1,417,641 | $ | 1,465,576 | |||||||||||||||
2020 | 487,130 | 509,890 | 1,443,691 | 1,487,761 |
36
Loan Transfers Accounted for as Sales | |||||||||||||||||||||||
Commercial Loans | Residential Loans | ||||||||||||||||||||||
Face amount (1) | Proceeds (1) | Face Amount | Proceeds | ||||||||||||||||||||
For the Three Months Ended September 30, | |||||||||||||||||||||||
2021 | $ | 35,700 | $ | 35,356 | $ | — | $ | — | |||||||||||||||
2020 | — | — | — | — | |||||||||||||||||||
For the Nine Months Ended September 30, | |||||||||||||||||||||||
2021 | $ | 268,370 | $ | 264,846 | $ | 89,801 | $ | 92,817 | |||||||||||||||
2020 | 399,132 | 396,078 | 550 | 604 |
| | | | | | |
| | Residential | ||||
|
| Face Amount |
| Proceeds | ||
For the Three Months Ended March 31, | | | | | | |
2021 | | $ | 89,418 | | $ | 92,419 |
2020 | | | 550 | | | 604 |
During the nine months ended September 30, 2021, we sold $245.8 million of senior interests in first mortgage loans and $22.6 million of whole loan interests for proceeds of $243.3 million and $21.5 million, respectively. During the three months ended September 30, 2021, we sold $35.7 million of senior interests in first mortgage loans for proceeds of $35.4 million. During the nine months ended September 30, 2020, we sold $230.9 million of senior interests in first mortgage loans and $168.2 million of whole loan interests for proceeds of $224.1 million and $172.0 million, respectively.
Infrastructure Loan Sales
September 30, 2021 or 2020.
37
•Interest rate swap guarantees whereby we guarantee the interest rate swap obligations of certain Infrastructure Lending borrowers. Our interest rate swap guarantees were assumed in connection with the acquisition of the Infrastructure Lending Segment.
Type of Derivative | Number of Contracts | Aggregate Notional Amount | Notional Currency | Maturity | ||||||||||||||||||||||
Fx contracts – Buy Euros ("EUR") | 17 | 52,389 | EUR | October 2021 - March 2023 | ||||||||||||||||||||||
Fx contracts – Buy Pounds Sterling ("GBP") | 13 | 9,935 | GBP | November 2021 - October 2024 | ||||||||||||||||||||||
Fx contracts – Sell EUR | 131 | 255,128 | EUR | October 2021 - November 2025 | ||||||||||||||||||||||
Fx contracts – Sell GBP | 131 | 534,811 | GBP | October 2021 - February 2025 | ||||||||||||||||||||||
Fx contracts – Sell Australian dollar ("AUD") | 51 | 259,803 | AUD | October 2021 - October 2024 | ||||||||||||||||||||||
Interest rate swaps – Paying fixed rates | 44 | 2,469,098 | USD | May 2023 - October 2031 | ||||||||||||||||||||||
Interest rate swaps – Receiving fixed rates | 2 | 473,200 | USD | March 2025 - October 2031 | ||||||||||||||||||||||
Interest rate caps | 20 | 939,893 | USD | November 2021 - April 2025 | ||||||||||||||||||||||
Interest rate caps | 1 | 61,000 | GBP | April 2024 | ||||||||||||||||||||||
Credit index instruments | 3 | 49,000 | USD | September 2058 - August 2061 | ||||||||||||||||||||||
Interest rate swap guarantees | 5 | 309,443 | USD | May 2022 - June 2025 | ||||||||||||||||||||||
Total | 418 |
| | | | | | | | |
Type of Derivative |
| Number of Contracts |
| Aggregate Notional Amount |
| Notional Currency |
| Maturity |
Fx contracts – Buy Euros ("EUR") | | 2 | | 3,973 | | EUR | | November 2022 |
Fx contracts – Buy Pounds Sterling ("GBP") | | 8 | | 16,675 | | GBP | | April 2021 – July 2022 |
Fx contracts – Sell EUR | | 208 | | 252,796 | | EUR | | April 2021 – November 2025 |
Fx contracts – Sell GBP | | 156 | | 556,798 | | GBP | | April 2021 – May 2024 |
Fx contracts – Sell Australian dollar ("AUD") | | 19 | | 188,554 | | AUD | | August 2021 – June 2022 |
Interest rate swaps – Paying fixed rates | | 46 | | 1,791,332 | | USD | | May 2023 – April 2031 |
Interest rate swaps – Receiving fixed rates | | 1 | | 470,000 | | USD | | March 2025 |
Interest rate caps | | 22 | | 985,635 | | USD | | April 2021 – April 2025 |
Credit index instruments | | 3 | | 49,000 | | USD | | September 2058 – August 2061 |
Interest rate swap guarantees | | 6 | | 371,890 | | USD | | March 2022 – June 2025 |
Total | | 471 | | | | | | |
Fair Value of Derivatives in an Asset Position (1) as of | Fair Value of Derivatives in a Liability Position (2) as of | ||||||||||||||||||||||
September 30, 2021 | December 31, 2020 | September 30, 2021 | December 31, 2020 | ||||||||||||||||||||
Interest rate contracts | $ | 22,684 | $ | 33,841 | $ | 2,054 | $ | 4 | |||||||||||||||
Interest rate swap guarantees | — | — | 417 | 849 | |||||||||||||||||||
Foreign exchange contracts | 29,882 | 6,585 | 12,896 | 39,951 | |||||||||||||||||||
Credit index instruments | — | 129 | 248 | 520 | |||||||||||||||||||
Total derivatives | $ | 52,566 | $ | 40,555 | $ | 15,615 | $ | 41,324 |
| | | | | | | | | | | | |
| | Fair Value of Derivatives | | Fair Value of Derivatives | ||||||||
| | in an Asset Position (1) as of | | in a Liability Position (2) as of | ||||||||
| | March 31, | | December 31, | | March 31, | | December 31, | ||||
|
| 2021 | | 2020 | | 2021 | | 2020 | ||||
Interest rate contracts | | $ | 25,331 | | $ | 33,841 | | $ | 4 | | $ | 4 |
Interest rate swap guarantees | | | — | | | — | | | 498 | | | 849 |
Foreign exchange contracts | |
| 12,617 | |
| 6,585 | |
| 34,002 | |
| 39,951 |
Credit index instruments | |
| 81 | |
| 129 | |
| 301 | |
| 520 |
Total derivatives | | $ | 38,029 | | $ | 40,555 | | $ | 34,805 | | $ | 41,324 |
Classified as derivative assets in our condensed consolidated balance sheets.
| | | | | | | | |
| | | | Amount of Gain (Loss) | ||||
| | | | Recognized in Income for the | ||||
Derivatives Not Designated | | Location of Gain (Loss) | | Three Months Ended March 31, | ||||
as Hedging Instruments |
| Recognized in Income |
| 2021 |
| 2020 | ||
Interest rate contracts |
| Gain on derivative financial instruments | | $ | 20,158 | | $ | (45,125) |
Interest rate swap guarantees | | Gain on derivative financial instruments | | | 351 | | | (675) |
Foreign exchange contracts |
| Gain on derivative financial instruments | |
| 13,602 | |
| 53,265 |
Credit index instruments |
| Gain on derivative financial instruments | |
| (122) | |
| 2,245 |
| | | | $ | 33,989 | | $ | 9,710 |
38
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income | Amount of Gain (Loss) Recognized in Income for the Three Months Ended September 30, | Amount of Gain (Loss) Recognized in Income for the Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||
Interest rate contracts | Gain (loss) on derivative financial instruments | $ | 7,993 | $ | 259 | $ | 20,808 | $ | (52,129) | |||||||||||||||||||||||
Interest rate swap guarantees | Gain (loss) on derivative financial instruments | (65) | 260 | 431 | (345) | |||||||||||||||||||||||||||
Foreign exchange contracts | Gain (loss) on derivative financial instruments | 33,796 | (28,514) | 44,857 | 17,644 | |||||||||||||||||||||||||||
Credit index instruments | Gain (loss) on derivative financial instruments | 88 | (102) | (304) | 345 | |||||||||||||||||||||||||||
$ | 41,812 | $ | (28,097) | $ | 65,792 | $ | (34,485) |
(ii) Gross Amounts Offset in the Statement of Financial Position | (iii) = (i) - (ii) Net Amounts Presented in the Statement of Financial Position | (iv) Gross Amounts Not Offset in the Statement of Financial Position | |||||||||||||||||||||||||||||||||
(i) Gross Amounts Recognized | Financial Instruments | Cash Collateral Received / Pledged | (v) = (iii) - (iv) Net Amount | ||||||||||||||||||||||||||||||||
As of September 30, 2021 | |||||||||||||||||||||||||||||||||||
Derivative assets | $ | 52,566 | $ | — | $ | 52,566 | $ | 12,912 | $ | 30,023 | $ | 9,631 | |||||||||||||||||||||||
Derivative liabilities | $ | 15,615 | $ | — | $ | 15,615 | $ | 12,912 | $ | 2,286 | $ | 417 | |||||||||||||||||||||||
Repurchase agreements | 8,004,910 | — | 8,004,910 | 8,004,910 | — | — | |||||||||||||||||||||||||||||
$ | 8,020,525 | $ | — | $ | 8,020,525 | $ | 8,017,822 | $ | 2,286 | $ | 417 | ||||||||||||||||||||||||
As of December 31, 2020 | |||||||||||||||||||||||||||||||||||
Derivative assets | $ | 40,555 | $ | — | $ | 40,555 | $ | 6,716 | $ | 33,772 | $ | 67 | |||||||||||||||||||||||
Derivative liabilities | $ | 41,324 | $ | — | $ | 41,324 | $ | 6,716 | $ | 27,416 | $ | 7,192 | |||||||||||||||||||||||
Repurchase agreements | 5,808,807 | — | 5,808,807 | 5,808,807 | — | — | |||||||||||||||||||||||||||||
$ | 5,850,131 | $ | — | $ | 5,850,131 | $ | 5,815,523 | $ | 27,416 | $ | 7,192 |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | (iv) | | | | ||||
| | | | | | | | | | | Gross Amounts Not | | | | ||||
| | | | | | | | | | | Offset in the Statement | | | | ||||
| | | | | (ii) | | (iii) = (i) - (ii) | | of Financial Position | | | | ||||||
|
| | | | Gross Amounts |
| Net Amounts |
| | |
| Cash |
| | | |||
| | (i) | | Offset in the | | Presented in | | | | | Collateral | | | | ||||
| | Gross Amounts | | Statement of | | the Statement of | | Financial | | Received / | | (v) = (iii) - (iv) | ||||||
| | Recognized | | Financial Position | | Financial Position | | Instruments | | Pledged | | Net Amount | ||||||
As of March 31, 2021 | | | | | | | | | | | | | | | | | | |
Derivative assets | | $ | 38,029 | | $ | — | | $ | 38,029 | | $ | 11,491 | | $ | 24,235 | | $ | 2,303 |
Derivative liabilities | | $ | 34,805 | | $ | — | | $ | 34,805 | | $ | 11,491 | | $ | 22,618 | | $ | 696 |
Repurchase agreements | |
| 6,947,488 | |
| — | |
| 6,947,488 | |
| 6,947,488 | |
| — | |
| — |
| | $ | 6,982,293 | | $ | — | | $ | 6,982,293 | | $ | 6,958,979 | | $ | 22,618 | | $ | 696 |
As of December 31, 2020 | | | | | | | | | | | | | | | | | | |
Derivative assets | | $ | 40,555 | | $ | — | | $ | 40,555 | | $ | 6,716 | | $ | 33,772 | | $ | 67 |
Derivative liabilities | | $ | 41,324 | | $ | — | | $ | 41,324 | | $ | 6,716 | | $ | 27,416 | | $ | 7,192 |
Repurchase agreements | |
| 5,808,807 | |
| — | |
| 5,808,807 | |
| 5,808,807 | |
| — | |
| — |
| | $ | 5,850,131 | | $ | — | | $ | 5,850,131 | | $ | 5,815,523 | | $ | 27,416 | | $ | 7,192 |
Securitization VIEs consolidated in accordance with ASC 810 are structured as pass through entities that receive principal and interest on the underlying collateral and distribute those payments to the certificate holders. The assets and other instruments held by these securitization entities are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the securitization entities do not have any recourse to the general credit of any other consolidated entities, nor to us as the primary beneficiary. The VIE liabilities initially represent investment securities on our balance sheet (pre-consolidation). Upon consolidation of these VIEs, our associated investment securities are eliminated, as is the interest income related to those securities. Similarly, the fees we earn in our roles as special servicer of the bonds issued by the consolidated VIEs or as collateral administrator of the consolidated VIEs are also eliminated. Finally, a portion of the identified servicing intangible associated with the eliminated fee streams is eliminated in consolidation.
During the year ended December 31, 2019,
39
The following table details the assets and liabilities of our consolidated CLOCLOs and SASB as of March 31,September 30, 2021 and December 31, 2020 (amounts in thousands):
September 30, 2021 | December 31, 2020 | ||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 22,018 | $ | 96,998 | |||||||
Loans held-for-investment | 3,014,891 | 1,002,441 | |||||||||
Investment securities | 11,950 | — | |||||||||
Accrued interest receivable | 8,796 | 5,454 | |||||||||
Other assets | 66,003 | 557 | |||||||||
Total Assets | $ | 3,123,658 | $ | 1,105,450 | |||||||
Liabilities | |||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 5,501 | $ | 663 | |||||||
Collateralized loan obligations and single asset securitization, net | 2,614,230 | 930,554 | |||||||||
Total Liabilities | $ | 2,619,731 | $ | 931,217 |
| | | | | | |
| | March 31, 2021 | | December 31, 2020 | ||
Assets: | | | | | | |
Cash and cash equivalents | | $ | — | | $ | 96,998 |
Loans held-for-investment | | | 1,099,639 | |
| 1,002,441 |
Accrued interest receivable | |
| 4,068 | | | 5,454 |
Other assets | | | 307 | |
| 557 |
Total Assets | | $ | 1,104,014 | | $ | 1,105,450 |
Liabilities | | | | | | |
Accounts payable, accrued expenses and other liabilities | | $ | 640 | | $ | 663 |
Collateralized loan obligations, net | |
| 931,178 | |
| 930,554 |
Total Liabilities | | $ | 931,818 | | $ | 931,217 |
In addition to the above non-securitization entities, we have smaller VIEs with total assets of $98.7$102.0 million and liabilities of $53.8$53.5 million as of March 31,September 30, 2021.
AsTable of March 31, 2021, 5 of our 6 collateralized debt obligation (“CDO”) structures within our Investing and Servicing Segment were in default or imminent default, which, pursuant to the underlying indentures, changes the rights of the variable interest holders. NaN of the 5 CDOs defaulted during the year ended December 31, 2020. Upon default of a CDO, the trustee or senior note holders are allowed to exercise certain rights, including liquidation of the collateral, which at that time, is the activity which would most significantly impact the CDO’s economic performance. Further, when the CDO is in default, the collateral administrator no longer has the option to purchase securities from the CDO. In cases where the CDO is in default and we do not have the ability to exercise rights which would most significantly impact the CDO’s economic performance, we do not consolidate the VIE. As of March 31, 2021, NaN of these 5 CDO structures were consolidated.
Contents
40
As noted above, we are not obligated to provide, nor have we provided, any financial support for any of our securitization VIEs, whether or not we are deemed to be the primary beneficiary. As such, the risk associated with our involvement in these VIEs is limited to the carrying value of our investment in the entity. As of March 31,September 30, 2021, our maximum risk of loss related to securitization VIEs in which we were not the primary beneficiary was $19.3$23.5 million on a fair value basis.
Base Management Fee. For both the three months ended March 31,September 30, 2021 and 2020, approximately $19.2 million was incurred for base management fees. For the nine months ended September 30, 2021 and $19.12020, approximately $57.5 million and $57.4 million, respectively, was incurred for base management fees. As of both March 31,September 30, 2021 and December 31, 2020, there were $19.2 million of unpaid base management fees included in related-party payable in our condensed consolidated balance sheets.
Incentive Fee. For the three months ended March 31,September 30, 2021, approximately $1.0 million was incurred for incentive fees. There were no incentive fees incurred during the three months ended September 30, 2020. For the nine months ended September 30, 2021 and 2020, approximately $13.1$19.1 million and $15.8 million, respectively, was incurred for incentive fees. As of March 31,September 30, 2021 and December 31, 2020, there were $13.1$1.0 million and $15.0 million of unpaid incentive fees included in related-party payable in our condensed consolidated balance sheets.
Expense Reimbursement. For the three months ended March 31,September 30, 2021 and 2020, approximately $1.5$1.8 million and $2.2$1.5 million, respectively, was incurred for executive compensation and other reimbursable expenses and recognized within general and administrative expenses in our condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, approximately $4.8 million and $5.2 million, respectively, was incurred for executive compensation and other reimbursable expenses. As of March 31,September 30, 2021 and December 31, 2020, there were $3.8$3.2 million and $5.0 million, respectively, of unpaid reimbursable executive compensation and other expenses included in related-party payable in our condensed consolidated balance sheets.
Equity Awards. In certain instances, we issue RSAs to certain employees of affiliates of our Manager who perform services for us. During the threenine months ended March 31,September 30, 2021 and 2020, we granted 981,951 and 341,635 RSAs, respectively, at grant date fair values of $19.6 million and $3.9 million, respectively. There were no RSAs granted during the three months ended September 30, 2021 or 2020. Expenses related to the vesting of awards to employees of affiliates of our Manager were $2.4$2.2 million and $1.1$0.1 million during the three months ended March 31,September 30, 2021 and 2020, respectively, and are reflected in general and administrative expenses in our condensed consolidated statements of operations. Expenses related to the vesting of such awards were $6.7 million and $2.5 million during the nine months ended September 30, 2021 and 2020, respectively. These shares generally vest over a three-year period.
41
Manager Equity Plan
the proceeds were used to partially repay €11.5 million of the existing loan, of which SEREF's portion was €5.7 million.
During the three and nine months ended March 31,September 30, 2021, the Company acquired $141.6$395.3 million and $719.9 million, respectively, of loans from a residential mortgage originator in which it holds an equity interest. Additionally, as of March 31,September 30, 2021, the Company had outstanding residential mortgage loan purchase commitments of $27.4$144.0 million to this residential mortgage originator. Refer to Note 7 for further discussion.
In April 2020 we provided a $1.9 million cash security deposit to the landlord. During the three and nine months ended September 30, 2021, we made payments to the landlord of $3.0 million and $7.8 million, respectively, for reimbursements relating to tenant improvements under the terms of the lease.
During the nine months ended September 30, 2021 and 2020, property management fees to Highmark were $2.8 million and $1.4 million, respectively.
42
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Declaration Date | Record Date | Ex-Dividend Date | Payment Date | Amount | Frequency | |||||||||||||||||||||||||||
9/15/21 | 9/30/21 | 9/29/21 | 10/15/21 | $ | 0.48 | Quarterly | ||||||||||||||||||||||||||
6/14/21 | 6/30/21 | 6/29/21 | 7/15/21 | 0.48 | Quarterly | |||||||||||||||||||||||||||
3/11/21 | 3/31/21 | 3/30/21 |
| 4/15/21 |
|
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| Quarterly |
Grant Date | Type | Amount Granted | Grant Date Fair Value | Vesting Period | ||||||||||||||||||||||
November 2020 | RSU | 1,800,000 | $ | 30,078 | 3 years | |||||||||||||||||||||
September 2019 | RSU | 1,200,000 | 29,484 | (1) | ||||||||||||||||||||||
April 2018 | RSU | 775,000 | 16,329 | 3 years | ||||||||||||||||||||||
March 2017 | RSU | 1,000,000 | 22,240 | 3 years |
| | | | | | | | | | |
Grant Date |
| Type |
| Amount Granted |
| Grant Date Fair Value |
| Vesting Period |
| |
November 2020 | | RSU | | 1,800,000 | | $ | 30,078 | | 3 years | |
September 2019 | | RSU | | 1,200,000 | | | 29,484 | | (1) | |
April 2018 | | RSU | | 775,000 | | | 16,329 | | 3 years | |
March 2017 | | RSU | | 1,000,000 | | | 22,240 | | 3 years | |
Schedule of Non-Vested Shares and Share Equivalents
2017 Equity Plan | 2017 Manager Equity Plan | Total | Weighted Average Grant Date Fair Value (per share) | ||||||||||||||||||||
Balance as of January 1, 2021 | 1,594,605 | 2,286,896 | 3,881,501 | $ | 17.26 | ||||||||||||||||||
Granted | 1,677,654 | — | 1,677,654 | 22.09 | |||||||||||||||||||
Vested | (733,500) | (759,860) | (1,493,360) | 18.14 | |||||||||||||||||||
Forfeited | (36,568) | — | (36,568) | 19.79 | |||||||||||||||||||
Balance as of September 30, 2021 | 2,502,191 | 1,527,036 | 4,029,227 | 18.93 |
| | | | | | | | | |
| | | | 2017 | | | | Weighted Average | |
| | 2017 | | Manager | | | | Grant Date Fair | |
| | Equity Plan | | Equity Plan | | Total | | Value (per share) | |
Balance as of January 1, 2021 |
| 1,594,605 |
| 2,286,896 |
| 3,881,501 |
| $ | 17.26 |
Granted | | 1,518,072 | | — |
| 1,518,072 | |
| 21.81 |
Vested |
| (633,893) | | (296,342) |
| (930,235) | |
| 17.48 |
Balance as of March 31, 2021 |
| 2,478,784 |
| 1,990,554 |
| 4,469,338 |
| | 18.76 |
43
Non-Controlling Interests in Consolidated Subsidiaries
44
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2021 |
| 2020 | ||
Basic Earnings (Loss) | | | | | | |
Income (loss) attributable to STWD common stockholders | | $ | 111,378 | | $ | (66,769) |
Less: Income attributable to participating shares not already deducted as non-controlling interests | |
| (1,925) | |
| (1,222) |
Basic earnings (loss) | | $ | 109,453 | | $ | (67,991) |
| | | | | | |
Diluted Earnings (Loss) | | | | | | |
Income (loss) attributable to STWD common stockholders | | $ | 111,378 | | $ | (66,769) |
Less: Income attributable to participating shares not already deducted as non-controlling interests | |
| (1,925) | |
| (1,222) |
Add: Interest expense on Convertible Notes | | | 2,916 | | | * |
Diluted earnings (loss) | | $ | 112,369 | | $ | (67,991) |
| | | | | | |
Number of Shares: | | | | | | |
Basic — Average shares outstanding | |
| 283,319 | |
| 280,990 |
Effect of dilutive securities — Convertible Notes | |
| 9,649 | |
| * |
Effect of dilutive securities — Contingently issuable shares | |
| 263 | |
| — |
Diluted — Average shares outstanding | |
| 293,231 | |
| 280,990 |
| | | | | | |
Earnings (Loss) Per Share Attributable to STWD Common Stockholders: | | | | | | |
Basic | | $ | 0.39 | | $ | (0.24) |
Diluted | | $ | 0.38 | | $ | (0.24) |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Basic Earnings | |||||||||||||||||||||||
Income attributable to STWD common stockholders | $ | 128,602 | $ | 151,834 | $ | 356,290 | $ | 224,721 | |||||||||||||||
Less: Income attributable to participating shares not already deducted as non-controlling interests | (1,635) | (1,721) | (5,351) | (3,422) | |||||||||||||||||||
Basic earnings | $ | 126,967 | $ | 150,113 | $ | 350,939 | $ | 221,299 | |||||||||||||||
Diluted Earnings | |||||||||||||||||||||||
Income attributable to STWD common stockholders | $ | 128,602 | $ | 151,834 | $ | 356,290 | $ | 224,721 | |||||||||||||||
Less: Income attributable to participating shares not already deducted as non-controlling interests | (1,635) | (1,721) | (5,351) | (3,422) | |||||||||||||||||||
Add: Interest expense on Convertible Notes | 2,901 | 3,055 | 8,717 | * | |||||||||||||||||||
Add: Undistributed earnings to participating shares | — | 663 | $ | — | — | ||||||||||||||||||
Less: Undistributed earnings reallocated to participating shares | — | (642) | $ | — | — | ||||||||||||||||||
Diluted earnings | $ | 129,868 | $ | 153,189 | $ | 359,656 | $ | 221,299 | |||||||||||||||
Number of Shares: | |||||||||||||||||||||||
Basic — Average shares outstanding | 285,676 | 282,596 | 284,577 | 281,686 | |||||||||||||||||||
Effect of dilutive securities — Convertible Notes | 9,649 | 9,649 | 9,649 | * | |||||||||||||||||||
Effect of dilutive securities — Contingently issuable shares | 19 | — | 19 | — | |||||||||||||||||||
Effect of dilutive securities — Unvested non-participating shares | 104 | 213 | 148 | 182 | |||||||||||||||||||
Diluted — Average shares outstanding | 295,448 | 292,458 | 294,393 | 281,868 | |||||||||||||||||||
Earnings Per Share Attributable to STWD Common Stockholders: | |||||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.53 | $ | 1.23 | $ | 0.79 | |||||||||||||||
Diluted | $ | 0.44 | $ | 0.52 | $ | 1.22 | $ | 0.79 |
45
Cumulative Unrealized Gain (Loss) on Available-for- Sale Securities | Foreign Currency Translation | Total | |||||||||||||||
Three Months Ended September 30, 2021 | |||||||||||||||||
Balance at July 1, 2021 | $ | 41,310 | $ | — | $ | 41,310 | |||||||||||
OCI before reclassifications | (822) | — | (822) | ||||||||||||||
Amounts reclassified from AOCI | (2) | — | (2) | ||||||||||||||
Net period OCI | (824) | — | (824) | ||||||||||||||
Balance at September 30, 2021 | $ | 40,486 | $ | — | $ | 40,486 | |||||||||||
Three Months Ended September 30, 2020 | |||||||||||||||||
Balance at July 1, 2020 | $ | 42,930 | $ | (64) | $ | 42,866 | |||||||||||
OCI before reclassifications | (581) | — | (581) | ||||||||||||||
Amounts reclassified from AOCI | — | — | — | ||||||||||||||
Net period OCI | (581) | — | (581) | ||||||||||||||
Balance at September 30, 2020 | $ | 42,349 | $ | (64) | $ | 42,285 | |||||||||||
Nine Months Ended September 30, 2021 | |||||||||||||||||
Balance at January 1, 2021 | $ | 44,057 | $ | (64) | $ | 43,993 | |||||||||||
OCI before reclassifications | (3,569) | — | (3,569) | ||||||||||||||
Amounts reclassified from AOCI | (2) | 64 | 62 | ||||||||||||||
Net period OCI | (3,571) | 64 | (3,507) | ||||||||||||||
Balance at September 30, 2021 | $ | 40,486 | $ | — | $ | 40,486 | |||||||||||
Nine Months Ended September 30, 2020 | |||||||||||||||||
Balance at January 1, 2020 | $ | 50,996 | $ | (64) | $ | 50,932 | |||||||||||
OCI before reclassifications | (8,647) | — | (8,647) | ||||||||||||||
Amounts reclassified from AOCI | — | — | — | ||||||||||||||
Net period OCI | (8,647) | — | (8,647) | ||||||||||||||
Balance at September 30, 2020 | $ | 42,349 | $ | (64) | $ | 42,285 |
| | | | | | | | | |
|
| Cumulative |
| | |
| | | |
| | Unrealized Gain | | | | | | | |
| | (Loss) on | | Foreign | | | | ||
| | Available-for- | | Currency | | | | ||
| | Sale Securities | | Translation | | Total | |||
Three Months Ended March 31, 2021 | | | | | | | | | |
Balance at January 1, 2021 | | $ | 44,057 | | $ | (64) | | $ | 43,993 |
OCI before reclassifications | |
| (2,403) | |
| — | |
| (2,403) |
Amounts reclassified from AOCI | |
| — | |
| 64 | |
| 64 |
Net period OCI | |
| (2,403) | |
| 64 | |
| (2,339) |
Balance at March 31, 2021 | | $ | 41,654 | | $ | — | | $ | 41,654 |
Three Months Ended March 31, 2020 | | | | | | | | | |
Balance at January 1, 2020 | | $ | 50,996 | | $ | (64) | | $ | 50,932 |
OCI before reclassifications | |
| (15,048) | |
| — | |
| (15,048) |
Amounts reclassified from AOCI | |
| — | |
| — | |
| — |
Net period OCI | |
| (15,048) | |
| — | |
| (15,048) |
Balance at March 31, 2020 | | $ | 35,948 | | $ | (64) | | $ | 35,884 |
Valuation Process
46
Unobservable Inputs—Where inputs are not observable, we review the appropriateness of the proposed valuation methodology to ensure it is consistent with how a market participant would arrive at the unobservable input. The valuation methodologies utilized in the absence of observable inputs may include extrapolation techniques and the use of comparable observable inputs.
47
Equity security
48
For the minority portion of our consolidated VIE liabilities which consist of unrated or non-investment grade bonds that are not owned by us, pricing may be either Level II or Level III. If independent third party pricing similar to that noted above is available, we consider the valuation to be Level II. If such third party pricing is not available, the valuation is generated from model-based techniques that use significant unobservable assumptions, and we consider the valuation to be Level III. For VIE liabilities classified as Level III, valuation is determined based on discounted expected future cash flows which take into consideration expected duration and yields based on market transaction information, ratings, subordination levels, vintage and current market spread. VIE liabilities may shift between Level II and Level III of the fair value hierarchy if the significant fair value inputs used to price the VIE liabilities become or cease to be observable.
SASB
49
September 30, 2021 | |||||||||||||||||||||||
Total | Level I | Level II | Level III | ||||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||
Loans under fair value option | $ | 2,190,765 | $ | — | $ | 384,549 | $ | 1,806,216 | |||||||||||||||
RMBS | 148,583 | — | — | 148,583 | |||||||||||||||||||
CMBS | 23,503 | — | — | 23,503 | |||||||||||||||||||
Equity security | 12,067 | 12,067 | — | — | |||||||||||||||||||
Domestic servicing rights | 15,942 | — | — | 15,942 | |||||||||||||||||||
Derivative assets | 52,566 | — | 52,566 | — | |||||||||||||||||||
VIE assets | 62,346,480 | — | — | 62,346,480 | |||||||||||||||||||
Total | $ | 64,789,906 | $ | 12,067 | $ | 437,115 | $ | 64,340,724 | |||||||||||||||
Financial Liabilities: | |||||||||||||||||||||||
Derivative liabilities | $ | 15,615 | $ | — | $ | 15,615 | $ | — | |||||||||||||||
VIE liabilities | 60,894,975 | — | 56,364,386 | 4,530,589 | |||||||||||||||||||
Total | $ | 60,910,590 | $ | — | $ | 56,380,001 | $ | 4,530,589 |
December 31, 2020 | |||||||||||||||||||||||
Total | Level I | Level II | Level III | ||||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||
Loans under fair value option | $ | 1,022,979 | $ | — | $ | — | $ | 1,022,979 | |||||||||||||||
RMBS | 167,349 | — | — | 167,349 | |||||||||||||||||||
CMBS | 19,457 | — | — | 19,457 | |||||||||||||||||||
Equity security | 11,247 | 11,247 | — | — | |||||||||||||||||||
Domestic servicing rights | 13,202 | — | — | 13,202 | |||||||||||||||||||
Derivative assets | 40,555 | — | 40,555 | — | |||||||||||||||||||
VIE assets | 64,238,328 | — | — | 64,238,328 | |||||||||||||||||||
Total | $ | 65,513,117 | $ | 11,247 | $ | 40,555 | $ | 65,461,315 | |||||||||||||||
Financial Liabilities: | |||||||||||||||||||||||
Derivative liabilities | $ | 41,324 | $ | — | $ | 41,324 | $ | — | |||||||||||||||
VIE liabilities | 62,776,371 | — | 60,756,495 | 2,019,876 | |||||||||||||||||||
Total | $ | 62,817,695 | $ | — | $ | 60,797,819 | $ | 2,019,876 |
| | | | | | | | | | | | |
| | March 31, 2021 | ||||||||||
|
| Total |
| Level I |
| Level II |
| Level III | ||||
Financial Assets: | | | | | | | | | | | | |
Loans under fair value option | | $ | 763,773 | | $ | — | | $ | — | | $ | 763,773 |
RMBS | |
| 160,301 | |
| — | |
| — | |
| 160,301 |
CMBS | |
| 19,256 | |
| — | |
| — | |
| 19,256 |
Equity security | |
| 10,655 | |
| 10,655 | |
| — | |
| — |
Domestic servicing rights | |
| 12,406 | |
| — | |
| — | |
| 12,406 |
Derivative assets | |
| 38,029 | |
| — | |
| 38,029 | |
| — |
VIE assets | |
| 62,367,110 | |
| — | |
| — | |
| 62,367,110 |
Total | | $ | 63,371,530 | | $ | 10,655 | | $ | 38,029 | | $ | 63,322,846 |
Financial Liabilities: | | | | | | | | | | | | |
Derivative liabilities | | $ | 34,805 | | $ | — | | $ | 34,805 | | $ | — |
VIE liabilities | |
| 60,896,709 | |
| — | |
| 58,669,281 | |
| 2,227,428 |
Total | | $ | 60,931,514 | | $ | — | | $ | 58,704,086 | | $ | 2,227,428 |
| | | | | | | | | | | | |
| | December 31, 2020 | ||||||||||
|
| Total |
| Level I |
| Level II |
| Level III | ||||
Financial Assets: | | | | | | | | | | | | |
Loans under fair value option | | $ | 1,022,979 | | $ | — | | $ | — | | $ | 1,022,979 |
RMBS | |
| 167,349 | |
| — | |
| — | |
| 167,349 |
CMBS | |
| 19,457 | |
| — | |
| — | |
| 19,457 |
Equity security | |
| 11,247 | |
| 11,247 | |
| — | |
| — |
Domestic servicing rights | |
| 13,202 | |
| — | |
| — | |
| 13,202 |
Derivative assets | |
| 40,555 | |
| — | |
| 40,555 | |
| — |
VIE assets | |
| 64,238,328 | |
| — | |
| — | |
| 64,238,328 |
Total | | $ | 65,513,117 | | $ | 11,247 | | $ | 40,555 | | $ | 65,461,315 |
Financial Liabilities: | | | | | | | | | | | | |
Derivative liabilities | | $ | 41,324 | | $ | — | | $ | 41,324 | | $ | — |
VIE liabilities | |
| 62,776,371 | |
| — | |
| 60,756,495 | |
| 2,019,876 |
Total | | $ | 62,817,695 | | $ | — | | $ | 60,797,819 | | $ | 2,019,876 |
50
The changes in financial assets and liabilities classified as Level III are as follows for the three and nine months ended March 31,September 30, 2021 and 2020 (amounts in thousands):
Three Months Ended September 30, 2021 | Loans at Fair Value | RMBS | CMBS | Domestic Servicing Rights | VIE Assets | VIE Liabilities | Total | |||||||||||||||||||||||||||||||||||||
July 1, 2021 balance | $ | 767,821 | $ | 154,704 | $ | 18,965 | $ | 13,705 | $ | 63,493,796 | $ | (4,836,192) | $ | 59,612,799 | ||||||||||||||||||||||||||||||
Total realized and unrealized gains (losses): | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings: | ||||||||||||||||||||||||||||||||||||||||||||
Change in fair value / gain on sale | 31,727 | — | (790) | 2,237 | (1,601,734) | 580,581 | (987,979) | |||||||||||||||||||||||||||||||||||||
Net accretion | — | 2,584 | — | — | — | — | 2,584 | |||||||||||||||||||||||||||||||||||||
Included in OCI | — | (824) | — | — | — | — | (824) | |||||||||||||||||||||||||||||||||||||
Purchases / Originations | 1,783,772 | — | — | — | — | — | 1,783,772 | |||||||||||||||||||||||||||||||||||||
Sales | (856,187) | — | — | — | — | — | (856,187) | |||||||||||||||||||||||||||||||||||||
Issuances | — | — | — | — | — | (27,112) | (27,112) | |||||||||||||||||||||||||||||||||||||
Cash repayments / receipts | (50,395) | (7,881) | (356) | — | — | (351) | (58,983) | |||||||||||||||||||||||||||||||||||||
Transfers into Level III | 4,414 | — | — | — | — | (112,562) | (108,148) | |||||||||||||||||||||||||||||||||||||
Transfers out of Level III | (133,863) | — | — | — | — | 349,922 | 216,059 | |||||||||||||||||||||||||||||||||||||
Transfers within Level III | 258,927 | — | — | — | (258,927) | — | — | |||||||||||||||||||||||||||||||||||||
Consolidation of VIEs | — | — | — | — | 1,649,200 | (520,325) | 1,128,875 | |||||||||||||||||||||||||||||||||||||
Deconsolidation of VIEs balance | — | — | 5,684 | — | (935,855) | 35,450 | (894,721) | |||||||||||||||||||||||||||||||||||||
September 30, 2021 balance | $ | 1,806,216 | $ | 148,583 | $ | 23,503 | $ | 15,942 | $ | 62,346,480 | $ | (4,530,589) | $ | 59,810,135 | ||||||||||||||||||||||||||||||
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2021: | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | $ | 12,571 | $ | 2,582 | $ | 409 | $ | 2,237 | $ | (1,601,734) | $ | 580,581 | $ | (1,003,354) | ||||||||||||||||||||||||||||||
Included in OCI | $ | — | $ | (822) | $ | — | $ | — | $ | — | $ | — | $ | (822) |
| | | | | | | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| Domestic |
| | |
| | |
| | | |
| | Loans at | | | | | | | | Servicing | | | | | VIE | | | | |||
Three Months Ended March 31, 2021 | | Fair Value | | RMBS | | CMBS | | Rights | | VIE Assets | | Liabilities | | Total | |||||||
January 1, 2021 balance | | $ | 1,022,979 | | $ | 167,349 | | $ | 19,457 | | $ | 13,202 | | $ | 64,238,328 | | $ | (2,019,876) | | $ | 63,441,439 |
Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | |
Included in earnings: | | | | | | | | | | | | | | | | | | | | | |
Change in fair value / gain on sale | |
| (9,478) | |
| — | |
| 372 | | | (796) | |
| (2,264,591) | |
| 65,681 | |
| (2,208,812) |
Net accretion | |
| — | |
| 2,606 | |
| — | |
| — | |
| — | |
| — | |
| 2,606 |
Included in OCI | |
| — | |
| (2,403) | |
| — | |
| — | |
| — | |
| — | |
| (2,403) |
Purchases / Originations | |
| 375,270 | |
| — | |
| — | |
| — | |
| — | |
| — | |
| 375,270 |
Sales | |
| (571,927) | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (571,927) |
Issuances | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (11,604) | |
| (11,604) |
Cash repayments / receipts | |
| (53,071) | |
| (7,251) | |
| (573) | |
| — | |
| — | |
| (1,137) | |
| (62,032) |
Transfers into Level III | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (409,267) | |
| (409,267) |
Transfers out of Level III | |
| — | |
| — | |
| — | |
| — | |
| — | |
| 148,775 | |
| 148,775 |
Consolidation of VIEs | |
| — | |
| — | |
| — | |
| — | |
| 393,373 | |
| — | |
| 393,373 |
March 31, 2021 balance | | $ | 763,773 | | $ | 160,301 | | $ | 19,256 | | $ | 12,406 | | $ | 62,367,110 | | $ | (2,227,428) | | $ | 61,095,418 |
Amount of unrealized gains (losses) attributable to assets still held at March 31, 2021: | | | | | | | | | | | | | | | | | | | | | |
Included in earnings | | $ | (7,708) | | $ | 2,606 | | $ | 372 | | $ | (796) | | $ | (2,264,591) | | $ | 65,681 | | $ | (2,204,436) |
Included in OCI | | $ | — | | $ | (2,403) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | (2,403) |
Three Months Ended September 30, 2020 | Loans at Fair Value | RMBS | CMBS | Domestic Servicing Rights | VIE Assets | VIE Liabilities | Total | |||||||||||||||||||||||||||||||||||||
July 1, 2020 balance | $ | 894,613 | $ | 174,281 | $ | 21,891 | $ | 13,955 | $ | 64,175,387 | $ | (2,129,529) | $ | 63,150,598 | ||||||||||||||||||||||||||||||
Total realized and unrealized gains (losses): | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings: | ||||||||||||||||||||||||||||||||||||||||||||
Change in fair value / gain on sale | 61,384 | — | (56) | 634 | (202,560) | (30,577) | (171,175) | |||||||||||||||||||||||||||||||||||||
Net accretion | — | 2,633 | — | — | — | — | 2,633 | |||||||||||||||||||||||||||||||||||||
Included in OCI | — | (581) | — | — | — | — | (581) | |||||||||||||||||||||||||||||||||||||
Purchases / Originations | 1,013,158 | — | — | — | — | — | 1,013,158 | |||||||||||||||||||||||||||||||||||||
Sales | (656,818) | — | — | — | — | — | (656,818) | |||||||||||||||||||||||||||||||||||||
Cash repayments / receipts | (43,257) | (6,063) | (213) | — | — | (329) | (49,862) | |||||||||||||||||||||||||||||||||||||
Transfers into Level III | — | — | — | — | — | (485,332) | (485,332) | |||||||||||||||||||||||||||||||||||||
Transfers out of Level III | — | — | — | — | — | 322,888 | 322,888 | |||||||||||||||||||||||||||||||||||||
Consolidation of VIEs | — | — | — | — | 512,300 | — | 512,300 | |||||||||||||||||||||||||||||||||||||
Deconsolidation of VIEs | — | — | 227 | — | (7,652) | 7,573 | 148 | |||||||||||||||||||||||||||||||||||||
September 30, 2020 balance | $ | 1,269,080 | $ | 170,270 | $ | 21,849 | $ | 14,589 | $ | 64,477,475 | $ | (2,315,306) | $ | 63,637,957 | ||||||||||||||||||||||||||||||
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2020: | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | $ | 8,864 | $ | 2,633 | $ | (56) | $ | 634 | $ | (194,147) | $ | (30,577) | $ | (212,649) | ||||||||||||||||||||||||||||||
Included in OCI | $ | — | $ | (581) | $ | — | $ | — | $ | — | $ | — | $ | (581) |
| | | | | | | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| Domestic |
| | |
| | |
| | | |
| | Loans at | | | | | | | | Servicing | | | | | VIE | | | | |||
Three Months Ended March 31, 2020 | | Fair Value | | RMBS | | CMBS | | Rights | | VIE Assets | | Liabilities | | Total | |||||||
January 1, 2020 balance | | $ | 1,436,194 | | $ | 189,576 | | $ | 25,008 | | $ | 16,917 | | $ | 62,187,175 | | $ | (2,537,392) | | $ | 61,317,478 |
Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | |
Included in earnings: | | | | | | | | | | | | | | | | | | | | | |
Change in fair value / gain on sale | |
| (16,134) | |
| — | |
| 5,738 | | | (393) | |
| (3,506,792) | |
| 146,282 | |
| (3,371,299) |
Net accretion | |
| — | |
| 2,661 | |
| — | |
| — | |
| — | |
| — | |
| 2,661 |
Included in OCI | |
| — | |
| (15,048) | |
| — | |
| — | |
| — | |
| — | |
| (15,048) |
Purchases / Originations | | | 746,880 | |
| — | |
| — | |
| — | |
| — | |
| — | | | 746,880 |
Sales | |
| (751,746) | |
| — | |
| (7,940) | |
| — | |
| — | |
| — | |
| (759,686) |
Issuances | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (24,376) | |
| (24,376) |
Cash repayments / receipts | | | (67,397) | |
| (6,549) | |
| (371) | |
| — | |
| — | |
| (8,916) | |
| (83,233) |
Transfers into Level III | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (101,265) | |
| (101,265) |
Transfers out of Level III | |
| — | |
| — | |
| — | |
| — | |
| — | |
| 1,090,325 | |
| 1,090,325 |
Consolidation of VIEs | |
| — | |
| — | |
| — | |
| — | |
| 2,477,422 | |
| (71,095) | |
| 2,406,327 |
March 31, 2020 balance | | $ | 1,347,797 | | $ | 170,640 | | $ | 22,435 | | $ | 16,524 | | $ | 61,157,805 | | $ | (1,506,437) | | $ | 61,208,764 |
Amount of unrealized (losses) gains attributable to assets still held at March 31, 2020: | | | | | | | | | | | | | | | | | | | | | |
Included in earnings | | $ | (39,070) | | $ | 2,661 | | $ | (647) | | $ | (393) | | $ | (3,506,792) | | $ | 146,282 | | $ | (3,397,959) |
Included in OCI | | $ | — | | $ | (15,048) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | (15,048) |
Nine Months Ended September 30, 2021 | Loans at Fair Value | RMBS | CMBS | Domestic Servicing Rights | VIE Assets | VIE Liabilities | Total | |||||||||||||||||||||||||||||||||||||
January 1, 2021 balance | $ | 1,022,979 | $ | 167,349 | $ | 19,457 | $ | 13,202 | $ | 64,238,328 | $ | (2,019,876) | $ | 63,441,439 | ||||||||||||||||||||||||||||||
Total realized and unrealized gains (losses): | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings: | ||||||||||||||||||||||||||||||||||||||||||||
Change in fair value / gain on sale | 68,116 | — | (98) | 2,740 | (4,952,071) | 647,555 | (4,233,758) | |||||||||||||||||||||||||||||||||||||
Net accretion | — | 7,800 | — | — | — | — | 7,800 | |||||||||||||||||||||||||||||||||||||
Included in OCI | — | (3,571) | — | — | — | — | (3,571) | |||||||||||||||||||||||||||||||||||||
Purchases / Originations | 3,151,346 | — | — | — | — | — | 3,151,346 | |||||||||||||||||||||||||||||||||||||
Sales | (2,333,767) | — | — | — | — | — | (2,333,767) | |||||||||||||||||||||||||||||||||||||
Issuances | — | — | — | — | — | (38,715) | (38,715) | |||||||||||||||||||||||||||||||||||||
Cash repayments / receipts | (153,723) | (22,995) | (1,540) | — | — | (2,889) | (181,147) | |||||||||||||||||||||||||||||||||||||
Transfers into Level III | 4,413 | — | — | — | — | (2,953,709) | (2,949,296) | |||||||||||||||||||||||||||||||||||||
Transfers out of Level III | (384,549) | — | — | — | — | 864,153 | 479,604 | |||||||||||||||||||||||||||||||||||||
Transfers within Level III | 431,401 | — | — | — | (431,401) | — | — | |||||||||||||||||||||||||||||||||||||
Consolidation of VIEs | — | — | — | — | 4,427,479 | (1,062,558) | 3,364,921 | |||||||||||||||||||||||||||||||||||||
Deconsolidation of VIEs | — | — | 5,684 | — | (935,855) | 35,450 | (894,721) | |||||||||||||||||||||||||||||||||||||
September 30, 2021 balance | $ | 1,806,216 | $ | 148,583 | $ | 23,503 | $ | 15,942 | $ | 62,346,480 | $ | (4,530,589) | $ | 59,810,135 | ||||||||||||||||||||||||||||||
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2021: | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | $ | 13,234 | $ | 7,793 | $ | 1,102 | $ | 2,740 | $ | (4,952,071) | $ | 647,555 | $ | (4,279,647) | ||||||||||||||||||||||||||||||
Included in OCI | $ | — | $ | (3,563) | $ | — | $ | — | $ | — | $ | — | $ | (3,563) |
Nine Months Ended September 30, 2020 | Loans at Fair Value | RMBS | CMBS | Domestic Servicing Rights | VIE Assets | VIE Liabilities | Total | |||||||||||||||||||||||||||||||||||||
January 1, 2020 balance | $ | 1,436,194 | $ | 189,576 | $ | 25,008 | $ | 16,917 | $ | 62,187,175 | $ | (2,537,392) | $ | 61,317,478 | ||||||||||||||||||||||||||||||
Total realized and unrealized gains (losses): | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings: | ||||||||||||||||||||||||||||||||||||||||||||
Change in fair value / gain on sale | 79,700 | — | 5,331 | (2,328) | (1,291,705) | 107,019 | (1,101,983) | |||||||||||||||||||||||||||||||||||||
Net accretion | — | 7,967 | — | — | — | — | 7,967 | |||||||||||||||||||||||||||||||||||||
Included in OCI | — | (8,647) | — | — | — | — | (8,647) | |||||||||||||||||||||||||||||||||||||
Purchases / Originations | 1,900,738 | — | — | — | — | — | 1,900,738 | |||||||||||||||||||||||||||||||||||||
Sales | (1,998,255) | — | (7,940) | — | — | — | (2,006,195) | |||||||||||||||||||||||||||||||||||||
Issuances | — | — | — | — | — | (24,376) | (24,376) | |||||||||||||||||||||||||||||||||||||
Cash repayments / receipts | (149,297) | (18,626) | (777) | — | — | (9,589) | (178,289) | |||||||||||||||||||||||||||||||||||||
Transfers into Level III | — | — | — | — | — | (1,242,539) | (1,242,539) | |||||||||||||||||||||||||||||||||||||
Transfers out of Level III | — | — | — | — | — | 1,455,093 | 1,455,093 | |||||||||||||||||||||||||||||||||||||
Consolidation of VIEs | — | — | — | — | 3,589,657 | (71,095) | 3,518,562 | |||||||||||||||||||||||||||||||||||||
Deconsolidation of VIEs | — | — | 227 | — | (7,652) | 7,573 | 148 | |||||||||||||||||||||||||||||||||||||
September 30, 2020 balance | $ | 1,269,080 | $ | 170,270 | $ | 21,849 | $ | 14,589 | $ | 64,477,475 | $ | (2,315,306) | $ | 63,637,957 | ||||||||||||||||||||||||||||||
Amount of unrealized gains (losses) attributable to assets still held at September 30, 2020: | ||||||||||||||||||||||||||||||||||||||||||||
Included in earnings | $ | 8,551 | $ | 7,967 | $ | (1,055) | $ | (2,328) | $ | (1,213,498) | $ | 107,019 | $ | (1,093,344) | ||||||||||||||||||||||||||||||
Included in OCI | $ | — | $ | (8,647) | $ | — | $ | — | $ | — | $ | — | $ | (8,647) |
| | | | | | | | | | | | |
| | March 31, 2021 | | December 31, 2020 | ||||||||
|
| Carrying |
| Fair | | Carrying |
| Fair | ||||
| | Value | | Value | | Value | | Value | ||||
Financial assets not carried at fair value: | | | | | | | | | | | | |
Loans held-for-investment and loans held-for-sale | | $ | 12,402,351 | | $ | 12,460,388 | | $ | 11,116,929 | | $ | 11,107,316 |
HTM debt securities | |
| 488,075 | |
| 466,687 | |
| 538,605 | |
| 515,253 |
Financial liabilities not carried at fair value: | | | | | | | | | | | | |
Secured financing agreements and CLO | | $ | 11,827,110 | | $ | 11,900,381 | | $ | 11,076,744 | | $ | 11,108,364 |
Unsecured senior notes | |
| 1,735,658 | |
| 1,803,224 | |
| 1,732,520 | |
| 1,786,667 |
51
September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
Financial assets not carried at fair value: | |||||||||||||||||||||||
Loans held-for-investment and loans held-for-sale | $ | 13,285,752 | $ | 13,355,441 | $ | 11,116,929 | $ | 11,107,316 | |||||||||||||||
HTM debt securities | 486,734 | 467,157 | 538,605 | 515,253 | |||||||||||||||||||
Financial liabilities not carried at fair value: | |||||||||||||||||||||||
Secured financing agreements, CLOs and SASB | $ | 14,116,282 | $ | 14,220,699 | $ | 11,076,744 | $ | 11,108,364 | |||||||||||||||
Unsecured senior notes | 1,733,684 | 1,805,826 | 1,732,520 | 1,786,667 |
The following is quantitative information about significant unobservable inputs in our Level III measurements for those assets and liabilities measured at fair value on a recurring basis (dollars in thousands):
| | | | | | | | | | | |
| | Carrying Value at | | Valuation | | Unobservable | | Range (Weighted Average) as of (1) | |||
|
| March 31, 2021 |
| Technique |
| Input | | March 31, 2021 | | December 31, 2020 | |
Loans under fair value option | | $ | 763,773 | | Discounted cash flow, market pricing | | Coupon (d) | | 3.4% - 9.5% (5.5%) | | 3.3% - 9.7% (5.9%) |
| | | | | | | Remaining contractual term (d) | | 7.0 - 39.0 years (24.7 years) | | 7.3 - 39.3 years (26.3 years) |
| | | | | | | FICO score (a) | | 519 - 823 (732) | | 519 - 823 (727) |
| | | | | | | LTV (b) | | 15% - 94% (66%) | | 5% - 94% (68%) |
| | | | | | | Purchase price (d) | | 85.6% - 104.8% (101.7%) | | 84.4% - 104.8% (99.8%) |
RMBS | |
| 160,301 | | Discounted cash flow | | Constant prepayment rate (a) | | 3.5% - 17.3% (7.4%) | | 3.6% - 19.4% (7.6%) |
| | | | | | | Constant default rate (b) | | 0.7% - 5.0% (2.2%) | | 0.7% - 5.4% (2.4%) |
| | | | | | | Loss severity (b) | | 0% - 84% (17%) (f) | | 0% - 85% (20%) (f) |
| | | | | | | Delinquency rate (c) | | 9% - 32% (18%) | | 10% - 32% (19%) |
| | | | | | | Servicer advances (a) | | 23% - 84% (53%) | | 23% - 82% (54%) |
| | | | | | | Annual coupon deterioration (b) | | 0.0% - 1.2% (0.1%) | | 0.0% - 0.9% (0.1%) |
| | | | | | | Putback amount per projected total collateral loss (e) | | 0% -17% (0.8%) | | 0% -17% (0.8%) |
CMBS | |
| 19,256 | | Discounted cash flow | | Yield (b) | | 0% - 298.5% (5.9%) | | 0% - 536.6% (7.1%) |
| | | | | | | Duration (c) | | 0 - 7.6 years (6.0 years) | | 0 - 7.6 years (5.3 years) |
Domestic servicing rights | |
| 12,406 | | Discounted cash flow | | Debt yield (a) | | 7.25% (7.25%) | | 7.50% (7.50%) |
| | | | | | | Discount rate (b) | | 15% (15%) | | 15% (15%) |
VIE assets | |
| 62,367,110 | | Discounted cash flow | | Yield (b) | | 0% - 752.4% (16.9%) | | 0% - 312.2% (14.3%) |
| | | | | | | Duration (c) | | 0 - 20.6 years (3.8 years) | | 0 - 16.3 years (3.8 years) |
VIE liabilities | |
| (2,227,428) | | Discounted cash flow | | Yield (b) | | 0% - 752.4% (17.3%) | | 0% - 312.2% (14.4%) |
| | | | | | | Duration (c) | | 0 - 11.0 years (3.7 years) | | 0 - 10.8 years (3.8 years) |
Carrying Value at September 30, 2021 | Valuation Technique | Unobservable Input | Range (Weighted Average) as of | ||||||||||||||||||||||||||
September 30, 2021 | December 31, | ||||||||||||||||||||||||||||
Loans under fair value option | $ | 1,806,216 | Discounted cash flow, market pricing | Coupon (d) | 3.3% - 6.1% (4.4%) | 3.3% - 9.7% (5.9%) | |||||||||||||||||||||||
Remaining contractual term (d) | 5.0 - 39.9 years - (29.0 years) | 7.3 - 39.3 years (26.3 years) | |||||||||||||||||||||||||||
FICO score (a) | 582 - 823 (746) | 519 - 823 (727) | |||||||||||||||||||||||||||
LTV (b) | 7% - 94% (67%) | 5% - 94% (68%) | |||||||||||||||||||||||||||
Purchase price (d) | 80.0% - 106.8% (99.4%) | 84.4% - 104.8% (99.8%) | |||||||||||||||||||||||||||
RMBS | 148,583 | Discounted cash flow | Constant prepayment rate (a) | 4.1% - 17.3% (8.8%) | 3.6% - 19.4% (7.6%) | ||||||||||||||||||||||||
Constant default rate (b) | 0.5% - 5.2% (2.2%) | 0.7% - 5.4% (2.4%) | |||||||||||||||||||||||||||
Loss severity (b) | 0% - 83% (11%) (f) | 0% - 85% (20%) (f) | |||||||||||||||||||||||||||
Delinquency rate (c) | 7% - 35% (19%) | 10% - 32% (19%) | |||||||||||||||||||||||||||
Servicer advances (a) | 21% - 83% (52%) | 23% - 82% (54%) | |||||||||||||||||||||||||||
Annual coupon deterioration (b) | 0% - 1.5% (0.1%) | 0% - 0.9% (0.1%) | |||||||||||||||||||||||||||
Putback amount per projected total collateral loss (e) | 0% - 8% (0.4%) | 0% - 17% (0.8%) | |||||||||||||||||||||||||||
CMBS | 23,503 | Discounted cash flow | Yield (b) | 0% - 301.3% (8.5%) | 0% - 536.6% (7.1%) | ||||||||||||||||||||||||
Duration (c) | 0 - 8.0 years (5.3 years) | 0 - 7.6 years (5.3 years) | |||||||||||||||||||||||||||
Domestic servicing rights | 15,942 | Discounted cash flow | Debt yield (a) | 7.25% (7.25%) | 7.50% (7.50%) | ||||||||||||||||||||||||
Discount rate (b) | 15% (15%) | 15% (15%) | |||||||||||||||||||||||||||
VIE assets | 62,346,480 | Discounted cash flow | Yield (b) | 0% - 340.7% (12.1%) | 0% - 312.2% (14.3%) | ||||||||||||||||||||||||
Duration (c) | 0 - 19.1 years (3.3 years) | 0 - 16.3 years (3.8 years) | |||||||||||||||||||||||||||
VIE liabilities | 4,530,589 | Discounted cash flow | Yield (b) | 0% - 340.7% (6.3%) | 0% - 312.2% (14.4%) | ||||||||||||||||||||||||
Duration (c) | 0 - 13.4 years (2.6 years) | 0 - 10.8 years (3.8 years) |
Unobservable inputs were weighted by the relative carrying value of the instruments as of September 30, 2021 and December 31, 2020.
(a)Significant increase (decrease) in the unobservable input in isolation would result in a significantly higher (lower) fair value measurement. (b)Significant increase (decrease) in the unobservable input in isolation would result in a significantly lower (higher) fair value measurement. (c)Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (higher or lower) fair value measurement depending on the structural features of the security in question. (d)This unobservable input is not subject to variability as of the respective reporting dates. (e)Any delay in the putback recovery date leads to a decrease in fair value for the majority of securities in our RMBS portfolio. 55 (f)9% and 23% of the portfolio falls within a range of 45% - 80% as of September 30, 2021 and December 31, 2020, respectively. |
52
| | | | | | | | | | | | |
|
| For the Three Months Ended March 31, | ||||||||||
| | 2021 | | 2020 | ||||||||
Federal statutory tax rate | | $ | 26,199 |
| 21.0 | % |
| $ | (15,329) |
| 21.0 | % |
REIT and other non-taxable loss | |
| (24,501) | | (19.6) | % | |
| 9,914 | | (13.6) | % |
State income taxes | |
| 558 | | 0.4 | % | |
| (1,779) | | 2.4 | % |
Federal benefit of state tax deduction | |
| (117) | | (0.1) | % | |
| 374 | | (0.5) | % |
Other | |
| 91 | | 0.1 | % | |
| 91 | | (0.1) | % |
Effective tax rate | | $ | 2,230 | | 1.8 | % | | $ | (6,729) | | 9.2 | % |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||
Federal statutory tax rate | $ | 31,078 | 21.0 | % | $ | 37,711 | 21.0 | % | $ | 83,113 | 21.0 | % | $ | 54,231 | 21.0 | % | |||||||||||||||||||||||||||||||
REIT and other non-taxable loss | (24,527) | (16.6) | % | (24,688) | (13.7) | % | (73,046) | (18.5) | % | (41,697) | (16.2) | % | |||||||||||||||||||||||||||||||||||
State income taxes | 2,153 | 1.5 | % | 4,278 | 2.4 | % | 3,308 | 0.8 | % | 4,118 | 1.6 | % | |||||||||||||||||||||||||||||||||||
Federal benefit of state tax deduction | (452) | (0.3) | % | (899) | (0.5) | % | (695) | (0.2) | % | (865) | (0.3) | % | |||||||||||||||||||||||||||||||||||
Net operating loss carryback rate differential | — | — | % | (1,569) | (0.9) | % | — | — | % | (5,286) | (2.0) | % | |||||||||||||||||||||||||||||||||||
Intra-entity transfers | (312) | (0.2) | % | — | — | % | (6,364) | (1.5) | % | (3,781) | (1.5) | % | |||||||||||||||||||||||||||||||||||
Other | (439) | (0.3) | % | 10 | — | % | 62 | — | % | 96 | — | % | |||||||||||||||||||||||||||||||||||
Effective tax rate | $ | 7,501 | 5.1 | % | $ | 14,843 | 8.3 | % | $ | 6,378 | 1.6 | % | $ | 6,816 | 2.6 | % |
53
54
In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis prior to the impact of consolidating securitization VIEs under ASC 810. The segment information within this Note is reported on that basis.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Commercial and | | | | | | | | | | | | | | | ||||||||
| | Residential | | Infrastructure | | | | Investing | | | | | | | | | ||||||||
| | Lending | | Lending | | Property | | and Servicing | | | | | | Securitization | | | ||||||||
| | Segment | | Segment | | Segment | | Segment | | Corporate | | Subtotal | | VIEs | | Total | ||||||||
Revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income from loans | | $ | 170,593 | | $ | 18,808 | | $ | — | | $ | 1,174 | | $ | — | | $ | 190,575 | | $ | — | | $ | 190,575 |
Interest income from investment securities | |
| 18,385 | |
| 564 | |
| — | |
| 20,940 | | | — | |
| 39,889 | |
| (28,279) | |
| 11,610 |
Servicing fees | |
| 124 | |
| — | |
| — | |
| 12,456 | | | — | |
| 12,580 | |
| (4,178) | |
| 8,402 |
Rental income | | | 1,339 | | | — | | | 65,104 | | | 9,895 | | | — | | | 76,338 | | | — | | | 76,338 |
Other revenues | |
| 90 | |
| 93 | |
| 40 | |
| 82 | | | — | |
| 305 | |
| — | |
| 305 |
Total revenues | |
| 190,531 | |
| 19,465 | |
| 65,144 | |
| 44,547 | |
| — | |
| 319,687 | |
| (32,457) | |
| 287,230 |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Management fees | |
| 315 | |
| — | |
| — | |
| 222 | |
| 38,188 | |
| 38,725 | |
| 11 | |
| 38,736 |
Interest expense | |
| 44,295 | |
| 8,841 | |
| 15,832 | |
| 5,449 | | | 29,148 | |
| 103,565 | |
| (191) | |
| 103,374 |
General and administrative | |
| 11,333 | |
| 3,442 | |
| 1,023 | |
| 18,440 | | | 4,311 | |
| 38,549 | |
| 87 | |
| 38,636 |
Acquisition and investment pursuit costs | |
| 185 | |
| — | |
| — | |
| — | | | — | |
| 185 | |
| — | |
| 185 |
Costs of rental operations | | | 477 | | | — | | | 23,960 | | | 4,308 | | | — | | | 28,745 | | | — | | | 28,745 |
Depreciation and amortization | |
| 307 | |
| 100 | |
| 18,100 | |
| 3,967 | | | — | |
| 22,474 | |
| — | |
| 22,474 |
Credit loss (reversal) provision, net | |
| (529) | |
| 573 | |
| — | |
| — | | | — | |
| 44 | |
| — | |
| 44 |
Other expense | |
| 31 | |
| — | |
| 583 | |
| 71 | | | — | |
| 685 | |
| — | |
| 685 |
Total costs and expenses | |
| 56,414 | |
| 12,956 | |
| 59,498 | |
| 32,457 | | | 71,647 | |
| 232,972 | |
| (93) | |
| 232,879 |
Other income (loss): | | | | | | | | | | | | | | | | | | | | | | | | |
Change in net assets related to consolidated VIEs | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| 39,745 | |
| 39,745 |
Change in fair value of servicing rights | |
| — | |
| — | |
| — | |
| 745 | | | — | |
| 745 | |
| (1,541) | |
| (796) |
Change in fair value of investment securities, net | |
| (2,050) | |
| — | |
| — | |
| 7,170 | | | — | |
| 5,120 | |
| (5,426) | |
| (306) |
Change in fair value of mortgage loans, net | |
| (10,714) | |
| — | |
| — | |
| 1,236 | | | — | |
| (9,478) | |
| — | |
| (9,478) |
Earnings (loss) from unconsolidated entities | |
| 1,753 | |
| (254) | |
| — | |
| 589 | | | — | |
| 2,088 | |
| (354) | |
| 1,734 |
Gain on sale of investments and other assets, net | |
| 17,693 | |
| — | |
| — | |
| — | | | — | |
| 17,693 | |
| — | |
| 17,693 |
Gain (loss) on derivative financial instruments, net | |
| 26,141 | |
| 684 | |
| 4,724 | |
| 9,283 | | | (6,843) | |
| 33,989 | |
| — | |
| 33,989 |
Foreign currency (loss) gain, net | |
| (11,594) | |
| (49) | |
| 25 | |
| (63) | | | — | |
| (11,681) | |
| — | |
| (11,681) |
Loss on extinguishment of debt | | | (68) | | | (307) | | | (141) | | | — | | | — | | | (516) | | | — | | | (516) |
Other income, net | |
| — | |
| 21 | |
| — | |
| — | | | — | |
| 21 | |
| — | |
| 21 |
Total other income (loss) | |
| 21,161 | |
| 95 | |
| 4,608 | |
| 18,960 | | | (6,843) | |
| 37,981 | |
| 32,424 | |
| 70,405 |
Income (loss) before income taxes | |
| 155,278 | |
| 6,604 | |
| 10,254 | |
| 31,050 | | | (78,490) | |
| 124,696 | |
| 60 | |
| 124,756 |
Income tax provision | |
| (1,505) | |
| (92) | |
| — | |
| (633) | | | — | |
| (2,230) | |
| — | |
| (2,230) |
Net income (loss) | |
| 153,773 | |
| 6,512 | |
| 10,254 | |
| 30,417 | | | (78,490) | |
| 122,466 | |
| 60 | |
| 122,526 |
Net income attributable to non-controlling interests | |
| (3) | |
| — | |
| (5,077) | |
| (6,008) | | | — | |
| (11,088) | |
| (60) | |
| (11,148) |
Net income (loss) attributable to Starwood Property Trust, Inc. | | $ | 153,770 | | $ | 6,512 | | $ | 5,177 | | $ | 24,409 | | $ | (78,490) | | $ | 111,378 | | $ | — | | $ | 111,378 |
55
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income from loans | $ | 179,486 | $ | 21,566 | $ | — | $ | 2,200 | $ | — | $ | 203,252 | $ | — | $ | 203,252 | |||||||||||||||||||||||||||||||
Interest income from investment securities | 16,043 | 540 | — | 25,140 | — | 41,723 | (31,026) | 10,697 | |||||||||||||||||||||||||||||||||||||||
Servicing fees | 99 | — | — | 15,447 | — | 15,546 | (5,073) | 10,473 | |||||||||||||||||||||||||||||||||||||||
Rental income | 1,358 | — | 66,673 | 9,481 | — | 77,512 | — | 77,512 | |||||||||||||||||||||||||||||||||||||||
Other revenues | 59 | 66 | 54 | 173 | — | 352 | — | 352 | |||||||||||||||||||||||||||||||||||||||
Total revenues | 197,045 | 22,172 | 66,727 | 52,441 | — | 338,385 | (36,099) | 302,286 | |||||||||||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Management fees | 286 | — | — | (1,239) | 24,680 | 23,727 | — | 23,727 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 52,066 | 9,381 | 17,002 | 5,652 | 31,651 | 115,752 | (221) | 115,531 | |||||||||||||||||||||||||||||||||||||||
General and administrative | 9,178 | 3,307 | 913 | 21,022 | 4,372 | 38,792 | 72 | 38,864 | |||||||||||||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 158 | — | — | 56 | — | 214 | — | 214 | |||||||||||||||||||||||||||||||||||||||
Costs of rental operations | 438 | — | 26,634 | 4,444 | — | 31,516 | — | 31,516 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 312 | 101 | 17,882 | 3,746 | — | 22,041 | — | 22,041 | |||||||||||||||||||||||||||||||||||||||
Credit loss provision (reversal), net | 19 | (582) | — | — | — | (563) | — | (563) | |||||||||||||||||||||||||||||||||||||||
Other expense | — | — | — | 23 | — | 23 | — | 23 | |||||||||||||||||||||||||||||||||||||||
Total costs and expenses | 62,457 | 12,207 | 62,431 | 33,704 | 60,703 | 231,502 | (149) | 231,353 | |||||||||||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | 28,049 | 28,049 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of servicing rights | — | — | — | (410) | — | (410) | 2,647 | 2,237 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of investment securities, net | (8,682) | — | — | 2,870 | — | (5,812) | 5,513 | (299) | |||||||||||||||||||||||||||||||||||||||
Change in fair value of mortgage loans, net | 22,464 | — | — | 9,263 | — | 31,727 | — | 31,727 | |||||||||||||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 1,666 | 399 | — | 153 | — | 2,218 | (176) | 2,042 | |||||||||||||||||||||||||||||||||||||||
Loss on sale of investments and other assets, net | (47) | — | — | — | — | (47) | — | (47) | |||||||||||||||||||||||||||||||||||||||
Gain (loss) on derivative financial instruments, net | 38,016 | 87 | (318) | 3,992 | 35 | 41,812 | — | 41,812 | |||||||||||||||||||||||||||||||||||||||
Foreign currency (loss) gain, net | (26,820) | (168) | (16) | 1 | — | (27,003) | — | (27,003) | |||||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | — | (18) | — | — | (481) | (499) | — | (499) | |||||||||||||||||||||||||||||||||||||||
Other loss, net | (964) | — | — | — | — | (964) | — | (964) | |||||||||||||||||||||||||||||||||||||||
Total other income (loss) | 25,633 | 300 | (334) | 15,869 | (446) | 41,022 | 36,033 | 77,055 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 160,221 | 10,265 | 3,962 | 34,606 | (61,149) | 147,905 | 83 | 147,988 | |||||||||||||||||||||||||||||||||||||||
Income tax (provision) benefit | (5,652) | 488 | — | (2,337) | — | (7,501) | — | (7,501) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 154,569 | 10,753 | 3,962 | 32,269 | (61,149) | 140,404 | 83 | 140,487 | |||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | (3) | — | (4,691) | (7,108) | — | (11,802) | (83) | (11,885) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 154,566 | $ | 10,753 | $ | (729) | $ | 25,161 | $ | (61,149) | $ | 128,602 | $ | — | $ | 128,602 |
The table below presents our results of operations for the three months ended March 31,September 30, 2020 by business segment (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 | | $ | 192,381 | | $ | 22,413 | | $ | — | | $ | 2,633 | | $ | — | | $ | 217,427 | | $ | — | | $ | 217,427 |
Interest income from investment securities | |
| 18,628 | | | 701 | |
| — | |
| 24,800 | | | — | |
| 44,129 | |
| (28,889) | |
| 15,240 |
Servicing fees | |
| 172 | | | — | |
| — | |
| 6,442 | | | — | |
| 6,614 | |
| (1,821) | |
| 4,793 |
Rental income | | | 78 | | | — | | | 63,961 | | | 10,107 | | | — | |
| 74,146 | |
| — | |
| 74,146 |
Other revenues | |
| 178 | | | 143 | |
| 122 | |
| 513 | | | — | |
| 956 | |
| (2) | |
| 954 |
Total revenues | |
| 211,437 | | | 23,257 | |
| 64,083 | |
| 44,495 | |
| — | |
| 343,272 | |
| (30,712) | |
| 312,560 |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Management fees | |
| 351 | | | — | |
| — | |
| 239 | |
| 40,107 | |
| 40,697 | |
| 31 | |
| 40,728 |
Interest expense | |
| 53,950 | | | 13,117 | |
| 17,121 | |
| 7,194 | | | 28,805 | |
| 120,187 | |
| (162) | |
| 120,025 |
General and administrative | |
| 8,132 | | | 4,423 | |
| 1,078 | |
| 20,684 | | | 4,301 | |
| 38,618 | |
| 84 | |
| 38,702 |
Acquisition and investment pursuit costs | |
| 860 | | | 17 | |
| 12 | |
| 20 | | | — | |
| 909 | |
| — | |
| 909 |
Costs of rental operations | | | 778 | | | — | | | 22,852 | | | 4,584 | | | — | |
| 28,214 | |
| — | |
| 28,214 |
Depreciation and amortization | |
| 415 | | | 70 | |
| 19,288 | |
| 4,207 | | | — | |
| 23,980 | |
| — | |
| 23,980 |
Credit loss provision, net | |
| 40,217 | | | 8,452 | |
| — | |
| — | | | — | |
| 48,669 | |
| — | |
| 48,669 |
Other expense | |
| 77 | | | — | |
| 311 | |
| — | | | — | |
| 388 | |
| — | |
| 388 |
Total costs and expenses | |
| 104,780 | | | 26,079 | |
| 60,662 | |
| 36,928 | | | 73,213 | |
| 301,662 | |
| (47) | |
| 301,615 |
Other income (loss): | | | | | | | | | | | | | | | | | | | | | | | | |
Change in net assets related to consolidated VIEs | |
| — | | | — | |
| — | |
| — | |
| — | |
| — | |
| (45,493) | |
| (45,493) |
Change in fair value of servicing rights | |
| — | | | — | |
| — | |
| 318 | | | — | |
| 318 | |
| (711) | |
| (393) |
Change in fair value of investment securities, net | |
| (27,879) | | | — | |
| — | |
| (47,216) | | | — | |
| (75,095) | |
| 77,599 | |
| 2,504 |
Change in fair value of mortgage loans, net | |
| (35,517) | | | — | |
| — | |
| 19,383 | | | — | |
| (16,134) | |
| — | |
| (16,134) |
Earnings (loss) from unconsolidated entities | |
| 51 | | | — | |
| — | |
| 620 | | | — | |
| 671 | |
| (574) | |
| 97 |
Gain on sale of investments and other assets, net | |
| — | | | 296 | |
| — | |
| — | | | — | |
| 296 | |
| — | |
| 296 |
Gain (loss) on derivative financial instruments, net | |
| 30,805 | | | (1,001) | |
| (30,223) | |
| (19,106) | | | 29,235 | |
| 9,710 | |
| — | |
| 9,710 |
Foreign currency (loss) gain, net | |
| (34,001) | | | (473) | |
| (19) | |
| 7 | | | — | |
| (34,486) | |
| — | |
| (34,486) |
Loss on extinguishment of debt | | | — | | | (170) | | | — | | | — | | | — | | | (170) | | | — | | | (170) |
Other income, net | |
| — | | | — | |
| 50 | |
| 76 | | | — | |
| 126 | |
| — | |
| 126 |
Total other income (loss) | |
| (66,541) | | | (1,348) | |
| (30,192) | |
| (45,918) | | | 29,235 | |
| (114,764) | |
| 30,821 | |
| (83,943) |
Income (loss) before income taxes | |
| 40,116 | | | (4,170) | |
| (26,771) | |
| (38,351) | | | (43,978) | | | (73,154) | |
| 156 | |
| (72,998) |
Income tax benefit | |
| 4,422 | | | 145 | | | — | |
| 2,162 | | | — | |
| 6,729 | |
| — | |
| 6,729 |
Net income (loss) | |
| 44,538 | | | (4,025) | |
| (26,771) | |
| (36,189) | | | (43,978) | |
| (66,425) | |
| 156 | |
| (66,269) |
Net (income) loss attributable to non-controlling interests | |
| (3) | | | — | |
| (5,111) | |
| 4,770 | | | — | |
| (344) | |
| (156) | |
| (500) |
Net income (loss) attributable to Starwood Property Trust, Inc. | | $ | 44,535 | | $ | (4,025) | | $ | (31,882) | | $ | (31,419) | | $ | (43,978) | | $ | (66,769) | | $ | — | | $ | (66,769) |
56
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income from loans | $ | 149,972 | $ | 17,835 | $ | — | $ | 1,597 | $ | — | $ | 169,404 | $ | — | $ | 169,404 | |||||||||||||||||||||||||||||||
Interest income from investment securities | 21,385 | 635 | — | 23,587 | — | 45,607 | (33,421) | 12,186 | |||||||||||||||||||||||||||||||||||||||
Servicing fees | 110 | — | — | 13,749 | — | 13,859 | (4,311) | 9,548 | |||||||||||||||||||||||||||||||||||||||
Rental income | 2,014 | — | 63,925 | 10,039 | — | 75,978 | — | 75,978 | |||||||||||||||||||||||||||||||||||||||
Other revenues | 66 | 101 | 48 | 98 | — | 313 | (2) | 311 | |||||||||||||||||||||||||||||||||||||||
Total revenues | 173,547 | 18,571 | 63,973 | 49,070 | — | 305,161 | (37,734) | 267,427 | |||||||||||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Management fees | 297 | — | — | 221 | 22,596 | 23,114 | 13 | 23,127 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 38,422 | 8,914 | 16,180 | 5,425 | 27,040 | 95,981 | — | 95,981 | |||||||||||||||||||||||||||||||||||||||
General and administrative | 12,483 | 3,568 | 1,094 | 18,813 | 3,436 | 39,394 | 84 | 39,478 | |||||||||||||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 757 | 62 | — | 65 | — | 884 | — | 884 | |||||||||||||||||||||||||||||||||||||||
Costs of rental operations | 643 | — | 24,302 | 4,577 | — | 29,522 | — | 29,522 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 430 | 87 | 19,130 | 3,934 | — | 23,581 | — | 23,581 | |||||||||||||||||||||||||||||||||||||||
Credit loss provision (reversal), net | 782 | (4,369) | — | — | — | (3,587) | — | (3,587) | |||||||||||||||||||||||||||||||||||||||
Other expense | 77 | — | 95 | — | — | 172 | — | 172 | |||||||||||||||||||||||||||||||||||||||
Total costs and expenses | 53,891 | 8,262 | 60,801 | 33,035 | 53,072 | 209,061 | 97 | 209,158 | |||||||||||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | 58,585 | 58,585 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of servicing rights | — | — | — | 3,960 | — | 3,960 | (3,326) | 634 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of investment securities, net | 13,611 | — | — | 3,249 | — | 16,860 | (17,059) | (199) | |||||||||||||||||||||||||||||||||||||||
Change in fair value of mortgage loans, net | 59,402 | — | — | 1,982 | — | 61,384 | — | 61,384 | |||||||||||||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 3,253 | (80) | — | 358 | — | 3,531 | (339) | 3,192 | |||||||||||||||||||||||||||||||||||||||
(Loss) gain on derivative financial instruments, net | (28,577) | 110 | (313) | 38 | 645 | (28,097) | — | (28,097) | |||||||||||||||||||||||||||||||||||||||
Foreign currency gain, net | 25,302 | 110 | 14 | 26 | — | 25,452 | — | 25,452 | |||||||||||||||||||||||||||||||||||||||
Other (loss) income, net | — | — | (1) | 358 | — | 357 | — | 357 | |||||||||||||||||||||||||||||||||||||||
Total other income (loss) | 72,991 | 140 | (300) | 9,971 | 645 | 83,447 | 37,861 | 121,308 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 192,647 | 10,449 | 2,872 | 26,006 | (52,427) | 179,547 | 30 | 179,577 | |||||||||||||||||||||||||||||||||||||||
Income tax (provision) benefit | (16,700) | (86) | — | 1,943 | — | (14,843) | — | (14,843) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 175,947 | 10,363 | 2,872 | 27,949 | (52,427) | 164,704 | 30 | 164,734 | |||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | (3) | — | (5,072) | (7,795) | — | (12,870) | (30) | (12,900) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 175,944 | $ | 10,363 | $ | (2,200) | $ | 20,154 | $ | (52,427) | $ | 151,834 | $ | — | $ | 151,834 |
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income from loans | $ | 515,776 | $ | 61,545 | $ | — | $ | 5,778 | $ | — | $ | 583,099 | $ | — | $ | 583,099 | |||||||||||||||||||||||||||||||
Interest income from investment securities | 51,618 | 1,659 | — | 71,748 | — | 125,025 | (92,070) | 32,955 | |||||||||||||||||||||||||||||||||||||||
Servicing fees | 333 | — | — | 44,268 | — | 44,601 | (14,862) | 29,739 | |||||||||||||||||||||||||||||||||||||||
Rental income | 4,116 | — | 197,187 | 29,666 | — | 230,969 | — | 230,969 | |||||||||||||||||||||||||||||||||||||||
Other revenues | 223 | 228 | 138 | 3,032 | — | 3,621 | — | 3,621 | |||||||||||||||||||||||||||||||||||||||
Total revenues | 572,066 | 63,432 | 197,325 | 154,492 | — | 987,315 | (106,932) | 880,383 | |||||||||||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Management fees | 901 | — | — | (793) | 91,584 | 91,692 | 21 | 91,713 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 144,717 | 27,916 | 49,697 | 16,890 | 89,970 | 329,190 | (632) | 328,558 | |||||||||||||||||||||||||||||||||||||||
General and administrative | 30,922 | 10,281 | 2,964 | 65,182 | 13,172 | 122,521 | 244 | 122,765 | |||||||||||||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 522 | 249 | — | 35 | — | 806 | — | 806 | |||||||||||||||||||||||||||||||||||||||
Costs of rental operations | 1,348 | — | 76,516 | 13,128 | — | 90,992 | — | 90,992 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 930 | 301 | 53,883 | 11,878 | — | 66,992 | — | 66,992 | |||||||||||||||||||||||||||||||||||||||
Credit loss (reversal) provision, net | (12,957) | 594 | — | — | — | (12,363) | — | (12,363) | |||||||||||||||||||||||||||||||||||||||
Other expense | 31 | — | 583 | 94 | — | 708 | — | 708 | |||||||||||||||||||||||||||||||||||||||
Total costs and expenses | 166,414 | 39,341 | 183,643 | 106,414 | 194,726 | 690,538 | (367) | 690,171 | |||||||||||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | 80,303 | 80,303 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of servicing rights | — | — | — | 795 | — | 795 | 1,945 | 2,740 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of investment securities, net | (20,134) | — | — | (2,545) | — | (22,679) | 23,582 | 903 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of mortgage loans, net | 24,079 | — | — | 44,037 | — | 68,116 | — | 68,116 | |||||||||||||||||||||||||||||||||||||||
Earnings from unconsolidated entities | 5,415 | 75 | — | 235 | — | 5,725 | 277 | 6,002 | |||||||||||||||||||||||||||||||||||||||
Gain on sale of investments and other assets, net | 16,627 | 27 | — | 9,723 | — | 26,377 | — | 26,377 | |||||||||||||||||||||||||||||||||||||||
Gain (loss) on derivative financial instruments, net | 59,212 | 883 | 4,034 | 7,544 | (5,881) | 65,792 | — | 65,792 | |||||||||||||||||||||||||||||||||||||||
Foreign currency loss, net | (35,699) | (279) | (16) | (63) | — | (36,057) | — | (36,057) | |||||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | (289) | (1,264) | (141) | (22) | (481) | (2,197) | — | (2,197) | |||||||||||||||||||||||||||||||||||||||
Other (loss) income, net | (6,468) | 23 | — | 29 | — | (6,416) | — | (6,416) | |||||||||||||||||||||||||||||||||||||||
Total other income (loss) | 42,743 | (535) | 3,877 | 59,733 | (6,362) | 99,456 | 106,107 | 205,563 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 448,395 | 23,556 | 17,559 | 107,811 | (201,088) | 396,233 | (458) | 395,775 | |||||||||||||||||||||||||||||||||||||||
Income tax benefit (provision) | 886 | 338 | — | (7,602) | — | (6,378) | — | (6,378) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 449,281 | 23,894 | 17,559 | 100,209 | (201,088) | 389,855 | (458) | 389,397 | |||||||||||||||||||||||||||||||||||||||
Net (income) loss attributable to non-controlling interests | (10) | — | (14,682) | (18,873) | — | (33,565) | 458 | (33,107) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 449,271 | $ | 23,894 | $ | 2,877 | $ | 81,336 | $ | (201,088) | $ | 356,290 | $ | — | $ | 356,290 |
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income from loans | $ | 492,489 | $ | 59,374 | $ | — | $ | 6,071 | $ | — | $ | 557,934 | $ | — | $ | 557,934 | |||||||||||||||||||||||||||||||
Interest income from investment securities | 57,358 | 2,019 | — | 73,311 | — | 132,688 | (90,618) | 42,070 | |||||||||||||||||||||||||||||||||||||||
Servicing fees | 424 | — | — | 28,782 | — | 29,206 | (8,207) | 20,999 | |||||||||||||||||||||||||||||||||||||||
Rental income | 2,782 | — | 191,452 | 28,600 | — | 222,834 | — | 222,834 | |||||||||||||||||||||||||||||||||||||||
Other revenues | 298 | 344 | 228 | 891 | — | 1,761 | (5) | 1,756 | |||||||||||||||||||||||||||||||||||||||
Total revenues | 553,351 | 61,737 | 191,680 | 137,655 | — | 944,423 | (98,830) | 845,593 | |||||||||||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Management fees | 987 | — | — | 680 | 85,257 | 86,924 | 46 | 86,970 | |||||||||||||||||||||||||||||||||||||||
Interest expense | 134,243 | 31,709 | 49,243 | 18,796 | 83,670 | 317,661 | (162) | 317,499 | |||||||||||||||||||||||||||||||||||||||
General and administrative | 29,230 | 12,328 | 3,453 | 54,490 | 11,105 | 110,606 | 251 | 110,857 | |||||||||||||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 2,195 | 1,179 | 12 | (3) | — | 3,383 | — | 3,383 | |||||||||||||||||||||||||||||||||||||||
Costs of rental operations | 2,409 | — | 71,857 | 13,102 | — | 87,368 | — | 87,368 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 1,275 | 246 | 57,571 | 11,890 | — | 70,982 | — | 70,982 | |||||||||||||||||||||||||||||||||||||||
Credit loss provision, net | 52,293 | 2,991 | — | — | — | 55,284 | — | 55,284 | |||||||||||||||||||||||||||||||||||||||
Other expense | 230 | — | 432 | — | — | 662 | — | 662 | |||||||||||||||||||||||||||||||||||||||
Total costs and expenses | 222,862 | 48,453 | 182,568 | 98,955 | 180,032 | 732,870 | 135 | 733,005 | |||||||||||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Change in net assets related to consolidated VIEs | — | — | — | — | — | — | 64,353 | 64,353 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of servicing rights | — | — | — | 9,606 | — | 9,606 | (11,934) | (2,328) | |||||||||||||||||||||||||||||||||||||||
Change in fair value of investment securities, net | (8,814) | — | — | (36,026) | — | (44,840) | 47,972 | 3,132 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of mortgage loans, net | 56,895 | — | — | 22,805 | — | 79,700 | — | 79,700 | |||||||||||||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 3,975 | (1,198) | — | 30,504 | — | 33,281 | (1,216) | 32,065 | |||||||||||||||||||||||||||||||||||||||
(Loss) gain on sale of investments and other assets, net | (961) | 296 | — | 7,433 | — | 6,768 | — | 6,768 | |||||||||||||||||||||||||||||||||||||||
(Loss) gain on derivative financial instruments, net | (9,508) | (1,328) | (35,150) | (22,896) | 34,397 | (34,485) | — | (34,485) | |||||||||||||||||||||||||||||||||||||||
Foreign currency (loss) gain, net | (1,757) | (53) | (53) | 2 | — | (1,861) | — | (1,861) | |||||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | (22) | (170) | (2,185) | — | — | (2,377) | — | (2,377) | |||||||||||||||||||||||||||||||||||||||
Other income, net | — | — | 240 | 447 | — | 687 | — | 687 | |||||||||||||||||||||||||||||||||||||||
Total other income (loss) | 39,808 | (2,453) | (37,148) | 11,875 | 34,397 | 46,479 | 99,175 | 145,654 | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 370,297 | 10,831 | (28,036) | 50,575 | (145,635) | 258,032 | 210 | 258,242 | |||||||||||||||||||||||||||||||||||||||
Income tax (provision) benefit | (15,535) | 3 | — | 8,716 | — | (6,816) | — | (6,816) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 354,762 | 10,834 | (28,036) | 59,291 | (145,635) | 251,216 | 210 | 251,426 | |||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | (10) | — | (15,294) | (11,191) | — | (26,495) | (210) | (26,705) | |||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | $ | 354,752 | $ | 10,834 | $ | (43,330) | $ | 48,100 | $ | (145,635) | $ | 224,721 | $ | — | $ | 224,721 |
The table below presents our condensed consolidated balance sheet as of March 31,September 30, 2021 by business segment (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 | | $ | 56,629 | | $ | 7,873 | | $ | 39,791 | | $ | 29,064 | | $ | 217,049 | | $ | 350,406 | | $ | 784 | | $ | 351,190 |
Restricted cash | |
| 69,882 | |
| 27,973 | |
| 6,672 | |
| 14,197 | |
| — | |
| 118,724 | |
| — | |
| 118,724 |
Loans held-for-investment, net | |
| 10,733,752 | |
| 1,586,808 | |
| — | |
| 933 | |
| — | |
| 12,321,493 | |
| — | |
| 12,321,493 |
Loans held-for-sale | |
| 587,037 | |
| 89,368 | |
| — | |
| 168,226 | |
| — | |
| 844,631 | |
| — | |
| 844,631 |
Investment securities | |
| 969,968 | |
| 34,951 | |
| — | |
| 1,106,000 | |
| — | |
| 2,110,919 | |
| (1,432,632) | |
| 678,287 |
Properties, net | | | 93,718 | | | — | | | 1,954,880 | | | 196,150 | | | — | | | 2,244,748 | | | — | | | 2,244,748 |
Intangible assets | |
| — | |
| — | |
| 38,833 | |
| 70,857 | |
| — | |
| 109,690 | |
| (42,918) | |
| 66,772 |
Investment in unconsolidated entities | |
| 47,514 | |
| 24,840 | |
| — | |
| 44,435 | |
| — | |
| 116,789 | |
| (15,882) | |
| 100,907 |
Goodwill | |
| — | |
| 119,409 | |
| — | |
| 140,437 | |
| — | |
| 259,846 | |
| — | |
| 259,846 |
Derivative assets | |
| 13,088 | |
| — | |
| 162 | |
| 320 | |
| 24,459 | |
| 38,029 | |
| — | |
| 38,029 |
Accrued interest receivable | |
| 97,853 | |
| 3,310 | |
| — | |
| 274 | |
| 408 | |
| 101,845 | |
| (132) | |
| 101,713 |
Other assets | |
| 61,677 | |
| 7,107 | |
| 85,740 | |
| 44,719 | |
| 9,646 | |
| 208,889 | |
| (16) | |
| 208,873 |
VIE assets, at fair value | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| 62,367,110 | |
| 62,367,110 |
Total Assets | | $ | 12,731,118 | | $ | 1,901,639 | | $ | 2,126,078 | | $ | 1,815,612 | | $ | 251,562 | | $ | 18,826,009 | | $ | 60,876,314 | | $ | 79,702,323 |
Liabilities and Equity | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable, accrued expenses and other liabilities | | $ | 37,206 | | $ | 16,010 | | $ | 44,184 | | $ | 24,110 | | $ | 56,614 | | $ | 178,124 | | $ | 91 | | $ | 178,215 |
Related-party payable | |
| — | |
| — | |
| — | |
| — | |
| 36,135 | |
| 36,135 | |
| — | |
| 36,135 |
Dividends payable | |
| — | |
| — | |
| — | |
| — | |
| 138,906 | |
| 138,906 | |
| — | |
| 138,906 |
Derivative liabilities | |
| 33,190 | |
| 1,310 | |
| — | |
| 305 | |
| — | |
| 34,805 | |
| — | |
| 34,805 |
Secured financing agreements, net | |
| 6,502,059 | |
| 1,259,813 | |
| 1,871,026 | |
| 653,222 | |
| 631,655 | |
| 10,917,775 | |
| (21,843) | |
| 10,895,932 |
Collateralized loan obligations, net | | | 931,178 | | | — | | | — | |
| — | |
| — | |
| 931,178 | | | — | | | 931,178 |
Unsecured senior notes, net | |
| — | |
| — | |
| — | |
| — | |
| 1,735,658 | |
| 1,735,658 | |
| — | |
| 1,735,658 |
VIE liabilities, at fair value | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| 60,896,709 | |
| 60,896,709 |
Total Liabilities | |
| 7,503,633 | |
| 1,277,133 | |
| 1,915,210 | |
| 677,637 | |
| 2,598,968 | |
| 13,972,581 | |
| 60,874,957 | |
| 74,847,538 |
Equity: | | | | | | | | | | | | | | | | | | | | | | | | |
Starwood Property Trust, Inc. Stockholders’ Equity: | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock | |
| — | |
| — | |
| — | |
| — | |
| 2,943 | |
| 2,943 | |
| — | |
| 2,943 |
Additional paid-in capital | |
| 1,074,553 | |
| 599,666 | |
| 25,905 | |
| (298,098) | |
| 3,823,011 | |
| 5,225,037 | |
| — | |
| 5,225,037 |
Treasury stock | |
| — | |
| — | |
| — | |
| — | |
| (138,022) | |
| (138,022) | |
| — | |
| (138,022) |
Accumulated other comprehensive income | |
| 41,654 | |
| — | |
| — | |
| — | |
| — | |
| 41,654 | |
| — | |
| 41,654 |
Retained earnings (accumulated deficit) | |
| 4,111,160 | |
| 24,840 | |
| (40,641) | |
| 1,285,229 | |
| (6,035,338) | |
| (654,750) | |
| — | |
| (654,750) |
Total Starwood Property Trust, Inc. Stockholders’ Equity | |
| 5,227,367 | |
| 624,506 | |
| (14,736) | |
| 987,131 | |
| (2,347,406) | |
| 4,476,862 | |
| — | |
| 4,476,862 |
Non-controlling interests in consolidated subsidiaries | |
| 118 | |
| — | |
| 225,604 | |
| 150,844 | |
| — | |
| 376,566 | |
| 1,357 | |
| 377,923 |
Total Equity | |
| 5,227,485 | |
| 624,506 | |
| 210,868 | |
| 1,137,975 | |
| (2,347,406) | |
| 4,853,428 | |
| 1,357 | |
| 4,854,785 |
Total Liabilities and Equity | | $ | 12,731,118 | | $ | 1,901,639 | | $ | 2,126,078 | | $ | 1,815,612 | | $ | 251,562 | | $ | 18,826,009 | | $ | 60,876,314 | | $ | 79,702,323 |
57
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 19,626 | $ | 16,695 | $ | 32,162 | $ | 29,027 | $ | 175,197 | $ | 272,707 | $ | 609 | $ | 273,316 | |||||||||||||||||||||||||||||||
Restricted cash | 60,183 | 23,628 | 6,807 | 19,854 | — | 110,472 | — | 110,472 | |||||||||||||||||||||||||||||||||||||||
Loans held-for-investment, net | 11,603,370 | 1,688,847 | — | 781 | — | 13,292,998 | — | 13,292,998 | |||||||||||||||||||||||||||||||||||||||
Loans held-for-sale | 1,813,458 | 84,253 | — | 285,808 | — | 2,183,519 | — | 2,183,519 | |||||||||||||||||||||||||||||||||||||||
Investment securities | 927,411 | 33,323 | — | 1,128,921 | — | 2,089,655 | (1,418,768) | 670,887 | |||||||||||||||||||||||||||||||||||||||
Properties, net | 124,691 | — | 1,928,853 | 175,318 | — | 2,228,862 | — | 2,228,862 | |||||||||||||||||||||||||||||||||||||||
Intangible assets | — | — | 35,958 | 68,596 | — | 104,554 | (39,432) | 65,122 | |||||||||||||||||||||||||||||||||||||||
Investment in unconsolidated entities | 45,129 | 25,170 | — | 38,239 | — | 108,538 | (14,538) | 94,000 | |||||||||||||||||||||||||||||||||||||||
Goodwill | — | 119,409 | — | 140,437 | — | 259,846 | — | 259,846 | |||||||||||||||||||||||||||||||||||||||
Derivative assets | 31,835 | 36 | 96 | 78 | 20,521 | 52,566 | — | 52,566 | |||||||||||||||||||||||||||||||||||||||
Accrued interest receivable | 101,539 | 4,372 | — | 1,887 | 447 | 108,245 | (119) | 108,126 | |||||||||||||||||||||||||||||||||||||||
Other assets | 159,296 | 4,186 | 77,928 | 34,054 | 19,298 | 294,762 | (92) | 294,670 | |||||||||||||||||||||||||||||||||||||||
VIE assets, at fair value | — | — | — | — | — | — | 62,346,480 | 62,346,480 | |||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 14,886,538 | $ | 1,999,919 | $ | 2,081,804 | $ | 1,923,000 | $ | 215,463 | $ | 21,106,724 | $ | 60,874,140 | $ | 81,980,864 | |||||||||||||||||||||||||||||||
Liabilities and Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 55,572 | $ | 10,064 | $ | 48,663 | $ | 44,405 | $ | 51,321 | $ | 210,025 | $ | 55 | $ | 210,080 | |||||||||||||||||||||||||||||||
Related-party payable | — | — | — | — | 23,378 | 23,378 | — | 23,378 | |||||||||||||||||||||||||||||||||||||||
Dividends payable | — | — | — | — | 139,738 | 139,738 | — | 139,738 | |||||||||||||||||||||||||||||||||||||||
Derivative liabilities | 14,924 | 419 | — | 272 | — | 15,615 | — | 15,615 | |||||||||||||||||||||||||||||||||||||||
Secured financing agreements, net | 7,206,946 | 905,343 | 1,873,053 | 763,555 | 774,812 | 11,523,709 | (21,657) | 11,502,052 | |||||||||||||||||||||||||||||||||||||||
Collateralized loan obligations and single asset securitization, net | 2,209,270 | 404,960 | — | — | — | 2,614,230 | — | 2,614,230 | |||||||||||||||||||||||||||||||||||||||
Unsecured senior notes, net | — | — | — | — | 1,733,684 | 1,733,684 | — | 1,733,684 | |||||||||||||||||||||||||||||||||||||||
VIE liabilities, at fair value | — | — | — | — | — | — | 60,894,975 | 60,894,975 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities | 9,486,712 | 1,320,786 | 1,921,716 | 808,232 | 2,722,933 | 16,260,379 | 60,873,373 | 77,133,752 | |||||||||||||||||||||||||||||||||||||||
Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
Starwood Property Trust, Inc. Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock | — | — | — | — | 2,961 | 2,961 | — | 2,961 | |||||||||||||||||||||||||||||||||||||||
Additional paid-in capital | 929,932 | 636,911 | 17,137 | (377,386) | 4,063,671 | 5,270,265 | — | 5,270,265 | |||||||||||||||||||||||||||||||||||||||
Treasury stock | — | — | — | — | (138,022) | (138,022) | — | (138,022) | |||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income | 40,486 | — | — | — | — | 40,486 | — | 40,486 | |||||||||||||||||||||||||||||||||||||||
Retained earnings (accumulated deficit) | 4,429,290 | 42,222 | (65,568) | 1,342,156 | (6,436,080) | (687,980) | — | (687,980) | |||||||||||||||||||||||||||||||||||||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 5,399,708 | 679,133 | (48,431) | 964,770 | (2,507,470) | 4,487,710 | — | 4,487,710 | |||||||||||||||||||||||||||||||||||||||
Non-controlling interests in consolidated subsidiaries | 118 | — | 208,519 | 149,998 | — | 358,635 | 767 | 359,402 | |||||||||||||||||||||||||||||||||||||||
Total Equity | 5,399,826 | 679,133 | 160,088 | 1,114,768 | (2,507,470) | 4,846,345 | 767 | 4,847,112 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities and Equity | $ | 14,886,538 | $ | 1,999,919 | $ | 2,081,804 | $ | 1,923,000 | $ | 215,463 | $ | 21,106,724 | $ | 60,874,140 | $ | 81,980,864 |
The table below presents our condensed consolidated balance sheet as of December 31, 2020 by business segment (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 |
| $ | 160,007 |
| $ | 4,440 | | $ | 32,080 |
| $ | 19,546 |
| $ | 346,372 |
| $ | 562,445 |
| $ | 772 |
| $ | 563,217 |
Restricted cash | |
| 93,445 | | | 45,113 | |
| 7,192 | |
| 13,195 | |
| — | |
| 158,945 | |
| — | |
| 158,945 |
Loans held-for-investment, net | |
| 9,673,625 | | | 1,412,440 | |
| — | |
| 1,008 | |
| — | |
| 11,087,073 | |
| — | |
| 11,087,073 |
Loans held-for-sale | |
| 841,963 | | | 120,540 | |
| — | |
| 90,332 | |
| — | |
| 1,052,835 | |
| — | |
| 1,052,835 |
Investment securities | |
| 1,014,402 | | | 35,681 | |
| — | |
| 1,112,145 | |
| — | |
| 2,162,228 | |
| (1,425,570) | |
| 736,658 |
Properties, net | | | 103,896 | | | — | | | 1,969,414 | | | 197,843 | | | — | |
| 2,271,153 | |
| — | |
| 2,271,153 |
Intangible assets | |
| — | | | — | |
| 40,370 | |
| 71,123 | |
| — | |
| 111,493 | |
| (41,376) | |
| 70,117 |
Investment in unconsolidated entities | |
| 54,407 | | | 25,095 | |
| — | |
| 44,664 | |
| — | |
| 124,166 | |
| (16,112) | |
| 108,054 |
Goodwill | |
| — | | | 119,409 | |
| — | |
| 140,437 | |
| — | |
| 259,846 | |
| — | |
| 259,846 |
Derivative assets | |
| 6,595 | | | — | |
| 41 | |
| 147 | |
| 33,772 | |
| 40,555 | |
| — | |
| 40,555 |
Accrued interest receivable | |
| 87,922 | | | 2,091 | |
| — | |
| 123 | |
| 5,978 | |
| 96,114 | |
| (134) | |
| 95,980 |
Other assets | |
| 61,638 | | | 4,531 | |
| 69,859 | |
| 44,579 | |
| 10,148 | |
| 190,755 | |
| (7) | |
| 190,748 |
VIE assets, at fair value | |
| — | | | — | |
| — | |
| — | |
| — | |
| — | |
| 64,238,328 | |
| 64,238,328 |
Total Assets | | $ | 12,097,900 | | $ | 1,769,340 | | $ | 2,118,956 | | $ | 1,735,142 | | $ | 396,270 | | $ | 18,117,608 | | $ | 62,755,901 | | $ | 80,873,509 |
Liabilities and Equity | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable, accrued expenses and other liabilities | | $ | 41,104 | | $ | 12,144 | | $ | 43,630 | | $ | 45,309 | | $ | 64,583 | | $ | 206,770 | | $ | 75 | | $ | 206,845 |
Related-party payable | |
| — | | | — | |
| — | |
| 5 | |
| 39,165 | |
| 39,170 | |
| — | |
| 39,170 |
Dividends payable | |
| — | | | — | |
| — | |
| — | |
| 137,959 | |
| 137,959 | |
| — | |
| 137,959 |
Derivative liabilities | |
| 39,082 | | | 1,718 | |
| — | |
| 524 | |
| — | |
| 41,324 | |
| — | |
| 41,324 |
Secured financing agreements, net | |
| 5,893,999 | | | 1,240,763 | |
| 1,794,609 | |
| 606,100 | |
| 632,719 | |
| 10,168,190 | |
| (22,000) | |
| 10,146,190 |
Collateralized loan obligations, net | | | 930,554 | | | — | |
| — | |
| — | |
| — | |
| 930,554 | |
| — | |
| 930,554 |
Unsecured senior notes, net | |
| — | | | — | |
| — | |
| — | |
| 1,732,520 | |
| 1,732,520 | |
| — | |
| 1,732,520 |
VIE liabilities, at fair value | |
| — | | | — | |
| — | |
| — | |
| — | |
| — | |
| 62,776,371 | |
| 62,776,371 |
Total Liabilities | |
| 6,904,739 | | | 1,254,625 | |
| 1,838,239 | |
| 651,938 | |
| 2,606,946 | |
| 13,256,487 | |
| 62,754,446 | |
| 76,010,933 |
Equity: | | | | | | | | | | | | | | | | | | | | | | | | |
Starwood Property Trust, Inc. Stockholders’ Equity: | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock | |
| — | | | — | |
| — | |
| — | |
| 2,921 | |
| 2,921 | |
| — | |
| 2,921 |
Additional paid-in capital | |
| 1,192,584 | | | 496,387 | |
| 98,882 | |
| (322,992) | |
| 3,744,878 | |
| 5,209,739 | |
| — | |
| 5,209,739 |
Treasury stock | |
| — | | | — | |
| — | |
| — | |
| (138,022) | |
| (138,022) | |
| — | |
| (138,022) |
Accumulated other comprehensive income (loss) | |
| 44,057 | | | — | |
| — | |
| (64) | |
| — | |
| 43,993 | |
| — | |
| 43,993 |
Retained earnings (accumulated deficit) | |
| 3,956,405 | | | 18,328 | |
| (44,832) | |
| 1,260,819 | |
| (5,820,453) | |
| (629,733) | |
| — | |
| (629,733) |
Total Starwood Property Trust, Inc. Stockholders’ Equity | |
| 5,193,046 | | | 514,715 | |
| 54,050 | |
| 937,763 | |
| (2,210,676) | |
| 4,488,898 | |
| — | |
| 4,488,898 |
Non-controlling interests in consolidated subsidiaries | |
| 115 | | | — | |
| 226,667 | |
| 145,441 | |
| — | |
| 372,223 | |
| 1,455 | |
| 373,678 |
Total Equity | |
| 5,193,161 | | | 514,715 | |
| 280,717 | |
| 1,083,204 | |
| (2,210,676) | |
| 4,861,121 | |
| 1,455 | |
| 4,862,576 |
Total Liabilities and Equity | | $ | 12,097,900 | | $ | 1,769,340 | | $ | 2,118,956 | | $ | 1,735,142 | | $ | 396,270 | | $ | 18,117,608 | | $ | 62,755,901 | | $ | 80,873,509 |
58
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Subtotal | Securitization VIEs | Total | ||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 160,007 | $ | 4,440 | $ | 32,080 | $ | 19,546 | $ | 346,372 | $ | 562,445 | $ | 772 | $ | 563,217 | |||||||||||||||||||||||||||||||
Restricted cash | 93,445 | 45,113 | 7,192 | 13,195 | — | 158,945 | — | 158,945 | |||||||||||||||||||||||||||||||||||||||
Loans held-for-investment, net | 9,673,625 | 1,412,440 | — | 1,008 | — | 11,087,073 | — | 11,087,073 | |||||||||||||||||||||||||||||||||||||||
Loans held-for-sale | 841,963 | 120,540 | — | 90,332 | — | 1,052,835 | — | 1,052,835 | |||||||||||||||||||||||||||||||||||||||
Investment securities | 1,014,402 | 35,681 | — | 1,112,145 | — | 2,162,228 | (1,425,570) | 736,658 | |||||||||||||||||||||||||||||||||||||||
Properties, net | 103,896 | — | 1,969,414 | 197,843 | — | 2,271,153 | — | 2,271,153 | |||||||||||||||||||||||||||||||||||||||
Intangible assets | — | — | 40,370 | 71,123 | — | 111,493 | (41,376) | 70,117 | |||||||||||||||||||||||||||||||||||||||
Investment in unconsolidated entities | 54,407 | 25,095 | — | 44,664 | — | 124,166 | (16,112) | 108,054 | |||||||||||||||||||||||||||||||||||||||
Goodwill | — | 119,409 | — | 140,437 | — | 259,846 | — | 259,846 | |||||||||||||||||||||||||||||||||||||||
Derivative assets | 6,595 | — | 41 | 147 | 33,772 | 40,555 | — | 40,555 | |||||||||||||||||||||||||||||||||||||||
Accrued interest receivable | 87,922 | 2,091 | — | 123 | 5,978 | 96,114 | (134) | 95,980 | |||||||||||||||||||||||||||||||||||||||
Other assets | 61,638 | 4,531 | 69,859 | 44,579 | 10,148 | 190,755 | (7) | 190,748 | |||||||||||||||||||||||||||||||||||||||
VIE assets, at fair value | — | — | — | — | — | — | 64,238,328 | 64,238,328 | |||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 12,097,900 | $ | 1,769,340 | $ | 2,118,956 | $ | 1,735,142 | $ | 396,270 | $ | 18,117,608 | $ | 62,755,901 | $ | 80,873,509 | |||||||||||||||||||||||||||||||
Liabilities and Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 41,104 | $ | 12,144 | $ | 43,630 | $ | 45,309 | $ | 64,583 | $ | 206,770 | $ | 75 | $ | 206,845 | |||||||||||||||||||||||||||||||
Related-party payable | — | — | — | 5 | 39,165 | 39,170 | — | 39,170 | |||||||||||||||||||||||||||||||||||||||
Dividends payable | — | — | — | — | 137,959 | 137,959 | — | 137,959 | |||||||||||||||||||||||||||||||||||||||
Derivative liabilities | 39,082 | 1,718 | — | 524 | — | 41,324 | — | 41,324 | |||||||||||||||||||||||||||||||||||||||
Secured financing agreements, net | 5,893,999 | 1,240,763 | 1,794,609 | 606,100 | 632,719 | 10,168,190 | (22,000) | 10,146,190 | |||||||||||||||||||||||||||||||||||||||
Collateralized loan obligations, net | 930,554 | — | — | — | — | 930,554 | — | 930,554 | |||||||||||||||||||||||||||||||||||||||
Unsecured senior notes, net | — | — | — | — | 1,732,520 | 1,732,520 | — | 1,732,520 | |||||||||||||||||||||||||||||||||||||||
VIE liabilities, at fair value | — | — | — | — | — | — | 62,776,371 | 62,776,371 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities | 6,904,739 | 1,254,625 | 1,838,239 | 651,938 | 2,606,946 | 13,256,487 | 62,754,446 | 76,010,933 | |||||||||||||||||||||||||||||||||||||||
Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
Starwood Property Trust, Inc. Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock | — | — | — | — | 2,921 | 2,921 | — | 2,921 | |||||||||||||||||||||||||||||||||||||||
Additional paid-in capital | 1,192,584 | 496,387 | 98,882 | (322,992) | 3,744,878 | 5,209,739 | — | 5,209,739 | |||||||||||||||||||||||||||||||||||||||
Treasury stock | — | — | — | — | (138,022) | (138,022) | — | (138,022) | |||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income (loss) | 44,057 | — | — | (64) | — | 43,993 | — | 43,993 | |||||||||||||||||||||||||||||||||||||||
Retained earnings (accumulated deficit) | 3,956,405 | 18,328 | (44,832) | 1,260,819 | (5,820,453) | (629,733) | — | (629,733) | |||||||||||||||||||||||||||||||||||||||
Total Starwood Property Trust, Inc. Stockholders’ Equity | 5,193,046 | 514,715 | 54,050 | 937,763 | (2,210,676) | 4,488,898 | — | 4,488,898 | |||||||||||||||||||||||||||||||||||||||
Non-controlling interests in consolidated subsidiaries | 115 | — | 226,667 | 145,441 | — | 372,223 | 1,455 | 373,678 | |||||||||||||||||||||||||||||||||||||||
Total Equity | 5,193,161 | 514,715 | 280,717 | 1,083,204 | (2,210,676) | 4,861,121 | 1,455 | 4,862,576 | |||||||||||||||||||||||||||||||||||||||
Total Liabilities and Equity | $ | 12,097,900 | $ | 1,769,340 | $ | 2,118,956 | $ | 1,735,142 | $ | 396,270 | $ | 18,117,608 | $ | 62,755,901 | $ | 80,873,509 |
Collateralized Loan Obligations
In May 2021, we refinanced a pool of our commercial loans held-for-investment through a $1.3 billion CLO, STWD 2021-FL2, with $1.1 billion of third party financing atpost-closing adjustments. The Fund carries an average coupon of LIBOR + 150 bps. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO for a period of two years.
59
Item 2. Management’s Discussion and AnalysisAnalysis of Financial Condition and Results of Operations
Real estate commercial and residential lending (the “Commercial and Residential Lending Segment”)—engages primarily in originating, acquiring, financing and managing commercial first mortgages, non-agency residential mortgages (“residential loans”), subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”) and other real estate and real estate-related debt investments in both the U.S. and Europe (including distressed or non-performing loans). Our residential loans are secured by a first mortgage lien on residential property and primarily consist of non-agency residential loans that are not guaranteed by any U.S. Government agency or federally chartered corporation.
Infrastructure lending (the “Infrastructure Lending Segment”)—engages primarily in originating, acquiring, financing and managing infrastructure debt investments.
Real estate property (the “Property Segment”)—engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, including multifamily properties and commercial properties subject to net leases, that are held for investment.
Refer to Note 1 of our condensed consolidated financial statements included herein (the “Condensed Consolidated Financial Statements”) for further discussion of our business and organization.
60
COVID-19 Pandemic
The outbreak of the COVID-19 pandemic beginning in the first quarter of 2020 and its continuing impact on the financial, economic and capital markets environment, and future developments in these and other areas, present uncertainty and risk with respect to our financial condition, results of operations, liquidity, and ability to pay distributions. We expect that these impacts are likely to continue to some extent as the outbreak persists and potentially even longer. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions, and, as a result, present material uncertainty and risk with respect to us and the performance of our investments.
Asset Performance and Collections
We maintain an in-house team of asset management professionals who oversee our commercial loans and are in regular communication with these borrowers. We have utilized these relationships to address the potential impacts of the COVID-19 pandemic on the assets which secure our loans, particularly hospitality assets. Some of our borrowers have indicated that due to the impact of the COVID-19 pandemic, they will be unable to timely execute their business plans, have had to temporarily close their businesses, or have experienced other negative business consequences which have led to cash flow pressures at the underlying properties. In some cases, these borrowers have requested temporary interest deferral or forbearance, or other modifications of their loans.
Since the outbreak of the COVID-19 pandemic, we have granted certain payment related loan modifications to our commercial borrowers, consisting principally of partial and temporary deferrals of interest and the repurposing of reserves, many of which were coupled with additional equity commitments from sponsors. We are generally encouraged by our borrowers’ response to the COVID-19 pandemic’s impacts on their properties. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments. As of March 31, 2021, we had one commercial loan held-for-investment with an aggregate principal balance of $40.8 million which remained on its post-COVID partial interest deferral.
In response to the impact of COVID-19 on certain of our residential borrowers, we began offering short-term relief starting in the first quarter of 2020. Under the terms of these plans, borrowers were granted up to a three to six-month “zero pay” forbearance with payments required to resume at the conclusion of the plan. Since their peak last summer, we have seen the majority of these borrowers resume making payments, with some fully prepaying their loans. We continue to see loans in forbearance decrease, with strong home price appreciation keeping any estimated credit losses low. For those loans which have not yet resumed payments, we continue to evaluate loss mitigation options, including forbearance, repayment plans, loan modification and foreclosure. In accordance with our policies, we placed any residential loans that were more than 90 days delinquent on nonaccrual.
In our property segment, we collected 98% of rents due during the three months ended March 31, 2021. Collections were particularly strong in our Woodstar I and Woodstar II affordable housing portfolios, where 98% of rent due was collected. Given current demographic trends, which tend to favor flexible rental arrangements, we continue to see sustained demand in multifamily properties and decreased turnover.
61
In our infrastructure segment, during the three months ended March 31, 2021, we collected 100% of interest due and did not grant any payment related loan modifications.
Goodwill and Intangible Assets
Goodwill is tested for impairment annually in the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Management considered the general economic decline and the impact of the COVID-19 pandemic, but did not identify any such event or circumstances. However, future changes in the expectations of the impact of COVID-19 on our operations, financial performance and cash flows could cause our goodwill to be impaired.
Developments During the FirstThird Quarter of 2021
Commercial and Residential Lending Segment
62
◦$235.1 million first mortgage and mezzanine loan for the refinancing of a 55-story office property located in Texas, of which the Company funded $200.3 million. ◦AU$240.3 million ($178.4 million) first mortgage loan for the acquisition and development of industrial and logistics assets located in Australia, of which the Company funded $102.8 million. ◦£122.0 million ($168.9 million) first mortgage loan for the acquisition and refurbishment of an office building located in the United Kingdom, of which the Company funded $80.7 million. ◦$148.3 million first mortgage loan for the refinancing of a 455-unit multifamily property located in Virginia, of which the Company funded $138.0 million. ◦$125.0 million first mortgage and mezzanine loan for the refinancing of an existing loan on a 26-story, multifamily building located in Pennsylvania, which the Company fully funded. •Funded $171.9 million of previously originated commercial loan commitments. •Received gross proceeds of $872.0 million ($399.5 million, net of debt repayments) from maturities and principal repayments on our commercial loans. •Received gross proceeds of $35.4 million ($9.1 million, net of debt repayments) from sales of senior interests in first mortgage loans. •Acquired $1.8 billion of residential loans, of which $262.2 million related to principal acquired upon redemption of a consolidated RMBS trust. •Received proceeds of $491.9 million, including retained RMBS of $33.0 million, from the securitization of $469.7 million of residential loans. •Amended residential loan repurchase facilities to increase the available borrowings by $650.0 million. |
Infrastructure Lending Segment
Property Segment
Amended a repurchase facility that provides for a temporary increase to available borrowings from $500.0 million to $650.0 million, with available capacity decreasing to $600.0 million in September 2022, $550.0 million in December 2022 and back to $500.0 million in March 2023. The amendment also extends the current maturity from February 2022 to September 2024, with two one-year extension options. In connection with this amendment, we terminated the Infrastructure Acquisition Facility and transferred the related financing to the amended repurchase facility. The facility carries an annual interest rate of LIBOR + 2.00%.
Originated commercial conduit loans of $259.3 million. •Received proceeds of $364.3 million from sales of previously originated commercial conduit loans and priced $239.4 million of previously originated commercial conduit loans in a securitization that settled subsequent to September 30, 2021. •Sold CMBS for total gross proceeds of $27.1 million, of which $10.6 million related to non-controlling interests, and acquired CMBS for a purchase price of $8.4 million. •Obtained 17 new special servicing assignments for CMBS trusts with a total unpaid principal balance of $14.9 billion, bringing our total named special servicing portfolio to $91.4 billion. Corporate •Issued $400.0 million of 3.625% Senior Notes due 2026 (the “2026 Senior Notes”). •Redeemed $400.0 million of 5.00% Senior Notes due December 2021 (the "2021 Senior Notes"). •Amended the term loan facility to increase the incremental borrowings by $150.0 million and reduce the annual interest rate by 0.25% to LIBOR + 3.25% on all the incremental borrowings, subject to a 0.75% LIBOR floor. Additionally, we increased the maximum facility size of the revolver by $30.0 million to $150.0 million, reduced the annual interest rate by 0.50% to SOFR + 2.50% and extended the maturity from July 2024 to April 2026. Developments During the Nine Months Ended September 30, 2021 Commercial and Residential Lending Segment •In May 2021, we refinanced a pool of our commercial loans held-for-investment through a collateralized loan obligation (“CLO”), STWD 2021-FL2. The CLO has a contractual maturity of April 2038 and a weighted average cost of financing of LIBOR + 1.78%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $1.3 billion of notes and preferred shares, of which $1.1 billion of notes was purchased by third party investors. We retained $70.1 million of notes, along with preferred shares with a liquidation preference of $127.5 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO in exchange for cash. •Originated or acquired $5.6 billion of commercial loans during the period, including the following: ◦£360.0 million ($504.5 million) first mortgage loan to finance the acquisition of a portfolio of vacation cottages, caravan homes and resorts across the United Kingdom, which the Company fully funded. ◦$460.0 million first mortgage, mezzanine loan and preferred equity interest for the refinancing of a five asset portfolio that includes four multifamily properties ($298.0 million) and an office property ($162.0 million) located in New York and Connecticut, of which the Company funded $297.9 million. ◦£227.6 million ($317.5 million) first mortgage loan for the refinancing of 14 assisted living facilities located across the United Kingdom, which the Company fully funded. ◦$295.0 million first mortgage and mezzanine loan for the refinancing of a 666 unit Class A high-rise multifamily property and 70,873 square foot office building located in California, of which the Company funded $280.0 million. 67 ◦$253.0 million first mortgage and mezzanine loan for the refinancing of a 495 unit, three tower multifamily property located in Florida, of which the Company funded $211.6 million. ◦$245.1 million first mortgage loan for the refinancing of an existing construction loan for a mixed-use property located in Texas, of which the Company funded $229.1 million. ◦$235.1 million first mortgage and mezzanine loan for the refinancing of a 55-story office property located in Texas, of which the Company funded $200.3 million. ◦$230.0 million first mortgage and mezzanine loan on a 41 property extended stay portfolio located across the U.S., which the Company fully funded. In July 2021, we contributed this loan into a single asset securitization, STWD 2021-HTS, with $210.1 million of third party financing at a weighted average cost of financing of LIBOR + 2.47%, inclusive of the amortization of deferred issuance costs. ◦$231.1 million first mortgage and mezzanine loan for the refinancing of a luxury residential project located in California, of which the Company funded $181.6 million and sold the $147.9 million senior interest in the first mortgage. •Funded $468.9 million of previously originated commercial loan commitments. •Received gross proceeds of $3.1 billion ($1.2 billion, net of debt repayments) from maturities and principal repayments on our commercial loans. •Received gross proceeds of $243.3 million and $21.5 million ($39.0 million and $2.5 million, net of debt repayments) from sales of senior interests in first mortgage loans and whole loan interests, respectively. •Sold commercial real estate in Montgomery, Alabama that was previously acquired through foreclosure in March 2019 for gross proceeds of $30.6 million and recognized a gain of $17.7 million. At the foreclosure date, the loan had a carrying value of $9.0 million ($20.9 million unpaid principal balance net of an $8.3 million allowance and $3.6 million of unamortized discount). •Acquired $2.7 billion of residential loans, of which $434.6 million related to principal acquired upon redemption of two consolidated RMBS trusts. •Received proceeds of $1.5 billion, including retained RMBS of $112.7 million, from the securitization of $1.4 billion of residential loans. •Received proceeds of $30.7 million from the sale of retained RMBS. •Entered into or amended residential loan repurchase facilities to increase the available borrowings by $1.8 billion. Infrastructure Lending Segment •In April 2021, we refinanced a pool of our infrastructure loans held-for-investment through a CLO, STWD 2021-SIF1. The CLO has a contractual maturity of April 2032 and a weighted average cost of financing of LIBOR + 2.15%, inclusive of the amortization of deferred issuance costs. On the closing date, the CLO issued $500.0 million of notes and preferred shares, of which $410.0 million of notes was purchased by third party investors. We retained preferred shares with a liquidation preference of $90.0 million. The CLO contains a reinvestment feature that, subject to certain eligibility criteria, allows us to contribute new loans or participation interests in loans to the CLO in exchange for cash. •Amended a repurchase facility that provides for a temporary increase to available borrowings from $500.0 million to $650.0 million, with available capacity decreasing to $600.0 million in September 2022, $550.0 million in December 2022 and back to $500.0 million in March 2023. The amendment also extends the current maturity from February 2022 to September 2024, with two one-year extension options. In connection with this amendment, we terminated the Infrastructure Acquisition Facility and transferred the related financing to the amended repurchase facility. The facility carries an annual interest rate of LIBOR + 2.00%. •Acquired $344.3 million of infrastructure loans and funded $53.4 million of pre-existing infrastructure loan commitments. 68 •Received $217.1 million from principal repayments on our infrastructure loans and bonds. Property Segment •Refinanced our Woodstar II Portfolio by entering into mortgage loans with total borrowings of $82.9 million. The loans carry seven-year terms and a weighted average fixed annual interest rate of 4.36%. A portion of the net proceeds from the mortgage loans was used to repay $4.9 million of outstanding government sponsored mortgage loans. Investing and Servicing Segment •Originated commercial conduit loans of $927.2 million. •Received proceeds of $775.4 million from sales of previously originated commercial conduit loans and priced $239.4 million of previously originated commercial conduit loans in a securitization that settled subsequent to September 30, 2021. •Acquired CMBS for a purchase price of $62.5 million, of which $2.5 million related to non-controlling interests, and sold CMBS for total gross proceeds of $38.7 million, of which $10.6 million related to non-controlling interests. •Obtained 20 new special servicing assignments for CMBS trusts with a total unpaid principal balance of $16.1 billion, bringing our total named special servicing portfolio to $91.4 billion. •Sold commercial real estate for gross proceeds of $30.9 million and recognized a gain of $9.7 million. Corporate •Issued $400.0 million of 3.625% Senior Notes due 2026. •Redeemed $400.0 million of 5.00% Senior Notes due December 2021. •Amended the term loan facility to increase the incremental borrowings by $150.0 million and reduce the annual interest rate by 0.25% to LIBOR + 3.25% on all the incremental borrowings, subject to a 0.75% LIBOR floor. Additionally, we increased the maximum facility size of the revolver by $30.0 million to $150.0 million, reduced the annual interest rate by 0.50% to SOFR + 2.50% and extended the maturity from July 2024 to April 2026. |
Subsequent Events
63
Results of Operations
| | | | | | | | | | | | | | | |
| | | | | | | | | | | $ Change | | $ Change | ||
| | For the Three Months Ended | | March 31, 2021 vs. | | March 31, 2021 vs. | |||||||||
Revenues: | | March 31, 2021 | | December 31, 2020 | | March 31, 2020 | | December 31, 2020 | | March 31, 2020 | |||||
Commercial and Residential Lending Segment | | $ | 190,531 | | $ | 196,309 | | $ | 211,437 | | $ | (5,778) | | $ | (20,906) |
Infrastructure Lending Segment | | | 19,465 | | | 19,250 | | | 23,257 | | | 215 | | | (3,792) |
Property Segment | | | 65,144 | | | 64,065 | | | 64,083 | | | 1,079 | | | 1,061 |
Investing and Servicing Segment | |
| 44,547 | |
| 45,372 | |
| 44,495 | | | (825) | |
| 52 |
Corporate | | | — | | | — | |
| — | | | — | | | — |
Securitization VIE eliminations | |
| (32,457) | |
| (34,434) | |
| (30,712) | | | 1,977 | |
| (1,745) |
| |
| 287,230 | |
| 290,562 | |
| 312,560 | |
| (3,332) | |
| (25,330) |
Costs and expenses: | | | | | | | | | | | | | | | |
Commercial and Residential Lending Segment | |
| 56,414 | |
| 50,999 | |
| 104,780 | | | 5,415 | |
| (48,366) |
Infrastructure Lending Segment | | | 12,956 | | | 5,555 | | | 26,079 | | | 7,401 | | | (13,123) |
Property Segment | | | 59,498 | | | 61,289 | | | 60,662 | | | (1,791) | | | (1,164) |
Investing and Servicing Segment | |
| 32,457 | |
| 39,722 | |
| 36,928 | | | (7,265) | |
| (4,471) |
Corporate | | | 71,647 | | | 73,965 | |
| 73,213 | | | (2,318) | | | (1,566) |
Securitization VIE eliminations | |
| (93) | |
| (127) | |
| (47) | | | 34 | |
| (46) |
| |
| 232,879 | |
| 231,403 | |
| 301,615 | |
| 1,476 | |
| (68,736) |
Other income (loss): | | | | | | | | | | | | | | | |
Commercial and Residential Lending Segment | |
| 21,161 | |
| 13,318 | |
| (66,541) | | | 7,843 | |
| 87,702 |
Infrastructure Lending Segment | | | 95 | | | (259) | | | (1,348) | | | 354 | | | 1,443 |
Property Segment | | | 4,608 | | | 391 | | | (30,192) | | | 4,217 | | | 34,800 |
Investing and Servicing Segment | |
| 18,960 | |
| 22,349 | |
| (45,918) | | | (3,389) | |
| 64,878 |
Corporate | | | (6,843) | | | (1,239) | | | 29,235 | | | (5,604) | | | (36,078) |
Securitization VIE eliminations | |
| 32,424 | |
| 34,317 | |
| 30,821 | | | (1,893) | |
| 1,603 |
| |
| 70,405 | |
| 68,877 | |
| (83,943) | |
| 1,528 | |
| 154,348 |
Income (loss) before income taxes: | | | | | | | | | | | | | | | |
Commercial and Residential Lending Segment | |
| 155,278 | |
| 158,628 | |
| 40,116 | | | (3,350) | |
| 115,162 |
Infrastructure Lending Segment | | | 6,604 | | | 13,436 | | | (4,170) | | | (6,832) | | | 10,774 |
Property Segment | | | 10,254 | | | 3,167 | | | (26,771) | | | 7,087 | | | 37,025 |
Investing and Servicing Segment | |
| 31,050 | |
| 27,999 | |
| (38,351) | | | 3,051 | |
| 69,401 |
Corporate | | | (78,490) | | | (75,204) | | | (43,978) | | | (3,286) | | | (34,512) |
Securitization VIE eliminations | |
| 60 | |
| 10 | |
| 156 | | | 50 | |
| (96) |
| |
| 124,756 | |
| 128,036 | |
| (72,998) | |
| (3,280) | |
| 197,754 |
Income tax provision | |
| (2,230) | |
| (13,381) | |
| 6,729 | | | 11,151 | |
| (8,959) |
Net income attributable to non-controlling interests | |
| (11,148) | |
| (7,687) | |
| (500) | | | (3,461) | |
| (10,648) |
Net income attributable to Starwood Property Trust, Inc. | | $ | 111,378 | | $ | 106,968 | | $ | (66,769) | | $ | 4,410 | | $ | 178,147 |
64
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||
Revenues: | September 30, 2021 | June 30, 2021 | $ Change | September 30, 2021 | September 30, 2020 | $ Change | |||||||||||||||||||||||||||||
Commercial and Residential Lending Segment | $ | 197,045 | $ | 184,490 | $ | 12,555 | $ | 572,066 | $ | 553,351 | $ | 18,715 | |||||||||||||||||||||||
Infrastructure Lending Segment | 22,172 | 21,795 | 377 | 63,432 | 61,737 | 1,695 | |||||||||||||||||||||||||||||
Property Segment | 66,727 | 65,454 | 1,273 | 197,325 | 191,680 | 5,645 | |||||||||||||||||||||||||||||
Investing and Servicing Segment | 52,441 | 57,504 | (5,063) | 154,492 | 137,655 | 16,837 | |||||||||||||||||||||||||||||
Corporate | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Securitization VIE eliminations | (36,099) | (38,376) | 2,277 | (106,932) | (98,830) | (8,102) | |||||||||||||||||||||||||||||
302,286 | 290,867 | 11,419 | 880,383 | 845,593 | 34,790 | ||||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||||||
Commercial and Residential Lending Segment | 62,457 | 47,543 | 14,914 | 166,414 | 222,862 | (56,448) | |||||||||||||||||||||||||||||
Infrastructure Lending Segment | 12,207 | 14,178 | (1,971) | 39,341 | 48,453 | (9,112) | |||||||||||||||||||||||||||||
Property Segment | 62,431 | 61,714 | 717 | 183,643 | 182,568 | 1,075 | |||||||||||||||||||||||||||||
Investing and Servicing Segment | 33,704 | 40,253 | (6,549) | 106,414 | 98,955 | 7,459 | |||||||||||||||||||||||||||||
Corporate | 60,703 | 62,376 | (1,673) | 194,726 | 180,032 | 14,694 | |||||||||||||||||||||||||||||
Securitization VIE eliminations | (149) | (125) | (24) | (367) | 135 | (502) | |||||||||||||||||||||||||||||
231,353 | 225,939 | 5,414 | 690,171 | 733,005 | (42,834) | ||||||||||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||||||||||
Commercial and Residential Lending Segment | 25,633 | (4,051) | 29,684 | 42,743 | 39,808 | 2,935 | |||||||||||||||||||||||||||||
Infrastructure Lending Segment | 300 | (930) | 1,230 | (535) | (2,453) | 1,918 | |||||||||||||||||||||||||||||
Property Segment | (334) | (397) | 63 | 3,877 | (37,148) | 41,025 | |||||||||||||||||||||||||||||
Investing and Servicing Segment | 15,869 | 24,904 | (9,035) | 59,733 | 11,875 | 47,858 | |||||||||||||||||||||||||||||
Corporate | (446) | 927 | (1,373) | (6,362) | 34,397 | (40,759) | |||||||||||||||||||||||||||||
Securitization VIE eliminations | 36,033 | 37,650 | (1,617) | 106,107 | 99,175 | 6,932 | |||||||||||||||||||||||||||||
77,055 | 58,103 | 18,952 | 205,563 | 145,654 | 59,909 | ||||||||||||||||||||||||||||||
Income (loss) before income taxes: | |||||||||||||||||||||||||||||||||||
Commercial and Residential Lending Segment | 160,221 | 132,896 | 27,325 | 448,395 | 370,297 | 78,098 | |||||||||||||||||||||||||||||
Infrastructure Lending Segment | 10,265 | 6,687 | 3,578 | 23,556 | 10,831 | 12,725 | |||||||||||||||||||||||||||||
Property Segment | 3,962 | 3,343 | 619 | 17,559 | (28,036) | 45,595 | |||||||||||||||||||||||||||||
Investing and Servicing Segment | 34,606 | 42,155 | (7,549) | 107,811 | 50,575 | 57,236 | |||||||||||||||||||||||||||||
Corporate | (61,149) | (61,449) | 300 | (201,088) | (145,635) | (55,453) | |||||||||||||||||||||||||||||
Securitization VIE eliminations | 83 | (601) | 684 | (458) | 210 | (668) | |||||||||||||||||||||||||||||
147,988 | 123,031 | 24,957 | 395,775 | 258,242 | 137,533 | ||||||||||||||||||||||||||||||
Income tax (provision) benefit | (7,501) | 3,353 | (10,854) | (6,378) | (6,816) | 438 | |||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | (11,885) | (10,074) | (1,811) | (33,107) | (26,705) | (6,402) | |||||||||||||||||||||||||||||
Net income attributable to Starwood Property Trust, Inc. | $ | 128,602 | $ | 116,310 | $ | 12,292 | $ | 356,290 | $ | 224,721 | $ | 131,569 |
Three Months Ended March 31,September 30, 2021 Compared to the Three Months Ended December 31, 2020
June 30, 2021
For the Three Months Ended | |||||||||||||||||
September 30, 2021 | June 30, 2021 | Change | |||||||||||||||
Interest income from loans | $ | 179,486 | $ | 165,697 | $ | 13,789 | |||||||||||
Interest income from investment securities | 16,043 | 17,190 | (1,147) | ||||||||||||||
Interest expense | (52,066) | (48,356) | (3,710) | ||||||||||||||
Net interest income | $ | 143,463 | $ | 134,531 | $ | 8,932 |
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
|
| March 31, 2021 |
| December 31, 2020 |
| Change | |||
Interest income from loans | | $ | 170,593 | | $ | 173,014 | | $ | (2,421) |
Interest income from investment securities | |
| 18,385 | |
| 21,132 | |
| (2,747) |
Interest expense | |
| (44,295) | |
| (41,987) | |
| (2,308) |
Net interest income | | $ | 144,683 | | $ | 152,159 | | $ | (7,476) |
For the Three Months Ended | |||||||||||
September 30, 2021 | June 30, 2021 | ||||||||||
Commercial | 5.5 | % | 5.6 | % | |||||||
Residential | 5.0 | % | 5.5 | % | |||||||
Overall | 5.5 | % | 5.7 | % |
| | | | | |
| | For the Three Months Ended | | ||
| | March 31, 2021 | | December 31, 2020 | |
Commercial | | 5.9 | % | 6.3 | % |
Residential | | 7.5 | % | 7.2 | % |
Overall | | 6.1 | % | 6.4 | % |
higher prepayment related income on commercial loans.
65
During the three months ended March 31,September 30, 2021 and December 31, 2020,June 30, 2021, the Commercial and Residential Lending Segment’s weighted average secured borrowing rates, inclusive of interest rate hedging costs and the amortization of deferred financing fees, were 2.6%2.4% and 2.5%, respectively.
(Loss)
Costs and Expenses
For the Three Months Ended | |||||||||||||||||
September 30, 2021 | June 30, 2021 | Change | |||||||||||||||
Interest income from loans | $ | 21,566 | $ | 21,171 | $ | 395 | |||||||||||
Interest income from investment securities | 540 | 555 | (15) | ||||||||||||||
Interest expense | (9,381) | (9,694) | 313 | ||||||||||||||
Net interest income | $ | 12,725 | $ | 12,032 | $ | 693 |
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
|
| March 31, 2021 |
| December 31, 2020 |
| Change | |||
Interest income from loans | | $ | 18,808 | | $ | 18,477 | | $ | 331 |
Interest income from investment securities | |
| 564 | |
| 618 | |
| (54) |
Interest expense | |
| (8,841) | |
| (9,204) | |
| 363 |
Net interest income | | $ | 10,531 | | $ | 9,891 | | $ | 640 |
66
During the three months ended March 31,September 30, 2021 and 2020,June 30, 2021, the weighted average unlevered yields on the Infrastructure Lending Segment’s investments were as follows:
For the Three Months Ended | |||||||||||
September 30, 2021 | June 30, 2021 | ||||||||||
Loans and investment securities held-for-investment | 4.9 | % | 4.9 | % | |||||||
Loans held-for-sale | 2.8 | % | 2.9 | % |
| | | | | |
| | For the Three Months Ended | | ||
| | March 31, 2021 | | December 31, 2020 | |
Loans and investment securities held-for-investment | | 4.8 | % | 4.8 | % |
Loans held-for-sale | | 3.2 | % | 3.7 | % |
June 30, 2021. This improvement was primarily due to a $0.9 million lower loss on extinguishment of debt.
$ Change from prior period | |||||||||||||||||||||||||||||
Revenues | Costs and expenses | Gain (loss) on derivative financial instruments | Other income (loss) | Income (loss) before income taxes | |||||||||||||||||||||||||
Master Lease Portfolio | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Medical Office Portfolio | 423 | 359 | 44 | — | 108 | ||||||||||||||||||||||||
Woodstar I Portfolio | 682 | 107 | 10 | — | 585 | ||||||||||||||||||||||||
Woodstar II Portfolio | 168 | 297 | — | — | (129) | ||||||||||||||||||||||||
Other/Corporate | — | (46) | — | 9 | 55 | ||||||||||||||||||||||||
Total | $ | 1,273 | $ | 717 | $ | 54 | $ | 9 | $ | 619 | |||||||||||||||||||
| | | | | | | | | | | | | | | |
|
| $ Change from prior period | |||||||||||||
| | | | Costs and | | Gain (loss) on derivative | | | | Income (loss) before | |||||
| | Revenues |
| expenses |
| financial instruments |
| Other income (loss) |
| income taxes | |||||
Master Lease Portfolio | | $ | — | | $ | (13) | | $ | — | | $ | — | | $ | 13 |
Medical Office Portfolio | | | 125 | | | (61) | | | 3,833 | | | — | | | 4,019 |
Woodstar I Portfolio | | | 524 | | | (1,471) | | | 133 | | | — | | | 2,128 |
Woodstar II Portfolio | | | 449 | | | (287) | | | — | | | (141) | | | 595 |
Ireland Portfolio | | | — | | | — | | | — | | | — | | | — |
Investment in unconsolidated entities | |
| — | |
| — | |
| — | |
| — | |
| — |
Other/Corporate | | | (19) | | | 41 | | | — | | | 392 | | | 332 |
Total | | $ | 1,079 | | $ | (1,791) | | $ | 3,966 | | $ | 251 | | $ | 7,087 |
Revenues
June 30, 2021.
Loss
67
Investing and Servicing Segment
loans.
Income (Loss)
68
Income Tax Provision
(Provision) Benefit
Three
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
| | March 31, | | | | ||||
|
| 2021 |
| 2020 |
| Change | |||
Interest income from loans | | $ | 170,593 | | $ | 192,381 | | $ | (21,788) |
Interest income from investment securities | |
| 18,385 | |
| 18,628 | |
| (243) |
Interest expense | |
| (44,295) | |
| (53,950) | |
| 9,655 |
Net interest income | | $ | 144,683 | | $ | 157,059 | | $ | (12,376) |
For the Nine Months Ended September 30, | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
Interest income from loans | $ | 515,776 | $ | 492,489 | $ | 23,287 | |||||||||||
Interest income from investment securities | 51,618 | 57,358 | (5,740) | ||||||||||||||
Interest expense | (144,717) | (134,243) | (10,474) | ||||||||||||||
Net interest income | $ | 422,677 | $ | 415,604 | $ | 7,073 |
69
During the threenine months ended March 31,September 30, 2021 and 2020, the weighted average unlevered yields on the Commercial and Residential Lending Segment’s loans and investment securities, excluding retained RMBS, were as follows:
For the Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Commercial | 5.8 | % | 6.5 | % | |||||||
Residential | 5.0 | % | 5.7 | % | |||||||
Overall | 5.8 | % | 6.5 | % |
| | | | | |
| | For the Three Months Ended | | ||
| | March 31, | | ||
| | 2021 | | 2020 | |
Commercial | | 5.9 | % | 6.8 | % |
Residential | | 7.5 | % | 6.8 | % |
Overall | | 6.1 | % | 6.8 | % |
newer loans.
Costs and Expenses
70
Net Interest Income (amounts in thousands)
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
| | March 31, | | | | ||||
|
| 2021 |
| 2020 |
| Change | |||
Interest income from loans | | $ | 18,808 | | $ | 22,413 | | $ | (3,605) |
Interest income from investment securities | |
| 564 | |
| 701 | |
| (137) |
Interest expense | |
| (8,841) | |
| (13,117) | |
| 4,276 |
Net interest income | | $ | 10,531 | | $ | 9,997 | | $ | 534 |
For the Nine Months Ended September 30, | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
Interest income from loans | $ | 61,545 | $ | 59,374 | $ | 2,171 | |||||||||||
Interest income from investment securities | 1,659 | 2,019 | (360) | ||||||||||||||
Interest expense | (27,916) | (31,709) | 3,793 | ||||||||||||||
Net interest income | $ | 35,288 | $ | 29,684 | $ | 5,604 |
For the Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Loans and investment securities held-for-investment | 4.9 | % | 5.3 | % | |||||||
Loans held-for-sale | 2.8 | % | 3.7 | % |
| | | | | |
| | For the Three Months Ended | | ||
| | March 31, | | ||
| | 2021 | | 2020 | |
Loans and investment securities held-for-investment | | 4.8 | % | 6.1 | % |
Loans held-for-sale | | 3.2 | % | 3.6 | % |
Loss
$ Change from prior period | |||||||||||||||||||||||||||||
Revenues | Costs and expenses | Gain (loss) on derivative financial instruments | Other income (loss) | Income (loss) before income taxes | |||||||||||||||||||||||||
Master Lease Portfolio | $ | (11) | $ | (125) | $ | — | $ | — | $ | 114 | |||||||||||||||||||
Medical Office Portfolio | 799 | (3,037) | 38,846 | — | 42,682 | ||||||||||||||||||||||||
Woodstar I Portfolio | 2,848 | 255 | 338 | 1,702 | 4,633 | ||||||||||||||||||||||||
Woodstar II Portfolio | 2,023 | 4,535 | — | (141) | (2,653) | ||||||||||||||||||||||||
Other/Corporate | (14) | (553) | — | 280 | 819 | ||||||||||||||||||||||||
Total | $ | 5,645 | $ | 1,075 | $ | 39,184 | $ | 1,841 | $ | 45,595 |
| | | | | | | | | | | | | | | |
|
| $ Change from prior period | |||||||||||||
| | | | Costs and | | Gain (loss) on derivative | | | | Income (loss) before | |||||
| | Revenues |
| expenses |
| financial instruments |
| Other income (loss) |
| income taxes | |||||
Master Lease Portfolio | | $ | — | | $ | (4) | | $ | — | | $ | — | | $ | 4 |
Medical Office Portfolio | | | 388 | | | (753) | | | 34,825 | | | — | | | 35,966 |
Woodstar I Portfolio | | | 305 | | | (139) | | | 122 | | | — | | | 566 |
Woodstar II Portfolio | | | 368 | | | 284 | | | — | | | (141) | | | (57) |
Ireland Portfolio | | | — | | | — | | | — | | | — | | | — |
Investment in unconsolidated entities | |
| — | |
| — | |
| — | |
| — | |
| — |
Other/Corporate | | | — | | | (552) | | | — | | | (6) | | | 546 |
Total | | $ | 1,061 | | $ | (1,164) | | $ | 34,947 | | $ | (147) | | $ | 37,025 |
71
Costs and Expenses
For the threenine months ended March 31,September 30, 2021, costs and expensesother income (loss) of our Property Segment decreased $1.2improved $41.0 million to $59.5 million, compared to $60.7 million for the three months ended March 31, 2020. The decrease in costs and expenses primarily reflects a $1.3 million decrease in interest expense.
Other Income (Loss)
For the three months ended March 31, 2021, other income of our Property Segment increased $34.8 million to $4.6$3.9 million, compared to a loss of $30.2$37.1 million for the threenine months ended March 31,September 30, 2020. The improvement in other income (loss) was primarily due to a $34.9$39.2 million favorable change in gain (loss) on derivatives which primarily hedge our interest rate risk on borrowings secured by our Medical Office Portfolio.
reflecting an increased volume of COVID-19 related loan resolutions.
72
Corporate Other Income (Loss)
For the three months ended March 31, 2021, corporate other income decreased $36.0 million to a loss of $6.8 million, compared to income of $29.2 million for the three months ended March 31, 2020. This was due to an unfavorable change in gain (loss) on interest rate swaps which hedge a portion of our unsecured senior notes used to repay variable-rate secured financing.
non-cash equity compensation expense;
incentive fees due under our management agreement;
depreciation and amortization of real estate and associated intangibles;
acquisition costs associated with successful acquisitions;
73
We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and cash flow from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a useful financial metric for existing and potential future holders of our common stock as historically, over time, Distributable Earnings has been a strong indicator of our dividends per share. As a REIT, we generally must distribute annually at least 90% of our net taxable income, subject to certain adjustments, and therefore we believe our dividends are one of the principal reasons stockholders may invest in our common stock. Further, Distributable Earnings helps us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations, and is a performance metric we consider when declaring our dividends. We also use Distributable Earnings (previously defined as “Core Earnings”) to compute the incentive fee due under our management agreement.
Unvested stock awards – Currently, unvested stock awards are excluded from the denominator of GAAP EPS. The related compensation expense is also excluded from Distributable Earnings. In order to effectuate dilution from these awards in the Distributable Earnings computation, we adjust the GAAP diluted share count to include these shares.
Convertible Notes – Conversion of our Convertible Notes is an event that is contingent upon numerous factors, none of which are in our control, and is an event that may or may not occur. Consistent with the treatment of other unrealized adjustments to Distributable Earnings, we adjust the GAAP diluted share count to exclude the potential shares issuable upon conversion until a conversion occurs.
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, 2021 | | December 31, 2020 | | March 31, 2020 |
Diluted weighted average shares - GAAP EPS | | 293,231 | | 292,900 | | 280,990 |
Add: Unvested stock awards | | 4,484 | | 3,361 | | 2,723 |
Add: Woodstar II Class A Units | | 10,622 | | 10,598 | | 10,738 |
Add: Other dilutive securities not included above | | — | | — | | 685 |
Less: Convertible Notes dilution | | (9,649) | | (9,649) | | — |
Diluted weighted average shares - Distributable EPS |
| 298,688 |
| 297,210 |
| 295,136 |
For the Three Months Ended | For the Nine Months Ended September 30, | ||||||||||||||||||||||
September 30, 2021 | June 30, 2021 | 2021 | 2020 | ||||||||||||||||||||
Diluted weighted average shares - GAAP EPS | 295,448 | 294,571 | 294,393 | 281,868 | |||||||||||||||||||
Add: Unvested stock awards | 4,167 | 4,398 | 4,274 | 2,587 | |||||||||||||||||||
Add: Woodstar II Class A Units | 9,849 | 10,383 | 10,282 | 10,676 | |||||||||||||||||||
Less: Convertible Notes dilution | (9,649) | (9,649) | (9,649) | — | |||||||||||||||||||
Diluted weighted average shares - Distributable EPS | 299,815 | 299,703 | 299,300 | 295,131 |
74
Distributable Earnings For the Three-Month Periods Ended | |||||||||||
March 31, | June 30, | September 30, | |||||||||
2021 | $ | 0.50 | $ | 0.51 | $ | 0.52 | |||||
2020 | 0.55 | 0.43 | 0.50 |
The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the three months ended March 31,September 30, 2021, by business segment (amounts in thousands, except per share data):
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Total | ||||||||||||||||||||||||||||||
Revenues | $ | 197,045 | $ | 22,172 | $ | 66,727 | $ | 52,441 | $ | — | $ | 338,385 | |||||||||||||||||||||||
Costs and expenses | (62,457) | (12,207) | (62,431) | (33,704) | (60,703) | (231,502) | |||||||||||||||||||||||||||||
Other income (loss) | 25,633 | 300 | (334) | 15,869 | (446) | 41,022 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 160,221 | 10,265 | 3,962 | 34,606 | (61,149) | 147,905 | |||||||||||||||||||||||||||||
Income tax (provision) benefit | (5,652) | 488 | — | (2,337) | — | (7,501) | |||||||||||||||||||||||||||||
Income attributable to non-controlling interests | (3) | — | (4,691) | (7,108) | — | (11,802) | |||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 154,566 | 10,753 | (729) | 25,161 | (61,149) | 128,602 | |||||||||||||||||||||||||||||
Add / (Deduct): | |||||||||||||||||||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 4,691 | — | — | 4,691 | |||||||||||||||||||||||||||||
Non-cash equity compensation expense | 1,787 | 423 | 54 | 1,108 | 6,080 | 9,452 | |||||||||||||||||||||||||||||
Management incentive fee | — | — | — | — | 953 | 953 | |||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | (98) | — | (89) | — | — | (187) | |||||||||||||||||||||||||||||
Depreciation and amortization | 252 | 91 | 17,950 | 3,884 | — | 22,177 | |||||||||||||||||||||||||||||
Credit loss provision (reversal), net | 19 | (582) | — | — | — | (563) | |||||||||||||||||||||||||||||
Interest income adjustment for securities | (171) | — | — | 3,748 | — | 3,577 | |||||||||||||||||||||||||||||
Extinguishment of debt, net | — | — | — | — | (246) | (246) | |||||||||||||||||||||||||||||
Other non-cash items | 3 | — | (282) | 173 | (2) | (108) | |||||||||||||||||||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | |||||||||||||||||||||||||||||||||||
Loans | (22,464) | — | — | (9,263) | — | (31,727) | |||||||||||||||||||||||||||||
Securities | 8,682 | — | — | (2,870) | — | 5,812 | |||||||||||||||||||||||||||||
Derivatives | (40,473) | (150) | (1,495) | (4,660) | 2,406 | (44,372) | |||||||||||||||||||||||||||||
Foreign currency | 26,820 | 168 | 16 | (1) | — | 27,003 | |||||||||||||||||||||||||||||
(Earnings) loss from unconsolidated entities | (1,666) | (399) | — | (153) | — | (2,218) | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Recognition of Distributable realized gains / (losses) on: | |||||||||||||||||||||||||||||||||||
Loans | 19,010 | — | — | 9,141 | — | 28,151 | |||||||||||||||||||||||||||||
Securities | (11,093) | — | — | 3,642 | — | (7,451) | |||||||||||||||||||||||||||||
Derivatives | 6,129 | — | (35) | 4,183 | — | 10,277 | |||||||||||||||||||||||||||||
Foreign currency | (1,171) | (13) | (16) | 1 | — | (1,199) | |||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 1,806 | 399 | — | 261 | — | 2,466 | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Distributable Earnings (Loss) | $ | 141,938 | $ | 10,690 | $ | 20,065 | $ | 34,355 | $ | (51,958) | $ | 155,090 | |||||||||||||||||||||||
Distributable Earnings (Loss) per Weighted Average Diluted Share | $ | 0.47 | $ | 0.04 | $ | 0.07 | $ | 0.11 | $ | (0.17) | $ | 0.52 |
| | | | | | | | | | | | | | | | | | |
|
| Commercial |
| |
| |
| |
| |
| | ||||||
| | and | | | | | | | | | | | | | | | | |
| | Residential | | Infrastructure | | | | Investing | | | | | ||||||
| | Lending | | Lending | | Property | | and Servicing | | | | | ||||||
| | Segment | | Segment | | Segment | | Segment | | Corporate | | Total | ||||||
Revenues | | $ | 190,531 | | $ | 19,465 | | $ | 65,144 | | $ | 44,547 | | $ | — | | $ | 319,687 |
Costs and expenses | |
| (56,414) | |
| (12,956) | |
| (59,498) | |
| (32,457) | | | (71,647) | |
| (232,972) |
Other income (loss) | |
| 21,161 | |
| 95 | |
| 4,608 | |
| 18,960 | |
| (6,843) | |
| 37,981 |
Income (loss) before income taxes | |
| 155,278 | |
| 6,604 | |
| 10,254 | |
| 31,050 | | | (78,490) | |
| 124,696 |
Income tax provision | |
| (1,505) | |
| (92) | |
| — | |
| (633) | | | — | |
| (2,230) |
Income attributable to non-controlling interests | |
| (3) | |
| — | |
| (5,077) | |
| (6,008) | |
| — | |
| (11,088) |
Net income (loss) attributable to Starwood Property Trust, Inc. | | | 153,770 | |
| 6,512 | |
| 5,177 | |
| 24,409 | | | (78,490) | |
| 111,378 |
Add / (Deduct): | | | | | | | | | | | | | | | | | | |
Non-controlling interests attributable to Woodstar II Class A Units | | | — | | | — | | | 5,077 | | | — | | | — | |
| 5,077 |
Non-cash equity compensation expense | | | 1,781 | | | 300 | | | 31 | | | 881 | | | 7,317 | |
| 10,310 |
Management incentive fee | | | — | | | — | | | — | | | — | | | 13,123 | |
| 13,123 |
Acquisition and investment pursuit costs | | | (164) | | | — | | | (89) | | | — | | | — | |
| (253) |
Depreciation and amortization | | | 247 | | | 91 | | | 18,161 | | | 3,603 | | | — | |
| 22,102 |
Credit loss (reversal) provision, net | | | (529) | | | 573 | | | — | | | — | | | — | |
| 44 |
Interest income adjustment for securities | | | (1,300) | | | — | | | — | | | 3,995 | | | — | |
| 2,695 |
Extinguishment of debt, net | | | — | | | — | | | — | | | — | | | (246) | | | (246) |
Income tax (provision) benefit associated with realized (gains) losses | | | (6,495) | | | — | | | — | | | 405 | | | — | | | (6,090) |
Other non-cash items | | | 3 | | | — | | | (337) | | | 207 | | | 415 | |
| 288 |
Reversal of GAAP unrealized (gains) / losses on: | | | | | | | | | | | | | | | | | | |
Loans | | | 10,714 | | | — | | | — | | | (1,236) | | | — | |
| 9,478 |
Securities | | | 2,050 | | | — | | | — | | | (7,170) | | | — | | | (5,120) |
Derivatives | | | (27,171) | | | (745) | | | (6,446) | | | (9,719) | | | 9,313 | |
| (34,768) |
Foreign currency | | | 11,594 | | | 49 | | | (25) | | | 63 | | | — | |
| 11,681 |
(Earnings) loss from unconsolidated entities | | | (1,753) | | | 254 | | | — | | | (589) | | | — | |
| (2,088) |
Sales of properties | | | (17,693) | | | — | | | — | | | — | | | — | |
| (17,693) |
Recognition of Distributable realized gains / (losses) on: | | | | | | | | | | | | | | | | | | |
Loans | | | 14,553 | | | — | | | — | | | 4,672 | | | — | | | 19,225 |
Realized credit loss | | | (7,757) | | | — | | | — | | | — | | | — | | | (7,757) |
Securities | | | (2,861) | | | — | | | — | | | 1,776 | | | — | |
| (1,085) |
Derivatives | | | 1,950 | | | — | | | (35) | | | 1,595 | | | — | |
| 3,510 |
Foreign currency | | | 4,784 | | | (10) | | | 25 | | | (63) | | | — | |
| 4,736 |
Earnings (loss) from unconsolidated entities | | | 3,218 | | | (254) | | | — | | | 964 | | | — | |
| 3,928 |
Sales of properties | | | 8,298 | | | — | | | — | | | — | | | — | |
| 8,298 |
Distributable Earnings (Loss) | | $ | 147,239 | | $ | 6,770 | | $ | 21,539 | | $ | 23,793 | | $ | (48,568) | | $ | 150,773 |
Distributable Earnings (Loss) per Weighted Average Diluted Share | | $ | 0.49 | | $ | 0.02 | | $ | 0.07 | | $ | 0.08 | | $ | (0.16) | | $ | 0.50 |
75
The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the three months ended December 31, 2020,June 30, 2021, by business segment (amounts in thousands, except per share data):
| | | | | | | | | | | | | | | | | | |
|
| Commercial |
| | |
| |
| |
| |
| | |||||
| | and | | | | | | | | | | | | | | | | |
| | Residential | | Infrastructure | | | | Investing | | | | | ||||||
| | Lending | | Lending | | Property | | and Servicing | | | | | ||||||
| | Segment | | Segment | | Segment | | Segment | | Corporate | | Total | ||||||
Revenues | | $ | 196,309 | | $ | 19,250 | | $ | 64,065 | | $ | 45,372 | | $ | — | | $ | 324,996 |
Costs and expenses | |
| (50,999) | | | (5,555) | | | (61,289) | | | (39,722) | | | (73,965) | | | (231,530) |
Other income (loss) | |
| 13,318 | | | (259) | | | 391 | | | 22,349 | | | (1,239) | | | 34,560 |
Income (loss) before income taxes | |
| 158,628 | | | 13,436 | | | 3,167 | | | 27,999 | | | (75,204) | | | 128,026 |
Income tax provision | |
| (5,556) | | | (120) | | | — | | | (7,705) | | | — | | | (13,381) |
(Income) loss attributable to non-controlling interests | |
| (4) | | | — | | | (5,100) | | | (2,573) | | | — | | | (7,677) |
Net income (loss) attributable to Starwood Property Trust, Inc. | | | 153,068 | | | 13,316 | | | (1,933) | | | 17,721 | | | (75,204) | | | 106,968 |
Add / (Deduct): | | | | | | | | | | | | | | | | | | |
Non-controlling interests attributable to Woodstar II Class A Units | | | — | | | — | | | 5,100 | | | — | | | — | | | 5,100 |
Non-cash equity compensation expense | | | 891 | | | 299 | | | 34 | | | 869 | | | 6,707 | | | 8,800 |
Management incentive fee | | | — | | | — | | | — | | | — | | | 14,974 | | | 14,974 |
Acquisition and investment pursuit costs | | | (278) | | | — | | | (89) | | | — | | | — | | | (367) |
Depreciation and amortization | | | 372 | | | 86 | | | 18,736 | | | 3,832 | | | — | | | 23,026 |
Credit loss reversal, net | | | (5,037) | | | (7,094) | | | — | | | — | | | — | | | (12,131) |
Interest income adjustment for securities | | | (1,102) | | | — | | | — | | | 5,245 | | | — | | | 4,143 |
Extinguishment of debt, net | | | — | | | — | | | — | | | — | | | (247) | | | (247) |
Income tax provision associated with fair value adjustments | | | 4,883 | | | — | | | — | | | 550 | | | — | | | 5,433 |
Other non-cash items | | | 4 | | | — | | | (374) | | | 239 | | | 161 | | | 30 |
Reversal of GAAP unrealized (gains) / losses on: | | | | | | | | | | | | | | | | | | |
Loans | | | (20,002) | | | — | | | — | | | (33,422) | | | — | | | (53,424) |
Securities | | | 6,294 | | | — | | | — | | | 15,377 | | | — | | | 21,671 |
Derivatives | | | 48,046 | | | 105 | | | (2,480) | | | (2,218) | | | 3,945 | | | 47,398 |
Foreign currency | | | (43,962) | | | (260) | | | (39) | | | 5 | | | — | | | (44,256) |
Earnings from unconsolidated entities | | | (4,804) | | | (431) | | | — | | | (341) | | | — | | | (5,576) |
Recognition of Distributable realized gains / (losses) on: | | | | | | | | | | | | | | | | | | |
Loans | | | 2,461 | | | — | | | — | | | 32,528 | | | — | | | 34,989 |
Securities | | | 398 | | | — | | | — | | | (9,389) | | | — | | | (8,991) |
Derivatives | | | (3,858) | | | — | | | (34) | | | 20 | | | — | | | (3,872) |
Foreign currency | | | 631 | | | 14 | | | 39 | | | (5) | | | — | | | 679 |
Earnings from unconsolidated entities | | | 2,914 | | | 431 | | | — | | | 745 | | | — | | | 4,090 |
Distributable Earnings (Loss) | | $ | 140,919 | | $ | 6,466 | | $ | 18,960 | | $ | 31,756 | | $ | (49,664) | | $ | 148,437 |
Distributable Earnings (Loss) per Weighted Average Diluted Share | | $ | 0.47 | | $ | 0.02 | | $ | 0.07 | | $ | 0.11 | | $ | (0.17) | | $ | 0.50 |
76
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Total | ||||||||||||||||||||||||||||||
Revenues | $ | 184,490 | $ | 21,795 | $ | 65,454 | $ | 57,504 | $ | — | $ | 329,243 | |||||||||||||||||||||||
Costs and expenses | (47,543) | (14,178) | (61,714) | (40,253) | (62,376) | (226,064) | |||||||||||||||||||||||||||||
Other income (loss) | (4,051) | (930) | (397) | 24,904 | 927 | 20,453 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 132,896 | 6,687 | 3,343 | 42,155 | (61,449) | 123,632 | |||||||||||||||||||||||||||||
Income tax benefit (provision) | 8,043 | (58) | — | (4,632) | — | 3,353 | |||||||||||||||||||||||||||||
Income attributable to non-controlling interests | (4) | — | (4,914) | (5,757) | — | (10,675) | |||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 140,935 | 6,629 | (1,571) | 31,766 | (61,449) | 116,310 | |||||||||||||||||||||||||||||
Add / (Deduct): | |||||||||||||||||||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 4,914 | — | — | 4,914 | |||||||||||||||||||||||||||||
Non-cash equity compensation expense | 1,859 | 440 | 57 | 1,190 | 6,051 | 9,597 | |||||||||||||||||||||||||||||
Management incentive fee | — | — | — | — | 5,031 | 5,031 | |||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | (196) | — | (88) | (58) | — | (342) | |||||||||||||||||||||||||||||
Depreciation and amortization | 251 | 90 | 17,969 | 3,812 | — | 22,122 | |||||||||||||||||||||||||||||
Credit loss (reversal) provision, net | (12,447) | 603 | — | — | — | (11,844) | |||||||||||||||||||||||||||||
Interest income adjustment for securities | (861) | — | — | 3,662 | — | 2,801 | |||||||||||||||||||||||||||||
Extinguishment of debt, net | — | — | — | — | (247) | (247) | |||||||||||||||||||||||||||||
Other non-cash items | 6 | — | (262) | 205 | — | (51) | |||||||||||||||||||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | |||||||||||||||||||||||||||||||||||
Loans | (12,329) | — | — | (33,538) | — | (45,867) | |||||||||||||||||||||||||||||
Securities | 9,402 | — | — | 12,585 | — | 21,987 | |||||||||||||||||||||||||||||
Derivatives | 3,594 | (173) | (1,401) | 4,927 | 1,532 | 8,479 | |||||||||||||||||||||||||||||
Foreign currency | (2,715) | 62 | 25 | 1 | — | (2,627) | |||||||||||||||||||||||||||||
(Earnings) loss from unconsolidated entities | (1,996) | 70 | — | 507 | — | (1,419) | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | (9,723) | — | (9,723) | |||||||||||||||||||||||||||||
Recognition of Distributable realized gains / (losses) on: | |||||||||||||||||||||||||||||||||||
Loans | 11,062 | — | — | 30,623 | — | 41,685 | |||||||||||||||||||||||||||||
Securities | (18,088) | — | — | (2,779) | — | (20,867) | |||||||||||||||||||||||||||||
Derivatives | (2,546) | — | (34) | (718) | — | (3,298) | |||||||||||||||||||||||||||||
Foreign currency | 6,518 | (31) | (25) | (1) | — | 6,461 | |||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 4,444 | (70) | — | 776 | — | 5,150 | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | 4,975 | — | 4,975 | |||||||||||||||||||||||||||||
Distributable Earnings (Loss) | $ | 126,893 | $ | 7,620 | $ | 19,584 | $ | 48,212 | $ | (49,082) | $ | 153,227 | |||||||||||||||||||||||
Distributable Earnings (Loss) per Weighted Average Diluted Share | $ | 0.42 | $ | 0.02 | $ | 0.07 | $ | 0.16 | $ | (0.16) | $ | 0.51 |
The following table presents our summarized results of operations and reconciliation to Distributable Earnings for the three months ended March 31, 2020, by business segment (amounts in thousands, except per share data):
| | | | | | | | | | | | | | | | | | |
|
| Commercial |
| | |
| |
| |
| |
| | |||||
| | and | | | | | | | | | | | | | | | | |
| | Residential | | Infrastructure | | | | Investing | | | | | ||||||
| | Lending | | Lending | | Property | | and Servicing | | | | | ||||||
| | Segment | | Segment | | Segment | | Segment | | Corporate | | Total | ||||||
Revenues | | $ | 211,437 | | $ | 23,257 | | $ | 64,083 | | $ | 44,495 | | $ | — | | $ | 343,272 |
Costs and expenses | |
| (104,780) | | | (26,079) | | | (60,662) | | | (36,928) | | | (73,213) | | | (301,662) |
Other income (loss) | |
| (66,541) | | | (1,348) | | | (30,192) | | | (45,918) | | | 29,235 | | | (114,764) |
Income (loss) before income taxes | |
| 40,116 | | | (4,170) | | | (26,771) | | | (38,351) | | | (43,978) | | | (73,154) |
Income tax benefit | |
| 4,422 | | | 145 | | | — | | | 2,162 | | | — | | | 6,729 |
(Income) loss attributable to non-controlling interests | |
| (3) | | | — | | | (5,111) | | | 4,770 | | | — | | | (344) |
Net income (loss) attributable to Starwood Property Trust, Inc. | | | 44,535 | | | (4,025) | | | (31,882) | | | (31,419) | | | (43,978) | | | (66,769) |
Add / (Deduct): | | | | | | | | | | | | | | | | | | |
Non-controlling interests attributable to Woodstar II Class A Units | | | — | | | — | | | 5,111 | | | — | | | — | | | 5,111 |
Non-cash equity compensation expense | | | 1,112 | | | 466 | | | 73 | | | 1,263 | | | 5,886 | | | 8,800 |
Management incentive fee | | | — | | | — | | | — | | | — | | | 15,799 | | | 15,799 |
Acquisition and investment pursuit costs | | | 358 | | | — | | | (89) | | | — | | | — | | | 269 |
Depreciation and amortization | | | 355 | | | 51 | | | 19,381 | | | 3,807 | | | — | | | 23,594 |
Credit loss provision, net | | | 40,217 | | | 8,452 | | | — | | | — | | | — | | | 48,669 |
Interest income adjustment for securities | | | 124 | | | — | | | — | | | 6,315 | | | — | | | 6,439 |
Extinguishment of debt, net | | | — | | | — | | | — | | | — | | | (246) | | | (246) |
Income tax benefit associated with fair value adjustments | | | (5,821) | | | — | | | — | | | (1,442) | | | — | | | (7,263) |
Other non-cash items | | | 3 | | | — | | | (491) | | | 248 | | | 156 | | | (84) |
Reversal of GAAP unrealized (gains) / losses on: | | | | | | | | | | | | | | | | | | |
Loans | | | 35,517 | | | — | | | — | | | (19,383) | | | — | | | 16,134 |
Securities | | | 27,879 | | | — | | | — | | | 47,216 | | | — | | | 75,095 |
Derivatives | | | (30,563) | | | 1,013 | | | 30,569 | | | 19,013 | | | (27,649) | | | (7,617) |
Foreign currency | | | 34,001 | | | 473 | | | 19 | | | (7) | | | — | | | 34,486 |
Earnings from unconsolidated entities | | | (51) | | | — | | | — | | | (620) | | | — | | | (671) |
Recognition of Distributable realized gains / (losses) on: | | | | | | | | | | | | | | | | | | |
Loans | | | 2,164 | | | (62) | | | — | | | 16,559 | | | — | | | 18,661 |
Securities | | | — | | | — | | | — | | | (4,212) | | | — | | | (4,212) |
Derivatives | | | 3,250 | | | 118 | | | (35) | | | (6,087) | | | — | | | (2,754) |
Foreign currency | | | (4,271) | | | (194) | | | (19) | | | 7 | | | — | | | (4,477) |
(Loss) earnings from unconsolidated entities | | | (556) | | | — | | | — | | | 3,738 | | | — | | | 3,182 |
Distributable Earnings (Loss) | | $ | 148,253 | | $ | 6,292 | | $ | 22,637 | | $ | 34,996 | | $ | (50,032) | | $ | 162,146 |
Distributable Earnings (Loss) per Weighted Average Diluted Share | | $ | 0.50 | | $ | 0.02 | | $ | 0.08 | | $ | 0.12 | | $ | (0.17) | | $ | 0.55 |
77
Three Months Ended March 31,September 30, 2021 Compared to the Three Months Ended December 31, 2020June 30, 2021
expenses.
derivatives, net of related foreign currency gains (losses), associated with commercial loan activity, all partially offset by (v) the nonrecurrence of $7.5 million of gains on sales of RMBS in the second quarter of 2021.
Costs and expenses decreased by $0.3 million in the first quarter of 2021, primarily due to a slight decrease in interest expense on the secured debt facilities used to finance this segment’s investments.
78
Property Segment
For the Three Months Ended | |||||||||||||||||
September 30, 2021 | June 30, 2021 | Change | |||||||||||||||
Master Lease Portfolio | $ | 4,307 | $ | 4,306 | $ | 1 | |||||||||||
Medical Office Portfolio | 4,902 | 4,968 | (66) | ||||||||||||||
Woodstar I Portfolio | 6,449 | 5,846 | 603 | ||||||||||||||
Woodstar II Portfolio | 5,156 | 5,262 | (106) | ||||||||||||||
Other/Corporate | (749) | (798) | 49 | ||||||||||||||
Distributable Earnings | $ | 20,065 | $ | 19,584 | $ | 481 |
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
|
| March 31, 2021 |
| December 31, 2020 |
| Change | |||
Master Lease Portfolio | | $ | 4,312 | | $ | 4,300 | | $ | 12 |
Medical Office Portfolio | | | 5,513 | | | 5,339 | | | 174 |
Woodstar I Portfolio | | | 6,338 | | | 4,907 | | | 1,431 |
Woodstar II Portfolio | | | 6,100 | | | 5,470 | | | 630 |
Other/Corporate | | | (724) | | | (1,056) | | | 332 |
Distributable Earnings | | $ | 21,539 | | $ | 18,960 | | $ | 2,579 |
Costs and expenses decreased by $1.2 million in the firstthird quarter of 2021.
Other loss decreased
79
Income taxes, which principally relate to the taxable nature of this segment’s loan servicing and loan securitization businesses which are housed in TRSs, decreased $6.9$2.3 million due to lower taxable income of those TRSs in the firstthird quarter of 2021.
2021, primarily due to non-controlling interests in increased distributable earnings of a consolidated CMBS joint venture in which we hold a 51% interest.
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Total | ||||||||||||||||||||||||||||||
Revenues | $ | 572,066 | $ | 63,432 | $ | 197,325 | $ | 154,492 | $ | — | $ | 987,315 | |||||||||||||||||||||||
Costs and expenses | (166,414) | (39,341) | (183,643) | (106,414) | (194,726) | (690,538) | |||||||||||||||||||||||||||||
Other income (loss) | 42,743 | (535) | 3,877 | 59,733 | (6,362) | 99,456 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 448,395 | 23,556 | 17,559 | 107,811 | (201,088) | 396,233 | |||||||||||||||||||||||||||||
Income tax benefit (provision) | 886 | 338 | — | (7,602) | — | (6,378) | |||||||||||||||||||||||||||||
Income attributable to non-controlling interests | (10) | — | (14,682) | (18,873) | — | (33,565) | |||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 449,271 | 23,894 | 2,877 | 81,336 | (201,088) | 356,290 | |||||||||||||||||||||||||||||
Add / (Deduct): | |||||||||||||||||||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 14,682 | — | — | 14,682 | |||||||||||||||||||||||||||||
Non-cash equity compensation expense | 5,427 | 1,163 | 142 | 3,179 | 19,448 | 29,359 | |||||||||||||||||||||||||||||
Management incentive fee | — | — | — | — | 19,107 | 19,107 | |||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | (458) | — | (266) | (58) | — | (782) | |||||||||||||||||||||||||||||
Depreciation and amortization | 750 | 272 | 54,080 | 11,299 | — | 66,401 | |||||||||||||||||||||||||||||
Credit loss (reversal) provision, net | (12,957) | 594 | — | — | — | (12,363) | |||||||||||||||||||||||||||||
Interest income adjustment for securities | (2,332) | — | — | 11,405 | — | 9,073 | |||||||||||||||||||||||||||||
Extinguishment of debt, net | — | — | — | — | (739) | (739) | |||||||||||||||||||||||||||||
Income tax (provision) benefit associated with realized (gains) losses | (6,495) | — | — | 405 | — | (6,090) | |||||||||||||||||||||||||||||
Other non-cash items | 12 | — | (881) | 585 | 413 | 129 | |||||||||||||||||||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | |||||||||||||||||||||||||||||||||||
Loans | (24,079) | — | — | (44,037) | — | (68,116) | |||||||||||||||||||||||||||||
Securities | 20,134 | — | — | 2,545 | — | 22,679 | |||||||||||||||||||||||||||||
Derivatives | (64,050) | (1,068) | (9,342) | (9,452) | 13,251 | (70,661) | |||||||||||||||||||||||||||||
Foreign currency | 35,699 | 279 | 16 | 63 | — | 36,057 | |||||||||||||||||||||||||||||
(Earnings) loss from unconsolidated entities | (5,415) | (75) | — | (235) | — | (5,725) | |||||||||||||||||||||||||||||
Sales of properties | (17,693) | — | — | (9,723) | — | (27,416) | |||||||||||||||||||||||||||||
Recognition of Distributable realized gains / (losses) on: | |||||||||||||||||||||||||||||||||||
Loans | 44,625 | — | — | 44,436 | — | 89,061 | |||||||||||||||||||||||||||||
Realized credit loss | (7,757) | — | — | — | — | (7,757) | |||||||||||||||||||||||||||||
Securities | (32,042) | — | — | 2,639 | — | (29,403) | |||||||||||||||||||||||||||||
Derivatives | 5,533 | — | (104) | 5,060 | — | 10,489 | |||||||||||||||||||||||||||||
Foreign currency | 10,131 | (54) | (16) | (63) | — | 9,998 | |||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 9,468 | 75 | — | 2,001 | — | 11,544 | |||||||||||||||||||||||||||||
Sales of properties | 8,298 | — | — | 4,975 | — | 13,273 | |||||||||||||||||||||||||||||
Distributable Earnings (Loss) | $ | 416,070 | $ | 25,080 | $ | 61,188 | $ | 106,360 | $ | (149,608) | $ | 459,090 | |||||||||||||||||||||||
Distributable Earnings (Loss) per Weighted Average Diluted Share | $ | 1.39 | $ | 0.08 | $ | 0.20 | $ | 0.36 | $ | (0.50) | $ | 1.53 |
Commercial and Residential Lending Segment | Infrastructure Lending Segment | Property Segment | Investing and Servicing Segment | Corporate | Total | ||||||||||||||||||||||||||||||
Revenues | $ | 553,351 | $ | 61,737 | $ | 191,680 | $ | 137,655 | $ | — | $ | 944,423 | |||||||||||||||||||||||
Costs and expenses | (222,862) | (48,453) | (182,568) | (98,955) | (180,032) | (732,870) | |||||||||||||||||||||||||||||
Other (loss) income | 39,808 | (2,453) | (37,148) | 11,875 | 34,397 | 46,479 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 370,297 | 10,831 | (28,036) | 50,575 | (145,635) | 258,032 | |||||||||||||||||||||||||||||
Income tax (provision) benefit | (15,535) | 3 | — | 8,716 | — | (6,816) | |||||||||||||||||||||||||||||
Income attributable to non-controlling interests | (10) | — | (15,294) | (11,191) | — | (26,495) | |||||||||||||||||||||||||||||
Net income (loss) attributable to Starwood Property Trust, Inc. | 354,752 | 10,834 | (43,330) | 48,100 | (145,635) | 224,721 | |||||||||||||||||||||||||||||
Add / (Deduct): | |||||||||||||||||||||||||||||||||||
Non-controlling interests attributable to Woodstar II Class A Units | — | — | 15,294 | — | — | 15,294 | |||||||||||||||||||||||||||||
Non-cash equity compensation expense | 3,563 | 821 | 185 | 3,725 | 14,147 | 22,441 | |||||||||||||||||||||||||||||
Management incentive fee | — | — | — | — | 15,799 | 15,799 | |||||||||||||||||||||||||||||
Acquisition and investment pursuit costs | 401 | — | (266) | (72) | — | 63 | |||||||||||||||||||||||||||||
Depreciation and amortization | 1,095 | 208 | 57,808 | 10,669 | — | 69,780 | |||||||||||||||||||||||||||||
Credit loss provision, net | 51,252 | 2,991 | — | — | — | 54,243 | |||||||||||||||||||||||||||||
Interest income adjustment for securities | 238 | — | — | 9,856 | — | 10,094 | |||||||||||||||||||||||||||||
Extinguishment of debt, net | — | — | — | — | (739) | (739) | |||||||||||||||||||||||||||||
Income tax provision (benefit) associated with fair value adjustments | 1,612 | — | — | (955) | — | 657 | |||||||||||||||||||||||||||||
Other non-cash items | 10 | — | (1,689) | 703 | 470 | (506) | |||||||||||||||||||||||||||||
Reversal of GAAP unrealized (gains) / losses on: | |||||||||||||||||||||||||||||||||||
Loans | (56,895) | — | — | (22,805) | — | (79,700) | |||||||||||||||||||||||||||||
Securities | 8,814 | — | — | 36,026 | — | 44,840 | |||||||||||||||||||||||||||||
Derivatives | 8,816 | 1,260 | 32,593 | 21,986 | (23,509) | 41,146 | |||||||||||||||||||||||||||||
Foreign currency | 1,757 | 53 | 53 | (2) | — | 1,861 | |||||||||||||||||||||||||||||
(Earnings) loss from unconsolidated entities | (3,975) | 1,198 | — | (30,504) | — | (33,281) | |||||||||||||||||||||||||||||
Recognition of Distributable realized gains / (losses) on: | |||||||||||||||||||||||||||||||||||
Loans | 45,742 | (62) | — | 22,759 | — | 68,439 | |||||||||||||||||||||||||||||
Securities | — | — | — | (8,711) | — | (8,711) | |||||||||||||||||||||||||||||
Derivatives | (3,853) | 118 | (439) | (13,438) | — | (17,612) | |||||||||||||||||||||||||||||
Foreign currency | (5,441) | (147) | (53) | 2 | — | (5,639) | |||||||||||||||||||||||||||||
Earnings (loss) from unconsolidated entities | 2,772 | (813) | — | 17,502 | — | 19,461 | |||||||||||||||||||||||||||||
Sales of properties | — | — | — | (5,789) | — | (5,789) | |||||||||||||||||||||||||||||
Distributable Earnings (Loss) | $ | 410,660 | $ | 16,461 | $ | 60,156 | $ | 89,052 | $ | (139,467) | $ | 436,862 | |||||||||||||||||||||||
Distributable Earnings (Loss) per Weighted Average Diluted Share | $ | 1.39 | $ | 0.06 | $ | 0.20 | $ | 0.30 | $ | (0.47) | $ | 1.48 |
rates.
property, (v) gains of $7.5 million on sales of RMBS and (vi) a $6.7 million increase in earnings from unconsolidated entities primarily reflecting equity in higher distributable earnings of a residential mortgage originator.
80
Distributable Earnings, revenues were $19.5$63.4 million, costs and expenses were $12.0$37.3 million and other loss was $0.6$1.4 million.
rates and (ii) a $2.4 million decrease in general and administrative expenses reflecting lower compensation costs and professional fees.
2021, primarily due to an increased loss on extinguishment of debt resulting from the write-off of deferred financing fees relating to partial debt prepayments from CLO and other loan refinancings.
For the Nine Months Ended September 30, | |||||||||||||||||
2021 | 2020 | Change | |||||||||||||||
Master Lease Portfolio | $ | 12,925 | $ | 12,811 | $ | 114 | |||||||||||
Medical Office Portfolio | 15,382 | 14,526 | 856 | ||||||||||||||
Woodstar I Portfolio | 18,633 | 17,129 | 1,504 | ||||||||||||||
Woodstar II Portfolio | 16,518 | 18,736 | (2,218) | ||||||||||||||
Other/Corporate | (2,270) | (3,046) | 776 | ||||||||||||||
Distributable Earnings | $ | 61,188 | $ | 60,156 | $ | 1,032 |
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
| | March 31, | | | | ||||
|
| 2021 |
| 2020 |
| Change | |||
Master Lease Portfolio | | $ | 4,312 | | $ | 4,308 | | $ | 4 |
Medical Office Portfolio | | | 5,513 | | | 6,765 | | | (1,252) |
Woodstar I Portfolio | | | 6,338 | | | 6,784 | | | (446) |
Woodstar II Portfolio | | | 6,100 | | | 6,009 | | | 91 |
Other/Corporate | | | (724) | | | (1,229) | | | 505 |
Distributable Earnings | | $ | 21,539 | | $ | 22,637 | | $ | (1,098) |
2021, primarily reflecting increased rental rates in the Woodstar Portfolios.
Other income decreased by $2.2 million to a loss in the first quarternine months of 2021, primarily due to an unfavorable changea $2.5 million increase in repairs and maintenance.
derivatives, partially offset by a $2.0 million decreased loss on extinguishment of debt.
transaction.
81
Other income decreasedincreased by $15.4$20.7 million in the first quarternine months of 2021, primarily due to decreases(i) a $21.7 million increase in realized gains of $11.9 million on conduit loans, and $11.5 million on CMBS, partially offset by(ii) a $7.3$17.8 million favorable change in gain (loss)realized gains (losses) on related interest rate derivatives and (iii) a $5.6 million decrease in recognized losses on CMBS, all partially offset by (iv) a $15.5 million decrease in distributable earnings of unconsolidated entities, mostly related torepresenting nonrecurring gains in the conduit loans.
nine months of 2020, and (v) an $8.8 million lesser increase in fair value of servicing rights.
2021 compared to losses in the nine months of 2020.
financing.
Credit Facilities
Shortly after the initial outbreak of the COVID-19 pandemic, we entered into agreements with certain of our secured credit facility lenders in our commercial lending portfolio to temporarily suspend credit mark provisions on certain of their portfolio assets in exchange for: (i) cash repayments; (ii) pledges of additional collateral; and (iii) reductions of available borrowings.
We are in frequent, consistent dialogue with the providers of our secured credit facilities regarding our management of their collateral assets in light of the impacts of the COVID-19 pandemic, including the determination of whether any extensions to these agreements are necessary as these temporary suspensions expire. Our in-house asset management team, along with an experienced team of workout professionals within our special servicer, are skilled in managing loans throughout cycles, which we believe will assist us in achieving maximum resolution on any assets impacted by the COVID-19 pandemic.
No such modifications or agreements were made with lenders on credit facilities related to our property, residential lending or infrastructure lending portfolios.
82
Sources of Liquidity
| | | | | | | | | |
|
| | |
| VIE |
| Excluding Investing | ||
| | GAAP | | Adjustments | | and Servicing VIEs | |||
Net cash provided by operating activities | | $ | 270,766 | | $ | (353) | | $ | 270,413 |
Cash Flows from Investing Activities: | | | | | | | | | |
Origination, purchase and funding of loans held-for-investment | |
| (2,296,124) | |
| — | |
| (2,296,124) |
Proceeds from principal collections and sale of loans | |
| 1,051,695 | |
| — | |
| 1,051,695 |
Purchase and funding of investment securities | |
| — | |
| (27,333) | |
| (27,333) |
Proceeds from sales and collections of investment securities | |
| 59,514 | |
| 26,085 | |
| 85,599 |
Proceeds from sales of real estate | | | 30,566 | | | — | | | 30,566 |
Purchases and additions to properties and other assets | | | (3,512) | | | — | | | (3,512) |
Net cash flows from other investments and assets | |
| 38,656 | |
| 183 | |
| 38,839 |
Net cash used in investing activities | |
| (1,119,205) | |
| (1,065) | |
| (1,120,270) |
Cash Flows from Financing Activities: | | | | | | | | | |
Proceeds from borrowings | |
| 2,748,317 | |
| — | |
| 2,748,317 |
Principal repayments on and repurchases of borrowings | |
| (2,001,336) | |
| (157) | |
| (2,001,493) |
Payment of deferred financing costs | |
| (5,052) | |
| — | |
| (5,052) |
Proceeds from common stock issuances, net of offering costs | |
| 240 | |
| — | |
| 240 |
Payment of dividends | |
| (137,667) | |
| — | |
| (137,667) |
Contributions from non-controlling interests | | | 2,969 | | | — | |
| 2,969 |
Distributions to non-controlling interests | |
| (8,833) | |
| 158 | |
| (8,675) |
Issuance of debt of consolidated VIEs | |
| 11,604 | |
| (11,604) | |
| — |
Repayment of debt of consolidated VIEs | |
| (27,490) | |
| 27,490 | |
| — |
Distributions of cash from consolidated VIEs | |
| 14,481 | |
| (14,481) | |
| — |
Net cash provided by financing activities | |
| 597,233 | |
| 1,406 | |
| 598,639 |
Net decrease in cash, cash equivalents and restricted cash | |
| (251,206) | |
| (12) | |
| (251,218) |
Cash, cash equivalents and restricted cash, beginning of period | |
| 722,162 | |
| (772) | |
| 721,390 |
Effect of exchange rate changes on cash | |
| (1,042) | |
| — | |
| (1,042) |
Cash, cash equivalents and restricted cash, end of period | | $ | 469,914 | | $ | (784) | | $ | 469,130 |
GAAP | VIE Adjustments | Excluding Investing and Servicing VIEs | |||||||||||||||
Net cash used in operating activities | $ | (461,753) | $ | (409,435) | $ | (871,188) | |||||||||||
Cash Flows from Investing Activities: | |||||||||||||||||
Origination, purchase and funding of loans held-for-investment | (5,635,707) | (23,874) | (5,659,581) | ||||||||||||||
Proceeds from principal collections and sale of loans | 3,441,113 | — | 3,441,113 | ||||||||||||||
Purchase and funding of investment securities | — | (175,158) | (175,158) | ||||||||||||||
Proceeds from sales and collections of investment securities | 77,855 | 153,183 | 231,038 | ||||||||||||||
Proceeds from sales of real estate | 60,969 | — | 60,969 | ||||||||||||||
Purchases and additions to properties and other assets | (17,259) | — | (17,259) | ||||||||||||||
Net cash flows from other investments and assets | 55,598 | 308 | 55,906 | ||||||||||||||
Net cash used in investing activities | (2,017,431) | (45,541) | (2,062,972) | ||||||||||||||
Cash Flows from Financing Activities: | |||||||||||||||||
Proceeds from borrowings | 11,654,848 | — | 11,654,848 | ||||||||||||||
Principal repayments on and repurchases of borrowings | (8,566,856) | (343) | (8,567,199) | ||||||||||||||
Payment of deferred financing costs | (46,196) | — | (46,196) | ||||||||||||||
Proceeds from common stock issuances, net of offering costs | 670 | — | 670 | ||||||||||||||
Payment of dividends | (414,977) | — | (414,977) | ||||||||||||||
Contributions from non-controlling interests | 5,590 | — | 5,590 | ||||||||||||||
Distributions to non-controlling interests | (35,235) | 231 | (35,004) | ||||||||||||||
Issuance of debt of consolidated VIEs | 69,399 | (69,399) | — | ||||||||||||||
Repayment of debt of consolidated VIEs | (608,435) | 608,435 | — | ||||||||||||||
Distributions of cash from consolidated VIEs | 83,785 | (83,785) | — | ||||||||||||||
Net cash provided by financing activities | 2,142,593 | 455,139 | 2,597,732 | ||||||||||||||
Net decrease in cash, cash equivalents and restricted cash | (336,591) | 163 | (336,428) | ||||||||||||||
Cash, cash equivalents and restricted cash, beginning of period | 722,162 | (772) | 721,390 | ||||||||||||||
Effect of exchange rate changes on cash | (1,783) | — | (1,783) | ||||||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 383,788 | $ | (609) | $ | 383,179 |
Net cash provided by operating activities of $270.4$871.2 million during the threenine months ended March 31,September 30, 2021 related primarily to proceeds from sales$1.1 billion in originations and purchases of loans held-for-sale, net of originationssales and purchases,principal collections, cash interest expense of $244.6$276.8 million, general and administrative expenses of $83.2 million, management fees of $74.8 million and a net change in operating assets and liabilities of $55.2 million. Offsetting these cash outflows was cash interest income of $131.9$432.4 million from our loans and $36.1$115.5 million from our investment securities. Net rental income provided cash of $48.9$142.6 million and servicing fees provided cash of $12.9$44.3 million. Offsetting these cash inflows was cash interest expense of $80.6 million, general and administrative expenses of $29.0 million, management fees of $27.4 million and a net change in operating assets and liabilities of $66.3 million.
83
Net cash used in investing activities of $1.1$2.1 billion for the threenine months ended March 31,September 30, 2021 related primarily to the origination and acquisition of loans held-for-investment of $2.3$5.7 billion and the purchase and funding of investment
84
Our Investment Portfolio
Commercial and Residential Lending Segment
Face Amount | Carrying Value | Asset Specific Financing | Net Investment | Unlevered Return on Asset | |||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||
First mortgages (1) | $ | 11,042,430 | $ | 10,984,155 | $ | 7,622,692 | $ | 3,361,463 | 5.6 | % | |||||||||||||||||||
Subordinated mortgages (2) | 82,916 | 81,159 | — | 81,159 | 9.9 | % | |||||||||||||||||||||||
Mezzanine loans (1) | 474,105 | 477,227 | — | 477,227 | 11.1 | % | |||||||||||||||||||||||
Residential loans, fair value option | 91,280 | 91,499 | 46,130 | 45,369 | 6.1 | % | |||||||||||||||||||||||
Other loans | 19,450 | 17,689 | — | 17,689 | 13.3 | % | |||||||||||||||||||||||
Loans held-for-sale, fair value option, residential | 1,758,342 | 1,813,458 | 1,394,585 | 418,873 | 4.2 | % | |||||||||||||||||||||||
RMBS, available-for-sale | 229,843 | 148,583 | 102,868 | 45,715 | 11.3 | % | |||||||||||||||||||||||
RMBS, fair value option | 119,472 | 215,152 | (3) | 37,672 | 177,480 | 10.6 | % | ||||||||||||||||||||||
CMBS, fair value option | 102,900 | 98,197 | (3) | 49,798 | 48,399 | 5.5 | % | ||||||||||||||||||||||
HTM debt securities (4) | 454,283 | 456,882 | 113,143 | 343,739 | 6.6 | % | |||||||||||||||||||||||
Credit loss allowance | — | (51,829) | — | (51,829) | |||||||||||||||||||||||||
Equity security | 12,313 | 12,067 | — | 12,067 | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 45,129 | — | 45,129 | |||||||||||||||||||||||||
Properties, net | N/A | 124,691 | 49,328 | 75,363 | |||||||||||||||||||||||||
$ | 14,387,334 | $ | 14,514,059 | $ | 9,416,216 | $ | 5,097,843 | ||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
First mortgages (1) | $ | 8,977,365 | $ | 8,930,764 | $ | 5,892,684 | $ | 3,038,080 | 6.4 | % | |||||||||||||||||||
Subordinated mortgages (2) | 72,257 | 71,185 | — | 71,185 | 8.7 | % | |||||||||||||||||||||||
Mezzanine loans (1) | 619,352 | 620,319 | — | 620,319 | 11.5 | % | |||||||||||||||||||||||
Residential loans, fair value option | 86,796 | 90,684 | 58,885 | 31,799 | 5.8 | % | |||||||||||||||||||||||
Other loans | 33,626 | 30,284 | — | 30,284 | 9.8 | % | |||||||||||||||||||||||
Loans held-for-sale, fair value option, residential | 820,807 | 841,963 | 573,584 | 268,379 | 5.9 | % | |||||||||||||||||||||||
RMBS, available-for-sale | 252,738 | 167,349 | 110,724 | 56,625 | 11.0 | % | |||||||||||||||||||||||
RMBS, fair value option | 142,288 | 235,997 | (3) | 30,267 | 205,730 | 6.3 | % | ||||||||||||||||||||||
CMBS, fair value option | 102,900 | 96,885 | (3) | 25,313 | 71,572 | 5.6 | % | ||||||||||||||||||||||
HTM debt securities (4) | 505,247 | 505,673 | 84,233 | 421,440 | 6.8 | % | |||||||||||||||||||||||
Credit loss allowance | — | (72,360) | — | (72,360) | |||||||||||||||||||||||||
Equity security | 12,497 | 11,247 | — | 11,247 | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 54,407 | — | 54,407 | |||||||||||||||||||||||||
Properties, net | N/A | 103,896 | 48,863 | 55,033 | |||||||||||||||||||||||||
$ | 11,625,873 | $ | 11,688,293 | $ | 6,824,553 | $ | 4,863,740 |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Unlevered | |
|
| Face |
| Carrying |
| Asset Specific |
| Net |
| Return on | | ||||
| | Amount | | Value | | Financing | | Investment | | Asset | | ||||
March 31, 2021 | | | | | | | | | | | | | | | |
First mortgages (1) | | $ | 10,002,124 | | $ | 9,954,741 | | $ | 6,665,879 | | $ | 3,288,862 |
| 6.1 | % |
Subordinated mortgages | |
| 71,428 | |
| 70,457 | |
| — | |
| 70,457 |
| 8.7 | % |
Mezzanine loans (1) | |
| 601,080 | |
| 603,119 | |
| — | |
| 603,119 |
| 11.6 | % |
Residential loans, fair value option | | | 149,404 | |
| 150,712 | |
| 58,656 | |
| 92,056 | | 6.1 | % |
Other loans | | | 20,267 | |
| 18,200 | |
| — | |
| 18,200 |
| 13.3 | % |
Loans held-for-sale, fair value option, residential | | | 435,025 | |
| 444,835 | |
| 270,096 | |
| 174,739 |
| 5.6 | % |
Loans held-for-sale, commercial | | | 142,798 | |
| 142,202 | |
| 80,500 | |
| 61,702 |
| 5.9 | % |
RMBS, available-for-sale | |
| 245,472 | |
| 160,301 | |
| 106,447 | |
| 53,854 |
| 10.9 | % |
RMBS, fair value option | | | 160,124 | | | 249,005 | (2) | | 39,700 | | | 209,305 | | 9.2 | % |
CMBS, fair value option | | | 102,900 | | | 96,883 | (2) | | 49,798 | | | 47,085 | | 5.5 | % |
HTM debt securities (3) | |
| 454,283 | |
| 455,586 | |
| 113,143 | |
| 342,443 |
| 6.6 | % |
Credit loss allowance | |
| — | |
| (65,939) | |
| — | |
| (65,939) |
| | |
Equity security | |
| 12,594 | |
| 10,655 | |
| — | |
| 10,655 |
| | |
Investment in unconsolidated entities | |
| N/A | |
| 47,514 | |
| — | |
| 47,514 |
| | |
Properties, net | | | N/A | |
| 93,718 | |
| 49,018 | |
| 44,700 | | | |
| | $ | 12,397,499 | | $ | 12,431,989 | | $ | 7,433,237 | | $ | 4,998,752 | | | |
| | | | | | | | | | | | | | | |
December 31, 2020 | | | | | | | | | | | | | | | |
First mortgages (1) | | $ | 8,977,365 | | $ | 8,930,764 | | $ | 5,892,684 | | $ | 3,038,080 |
| 6.4 | % |
Subordinated mortgages | |
| 72,257 | |
| 71,185 | |
| — | |
| 71,185 |
| 8.7 | % |
Mezzanine loans (1) | |
| 619,352 | |
| 620,319 | |
| — | |
| 620,319 |
| 11.5 | % |
Residential loans, fair value option | | | 86,796 | |
| 90,684 | |
| 58,885 | |
| 31,799 | | 5.9 | % |
Other loans | | | 33,626 | |
| 30,284 | |
| — | |
| 30,284 | | 9.8 | % |
Loans held-for-sale, fair value option, residential | | | 820,807 | |
| 841,963 | |
| 573,584 | |
| 268,379 |
| 6.1 | % |
RMBS, available-for-sale | | | 252,738 | |
| 167,349 | |
| 110,724 | |
| 56,625 | | 11. 0 | % |
RMBS, fair value option | |
| 142,288 | | | 235,997 | (2) | | 30,267 | | | 205,730 |
| 6.3 | % |
CMBS, fair value option | |
| 102,900 | | | 96,885 | (2) | | 25,313 | | | 71,572 |
| 5.6 | % |
HTM debt securities (3) | |
| 505,247 | |
| 505,673 | |
| 84,233 | |
| 421,440 |
| 6.8 | % |
Credit loss allowance | |
| — | |
| (72,360) | |
| — | |
| (72,360) |
| | |
Equity security | |
| 12,497 | |
| 11,247 | |
| — | |
| 11,247 |
| | |
Investment in unconsolidated entities | |
| N/A | |
| 54,407 | |
| — | |
| 54,407 |
| | |
Properties, net | | | N/A | |
| 103,896 | |
| 48,863 | |
| 55,033 | | | |
| | $ | 11,625,873 | | $ | 11,688,293 | | $ | 6,824,553 | | $ | 4,863,740 | | | |
85
(2)
Subordinated mortgages include B-Notes and junior participation in first mortgages where we do not own the senior A-Note or senior participation. If we own both the A-Note and B-Note, we categorize the loan as a first mortgage loan.
| | | | | |
Collateral Property Type |
| March 31, 2021 |
| December 31, 2020 | |
Office |
| 32.1 | % | 35.2 | % |
Hotel |
| 19.6 | % | 21.6 | % |
Multifamily |
| 19.1 | % | 16.1 | % |
Mixed Use | | 12.2 | % | 8.2 | % |
Residential |
| 5.7 | % | 6.7 | % |
Retail |
| 2.6 | % | 2.8 | % |
Industrial |
| 2.5 | % | 3.0 | % |
Other | | 6.2 | % | 6.4 | % |
|
| 100.0 | % | 100.0 | % |
| | | | | |
Geographic Location |
| March 31, 2021 |
| December 31, 2020 | |
U.S. Regions: |
| | | | |
North East |
| 20.5 | % | 22.7 | % |
West |
| 20.0 | % | 19.0 | % |
South West |
| 10.3 | % | 11.1 | % |
Mid Atlantic |
| 9.7 | % | 9.5 | % |
South East |
| 6.9 | % | 7.3 | % |
Midwest |
| 4.5 | % | 4.4 | % |
International: |
| | | | |
Europe/Australia |
| 25.5 | % | 23.3 | % |
Bahamas/Bermuda |
| 2.6 | % | 2.7 | % |
|
| 100.0 | % | 100.0 | % |
86
Collateral Property Type | September 30, 2021 | December 31, 2020 | ||||||||||||
Office | 29.6 | % | 35.2 | % | ||||||||||
Multifamily | 23.3 | % | 16.1 | % | ||||||||||
Hotel | 19.7 | % | 21.6 | % | ||||||||||
Mixed Use | 13.1 | % | 8.2 | % | ||||||||||
Residential | 3.0 | % | 6.7 | % | ||||||||||
Industrial | 3.7 | % | 3.0 | % | ||||||||||
Retail | 2.5 | % | 2.8 | % | ||||||||||
Other | 5.1 | % | 6.4 | % | ||||||||||
100.0 | % | 100.0 | % |
Geographic Location | September 30, 2021 | December 31, 2020 | ||||||||||||
U.S. Regions: | ||||||||||||||
North East | 18.9 | % | 22.7 | % | ||||||||||
West | 16.8 | % | 19.0 | % | ||||||||||
South West | 12.4 | % | 11.1 | % | ||||||||||
South East | 10.5 | % | 7.3 | % | ||||||||||
Mid Atlantic | 10.7 | % | 9.5 | % | ||||||||||
Midwest | 4.4 | % | 4.4 | % | ||||||||||
International: | ||||||||||||||
United Kingdom | 18.3 | % | 17.5 | % | ||||||||||
Other Europe | 3.4 | % | 4.7 | % | ||||||||||
Bahamas/Bermuda | 2.5 | % | 2.7 | % | ||||||||||
Australia | 2.1 | % | 1.1 | % | ||||||||||
100.0 | % | 100.0 | % |
Infrastructure Lending Segment
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Unlevered | |
|
| Face |
| Carrying |
| Asset Specific |
| Net |
| Return on | | ||||
| | Amount | | Value | | Financing | | Investment | | Asset | | ||||
March 31, 2021 | | | | | | | | | | | | | | | |
First priority infrastructure loans and HTM securities | | $ | 1,664,665 | | $ | 1,633,491 | | $ | 1,186,526 | | $ | 446,965 |
| 4.8 | % |
Loans held-for-sale, infrastructure | | | 89,601 | |
| 89,368 | |
| 73,287 | |
| 16,081 |
| 3.2 | % |
Credit loss allowance | | | N/A | | | (11,732) | | | — | | | (11,732) | | | |
Investment in unconsolidated entities | | | N/A | | | 24,840 | | | — | | | 24,840 | | | |
| | $ | 1,754,266 | | $ | 1,735,967 | | $ | 1,259,813 | | $ | 476,154 | | | |
| | | | | | | | | | | | | | | |
December 31, 2020 | | | | | | | | | | | | | | | |
First priority infrastructure loans and HTM securities | | $ | 1,488,614 | | $ | 1,458,880 | | $ | 1,140,608 | | $ | 318,272 |
| 5.2 | % |
Loans held-for-sale, infrastructure | |
| 120,900 | |
| 120,540 | |
| 100,155 | |
| 20,385 |
| 3.5 | % |
Credit loss allowance | | | N/A | | | (10,759) | | | — | | | (10,759) | | | |
Investment in unconsolidated entities | | | N/A | | | 25,095 | | | — | | | 25,095 | | | |
| | $ | 1,609,514 | | $ | 1,593,756 | | $ | 1,240,763 | | $ | 352,993 | | | |
Face Amount | Carrying Value | Asset Specific Financing | Net Investment | Unlevered Return on Asset | |||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||
First priority infrastructure loans and HTM securities | $ | 1,766,259 | $ | 1,734,303 | $ | 1,239,412 | $ | 494,891 | 4.9 | % | |||||||||||||||||||
Loans held-for-sale, infrastructure | 84,457 | 84,253 | 70,891 | 13,362 | 2.8 | % | |||||||||||||||||||||||
Credit loss allowance | N/A | (12,133) | — | (12,133) | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 25,170 | — | 25,170 | |||||||||||||||||||||||||
$ | 1,850,716 | $ | 1,831,593 | $ | 1,310,303 | $ | 521,290 | ||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
First priority infrastructure loans and HTM securities | $ | 1,488,614 | $ | 1,458,880 | $ | 1,140,608 | $ | 318,272 | 5.2 | % | |||||||||||||||||||
Loans held-for-sale, infrastructure | 120,900 | 120,540 | 100,155 | 20,385 | 3.5 | % | |||||||||||||||||||||||
Credit loss allowance | N/A | (10,759) | — | (10,759) | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 25,095 | — | 25,095 | |||||||||||||||||||||||||
$ | 1,609,514 | $ | 1,593,756 | $ | 1,240,763 | $ | 352,993 |
| | | | | |
Collateral Type |
| March 31, 2021 |
| December 31, 2020 | |
Natural gas power |
| 62.7 | % | 65.8 | % |
Midstream |
| 20.8 | % | 21.9 | % |
Renewable power |
| 9.4 | % | 9.0 | % |
Other thermal power | | 6.6 | % | 3.3 | % |
Downstream | | 0.5 | % | — | % |
|
| 100.0 | % | 100.0 | % |
| | | | | |
Geographic Location | | March 31, 2021 | | December 31, 2020 | |
U.S. Regions: | | | | | |
North East |
| 41.4 | % | 43.1 | % |
Midwest |
| 22.5 | % | 20.8 | % |
South West |
| 14.5 | % | 15.3 | % |
South East | | 9.5 | % | 9.6 | % |
West | | 5.9 | % | 4.3 | % |
Mid-Atlantic | | 2.8 | % | 3.2 | % |
International: |
| | | | |
Mexico |
| 2.5 | % | 2.7 | % |
Other |
| 0.9 | % | 1.0 | % |
|
| 100.0 | % | 100.0 | % |
87
Collateral Type | September 30, 2021 | December 31, 2020 | ||||||||||||
Natural gas power | 62.5 | % | 65.8 | % | ||||||||||
Midstream/downstream oil & gas | 25.3 | % | 21.9 | % | ||||||||||
Renewable power | 6.5 | % | 9.0 | % | ||||||||||
Other thermal power | 5.7 | % | 3.3 | % | ||||||||||
100.0 | % | 100.0 | % |
Geographic Location | September 30, 2021 | December 31, 2020 | ||||||||||||
U.S. Regions: | ||||||||||||||
North East | 42.2 | % | 43.1 | % | ||||||||||
Midwest | 22.5 | % | 20.8 | % | ||||||||||
South West | 13.2 | % | 15.3 | % | ||||||||||
South East | 9.4 | % | 9.6 | % | ||||||||||
West | 5.7 | % | 4.3 | % | ||||||||||
Mid-Atlantic | 1.5 | % | 3.2 | % | ||||||||||
Other | 2.5 | % | — | % | ||||||||||
International: | ||||||||||||||
Mexico | 2.3 | % | 2.7 | % | ||||||||||
Other | 0.7 | % | 1.0 | % | ||||||||||
100.0 | % | 100.0 | % |
Property Segment
| | | | | | |
|
| March 31, 2021 |
| December 31, 2020 | ||
Properties, net | | $ | 1,954,880 | | $ | 1,969,414 |
Lease intangibles, net | |
| 37,080 | |
| 38,511 |
| | $ | 1,991,960 | | $ | 2,007,925 |
September 30, 2021 | December 31, 2020 | ||||||||||
Properties, net | $ | 1,928,853 | $ | 1,969,414 | |||||||
Lease intangibles, net | 34,399 | 38,511 | |||||||||
$ | 1,963,252 | $ | 2,007,925 |
The following table sets forth our net investment and other information regarding the Property Segment’s properties and lease intangibles as of March 31,September 30, 2021 (dollars in thousands):
| | | | | | | | | | | | | | |
|
| |
| Asset |
| |
| |
| Weighted Average | ||||
| | Carrying | | Specific | | Net | | Occupancy | | Remaining | ||||
| | Value | | Financing | | Investment | | Rate | | Lease Term | ||||
Office—Medical Office Portfolio | | $ | 760,266 | | $ | 592,853 | | $ | 167,413 | | 93.6 | % | | 5.8 years |
Multifamily residential—Woodstar I Portfolio | | | 636,740 | | | 572,784 | | | 63,956 | | 98.8 | % | | 0.5 years |
Multifamily residential—Woodstar II Portfolio | | | 610,558 | | | 512,588 | | | 97,970 | | 99.1 | % | | 0.5 years |
Retail—Master Lease Portfolio | | | 343,790 | |
| 192,801 | |
| 150,989 | | 100.0 | % | | 21.1 years |
Subtotal—undepreciated carrying value | | | 2,351,354 | | | 1,871,026 | | | 480,328 | | | | | |
Accumulated depreciation and amortization | | | (359,394) | | | — | | | (359,394) | | | | | |
Net carrying value | | $ | 1,991,960 | | $ | 1,871,026 | | $ | 120,934 | | | | | |
Carrying Value | Asset Specific Financing | Net Investment | Occupancy Rate | Weighted Average Remaining Lease Term | |||||||||||||||||||||||||
Office—Medical Office Portfolio | $ | 762,071 | $ | 593,852 | $ | 168,219 | 93.9 | % | 5.4 years | ||||||||||||||||||||
Multifamily residential—Woodstar I Portfolio | 640,886 | 573,368 | 67,518 | 98.1 | % | 0.5 years | |||||||||||||||||||||||
Multifamily residential—Woodstar II Portfolio | 611,819 | 512,870 | 98,949 | 97.8 | % | 0.5 years | |||||||||||||||||||||||
Retail—Master Lease Portfolio | 343,790 | 192,963 | 150,827 | 100.0 | % | 20.6 years | |||||||||||||||||||||||
Subtotal—undepreciated carrying value | 2,358,566 | 1,873,053 | 485,513 | ||||||||||||||||||||||||||
Accumulated depreciation and amortization | (395,313) | — | (395,313) | ||||||||||||||||||||||||||
Net carrying value | $ | 1,963,253 | $ | 1,873,053 | $ | 90,200 |
| | | | | |
Geographic Location | | March 31, 2021 | | December 31, 2020 | |
South East | | 62.1 | % | 62.1 | % |
South West |
| 10.3 | % | 10.3 | % |
Midwest |
| 10.1 | % | 10.1 | % |
North East |
| 9.6 | % | 9.6 | % |
West |
| 7.9 | % | 7.9 | % |
|
| 100.0 | % | 100.0 | % |
88
Geographic Location | September 30, 2021 | December 31, 2020 | ||||||||||||
South East | 62.2 | % | 62.1 | % | ||||||||||
South West | 10.3 | % | 10.3 | % | ||||||||||
Midwest | 10.0 | % | 10.1 | % | ||||||||||
North East | 9.6 | % | 9.6 | % | ||||||||||
West | 7.9 | % | 7.9 | % | ||||||||||
100.0 | % | 100.0 | % |
Investing and Servicing Segment
Face Amount | Carrying Value | Asset Specific Financing | Net Investment | ||||||||||||||||||||||||||
September 30, 2021 | |||||||||||||||||||||||||||||
CMBS, fair value option | $ | 2,678,039 | $ | 1,128,921 | (1) | $ | 394,886 | (2) | $ | 734,035 | |||||||||||||||||||
Intangible assets - servicing rights | N/A | 55,374 | (3) | — | 55,374 | ||||||||||||||||||||||||
Lease intangibles, net | N/A | 12,362 | — | 12,362 | |||||||||||||||||||||||||
Loans held-for-sale, fair value option, commercial | 278,736 | 285,808 | 191,947 | 93,861 | |||||||||||||||||||||||||
Loans held-for-investment | 781 | 781 | — | 781 | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 38,239 | (4) | — | 38,239 | ||||||||||||||||||||||||
Properties, net | N/A | 175,318 | 176,722 | (1,404) | |||||||||||||||||||||||||
$ | 2,957,556 | $ | 1,696,803 | $ | 763,555 | $ | 933,248 | ||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
CMBS, fair value option | $ | 2,652,459 | $ | 1,112,145 | (1) | $ | 360,221 | (2) | $ | 751,924 | |||||||||||||||||||
Intangible assets - servicing rights | N/A | 54,578 | (3) | — | 54,578 | ||||||||||||||||||||||||
Lease intangibles, net | N/A | 15,548 | — | 15,548 | |||||||||||||||||||||||||
Loans held-for-sale, fair value option, commercial | 90,789 | 90,332 | 53,040 | 37,292 | |||||||||||||||||||||||||
Loans held-for-investment | 1,008 | 1,008 | — | 1,008 | |||||||||||||||||||||||||
Investment in unconsolidated entities | N/A | 44,664 | (4) | — | 44,664 | ||||||||||||||||||||||||
Properties, net | N/A | 197,843 | 192,839 | 5,004 | |||||||||||||||||||||||||
$ | 2,744,256 | $ | 1,516,118 | $ | 606,100 | $ | 910,018 |
| | | | | | | | | | | | | |
|
| | |
| | |
| Asset |
| | |
| |
| | Face | | Carrying | | Specific | | Net |
| ||||
| | Amount | | Value | | Financing | | Investment |
| ||||
March 31, 2021 | | | | | | | | | | | | | |
CMBS, fair value option | | $ | 2,632,996 | | $ | 1,106,000 | (1) | $ | 350,187 | (2) | $ | 755,813 | |
Intangible assets - servicing rights | |
| N/A | |
| 55,324 | (3) |
| — | |
| 55,324 | |
Lease intangibles, net | | | N/A | | | 14,583 | | | — | | | 14,583 | |
Loans held-for-sale, fair value option, commercial | |
| 172,119 | |
| 168,226 | |
| 110,424 | |
| 57,802 | |
Loans held-for-investment | | | 933 | | | 933 | | | — | | | 933 | |
Investment in unconsolidated entities | | | N/A | | | 44,435 | (4) | | — | | | 44,435 | |
Properties, net | |
| N/A | |
| 196,150 | |
| 192,611 | |
| 3,539 | |
| | $ | 2,806,048 | | $ | 1,585,651 | | $ | 653,222 | | $ | 932,429 | |
December 31, 2020 | | | | | | | | | | | | | |
CMBS, fair value option | | $ | 2,652,459 | | $ | 1,112,145 | (1) | $ | 360,221 | (2) | $ | 751,924 | |
Intangible assets - servicing rights | |
| N/A | |
| 54,578 | (3) |
| — | |
| 54,578 | |
Lease intangibles, net | | | N/A | | | 15,548 | | | — | |
| 15,548 | |
Loans held-for-sale, fair value option, commercial | |
| 90,789 | |
| 90,332 | |
| 53,040 | |
| 37,292 | |
Loans held-for-investment | | | 1,008 | | | 1,008 | | | — | | | 1,008 | |
Investment in unconsolidated entities | | | N/A | | | 44,664 | (4) | | — | | | 44,664 | |
Properties, net | |
| N/A | |
| 197,843 | |
| 192,839 | |
| 5,004 | |
| | $ | 2,744,256 | | $ | 1,516,118 | | $ | 606,100 | | $ | 910,018 | |
89
Our REIS Equity Portfolio, as described in Note 6 to the Condensed Consolidated Financial Statements, had the following characteristics based on carrying values of $195.6$172.8 million and $198.2 million as of March 31,September 30, 2021 and December 31, 2020, respectively:
| | | | | |
Property Type | | March 31, 2021 | | December 31, 2020 | |
Office | | 50.5 | % | 50.6 | % |
Retail |
| 29.9 | % | 29.9 | % |
Mixed Use |
| 7.0 | % | 6.9 | % |
Self-storage |
| 6.2 | % | 6.2 | % |
Multifamily |
| 4.3 | % | 4.2 | % |
Hotel | | 2.1 | % | 2.2 | % |
|
| 100.0 | % | 100.0 | % |
| | | | | |
Geographic Location | | March 31, 2021 | | December 31, 2020 | |
South West |
| 24.9 | % | 25.1 | % |
North East |
| 25.4 | % | 24.8 | % |
South East |
| 15.2 | % | 15.4 | % |
West |
| 14.8 | % | 14.8 | % |
Mid Atlantic |
| 11.4 | % | 11.5 | % |
Midwest |
| 8.3 | % | 8.4 | % |
|
| 100.0 | % | 100.0 | % |
90
Property Type | September 30, 2021 | December 31, 2020 | ||||||||||||
Office | 45.1 | % | 50.6 | % | ||||||||||
Retail | 33.1 | % | 29.9 | % | ||||||||||
Mixed Use | 7.9 | % | 6.9 | % | ||||||||||
Self-storage | 7.0 | % | 6.2 | % | ||||||||||
Multifamily | 4.8 | % | 4.2 | % | ||||||||||
Hotel | 2.1 | % | 2.2 | % | ||||||||||
100.0 | % | 100.0 | % |
Geographic Location | September 30, 2021 | December 31, 2020 | ||||||||||||
North East | 28.1 | % | 24.8 | % | ||||||||||
South West | 17.4 | % | 25.1 | % | ||||||||||
South East | 16.6 | % | 15.4 | % | ||||||||||
West | 16.2 | % | 14.8 | % | ||||||||||
Mid Atlantic | 12.7 | % | 11.5 | % | ||||||||||
Midwest | 9.0 | % | 8.4 | % | ||||||||||
100.0 | % | 100.0 | % |
New Credit Facilities and Amendments
Current Maturity | Extended Maturity (a) | Weighted Average Pricing | Pledged Asset Carrying Value | Maximum Facility Size | Outstanding Balance | Approved but Undrawn Capacity (b) | Unallocated Financing Amount (c) | ||||||||||||||||||||||||||||||||||||||||
Repurchase Agreements: | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial Loans | Mar 2022 to Jul 2026 | (d) | Jun 2025 to Mar 2029 | (d) | (e) | $ | 7,750,853 | $ | 9,980,380 | (f) | $ | 5,294,281 | $ | 213,935 | $ | 4,472,164 | |||||||||||||||||||||||||||||||
Residential Loans | Jun 2022 to Oct 2023 | N/A | LIBOR + 2.01% | 1,755,161 | 2,550,000 | 1,440,018 | 28,719 | 1,081,263 | |||||||||||||||||||||||||||||||||||||||
Infrastructure Loans | Sep 2024 | Sep 2026 | LIBOR + 2.00% | 467,921 | 650,000 | 368,442 | — | 281,558 | |||||||||||||||||||||||||||||||||||||||
Conduit Loans | Feb 2022 to Jun 2024 | Feb 2023 to Jun 2025 | LIBOR + 1.99% | 259,155 | 350,000 | 192,829 | — | 157,171 | |||||||||||||||||||||||||||||||||||||||
CMBS/RMBS | Dec 2021 to May 2031 | (g) | Sep 2022 to Nov 2031 | (g) | (h) | 1,193,808 | 835,850 | 709,340 | (i) | — | 126,510 | ||||||||||||||||||||||||||||||||||||
Total Repurchase Agreements | 11,426,898 | 14,366,230 | 8,004,910 | 242,654 | 6,118,666 | ||||||||||||||||||||||||||||||||||||||||||
Other Secured Financing: | |||||||||||||||||||||||||||||||||||||||||||||||
Borrowing Base Facility | Apr 2022 | Apr 2024 | LIBOR + 2.25% | 73,502 | 650,000 | (j) | 2,000 | 53,125 | 594,875 | ||||||||||||||||||||||||||||||||||||||
Commercial Financing Facility | Mar 2022 | Mar 2029 | GBP LIBOR + 1.75% | 177,424 | 142,872 | 142,872 | — | — | |||||||||||||||||||||||||||||||||||||||
Residential Financing Facility | Sep 2022 | Sep 2025 | 3.50% | 149,604 | 250,000 | 2,018 | 103,229 | 144,753 | |||||||||||||||||||||||||||||||||||||||
Infrastructure Financing Facilities | Jul 2022 to Oct 2022 | Oct 2024 to Jul 2027 | LIBOR + 2.03% | 688,488 | 1,250,000 | 544,582 | — | 705,418 | |||||||||||||||||||||||||||||||||||||||
Property Mortgages - Fixed rate | Nov 2024 to Aug 2052 | (k) | N/A | 4.03% | 1,254,141 | 1,154,763 | 1,154,763 | — | — | ||||||||||||||||||||||||||||||||||||||
Property Mortgages - Variable rate | Nov 2021 to Jul 2030 | N/A | (l) | 898,634 | 969,790 | 945,311 | — | 24,479 | |||||||||||||||||||||||||||||||||||||||
Term Loan and Revolver | (m) | N/A | (m) | N/A | (m) | 940,750 | 790,750 | 150,000 | — | ||||||||||||||||||||||||||||||||||||||
STWD 2019-FL1 CLO | Jul 2038 | N/A | LIBOR + 1.34% | 1,103,259 | 936,375 | 936,375 | — | — | |||||||||||||||||||||||||||||||||||||||
STWD 2021-FL2 CLO | Apr 2038 | N/A | LIBOR + 1.50% | 1,279,245 | 1,077,375 | 1,077,375 | — | — | |||||||||||||||||||||||||||||||||||||||
STWD 2021-SIF1 CLO | Apr 2032 | N/A | LIBOR + 1.81% | 510,592 | 410,000 | 410,000 | — | — | |||||||||||||||||||||||||||||||||||||||
STWD 2021-HTS SASB | Apr 2034 | N/A | LIBOR + 2.22% | 230,562 | 210,091 | 210,091 | — | — | |||||||||||||||||||||||||||||||||||||||
Total Other Secured Financing | 6,365,451 | 7,992,016 | 6,216,137 | 306,354 | 1,469,525 | ||||||||||||||||||||||||||||||||||||||||||
$ | 17,792,349 | $ | 22,358,246 | $ | 14,221,047 | $ | 549,008 | $ | 7,588,191 | ||||||||||||||||||||||||||||||||||||||
Unamortized net discount | (14,603) | ||||||||||||||||||||||||||||||||||||||||||||||
Unamortized deferred financing costs | (90,162) | ||||||||||||||||||||||||||||||||||||||||||||||
$ | 14,116,282 |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Pledged | | | | | | | Approved | | | ||||
| | | | | | Weighted | | Asset | | Maximum | | | | but | | Unallocated | |||||
| | Current | | Extended | | Average | | Carrying | | Facility | | Outstanding | | Undrawn | | Financing | |||||
|
| Maturity |
| Maturity (a) |
| Pricing |
| Value |
| Size |
| Balance |
| Capacity (b) |
| Amount (c) | |||||
Repurchase Agreements: | | | | | | | | | | | | | | | | | | | | | |
Commercial Loans | | May 2021 to Aug 2025 | (d) | May 2023 to Mar 2029 | (d) | (e) | | $ | 8,088,081 | | $ | 9,164,525 | (f) | $ | 5,592,652 | | $ | 144,018 | | $ | 3,427,855 |
Residential Loans | | Jan 2022 to Oct 2023 | | N/A | | LIBOR + 2.09% | | | 428,877 | | | 1,750,000 | | | 328,620 | | | — | | | 1,421,380 |
Infrastructure Loans | | Feb 2022 | | N/A | | LIBOR + 2.00% | | | 295,516 | | | 500,000 | | | 246,136 | | | — | | | 253,864 |
Conduit Loans | | Feb 2022 to Jun 2023 | | Feb 2023 to Jun 2024 | | LIBOR + 2.15% | | | 147,523 | | | 350,000 | | | 111,087 | | | — | | | 238,913 |
CMBS/RMBS | | Dec 2021 to Oct 2030 | (g) | Mar 2022 to Apr 2031 | (g) | (h) | | | 1,112,819 | | | 823,365 | | | 668,993 | (i) | | — | | | 154,372 |
Total Repurchase Agreements | | | | | | | | | 10,072,816 | | | 12,587,890 | | | 6,947,488 | | | 144,018 | | | 5,496,384 |
Other Secured Financing: | | | | | | | | | | | | | | | | | | | | | |
Borrowing Base Facility | | Apr 2022 | | Apr 2024 | | LIBOR + 2.25% | | | 304,076 | | | 650,000 | (j) | | 223,302 | | | — | | | 426,698 |
Commercial Financing Facility | | Mar 2022 | | Mar 2029 | | GBP LIBOR + 1.75% | | | 101,559 | | | 81,847 | | | 81,847 | | | — | | | — |
Residential Financing Facility | | Sep 2022 | | Sep 2025 | | 3.50% | | | 163,545 | | | 250,000 | | | 1,515 | | | 120,129 | | | 128,356 |
Infrastructure Acquisition Facility | | Sep 2021 | | Sep 2022 | | (k) | | | 525,611 | | | 517,498 | | | 414,503 | | | — | | | 102,995 |
Infrastructure Financing Facilities | | Jul 2022 to Oct 2022 | | Oct 2024 to Jul 2027 | | LIBOR + 2.04% | | | 699,684 | | | 1,250,000 | | | 548,956 | | | — | | | 701,044 |
Property Mortgages - Fixed rate | | Nov 2024 to Aug 2052 | (l) | N/A | | 4.03% | | | 1,271,385 | | | 1,155,306 | | | 1,155,306 | | | — | | | — |
Property Mortgages - Variable rate | | Nov 2021 to Jul 2030 | | N/A | | (m) | | | 929,800 | | | 985,453 | | | 960,901 | | | — | | | 24,552 |
Term Loan and Revolver | | (n) | | N/A | | (n) | | | N/A | (n) | | 763,375 | | | 643,375 | | | 120,000 | | | — |
Collateralized Loan Obligation | | Jul 2038 | | N/A | | LIBOR + 1.34% | | | 1,099,639 | | | 936,375 | | | 936,375 | | | — | | | — |
Total Other Secured Financing | | | | | | | | | 5,095,299 | | | 6,589,854 | | | 4,966,080 | | | 240,129 | | | 1,383,645 |
| | | | | | | | $ | 15,168,115 | | $ | 19,177,744 | | $ | 11,913,568 | | $ | 384,147 | | $ | 6,880,029 |
Unamortized net discount | | | | | | | | | | | | | | | (13,149) | | | | | | |
Unamortized deferred financing costs | | | | | | | | | | | | | | | (73,309) | | | | | | |
| | | | | | | | | | | | | | $ | 11,827,110 | | | | | | |
91
(m)Consists of: (i) a $790.8 million term loan facility that matures in July 2026, of which $392.0 million (the "Initial Borrowings") has an annual interest rate of LIBOR + 2.50% and $398.8 million (the "Incremental Borrowings") has an annual interest rate of LIBOR + 3.25%, subject to a 0.75% LIBOR floor, and (ii) a $150.0 million revolving credit facility that matures in April 2026 with an annual interest rate of SOFR + 2.50%. These facilities are secured by the equity interests in certain of our subsidiaries which totaled $4.7 billion as of September 30, 2021. |
Refer to Note 9 of the Condensed Consolidated Financial Statements for further disclosure regarding the terms of our secured financing arrangements.
Quarter Ended | Quarter-End Balance | Weighted-Average Balance During Quarter | Variance | Explanations for Significant Variances | ||||||||||||||||||||||
December 31, 2020 | 11,169,964 | 10,945,199 | 224,765 | (a) | ||||||||||||||||||||||
March 31, 2021 | 11,913,568 | 11,274,970 | 638,598 | (b) | ||||||||||||||||||||||
June 30, 2021 | 12,436,034 | 12,403,163 | 32,871 | (c) | ||||||||||||||||||||||
September 30, 2021 | 14,221,047 | 13,099,170 | 1,121,877 | (d) |
| | | | | | | | | | | |
| | | | Weighted-Average | | | | | Explanations | ||
| | Quarter-End | | Balance During | | | | for Significant | |||
Quarter Ended |
| Balance |
| Quarter |
| Variance |
| Variances | |||
December 31, 2020 | | | 11,169,964 | | | 10,945,199 | | | 224,765 | | (a) |
March 31, 2021 | | | 11,913,568 | | | 11,274,970 | | | 638,598 | | (b) |
Borrowings under Unsecured Senior Notes
Refer to Note 10 of ourthe Condensed Consolidated Financial Statements for further disclosure regarding the terms of our unsecured senior notes.
92
Scheduled Principal Repayments on Investments and Overhang on Financing Facilities
Scheduled Principal Repayments on Loans and HTM Securities | Scheduled/Projected Principal Repayments on RMBS and CMBS | Projected/Required Repayments of Financing | Scheduled Principal Inflows Net of Financing Outflows | |||||||||||||||||||||||
Fourth Quarter 2021 | $ | 710,058 | $ | 7,920 | $ | (593,437) | $ | 124,541 | ||||||||||||||||||
First Quarter 2022 | 421,401 | 6,677 | (268,503) | 159,575 | ||||||||||||||||||||||
Second Quarter 2022 | 242,599 | 10,628 | (345,472) | (92,245) | (1) | |||||||||||||||||||||
Third Quarter 2022 | 218,028 | 13,000 | (1,332,689) | (1,101,661) | (2) | |||||||||||||||||||||
Total | $ | 1,592,086 | $ | 38,225 | $ | (2,540,101) | $ | (909,790) |
Shortfall primarily relates to: (i) $290.9 million of repayments under a Residential Loans repurchase facility that we intend to extend with the lender's consent, the current balance of which will be repaid with securitization proceeds.
| | | | | | | | | | | | | |
|
| Scheduled Principal |
| Scheduled/Projected |
| Projected/Required |
| Scheduled Principal |
| ||||
| | Repayments on Loans | | Principal Repayments | | Repayments of | | Inflows Net of |
| ||||
| | and HTM Securities | | on RMBS and CMBS | | Financing | | Financing Outflows |
| ||||
Second Quarter 2021 |
| $ | 731,009 |
| $ | 10,927 |
| $ | (91,314) | | $ | 650,622 | |
Third Quarter 2021 |
| | 55,560 |
| | 9,598 |
| | (15,264) | | | 49,894 | |
Fourth Quarter 2021 | | | 295,918 | | | 7,085 | | | (954,390) | | | (651,386) | (1) |
First Quarter 2022 | | | 631,041 | | | 5,965 | | | (1,000,898) | | | (363,892) | (2) |
Total | | $ | 1,713,528 | | $ | 33,575 | | $ | (2,061,866) | | $ | (314,762) | |
In the normal course of business, the Company is in discussions with its lenders to extend, amend or replace any financing facilities which contain near term expirations.
Other Potential Sources of Financing
Leverage Policies
93
corporate rates to the extent that it annually distributes less than 100% of its net taxable income. We generally intend to distribute substantially all of our taxable income (which does not necessarily equal our GAAP net income) to our stockholders each year, if and to the extent authorized by our board of directors. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating and debt service requirements. If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. Refer to our Form 10-K for a detailed dividend history.
Declare Date | Record Date | Payment Date | Amount | Frequency | ||||||||||||||||||||||||||||
9/15/2021 | 9/30/2021 | 10/15/2021 | $ | 0.48 | Quarterly | |||||||||||||||||||||||||||
6/14/2021 | 6/30/2021 | 7/15/2021 | 0.48 | Quarterly | ||||||||||||||||||||||||||||
3/11/2021 | 3/31/2021 | 4/15/2021 | 0.48 | Quarterly |
| | | | | | | | | |
Declare Date |
| Record Date |
| Payment Date |
| Amount |
| Frequency | |
3/11/21 | | 3/31/21 | | 4/15/21 | | $ | 0.48 | | Quarterly |
Contractual Obligations and Commitments
Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | |||||||||||||||||||||||||
Secured financings (a) | $ | 11,587,206 | $ | 1,653,932 | $ | 1,525,361 | $ | 5,830,378 | $ | 2,577,535 | |||||||||||||||||||
CLOs and SASB (b) | 2,633,841 | 125,998 | 993,829 | 1,494,263 | 19,751 | ||||||||||||||||||||||||
Unsecured senior notes | 1,750,000 | 300,000 | 550,000 | 900,000 | — | ||||||||||||||||||||||||
Future loan commitments: | |||||||||||||||||||||||||||||
Commercial Lending (c) | 1,352,772 | 1,000,526 | 342,434 | 9,812 | — | ||||||||||||||||||||||||
Residential Lending (d) | 877,689 | 877,689 | — | — | — | ||||||||||||||||||||||||
Infrastructure Lending (e) | 150,432 | 144,484 | 5,948 | — | — |
| | | | | | | | | | | | | | | | |
|
| | |
| Less than |
| | |
| | |
| More than |
| ||
| | Total | | 1 year | | 1 to 3 years | | 3 to 5 years | | 5 years |
| |||||
Secured financings (a) | | $ | 10,977,193 | | $ | 675,327 | | $ | 1,960,570 | | $ | 5,355,964 | | $ | 2,985,332 | |
Collateralized loan obligations | | | 936,375 | | | — | | | — | | | — | | | 936,375 | |
Unsecured senior notes | |
| 1,750,000 | |
| 700,000 | |
| 550,000 | |
| 500,000 | |
| — | |
Future loan funding commitments: | | | | | | | | | | | | | | | | |
Commercial Lending (b) | |
| 1,291,304 | |
| 928,429 | |
| 336,975 | |
| 25,900 | |
| — | |
Infrastructure Lending (c) | | | 192,515 | | | 163,211 | | | 29,304 | | | — | | | — | |
Excludes $234.1 million of loan funding commitments in which management projects the Company will not be obligated to fund in the future due to repayments made by the borrower earlier than, or in excess of, expectations.
above, including issuances of new unsecured senior notes.
94
Critical Accounting Estimates
As discussed in Note 2 to the Condensed Consolidated Financial Statements, ASC 326, Financial Instruments – Credit Losses, became effective for the Company on January 1, 2020. ASC 326 mandates the use of a current expected credit loss model (“CECL”) for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” credit model previously required under GAAP. The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event under the previous “incurred loss” methodology. The CECL model applies to our loans held-for-investment (“HFI”) and our held-to-maturity (“HTM”) debt securities which are carried at amortized cost, including future funding commitments and accrued interest receivable related to those loans and securities.
95
Available-for-Sale Debt Securities
96
Based on our qualitative assessment during the fourth quarter of 2020, we believe that the Investing and Servicing Segment reporting unit to which the LNR acquisition goodwill was attributed is not currently at risk of failing a quantitative assessment. This qualitative assessment required judgment to be applied in evaluating the effects of multiple factors, including actual and projected financial performance of the reporting unit, macroeconomic conditions, industry and market conditions, and relevant entity specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill.
| | | | | | | | |
|
| Face Value of |
| Aggregate Notional Value of |
| Number of | ||
| | Loans Held-for-Sale | | Credit Index Instruments | | Credit Index Instruments | ||
March 31, 2021 | | $ | 172,119 | | $ | 49,000 |
| 3 |
December 31, 2020 | | $ | 90,789 | | $ | 69,000 |
| 4 |
Face Value of Loans Held-for-Sale | Aggregate Notional Value of Credit Index Instruments | Number of Credit Index Instruments | ||||||||||||||||||
September 30, 2021 | $ | 39,300 | $ | 49,000 | 3 | |||||||||||||||
December 31, 2020 | $ | 90,789 | $ | 69,000 | 4 |
97
table presents financial instruments where we have utilized interest rate derivatives to hedge interest rate risk and the related interest rate derivatives as of March 31,September 30, 2021 and December 31, 2020 (dollars in thousands):
| | | | | | | | | |
|
| |
| Aggregate Notional |
| |
| ||
| | Face Value of | | Value of Interest | | Number of Interest |
| ||
| | Hedged Instruments | | Rate Derivatives | | Rate Derivatives |
| ||
Instrument hedged as of March 31, 2021 | | | | | | | | | |
Loans held-for-sale | | $ | 607,144 | | $ | 977,600 |
| 39 | |
RMBS, available-for-sale | |
| 245,472 | |
| 85,000 |
| 2 | |
CMBS, fair value option | | | 115,867 | | | 71,000 | | 2 | |
HTM debt securities | | | 16,015 | | | 16,015 | | 1 | |
Secured financing agreements | |
| 992,927 | | | 1,627,352 |
| 24 | |
Unsecured senior notes | |
| 500,000 | | | 470,000 |
| 1 | |
| | $ | 2,477,425 | | $ | 3,246,967 |
| 69 | |
Instrument hedged as of December 31, 2020 | | | | | | | | | |
Loans held-for-sale | | $ | 911,596 | | $ | 557,000 |
| 25 | |
RMBS, available-for-sale | |
| 252,738 | |
| 421,000 |
| 4 | |
CMBS, fair value option | | | 125,985 | | | 71,000 | | 2 | |
HTM debt securities | | | 16,554 | | | 16,554 | | 1 | |
Secured financing agreements | |
| 1,008,909 | | | 1,633,357 |
| 24 | |
Unsecured senior notes | |
| 500,000 | | | 470,000 |
| 1 | |
| | $ | 2,815,782 | | $ | 3,168,911 |
| 57 | |
Face Value of Hedged Instruments | Aggregate Notional Value of Credit Index Instruments | Number of Credit Index Instruments | |||||||||||||||
Instrument hedged as of September 30, 2021 | |||||||||||||||||
Loans held-for-sale | $ | 1,797,642 | $ | 1,660,200 | 38 | ||||||||||||
RMBS, available-for-sale | 229,843 | 85,000 | 2 | ||||||||||||||
CMBS, fair value option | 126,864 | 71,000 | 2 | ||||||||||||||
HTM debt securities | 14,937 | 14,937 | 1 | ||||||||||||||
Secured financing agreements | 995,657 | 1,663,233 | 23 | ||||||||||||||
Unsecured senior notes | 500,000 | 470,000 | 1 | ||||||||||||||
$ | 3,664,943 | $ | 3,964,370 | 67 | |||||||||||||
Instrument hedged as of December 31, 2020 | |||||||||||||||||
Loans held-for-sale | $ | 911,596 | $ | 557,000 | 25 | ||||||||||||
RMBS, available-for-sale | 252,738 | 421,000 | 4 | ||||||||||||||
CMBS, fair value option | 125,985 | 71,000 | 2 | ||||||||||||||
HTM debt securities | 16,554 | 16,554 | 1 | ||||||||||||||
Secured financing agreements | 1,008,909 | 1,633,357 | 24 | ||||||||||||||
Unsecured senior notes | 500,000 | 470,000 | 1 | ||||||||||||||
$ | 2,815,782 | $ | 3,168,911 | 57 |
Income (Expense) Subject to Interest Rate Sensitivity | Variable rate investments and indebtedness (1) | 1.0% Increase | 0.5% Increase | 0.5% Decrease | 1.0% Decrease | |||||||||||||||||||||||||||
Investment income from variable rate investments | $ | 13,244,542 | $ | 75,698 | $ | 32,159 | $ | (3,482) | $ | (3,609) | ||||||||||||||||||||||
Interest expense from variable rate debt, net of interest rate derivatives | (9,646,375) | (97,853) | (46,840) | 1,991 | (3,599) | |||||||||||||||||||||||||||
Net investment income from variable rate instruments | $ | 3,598,167 | $ | (22,155) | $ | (14,681) | $ | (1,491) | $ | (7,208) |
| | | | | | | | | | | | | | | |
|
| Variable rate |
| | |
| | |
| | |
| | | |
| | investments and | | 1.0% | | 0.5% | | 0.5% | | 1.0% | |||||
Income (Expense) Subject to Interest Rate Sensitivity | | indebtedness (1) | | Increase | | Increase | | Decrease | | Decrease | |||||
Investment income from variable rate investments | | $ | 11,974,667 | | $ | 57,992 | | $ | 24,502 | | $ | (4,237) | | $ | (4,364) |
Interest expense from variable rate debt, net of interest rate derivatives | |
| (8,276,358) | |
| (86,390) | |
| (41,759) | |
| 6,817 | |
| 5,184 |
Net investment income from variable rate instruments | | $ | 3,698,309 | | $ | (28,398) | | $ | (17,257) | | $ | 2,580 | | $ | 820 |
Impact per diluted shares outstanding | | | | | $ | (0.10) | �� | $ | (0.06) | | $ | 0.01 | | $ | 0.00 |
Foreign Currency Risk
98
The following table represents our current currency hedge exposure as it relates to our investments denominated in foreign currencies, along with the aggregate notional amount of the hedges in place (amounts in thousands except for number of contracts) using the March 31,September 30, 2021 GBP closing rate of 1.3779,1.3472, EUR closing rate of 1.17321.15848 and AUD closing rate of 0.7596.
0.7226.
Carrying Value of Net Investment | Local Currency | Number of Foreign Exchange Contracts | Aggregate Notional Value of Hedges Applied | Expiration Range of Contracts | ||||||||||||||||||||||
$ | 19,401 | GBP | 5 | $ | 25,942 | October 2021 - December 2023 | ||||||||||||||||||||
36,733 | GBP | 4 | 41,571 | July 2022 - July 2023 | ||||||||||||||||||||||
14,508 | GBP | 14 | 23,329 | October 2021 - February 2025 | ||||||||||||||||||||||
25,055 | EUR | 13 | 24,967 | October 2021 - October 2022 | ||||||||||||||||||||||
20,519 | EUR | 9 | 30,892 | November 2021 - November 2023 | ||||||||||||||||||||||
102,888 | GBP | 21 | 103,711 | October 2021 - August 2022 | ||||||||||||||||||||||
52,422 | GBP | 15 | 62,804 | November 2021 - May 2024 | ||||||||||||||||||||||
28,248 | GBP | 10 | 36,496 | October 2021 - January 2024 | ||||||||||||||||||||||
3,124 | GBP | 1 | 3,583 | October 2021 | ||||||||||||||||||||||
28,222 | EUR | 24 | 27,389 | November 2021 - August 2022 | ||||||||||||||||||||||
18,115 | GBP | 11 | 24,431 | November 2021 - May 2024 | ||||||||||||||||||||||
115,376 | GBP | 35 | 153,977 | October 2021 - January 2024 | ||||||||||||||||||||||
5,232 | EUR | 4 | 6,480 | November 2021 - July 2022 | ||||||||||||||||||||||
353 | GBP | 12 | 26,933 | November 2021 - July 2022 | ||||||||||||||||||||||
117,048 | GBP | 9 | 155,375 | November 2021 - November 2023 | ||||||||||||||||||||||
5,914 | AUD | 2 | 4,092 | August 2022 - August 2023 | ||||||||||||||||||||||
17,731 | EUR | 16 | 20,266 | November 2021 - June 2023 | ||||||||||||||||||||||
32,333 | EUR | 13 | 61,782 | November 2021 - November 2022 | ||||||||||||||||||||||
36,386 | EUR | 18 | 43,321 | December 2021 - November 2025 | ||||||||||||||||||||||
11,825 | EUR | 3 | 14,346 | November 2021 - November 2023 | ||||||||||||||||||||||
61,311 | GBP | 4 | 63,016 | November 2021 | ||||||||||||||||||||||
27,381 | AUD | 26 | 33,856 | October 2021 - October 2024 | ||||||||||||||||||||||
148,635 | AUD | 23 | 149,786 | November 2021 - June 2022 | ||||||||||||||||||||||
24,091 | EUR | 16 | 24,108 | June 2022 - April 2023 | ||||||||||||||||||||||
12,067 | GBP | 3 | 12,714 | December 2021 - April 2022 | ||||||||||||||||||||||
— | EUR | 32 | 102,704 | October 2021 - March 2023 | ||||||||||||||||||||||
$ | 964,918 | 343 | $ | 1,277,871 |
| | | | | | | | | | |
Carrying Value of Net Investment | | Local Currency | | Number of | | Aggregate Notional Value of Hedges Applied | | Expiration Range of Contracts | ||
$ | 19,711 | | GBP | | 7 | | $ | 27,815 | | April 2021 – December 2023 |
| 92,555 | | GBP | | 21 | | | 90,654 | | April 2021 – August 2022 |
| 28,028 | | EUR | | 60 | | | 23,894 | | April 2021 – April 2022 |
| 33,842 | | GBP | | 1 | | | 39,181 | | July 2023 |
| 63,112 | | EUR | | 38 | | | 66,784 | | May 2021 – March 2023 |
| 52,105 | | GBP | | 21 | | | 66,054 | | May 2021 – May 2024 |
| 29,268 | | GBP | | 12 | | | 39,214 | | April 2021 – January 2024 |
| 3,742 | | GBP | | 5 | | | 7,991 | | April 2021 – October 2021 |
| 28,394 | | EUR | | 36 | | | 29,689 | | May 2021 – August 2022 |
| 117,487 | | GBP | | 39 | | | 163,832 | | April 2021 – January 2024 |
| 60,286 | | GBP | | 19 | | | 84,765 | | April 2021 – August 2021 |
| 5,249 | | EUR | | 6 | | | 6,836 | | May 2021 – July 2022 |
| 4,126 | | GBP | | 12 | | | 23,430 | | May 2021 – July 2022 |
| 119,154 | | GBP | | 10 | | | 165,834 | | August 2021 – November 2023 |
| 3,981 | | AUD | | 1 | | | 4,301 | | August 2021 |
| 24,876 | | EUR | | 20 | | | 30,283 | | May 2021 – June 2023 |
| 34,983 | | EUR | | 10 | | | 60,459 | | May 2021 – November 2022 |
| 40,898 | | EUR | | 22 | | | 49,445 | | June 2021 – November 2025 |
| 11,633 | | EUR | | 5 | | | 14,745 | | May 2021 – November 2023 |
| 62,708 | | GBP | | 12 | | | 68,007 | | May 2021 – November 2021 |
| 131,211 | | AUD | | 18 | | | 138,925 | | November 2021 – June 2022 |
| 17,218 | | EUR | | 13 | | | 19,097 | | June 2022 – April 2023 |
| 10,655 | | GBP | | 5 | | | 13,413 | | June 2021 – April 2022 |
$ | 995,222 | | | | 393 | | $ | 1,234,648 | | |
Changes in Internal Control Over Financial Reporting. No change in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the quarter ended March 31,September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
99
Factors.
Securities.
Disclosures.
100
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INDEX TO EXHIBITS
Exhibit No. | Description | ||||||||
4.1 | |||||||||
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| Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 | ||||||||
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31.2 |
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32.1 |
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32.2 |
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101.INS |
| XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document | |||||||
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
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101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
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104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document) |
101
SIGNATURES
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| STARWOOD PROPERTY TRUST, INC. | |||||||
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Date: | By: | /s/ BARRY S. STERNLICHT | ||||||
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| Barry S. Sternlicht Chief Executive Officer Principal Executive Officer | ||||||
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Date: | By: | /s/ RINA PANIRY | ||||||
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| Rina Paniry Chief Financial Officer, Treasurer, Chief Accounting Officer and Principal Financial Officer |
102